TITRE

2016 ACER Work Programme Outline & key developments

16 June 2015,EP ITRE Committee

Alberto Pototschnig – ACER Director

Lord Mogg – ACER BoR Chair

Timing..consultation open until 19 June

By 30 June, draft WP to EP, EC and BoRBy 1st September, BoR approves WP By 30 September, AB adopts WP

Annual Work Programme

Activities, tasks and deliverables under 4 broad themes in continuity with last year

ChallengesWP in line with draft budget adopted by AB (with supportive BoR Opinion) – subject to the assignment of resources

Agency’s strategic areas 2015 – 2017 unchanged from last year

Multiannual outlook

Work Programme – Structure & Timing

2

ACER WP

Four Themes contributing to the

Energy Union

ACER work within the Energy Union context

Energy Union

Energy security,

solidarity and trust

A fully-integrated Internal EnergyMarket

Energy efficiency/

moderation of energy demand

Decarboni-sation of the

economy

Research and Innovation

3

• Complete transposition of Third Package

• Implementation & Monitoring of Network Codes

Themes of 2016 ACER WP

• REMIT ‘live’• Wholesale Market Monitoring

• European Network Planning • PCI selection & process • Cross-Border Cost Allocation

• “Bridge to 2025 implementation”

Theme 1: (Post-) IEM Completion

Theme 3: Infrastructure Challenge

Theme 2: Wholesale Energy Market Integrity and Transparency

Theme 4: Future Challenges, including RES Integration

4

Fully functioning IEM backbone of the Energy Union as underlined by the EP draft report on Energy Union!

Theme 1 – (Post-) IEM Completion Framework Guidelines and Network Codes

• Implementation of adopted NC and Guidelines• Follow-up on possible rules on Harmonised

Tariff StructuresElectricity

Gas

• Implementation of adopted NC and Guidelines• Early implementation of NC on Harmonised

Transmission Tariff Structures• CAM NC Amendment on Incremental Capacity• 3rd Congestion Report

5

Early Implementation: Electricity Day-Ahead Regional Integration (Market Coupling)

Theme 1 – (Post-) IEM Completion

6

Early Implementation:Current Gas CAM Pilot Projects (as of June 2015)

AT, BE, DK, ES, DE, FR,

IE, IT, NL, PT, SI, UKPRISMA Platform

PLGSA Platform: Bundled

Capacity at Polish IPs + Pilots

HU, RORegional Booking Platform:

Auctions of Bundled Capacity

LU/DE Pilot Project w/ PRISMA

DE/CZ &

PL/CZ

2 bundling Pilot Projects:

PRISMA: DE/CZ

GSA: PL/CZ

CZ/SK

Discussion on Pilot(s) between

eustream (SK) &

I) GSA

II) PRISMA

SI/HR Discussion on PRISMA Pilot

BG, GR, SE, FL, LT, LV,

EEundecided

CAMCOORDINATED AUCTIONSfor the allocation of a common set of cross-border bundled capacity products

Theme 1 – (Post-) IEM Completion

7

Adoption of the Implementing Acts

Registration of Market Participants

Data reporting and monitoring by ACER

Dec 2014

after 9 months

Feb/Mar 2015

Oct 2015

within 3 months

Getting ready for Market Monitoring of wholesale energy markets

Jan2015

Entry into Force of the Implementing Acts

Less than 4 months to go!Trade data reporting obligation starts on 7 October

2015

Theme 2 – REMIT - Timeline

8

9

56

35

5

10

15

30

20

25

2012 2013 2014

Year of notification

Progress of potential REMIT breach cases reported to/by the Agency – status as of 31/05/2015

Pending

Closed – Breach found and sanctioned

Closed – Breach found and no formal sanction applied (e.g.: warning)

Closed - Insufficient evidence or no breach

16

1

23

412

2015 Until

31/05/2015

10

33

12

Nu

mb

er o

f cases

Theme 2 – REMIT

9

ACER REMIT Portal: single entry point to information & applications for market participants, stakeholders and general public; also gives access to “Whistleblower platform”

Roundtable meetings to collect feedback from stakeholders

6th edition of ACER Q&A paper … released early June

REMIT Coordination Group (ACER and NRAs) to facilitate coordination in REMIT operations

NRAs 2nd Survey on state of play for REMIT application at national level

Continuous regulatory capacity building

Regular ACER and NRAs sessions on Open Questions & Answers

Intense, joint effort by ACER and NRAs to finalise the implementation of REMIT

Theme 2 – REMIT – Getting ready

10

ACER 2016 draft budget 20.078.441€* - Additional staff (+44) for REMIT and TEN-E Regulation

- Renewal of REMIT service contracts

Energy trade data reporting & market monitoring starts 7 October 2015

EC recognised need for additional resources; 27 May statement of estimates for 2016: ACER +10 staff members and €15.547m budget

but proposed resources are still insufficient…

* Adopted by AB (26 March) with supportive opinion of BoR

Theme 2 – REMIT – Budget challenges

Grateful to ITRE Committee for the continuous support

11

Theme 2 – REMIT: Concerns about impact of EU Financial Regulation on IEM

Currently majority of wholesale gas and electricity tradingoutside the scope of EU financial regulation Not considered ‘Financial Instruments’ under MiFID or

Can avail of a number of exemptions under MiFID

Current Level 2 legislation proposals will potentially capturemore energy trading under financial market regulationthrough: Widening the scope of the definition of ‘financial instruments’ under MiFID II

Narrowing possibility for energy firms to be exempted from MiFID II

This will add costs and regulatory burden on firms tradingenergy for little benefit (market integrity and transparency arespecifically catered for by REMIT)

Potential to damage liquidity making the IEM and Energy Unionmore difficult to achieve

Regulations to be finalised in 2 phases: in the coming weeks andmonths. Need for action

12

Theme 3 – The Infrastructure Challenge

ACER Priorities in 2016• Opinion on methodologies for cost-

benefit analysis• Report on national methodologies,

criteria to evaluate investments

PCI Support

EU network Planning

• Opinion on ENTSO-E’s Ten Year Network Development Plan

• Report on implementation of the inter-TSO compensation fund

• Opinions on national plans• Opinions on ENTSOs WP, supply

outlooks, adequacy forecasts

PCI Implementation Monitoring

• Annual report on PCI implementation and recommendations

ACER may also be called to issue Decisions on Cross-Border Cost Allocation

• PCI selection: Opinion on consistent application of criteria across regions (every 2 years)

13

o Bridge key elements linked to the Energy Union:o Including strengthening interactions with our neighbours’

NRAs and regulatory capacity building along IEM principles

Theme 4 - Meeting future challenges: the “Bridge to 2025”

2. Smarter

demand

side/grids

1. Flexibility

3. Further

competition

DSR Wholesale

Retail

Customers

14

The EU Energy Sector trends and

More liquid, flexible and integrated Gas

Markets

Towards aLow-Carbon Society

Increased penetration of Renewable Sources

Adequacy concerns and need for Flexibility

Uncertainty over Future Gas Demand

New uses of Gas

Gas used for Flexible Power Generation

Flexibility and Adequacy Markets in

Electricity

challenges

Theme 4 - Meeting future challenges : the “Bridge to 2025”

15

ACER will include the metric calculation results (biannually) for each market in the Market Monitoring Report (MMR) when (REMIT) data is available October 2015: market

places data April 2016: OTC data Probably first covered in

MMR 2016 (published 2017) NRAs to carry out self-evaluation

second half 2015

ACER to summarise and evaluate the results of self-evaluation and proposed measures

Implementation of the GTM

Theme 4 - Meeting future challenges: the “Bridge to 2025”

16

• Reinforcement of ACER recognised also in the EP draft report on EU: Possible areas

Oversight of ENTSOs & other Bodies

• Increasingly important role of ENTSOs• Effective oversight of the ENTSOs by ACER• Similar oversight of other bodies with critical

or monopoly IEM functions

Stronger NRAs Coordination

• Mechanisms to further enhance cooperation between NRAs

• ACER to replace “all NRAs” in taking CACM 3rd level decisions

Monitoring of Markets

• ACER powers to require from all EU energy-sector entities information needed for monitoring

Theme 4 - Meeting future challenges:

17

Thank you for your

attention

Save the Date! 9 July ACER Annual Conference

‘An Energy Union for Consumers’, Brdo Conference Centre, Slovenia

www.acer.europa.eu

ANNEX

ACER delivered 8 Framework Guidelines and recommended 11 (of 14) Network Codes for adoption

FG adopted by the Agency NC Status

Electricity

Grid Connection 20.07.20113 NCs recommended for adoption

With the EC - expected vote in Ctte in June-August 2012

Capacity Allocation & Cong.

Management

Forwards

29.07.2011

1 NCs recommended - approved in Ctte

1 NCs recommended - with EC - expected vote in Cttee in

September 2015

System Operation 02.12.2011

3 NCs recommended for adoption

1 NC being considered by ACER

Merged in one code by end of June 2015

Balancing 18.09.2012 1 NC: ACER recommendation expected in July2015

Gas

Capacity Allocation 03.08.2011 OJ: 14.10.2013 EiF: 1.11.2015

Balancing 18.10.2011 OJ: 26.03.2014 EiF: 1.10.2015

Interop. & Data Exch. 26.07.2012 Adopted on 30 April

Harm. Tariff Struct. 29.11.2013 ACER Opinion issued on 30.03.2015

Theme 1 – (Post-) IEM Completion

Annex 1

SINGLE EU ALLOCATION PLATFORMone-stop shop for allocating long-term transmission rights

Capacity Calculation

FLOW-BASED METHODto improve network security and the level of available capacity

SINGLE EU PRICE COUPLINGto optimise use of existing day-ahead cross-border capacities at EU level

SINGLE EU CONTINUOUS TRADINGwith the possibility of auctions

Long Term

Intraday

Day-Ahead

Electricity Capacity Allocation and Congestion Management Cross-regional Roadmaps

… for early, voluntary implementation of the Target Model

Theme 1 – (Post-) IEM Completion

Annex 2

- Single Price Coupling covering 19 Member States

- 4MMC Price Coupling (CZ. HU, SK, RO)

Single EU DA Price Coupling

Electricity CACM Roadmaps: State of Play

Single EU ID Contin. Trading

- Significant delay due to PXs’ disagreement- EC took the process over at FF Nov 2013- Statement of Principles from NRAs to

project parties in April 2015

Single EU LT Allocat. Platform

- MoU between CASC and CAO (75% of the EU borders with LT TRs)

- Common auction rules being developed by ENTSO-E, to be approved by NRAs

- CWE pilot project went live in May 2015- The CEE region to follow (ad-hoc solutions

may be required to address the loop flows phenomenon)

Flow-Based Cap. Calc. Method

Theme 1 – (Post-) IEM Completion

Annex 3

Operation of Centralised European register of energy market participants and of Information System for collection & sharing of data

Market monitoring of trading activity in wholesale energy markets

Coordination of NRAs and other authorities for consistency in REMIT implementation & ensure a coordinated approach in the enforcement of market abuse rules

Annual report on the Agency’s activities under REMIT

Key tasks in AWP 2016

Theme 2 - REMIT

Annex 4

TEN-E RegulationCross-Border Cost Allocation Decisions

Two CBCA Decisions adopted by ACER so far:.GIPL – Gas Interconnection Poland Lithuania (11.8.2014)

.LitPol – LT part of the Lithuania – Poland electricity interconnection (16.04.2015)

0

100

200

300

400

500

600

700

800

PL LT LV EE

Benefits

Costs

CBCA from CBCA to €m

LT PL 54.9 (64.0%)

LV PL 29.4 (34.3%)

EE PL 1.5 (1.7%)

Total Compensation 85.8 (100%)

LT receiving positive net benefits

(benefits > cost)

No CBCA compensation necessary

Theme 3 – The Infrastructure Challenge

Annex 5

Performance of Wholesale Gas Market in 2014GTM 2011 criteria

Based on 5 indicators:

Churn rate

Market size (TWh/year)

Number of gas sources

Herfindahl–HirschmanIndex

Residual Supply Index

Well-functioning Inadequate

Theme 4 - Meeting future Challenges: GTM

Annex 6