A summary of the Committee’s joint debate is now available.
EP ITRE Committee – 11 July 2017
Internal market for electricity (recast)
Common rules for the internal market in electricity (recast)
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Rapporteur Krišjānis Kariņš (EPP, LV) made the following opening remarks:
- the Commission’s proposal had a strong market-based approach, which was fully supported and further strengthened by the Rapporteur;
- he was against wholesale price caps and priority dispatch;
- capacity mechanisms needed to be the last resort and used only if market forces would not solve the issue;
- responsibility needed to be balanced across the board. A seller (including aggregators) who would make an improper sale needed to be penalised in order to avoid the same mistake in the future;
- regarding bidding zones and the decision-making process, he proposed an unanimous decision by the affected MS. In case such a decision could not be made, the Commission would have the power to step in and create more than one bidding zone if the congestion proved to be a problem. This would leave an opportunity for the Commission to work with the MS to find a solution which would mean building new power lines;
- he did not agree with the Commission’s proposal on regional operational centres (ROCs). In his view, there was a need for cooperation but it was important not to ‘mix apples and oranges’. The responsibility for running the network needed to remain with the TSOs, which did not contradict cooperation. Hence, instead of a regional operational centre, he called for a regional coordination centre which meant independent MS with competent TSOs working together in a coordinated manner;
- regarding crisis management, TSOs were on a daily crisis management mission and were used to it. Therefore, he proposed to keep the responsibility with the TSOs;
- regarding the Directive, storage needed to become a market player. He said TSOs and DSOs should not be in the game, “unless there would be no other way“;
- consumers needed to be aware about vital information on their consumer bills. However, over-burdening companies to have ten page bills was not a solution as well. It was important to have the essential information on the bills and everything else needed to be accessible in a “less forceful manner“.
Martina Werner (S&D, DE)
- she fully supported the Rapporteur’s approach on the capacity mechanism and bidding zones. Cost-efficient measures needed to be taken before the introduction of the capacity mechanism. For the S&D Group the transition mechanism was important, especially for workers in the effected regions;
- she did not agree with the storage element and she would table her amendments accordingly;
- she said it was a good idea to change the name of ROCs to regional cooperation centres (RCCs). It was important for this to take place in due legal process and not through network codes. However, unlike the Rapporteur, she believed RCCs needed to have a binding decision responsibility;
- regarding bidding zones and binding decision responsibility, separation into smaller zones made no sense. In her view, smaller DSOs needed to be represented as well;
- further concepts were crucial for the S&D Group:
- financial responsibility and renewable energy: the Rapporteur had taken a market-based approach. In her view, that meant assuming that the market would work and that all participants would have equal access. It was necessary to support renewable energy;
- provisions on energy poverty, consumer protection, energy community needed to be strengthened. With regards to energy poverty, the Rapporteur had focused on the national social system, however she believed measures which would provide more protection to energy poor households and regulated electricity prices did not follow a market-based approach;
- lastly, a non-judiciary dispute settlement was important, but it did not make sense to have a national and European data format.
Zdzisław Krasnodębski (ECR, PL)
- he agreed on RCCs;
- he did not agree with the approach of using the term ‘market‘ so many times in an area which, in his view, was based on subsidies and where the market played a rather limited role;
- the question of promoting clean energy was considered to be a “political project and an ideology“;
- it was also difficult to agree with a number of elements, including capacity mechanisms, power markets as well as wholesale pricing and EU competences in bidding zones. He would table amendments accordingly.
Kaja Kallas (ALDE, EE)
- she welcomed the draft report. The market-based approach was important;
- she supported regulated prices and fighting against energy poverty through social rather than energy policy;
- in her view, switching needed to be done earlier than 2025;
- she welcomed the capacity mechanism approach;
- she questioned why the Rapporteur had applied the 550 grams of CO2 per kilowatt hour (CO2/kWh) limit five years after the law had entered into force;
- regarding aggregators, she welcomed the general approach but did not understand the compensation issue. In her view, if the energy saved had never been generated, it was difficult to see the reasons for compensation. However, the overall balancing system had been supported;
- in her view, enhanced regional cooperation would not happen if regional centres had no decision-making powers. Decision meant more ownership of the process by regional actors and implementation of such decisions. She did not see how recommendations could be enough.
Claude Turmes (Greens/EFA, LU)
- in his view, the report had a neoliberal approach and was considered good from the technical point of view;
- he supported the Rapporteur’s approach on capacity mechanisms, the stability reserve and keeping the limit of 550 grams CO2/kWh, however he did not agree with weakening EU cooperation with the introduction of RCCs, bidding zones and weakening new actors. He questioned why the role of aggregators had not been strengthened;
- he was surprised with the weakening of the investment signals to renewables and the Rapporteur’s retroactive change to priority access and dispatch. He believed the Rapporteur went ‘too far‘ and questioned when did the policymakers start supporting retroactive changes to already made investments;
- regarding the issue of balancing responsibility, he said that if all the markets would be as liquid and have as many market actors as Germany, the balancing of responsibility for renewables would work. However, even in Germany small actors were protected because German authorities did not believe the market was good enough. He highlighted that Southeastern Europe was not ready for this and requested a series of conditions in this regard. Otherwise it could lead to more risk-taking, higher capital and higher market costs;
- he questioned what happened with the market exposure of nuclear energy and why it had not been mentioned;
- regarding regulated prices, he gave an example of regulating upper margins instead of prices in Estonia;
- lastly, he said the future system will be highly decentralised and that most of the connections will happen at the DSO level. Hence, not to create new oligopolies it was necessary to discuss neutrality.
- the regionalisation of the EU power system was central to securing a sustainable transition of the system;
- she welcomed the establishment of ROCs proposed by the Commission and suggested to the Rapporteur to maintain this proposal;
- she welcomed introducing capacity mechanism as a last resort. Member States needed to outline their use of storage and energy efficiency in this regard;
- she was happy the Rapporteur had maintained the Commission’s limit of 550 grams CO2/kWh. The limit needed to be applied to all power plants as soon as the Regulation would enter into force;
- it had been highlighted that the inflexible power capacity had not been mentioned in the Commission’s proposal or the Rapporteur’s draft report. The EU Emission Trading System had not been giving price signals for phasing out coal. The phase-out needed to be carefully managed and it was necessary to ensure a proper transition adjustment for the workers;
- regarding the common rules for the internal market in electricity, it was necessary to maintain priority access and dispatch for renewable energy sources. Investors needed to regain trust in a stable renewables regulatory framework;
- clarifications on energy communities was missing from the draft report. It was necessary to clarify the definition of local energy communities and ensure that national regulators oversaw a level-playing field for the energy communities.
Dario Tamburrano (EFDD, IT)
- human beings needed to be in the centre of concerns and not the market. “We can not consider the market as a new divinity, especially in such a fundamental sector“;
- creating fair conditions meant recognising different potentials between different actors for contributing to the overall aim and therefore establishing different rules;
- the new market set-up needed to create a compensation system and place all market players on the same level;
- renewables were essential technologies for achieving geopolitical and climate goals;
- it had been highlighted that eliminating the priority dispatch for renewables would lead to an increase in Co2 emissions. It needed to be done in a way for rules to function properly;
- regarding investments, he said not all investments were equal and questioned the importance of nuclear investment;
- waivers for balancing responsibility for smaller operators needed to be left intact;
- deleting provisions of small energy authorities involved in market balancing was considered to be discrimination against certain operators;
- he did not agree with compensation in regards to aggregators. “We must not maintain protecting them in the future, instead protect ourselves from the ghost of the past“.
Interventions from other members followed
Angelika Niebler (EPP, DE)
- she commented on three issues:
- capacity mechanism: article 23 paragraph 4 needed to be deleted. She did not approve mixing the capacity mechanism with climate protection. She had misgivings about the European Assessment on whether the capacity mechanism was necessary;
- regional operational centres: she was not a ‘huge fan‘. She supported the Rapporteur’s approach;
- article 13 and the bidding zones: she agreed with MS finding agreements on the bidding zones. However, the Commission’s competence in this regard had been rejected.
- lastly, she believed the draft report was good.
Janusz Lewandowski (EPP, PL)
- he said the emission limit standard of 550 grams CO2/kWh was practically ‘eliminating the majority of capacity units of Poland from the future capital market mechanism‘ and the transitional period did not help. As a result, the limit needed to have a bigger share of gas fuelled units and increased gas import dependancy;
- Poland’s effort to achieve climate goals through clean coal technologies was not feasible with such a standard;
José Blanco López (S&D, ES)
- he said the capacity mechanism should not be a pretext for supporting polluting energies;
- eliminating priority dispatch for renewable sources was a mistake. It was necessary to take into account particular characteristics of small renewable and pilot installations which could not otherwise compete on the market, and ensure not to produce electricity through polluting resources;
- recognising the importance of interconnections was considered vital for establishing and developing the internal energy market;
- he requested to further clarify the measures to be taken in order to address energy poverty.
Pilar del Castillo Vera (EPP, ES)
- she welcomed the market approach, but proper instruments were needed;
- interconnections which could guarantee energy flow and stable prices were a problem in a number of countries;
- evaluation of resources of two countries which would be willing to interconnect needed to be taken into account with regards to the capacity mechanism. It was necessary to focus on finding a solution which would provide an economic incentive for the development of interconnections. “Two countries with different types of energy sources, market and interests would prevent interconnectivity and the 10% target would not be met”.
Jaromír Kohlíček (GUE/NGL, PL)
- coordination was the right term to be used. TSOs needed to become coordination centres;
- electricity needed to be made available to everybody and it was a political decision, not a market decision;
- the elimination of the priority dispatch was considered ‘silly‘, as it was necessary in case of crisis;
- lastly, it was necessary to have a large capacity reserve which would be able to cover in case of blackouts. He requested to raise this issue in the report.
A European commission representative made the following remarks:
- he agreed with Claude Turmes (Greens/EFA, LU) that the reports were technically well done. The whole approach had indicated the transition towards a competitive energy market where the consumers were protected. Hence, the Commission had fully shared this approach;
- regarding the Rapporteur’s amendments on bidding zones, the Commission praised the fact that the amendments had taken into account the political dimension, gave the MS a possibility to agree upon a configuration and had put the Commission as the last resort;
- the Commission supported the amendments on capacity mechanisms. The amendments had strengthened the Commission’s proposal;
- regarding ROCs and RCCs, the Representative said that was the initial intention of the Commission. By calling them operation centres, the Commission had given the wrong impression of a completely new structure of regional centres. He said that was not the intention and the RCCs were closer to ‘reality’;
- regarding the question of the decision-making power, in the report there was a distinction between recommendations and normal recommendations. As a lawyer, he did not see the difference and invited the Rapporteur to ‘think again‘;
- he supported José Blanco López (S&D, ES) and Claude Turmes (Greens/EFA, LU) on priority dispatch and said the Rapporteur had gone too far;
- he agreed on storage and questioned why the wording of DSO ownership of storage and TSO was different. The definition for DSO ownership was the right one as it was limited to something inherent of the technical systems and could not be provided by the market, whereas for TSOs there was a broader term ‘integral part of the transmission system‘, which in his view, could be interpreted in a lot of ways;
- regarding the Directive, he welcomed the efforts made to increase the protection of consumers. Switching by 2025 was a good date, but preparation was necessary;
- he had raised a word of warning regarding regulated prices. He said that when DG ENER tried to convince the MS to get rid of regulated prices, a robust system for protecting vulnerable consumers had been put in place before discussing liberalisation. Hence, social tariffs in transitional periods were crucial. Social tariffs needed to be a transitional measure which would lead to a social policy;
- regarding Claude Turmes (Greens/EFA, LU) statement on regulating margins instead of prices, he questioned how to get the right signals for market investments in that case;
- lastly, the Commission had opted for ‘no compensation’ as a principle, because otherwise it could create an obstacle for aggregators to enter the market.
Rapporteur Krišjānis Kariņš (EPP, LV) made the following closing remarks:
- after all the comments, he said that the Committee needed to decide whether to support the Commission’s direction and the market-based approach;
- he said that the European market for electricity did not exist in reality. In Spain there was renewable potential but no potential to export energy due to physical lack of interconnectivity with France. In France there was a strong nuclear fleet which was not flexible. In Germany there was a lack of power lines between the North which produced and the South which consumed. Because of this, electricity unlike gas was not easily stored and followed the path of ‘least resistance’ which went through Poland, the Czech Republic and back to Austria and Germany;
- the Commission had proposed a direction which the Parliament needed to strengthen;
- regarding capacity mechanisms, subsidies for coal, nuclear, renewables were all the same. It was necessary to de-subsidise in general;
- there was no retroactive change mentioned. It was about MS looking for ways to buy out existing contracts, instead of paying for the next ten years;
- regarding the 550 grams CO2/kWh limit, he confirmed that it did cause problems for regions of Europe that had many people working in the coal mining industry. It was a fact which was not able to be avoided;
- there were two approaches regarding energy poverty: the subsidisation of prices or individuals. In his view, it was better to give money to the people who needed help paying the bills.
Source: One Policy Place