Policy area - Internal energy market

The Third Package of legislation on the internal energy market and the Infrastructure Package aim to achieve a well-functioning internal EU market. Fair competition, clear choice and protection if needed are the prerequisites of a market that offers the best deal at an affordable price to meet the individual needs of companies and households. Eurogas fully supports the objectives and is actively involved in the development of network codes and rules designed to enhance the liquidity of the gas market and in  the stakeholder dialogues aimed at empowering and protecting retail customers.

Wholesale market issues

Congestion Management Procedures (CMP)
Rules adopted in August 2012 aim to reduce congestion in the EU’s gas transmission pipelines and optimise efficient use of existing capacity. The “use-it-or-lose-it” rule  requires transport capacity booked but not used by energy companies  to be made available to other network users.  Another option involves transmission system operators (TSOs)  selling extra capacity to the market above the technical capacity of the pipelines.

Capacity Allocation Mechanisms (CAM)
A network code agreed in April 2013 provides rules for the efficient allocation of transport capacity in gas transmission pipelines, setting out requirements for standardised auction procedures, standard cross-border capacity products, and co-operation between TSOs. Provisions also cover the bundling of cross-border capacity and allocation of interruptible capacity. 

Balancing in transmission networks
The network code establishes a framework of principles underpinning non-discriminatory and transparent balancing systems. They include a market-based and harmonised daily balancing regime, clear responsibilities for TSOs and network users, new rules on imbalance charges, within-day obligations and operational balancing between transmission systems, as well as requirements for accurate and timely provision of information.

Harmonised transmission tariff structures
The aims of the planned network code are to promote convergence of tariff structures, and to ensure efficient gas transport based on cost-reflective tariffs, ensuring an adequate return for TSOs, with due attention to incentives for network investment, transparency and avoidance of cross-subsidies. The tariff systems should not discriminate among users, and their design should reflect the cost caused to the network by the shipper using it, as well as the value of the service to the market. The code will lay out cost-allocation methodologies.

Interoperability and data exchange rules
Interoperability between the EU gas transmission networks is a major prerequisite for the integration of a well-functioning cross-border gas market. The objective of the network code is to improve technical and operational interoperability. As well as data communications among transmission system operators (TSOs) and between TSOs and shippers the Code also covers interconnection agreements, units, gas quality, odorization, and capacity calculation.

Incremental capacity
The CAM Code does not deal with the question of incremental capacity. Therefore, an initiative was undertaken initially by the Council of European Energy Regulators (CEER) and will be pursued by ACER, the Agency for the Cooperation of Energy Regulators, to develop an EU approach to identify the incremental capacity requirements of gas transmission pipelines. The work recognises that different approaches will be necessary for routine investment in networks for which an extension of auction-based procedures can offer a way forward and major new, more complex investment requiring efficient and transparent Open Season procedures.

Retail market issues

The internal energy market should provide the retail customer with the opportunities to choose freely between different offers as well as different suppliers to meet their energy needs. For this it is important that the customer receives the information necessary to compare the offers available. The customer should be provided with clear information and be protected from misleading selling practices. Work is under way involving regulators, companies and consumers to improve the information available to customers and the clarity of bills, including e-billing. Eurogas is also engaged in stakeholder dialogue aimed at reducing the problems faced by vulnerable customers.

Empowering the customer
The retail customer should be able to switch supplier easily and quickly. Offers, contracts and bills should be transparent and fair. The aim is to strike a balance between commercial freedom, allowing energy companies to develop innovative and competitive products with services tailored to customers’ individual needs, and presenting customers with a bewildering range of offers. Comparison of offers should be clear for the customer.  

Protecting the customer
If something goes wrong and the customer cannot obtain satisfaction from the company, they should know to whom they should turn. Therefore, alternative dispute settlement procedures are widely in place. Attention is also paid to the problems encountered by vulnerable customers, notably those who have difficulty paying bills. It is important that Member States have systems in place to ease their problems that do not distort the market. Finding ways to reduce their energy consumption is a good way forward.  

Capacity remuneration mechanisms

Market distortion caused, for example, by the high influx of subsidised electricity from renewable energy sources or price caps, and market uncertainty with respect to future energy and climate policies are having a negative impact on the viability of required conventional power generation capacity. Capacity mechanisms can be an effective means to address security of electricity supply, but removal of market distortions should remain the first priority and any impact on the internal energy market and its further implementation should be minimised.

Environmental and energy aid

State aid paid to support the development of energy infrastructure, to ensure generation adequacy and system stability through capacity mechanisms or to incentivise investment in low-carbon technology has the potential to distort the internal energy market. So do exemptions from environmental taxes. For this reason, they have to be well targeted and limited in time.

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