The Starting Point: What Better Regulation Means

European energy regulation refers to the well-established trilateral process among the European Commission, the European Parliament, and the European Council, with a complementary role, since 2009, for ACER, as well as for the ENTSOs as outlined in Regulations 713/2009, 714/2009 and 715/2009.

Regulatory action is benchmarked against its contribution to reliability, affordability, simplicity, and protection and empowerment of the customer 1. The efficient cooperation of Member States and NRAs is critical for efficient TSO action. It should be stressed at once that the potential benefits of more regulation should always be analysed against the costs of nonintervention and the benefits and risks of possible voluntary or market approaches.

Voluntary cooperation has brought significant progress and enabled new ideas to be tested by TSOs, regulators, industries, market participants and Member States. TSOs cooperate voluntarily, for instance, through Regional Security Coordinators (RSCs) or capacity allocation offices. Regulators cooperate through CEER, and some Member States have set up cooperation structures such as NSCOGI, BEMIP and the Pentalateral Energy Forum (PLEF) 2. In many cases, voluntary approaches prepare the ground for sound new legislation or regulation. Likewise, a permanently improving exchange with stakeholders is key for ensuring better regulation. Mixed approaches combining voluntary and regulatory actions can also deliver very effectively: For example, market coupling grew organically and expanded quickly in Europe, driven by regional cooperation and the sheer interest of market participants. The Network Code on Capacity Allocation and Congestion Management, which entered into force in 2015, will ensure that maximum benefits are delivered to all European consumers.

There are numerous examples of successful voluntary approaches and they often constitute a first step to later on following legislation. For instance, the TSO community developed the UCTE Handbook and the Multilateral Agreement, which has remained an essential element of Continental European system operation and Regional Security Coordination Initiatives (RSCIs), without a top-down regulation push. In the future, TSOs due to their view on the whole electricity system and their responsibility for the overall electric balance and stability of the system could propose requirements for demandside response (DSR) services, as is the case in other parts of the world.

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  1. For so-called RASP principles, see CEER, Council of the European Energy Regulators

  2. See the vision paper “Where the Energy Union starts: regions” for details on these regional organisations, and how they should be further developed throughout all Europe.