In this podcast, Panagiotis Tsangaris, alumnus of the Max Planck Institute for Innovation and Competition, discusses the competition law and regulation issues that arise as a result of capacity withdrawals in the electricity wholesale markets, exploring the application of Article 102 TFEU and the terms of Regulation 1227/2011 (REMIT).

visit the Florence School of Regulation website:
fsr.eui.eu

In electricity wholesale markets, market power is mainly exercised either by withdrawing generation capacity (physical withdrawal) or by pricing it above competitive levels (economic withdrawal) in order to achieve a higher market price and, thereby, increase revenue. Inevitably, capacity withdrawal practices can be damaging for both the market and consumers. Thus, the ability of competent authorities to intervene against practices of physical and economic withholding of capacity is crucial. As with any other form of market abuse, the physical and economic withholding of capacity is subject to the application of competition law, in particular Article 102 TFEU. In addition, Regulation 1227/2011 on wholesale market integrity and transparency (REMIT) also enhances transparency in wholesale energy markets and prohibits any acts of market manipulation on wholesale energy markets and may be turned to in order to deal with capacity withdrawal practices. Panagiotis Tsangaris discusses the scope and application of both, as well as the roles of ACER and the NRAs in monitoring the markets, the definition and geographic delineation of the markets in an increasingly interconnected and integrated market across Europe, and the challenges of determining market dominance.
For more, you can see Panagiotis Tsangaris’ recent publication here:
https://www.springer.com/de/book/9783662555125?utm_medium=affiliate&utm_source=commission_junction_authors&utm_campaign=3_nsn6445_deeplink_PID8793001&utm_content=deeplink

Malagasy regulator’s view on the electrification and clean energy transition in Madagascar.

Listen to our interview with Ms Ketakandriana Rabemananjara, Director (Legal) of Office de Régulation de l’Electricité (ORE), Madagascar, at the first Regional Forum of on Sustainable Energy at Mauritius from May 28-30, 2018. Ms Ketakandriana discussed the dual challenge of electrifying while transitioning to a clean energy system. In particular how the regulator can play an active role in helping to step up the implementation.

At the sidelines of the State of the Union 2018, Jean-Michel Glachant (Director FSR) and Catia Bastioli (Chairwoman Terna) discuss the new industrial plan of Terna, the Italian TSO for electricity. The plan foresees a 5.3 billion euro of investment in the 2018-2022 period and is going to focus on sustainability and territories.

Ms Bastioli highlights the importance of a global vision while keeping the “roots” in the local communities and territories. Undeniably, the major obstacle to the energy transition is not the lack of technologies but the limited ability so far to involve regions and communities actively in the transition.

Industrial players and institutions must be transparent, include people and propose solutions that create trust and lead to the regeneration of territories and communities. This move is indispensable to reconcile the needs of the economy and climate with the needs and aspiration of society. Without it, the acceptability and the speed of the energy transition cannot be given for granted.

visit the Florence School of Regulation website:
fsr.eui.eu

Nicolò Rossetto (FSR) and Thomas Pearce (NARUC) discuss the issue of cybersecurity in the energy sector. Cybersecurity is attracting growing interest from companies and regulators around the world, largely because the associated costs are increasing and becoming more visible. Special attention from the regulators is then necessary. In the US, the 50 state jurisdictions plus the District of Columbia are putting in place different approaches, while sharing the same goal of enhanced cybersecurity protection for the utility systems they regulate. The differences in their approach often stem from each state’s varying regulatory framework: some have vertically integrated utilities, while others introduced unbundling and competition. Furthermore, some states have made more progress, while others are still defining their policy and looking for the best practices around the country. Indeed, both Europe and the US could learn from each other by sharing early experiences and reflections on an issue that is becoming increasingly relevant in the energy sector.

At the margins of the World Forum on Energy Regulation (WFER) in Cancun, Jean-Michel Glachant (Florence School of Regulation) interviews Marcelino Madrigal from the Comisión Reguladora de Energía (CRE) about the recent reform of Mexico’s energy system. The reform is all-encompassing, covering oil, natural gas and electricity at the same time; it is far-reaching too, because it introduces competition and freedom of choice for consumers. The power sector, for instance, has been unbundled and long-term contracts for the purchase of electricity from renewable sources have been successfully auctioned.
Within this major reform, CRE is performing several important tasks, like defining transmission and distribution tariffs and promoting a competitive retail market, where consumers are empowered. In this transition, Europe is seen as a reference case, in both positive and in negative ways, which emerging countries have to take into consideration, while not forgetting the significant differences in their social and economic context (positive demand growth, high energy losses, vulnerable consumers to protect; etc.).

Given its current carbon intensity, the power industry is particularly sensitive to the reform of the EU Emission Trading Scheme (ETS). Eurelectric, the association representing many of the big players in electricity generation, has a broadly positive view on the reform that has been recently approved by the Council and the European Parliament. Nevertheless, it is interesting to hear that for the largest power producers a price on carbon is not the only important factor that will steer the industry towards full decarbonisation by the middle of the century. Many other issues must be addressed, and the uncertainty that investors are currently facing is particularly important. Investment signals based on long-term electricity purchase agreements could become one of the key pillars of a new market design. Indeed, long-term contracts can efficiently complement short-term flexibility markets and ensure security of supply, decarbonisation and competitiveness for the power sector.

Competitiveness of wholesale energy markets is a fundamental goal of the EU since more than 20 years. Recently, specific pieces of legislation like REMIT have been introduced to foster market transparency and integrity. According to Clara Poletti – Head of the Energy Division at the Italian energy regulator ARERA (formerly known as AEEGSI) – national energy regulators are used to cooperate with national competition authorities and the European Commission to promote competition both ex-ante and ex-post. They are now obliged to adapt their procedures and praxis to the new rules. Beside traditional issues like abuse of market power and market foreclosure, they need to consider further cases of market abuse, not necessarily implemented by dominant players. Harmonised implementation across Europe is vital.

A relevant example is represented by excessive pricing. Unfortunately, due to the current deployment of more capital intensive electricity generation technologies, it is more and more difficult to assess whether a price is excessive or not. In other words: are the high prices recorded from time to time on wholesale markets the result of scarcity or the consequence of market power and other unfair conducts by market players? Academics are invited to contribute to the discussion.