First series of cross-border cost allocation decisions for projects of common interest : main lessons learned

Following the procedure introduced by the TEN-E Regulation, thirteen power and gas infrastructure projects from the list of “projects of common interest” have recently received a cross-border cost allocation decision. These decisions include twelve coordinated decisions by national regulatory authorities and one decision by the Agency for the Cooperation of Energy Regulators (ACER). • For most projects, the countries that are expected to apply part of the investment on their own territory are also a net beneficiary of the project. In one case, the cost benefit analysis indicates that the costs clearly outweigh the benefits for one of the involved countries (i.e. net loser). The decision has been to compensate this country. In three cases, countries have agreed to a cross-border cost allocation with compensation, even if none of the involved countries is expected to be a net loser. • In this brief, we determine the extent to which this first series of cross-border cost allocation decisions complies with the TEN-E Regulation, ACER’s Recommendation, and FSR’s recommendations. We find that the expected improvement in cross-border cost allocation decisions is ongoing, but the gap between practice and recommendations remains. • To reduce the gap, we have updated our recommendations into six lessons learned: [1] revisit the significance threshold and the interaction with the Connecting Europe Facility, [2] promote the good practice of using market tests to improve the cross-border cost allocation decision, [3] require a complete cross-border cost allocation decision, [4] continue to use the results of the cost-benefit analysisto facilitate innovative cross-border cost allocation decisions, [5] continue coordinating these decisions for strongly interacting projects, and [6] start including binding commitments in the decisions, especially with respect to the commissioning date.