Luxembourg/Brussels (energate) - The EU audit court criticised the lack of progress in the integration of an European internal electricity market. For this, the Court sharply criticised the European Commission and the Agency of European Regulators Acer. The Commission has prevented a European electricity market with the regulatory instruments it has chosen, according to a
special report. Acer, in turn, was unable to support investigations into the growing number of potential cross-border cases of market abuse, read excerpts from the sobering judgement. The aim is actually to harmonise electricity trading within the EU and thus to sharpen cross-border competition.
Too complex regulations
The EU Commission has made the trading rules excessively complex, resulting in implementation delay. These rules consist of grid guidelines and codes. By the end of 2021, the nation states have implemented the guidelines to varying degrees, so that none of the European rules have been realised across Europe so far.
The Commission had chosen an approach that lacked technical requirements. In turn, national regulators and Acer were responsible for approving them. But Acer had neither the full data nor sufficient staff to check whether countries were implementing the rules uniformly. This approach significantly and unnecessarily increased the effort and costs for all European regulators, grid and market operators, the court criticised.
Too little marginal capacity
One aspect without significant progress was cross-border transmission capacities. Although Acer made efforts to coordinate among grid operators, market coupling did not progress, the ACA said. From the beginning of 2020, at least 70 per cent of the available cross-border capacities should be available for electricity trading. Where this mark is not reached, a transition period until 2025 is possible (
energate reported). In its 2022 report, Acer itself notes that corresponding capacities are lacking (
energate reported).
Commission: Misleading indicator
According to the Commission, the barriers to trade exist because physical lines are missing and not because interconnectors are unavailable for trade. In general, the volume indicator for cross-border trade is wrongly chosen. Instead, what is decisive is the extent to which electricity trading increases the social well-being of customers and integrates renewable energies. The Commission and Acer refer to a study in which they estimate the benefits of cross-border trade at 34 billion euros per year as things stand. Although the energy crisis had shown weaknesses in market design, the existing state of market integration had prevented restrictions and failures in the grid.
Not effective with Remit
The EU audit court also sees serious shortcomings in the monitoring of market abuse and manipulation, according to the
Remit Regulation of 2011. Acer had collected too little data and focused on too narrow a scope in its evaluation, its monitoring was thus inadequate. Electricity producers, suppliers and traders could exploit loopholes and EU countries could try to outbid each other in applying sanctions and rules as laxly as possible, the control institution fears. The main risk in the electricity market has thus been passed on to the end consumers by the Commission and Acer, wrote the audit court.
The EU Commission replies in its statement that it is aware of Acer's lack of human and financial resources. Therefore, it has introduced fees that Acer has been taking from market participants since 2021 (
energate reported). In addition, Acer is allowed to create 15 new positions for market surveillance. As it is difficult to find and train specialised staff, the authority is recruiting on a staggered basis until 2027.
Acer: Unbalanced report
Acer criticised the Commission's report as unbalanced. The debate risks fragmenting the electricity market. She would have liked to see more precision and measurability. In recent years, there have been strong efforts to further integrate the markets. The ACA also recognises that between 2015 and 2021 there was visible, but not sufficient progress.
Target year for market integration was 2014
The interconnection of the national electricity markets was supposed to be completed in 2014. The member states had agreed on this in 1996. Ten years after the planned completion, there are still 27 different national regulatory systems, wrote the audit court. As the current energy crisis shows, wholesale prices diverge considerably between EU countries, and retail prices still depend heavily on national tax rates and grid charges instead of being determined by competition.
The ACA proposes several measures and urges swift progress. "The current energy and cost of living crisis faced by citizens has made it even more urgent for the EU to complete the internal market for electricity," commented Mihails Kozlovs, the European audit courts' audit member. /kj
