CEER opinion on the European Commission’s legislative proposal for future-oriented electricity bills

(Machine generated translation)

The Council of European Energy Regulators (CEER) has published its initial opinion on the European Commission’s legislative proposal to amend Regulation (EU) 2019/943 on the internal market for electricity. The proposal aims to modernise electricity networks, improve the use of network infrastructure and develop smart grids in support of electrification and the energy transition. CEER supports these objectives but emphasises that the design of network tariffs must remain within the remit of the independent national regulatory authorities (NRAs), as network characteristics and consumption profiles vary significantly between Member States.

Network tariffs as a competence of independent regulators

CEER endorses the general objectives of the proposal and supports the Commission’s intention to improve the utilisation of network infrastructure and to develop smart grids. Smart meters enable households and businesses to monitor their consumption and respond to price signals, whilst better data and system management can reduce congestion and optimise the use of existing infrastructure. Digitalisation supports flexibility on the consumption side and the alignment of consumption with periods of lower prices or higher generation from renewable sources.

CEER notes that NRAs have over 25 years’ experience in setting network tariffs in a way that ensures fair, transparent and efficient recovery of network costs, whilst supporting safe operation, flexibility and investment. Tariff design is closely linked to the specific characteristics of national electricity systems – network topology, energy mix, congestion patterns, consumer profiles, the structure of regulated network operators and the applicable regulatory framework – all of which vary not only between Member States but also within individual countries, between transmission and distribution networks, or between different categories of users.

According to CEER, sustainable tariff design requires a balance between common European principles and national regulatory discretion. EU law already establishes the fundamental principles of cost reflection, transparency, non-discrimination and efficient use of the network; their application to individual systems should remain the responsibility of national regulatory authorities. A mandatory, uniform approach for all networks and all users could give rise to undesirable consequences, including inefficient or distorting price signals and adverse effects on users who are unable to adjust their consumption or location. CEER insists that the legislative process be underpinned by a clear assessment of the expected impacts, whilst respecting the principles of proportionality, subsidiarity and necessity.

Harmonisation through the sharing of best practice, not through delegated acts

CEER has reservations regarding the proposed Article 61(5a), which empowers the Commission to adopt delegated acts on harmonised tariff structures and methodologies. Under Article 59(1)(a) of Directive (EU) 2019/944, responsibility for designing network tariffs lies with the independent NRAs, and the Court of Justice of the European Union has confirmed in recent judgments that NRAs may not receive external instructions when exercising their core regulatory powers. Binding guidelines would shift powers to the Commission and create uncertainty for regulatory frameworks and market participants.

CEER notes that a recently published Commission study on the tariff structures of transmission system operators (TSOs) in Europe does not identify a need for harmonisation of methodologies. The organisation further emphasises that the rationale behind the network code for harmonised gas transmission tariff structures (TAR NC, Regulation 2017/460) cannot be applied to the electricity sector, as electricity users do not pay cross-border capacity charges, and the proposed guidelines would also cover distribution charges, which have no cross-border significance. As an alternative, CEER proposes deleting the provision on delegated acts and achieving transparency and comparability through two instruments: a European template for the publication of transmission and distribution charges, drawn up by ACER with uniform definitions and reference values, and the explicit inclusion of special tariff regimes within the scope of ACER’s best practice reports under Article 8(8).

Smart grids, data and transparency

With regard to Articles 61(5a) and (5b) concerning implementing acts on smart grid indicators and data re-use, CEER recommends a lighter regulatory approach. The existing exchange of best practices between network operators and NRAs (Articles 18a(2) and 18a(3)) is identified as a more effective means of achieving the objective than detailed implementing acts. CEER welcomes the establishment of a clear legal framework for data sharing and analysis between transmission system operators (TSOs) and distribution system operators (DSOs) under Article 18a(4), but considers that the inclusion of an implementing act in this area could prove unduly burdensome.

With regard to the transparency requirements under Article 18 (5), CEER supports the objective but warns against duplication, as much of the requested data is already published in most Member States and is contained in ACER’s reports, the CEER Report on Regulatory Frameworks and ACER’s report on DSO revenue determination practices. The recommendation is to promote transparency, whilst leaving the detailed elements to ACER’s guidelines.

Benchmarking of TSOs

Article 18(7) introduces a requirement for NRAs to carry out a benchmarking exercise of TSO performance every four years where there is more than one operator. CEER supports benchmarking where it adds value, but points out that in a number of Member States distribution is entrusted to one very large operator and several small operators with limited coverage areas, which limits the benefit of such exercises. The organisation recommends that the analysis be carried out in preparation for each new regulatory period, rather than at fixed four-year intervals, and that NRAs be able to derogate from the requirement where the analysis cannot be carried out appropriately or does not add value given the heterogeneity of the sector.

Location signals, the capacity element and time-of-use

CEER recommends that NRAs retain discretion regarding the three instruments introduced in Article 18(2). Regarding location-based investment signals (point (f)), the organisation notes that, whilst they may reduce network costs and congestion, their suitability depends on network topology and user profiles; they should therefore be applied ‘where appropriate’, as provided for in the current Article 18 (3).

Regarding the capacity element (point (g)), CEER points out that the capacity and time-differentiated elements are both complementary and alternative. The capacity element limits individual peak consumption and ensures predictability, but may weaken incentives for flexibility, as part of the charge remains fixed in response to changes in demand. The optimal choice depends on tariff objectives and the flexibility potential of individual user groups; therefore, its inclusion should be subject to assessment by the NRA.

With regard to time-of-use tariffs (point (h)), CEER agrees with the potential role of this instrument but emphasises the complexity of its design and the need to take national specificities into account – alleviating congestion in transmission networks may now depend not on peak consumption but on generation patterns, and in distribution networks – on consumption reduced by the feed-in from distributed photovoltaic generation. CEER insists that the wording ‘where appropriate’ in Article 18(7) be retained.

Special schemes, connection and additional provisions

CEER supports the possibility of special tariff schemes (Article 18(3)) and priority access to the grid (Article 18d(1)), but recommends deleting the explicit listing of categories of users (energy-intensive sectors, data centres, energy communities, the public sector, etc.), as naming them specifically may give rise to expectations of automatic application. NSOs should determine the eligibility conditions on the basis of objective and transparent criteria.

Regarding Article 18d on measures to manage connection requests, CEER calls for Article 18d and Recital 28 to explicitly provide that measures may also be taken to prevent congestion, and not only after it has occurred, and that Article 18d clarifies the existing rules under Article 6 of Directive (EU) 2019/944.

CEER recommends retaining the ban on distance-based charges (Article 18(1)), as only non-distance-based charges (the ‘postage stamp’ model) allow for free trade in electricity by separating transactions from the physical use of the network. The organisation also calls for the reintroduction of the reference to the National Energy and Climate Plans (NECPs), which was removed without justification, as the charging methodologies contribute to achieving the plans’ objectives. Finally, CEER proposes that an explicit clause be included in Article 18 for the gradual implementation of the new rules, based on Recital 13, in order to give users time to adapt.

See the full text of the position.