In this position paper Nord Pool, one of the leading power exchanges (PXs) in Europe, argues that the Commission Regulation (EU) 2015/1222 establishing a Guideline on Capacity Allocation and Congestion Management (CACM) is in urgent need of reform.
The paper suggests various measures should be implemented in CACM in order to resolve, or at least alleviate, conflicts of interests which undermine the implementation of efficient pan-European market coupling. A major concern discussed in the paper is the current governance of the (joint) market coupling operator (MCO) function. Nord Pool argues for full ownership unbundling of the MCO operations from the businesses of competitive PXs. Besides redrawing the governance of MCO operations, several other measures are deemed necessary: liquidity sharing in fully decoupled bidding zones, limiting the creation of local and regional markets, phasing out explicit capacity allocation and turning physical shipping into an MCO task.
The paper strongly advocates for the implementation of the above measures and argues that only a “combined package” will ensure that single European market coupling is implemented in the most efficient and cost-effective way possible.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official position of the Florence School of Regulation.