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20 February 2018

Market Design : last chance for the European Parliament !


While the first trilogues on the Renewable Energy and the Energy Efficiency Directives, as well as the Regulation on the Governance of the Energy Union will start this week, the Members of the European Parliament (MEPs) of the Industry, Research and Energy Committee will adopt on February, 21st their position on the new electricity market design. The outcome of this vote is crucial: capacity mechanisms, short-term market reforms and consumer participation are at the core of the proposals on the table. However, despite the concerns raised by several delegations, some compromised amendments tabled by the rapporteur, Krisjanis Karins, put at risk the ability for Member States to guarantee the security of supply in Europe. UFE takes stock of the stakes for this vote and stresses the importance of extending the debate in the European Parliament…

MEPs will have to vote on the Directive on common rules for the electricity market, a key text of the “Clean Energy Package” that aims to increase the flexibility of the system and enable active consumer participation. From UFE’s point of view, strengthening of the role of the latter requires, first of all, an appropriate regulatory framework for aggregators in order to promote the growth of demand response services while guaranteeing a level playing field for all players. On this point, the rapporteur’s position is encouraging, and should be supported by MEPs: aggregators must be able to compensate suppliers for the energy injected but not consumed, as recognised in the current French system.

Putting the consumer at the heart of the energy system

It also implies that consumers be provided with relevant information to adjust their consumption and choose the best offers on the market. Unfortunately, the rapporteur’s and shadow rapporteurs’ proposals are aimed at extending the list of data transmitted to consumers via their bills. Such extension is likely to undermining the clarity of the information provided, therefore ultimately preventing consumers from making the best choices. Quality must prevail over quantity!

Internal market in electricity: the Parliament goes in the wrong direction…

UFE is concerned about the proposals made by the rapporteur and shadow rapporteurs on the Electricity Regulation, which is the cornerstone of the new internal market organisation.
Firstly, the regulatory framework proposed by MEPs is particularly worrying as it does not guarantee the long-term signals needed for investment and endangers the security of supply of Member States. Despite the concerns expressed by several parliamentary delegations to the rapporteur and shadow rapporteurs, the compromise amendments maintain ENTSO-E’s annual adequacy assessment as a prerequisite for the implementation of capacity mechanisms, consider these mechanisms as temporary, last-resort solutions and limit contracts to 1 year. However, the European Commission formally acknowledged on 7 February, when it validated six capacity mechanisms, that these mechanisms are necessary to ensure the security of electricity supply. UFE, along with seven other national associations, has reiterated such message on several occasions.
There are other areas of concern as well. With regard to short-term contracts, MEPs have questioned the provisions of the European network codes, in particular by modifying the imbalance settlement period and the market gate closure time, despite the extensive consultation process that had enabled them to be drawn up..
Similarly, MEPs echoed the Council’s proposal to define a threshold of minimum available capacity for cross-zonal trade (set at 75%). As pointed out in a joint declaration co-signed by EFET, Nordenergi, the Market Parties Platform and Eurelectric, in which UFE was strongly involved as a member of the latter two organisations, the threshold concept is arbitrary. Indeed, it does not maximise the efficiency of the system and does not reflect the reality of cross-border trade or the specificities of national and regional markets. The Clean Energy Package should develop, not undermine, the availability of cross-border capacity.
In fact, behind these apparently technical texts, the integration of European markets and security of supply are at stake: in view of the number of Member States concerned, UFE therefore calls on MEPs to live up to their responsibilities.

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The Union of the French Electricity Industry is the trade association of the French electricity sector. We bring together companies from the whole value chain of the electricity industry.

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