News brief of 25.5.2017

News from the Greek energy market:

Α. 2016 HEDNO Annual compliance report
RAE has published the annual compliance report of HEDNO within the scope of Article 124 in L. 4001/2011 (attached).

Β. Public Consultation on the Ten-year (2018-2027) Hellenic Electricity Transmission System Development Program (ESMIE)
In line with the procedure set in the provisions in L. 4001/2011, article 108, and article 230 of the HETS Operating Code (Hellenic Electricity Transmission System - ESMIE), RAE has submitted HETS' draft for the ten-year Hellenic Electricity Transmission System Development Program (TDP) to public consultation, which had been initially submitted to RAE by IPTO (Independent power transmission operator - ADMIE S.A.). It should be reminded that at an earlier time IPTO had submitted a draft plan of the specific TDP to public consultation. Consultation will end on Friday, June 9, 2017 (Α3).

European news:
Α. Conclusions from EURELECTRIC Conference "Smart Regulation for European Energy Consumers - Debating the Clean Energy Package Proposals"

HEDNO Chairman and CEO Mr. Ν. Chatziargyriou was the main coordinator at the debate on Energy Communities (EC) "Distributed Generation and Local Energy Communities", within the framework of Eurelectric Conference "Smart Regulation for European Energy Consumers", held on Wednesday, May 10, in Brussels. Participants at the Conference were electrical energy supplier representatives, regulators as well as representatives of Energy Communities from across Europe.
The main conclusion drawn from the debate was that the key to a successful operation of the Energy Communities is to have rights and obligations set out in accordance and cooperation with DSOs."
The Conference also confirmed the positive role that Energy Communities can play in encouraging consumers to participate in the energy market and further adopting of renewable decentralised energy sources as well as ensuring higher flexibility for electricasl systems. The decisive role of DSOs across Europe as regards the ongoing process of transformation of the electrical energy systems was also stressed, as continuously increasing amounts of distributed energy connect to their networks.
DSOs active support toward to the Energy Communities is a given, offering security of supply where local production is unable to fully meet demand.
The need to have Energy Communities' structure, size and obligations clearly defined was also stressed at the Conference. In particular, in case Energy Communities wish to deploy, possess and operate distribution networks, they should be subject to the same duties and rights as DSOs. On the contrary, if they opt for operating in the form of parallel infrastructures that are connected to the grids, they should be able to offer fair network fees as regards other tariffs in a way that does reflect their cost.
It is worthy of note that the topic of Energy Communities holds particular interest for our country as well, as it is absolutely relevant in view of the draft bill on Energy Communities that is soon to be submitted to public consultation by the Ministry of Environment and Energy (Β1).

Β. EDSO for Smart Grids response to the Council of European Energy Regulators (CEER) consultation on incentives schemes for regulating DSOs

EDSO for Smart Grids published its repsonse to the CEER consultation on incentives schemes for regulating DSOs.

In its response, EDSO for Smart Grids emphasises the fact that the role of DSOs is set to grow in the future with the deployment of Smart Grids that are needed to accommodate the spread of distributed production. The new demand and supply patterns as well as the new potential empowering customers in adopting self-production are affecting distribution grids in an unprecedented way.
This changing environment will require DSOs to fund investments in innovation. This would also require that regulation must adopt a more innovative approach, encouraging stakeholders (both DSOs and customers) to take on a more active role.
However, there are still considerable barriers to overcome to ensure more effective regulation and investments. Higher regulatory risks associated with Smart Grid investments and DSOs adopting the lowest possible cost approach are holding back investments.
In particular, in a majority of Member States, there is no specific innovation mechanism to promote innovation that would allow for a reasonable remuneration on R&D expenditure. At the same time, EDSO points out that in a majority of Member States, DSOs do not receive a return on capital because the value of public funds and other subsidies is substracted through the use of the RAB (regulatory asset base) a calculation method. This discourages DSOs from using additional funding innovation opportunities.
Therefore, EDSO for Smart Grids suggests that the best way to approach this should be to leave back cost-efficiency and rather seek an investment framework that can guarantee security and quality of supply at least societal cost, at the same time promoting innovation and digitalisation.

EDSO for Smart Grids invites CEER to adopt the following principles when reviewing regulatory patterns:
• Develop schemes that enable DSOs to choose the best possible and most cost-efficient solution that would best serve their targets.
• Create an attractive environment for investments by offsetting regulatory risks and moving away from an approach that would only focus on cost reductions.
• Develop more DSO remuneration schemes so as to ensure that more funds are invested in Research & Developemnt, and innovation.
• Create innovation-focused incentives that would cover the costs for Smart Grid projects and promote the increasingly critical role of DSOs as neutral market facilitators.
• Offer incentives for OPEX, in order to reflect the growing needs for OPEX associated with flexibility, if we look for less investments in the newly created network assets.
• Ensure stable and clear regulatory frameworks that allow DSOs to develop both short-term and long-term innovation needed for the transformation of the energy system (attached) (Β2).

C. EURELECTRIC response to the Council of European Energy Regulators (CEER) consultation on incentives schemes for regulating DSOs

EURELECTRIC published its reponse to the Council of European Energy Regulation (CEER) consultation regarding incentive regulation for distribution system operators.
Key messages conveyed by its response are given below:
• Security of supply, quality of service and innovation are of great important for regulating DSOs and allowing them to fulfil their roles and perform their work effectively, driving investments needed to ensure a reliable and high quality supply.
• Regulatory frameworks should shift from a short-term cost-cutting perspective to a forward-looking one, and provide a predictable and stable environment at the same time setting feasible targets for DSOs to achieve. EURELECTRIC believes that it is paramount to allow national regulatory aurthorities some flexibility to enable them to choose the appropriate tools to meet DSO regulating targets.
• EURELECTRIC opts for an engagement of the stakeholders (DSOs, market operators, Customers, etc.) in the regulatory process as they are the first to be faced with the repercussions of regulatory changes. This is why the regulatory process should be transparent and public.
• Taking account of the abundance of regulatory approaches, EURELECTRIC welcomes the use of cost-benefit analysis as regulatory tools to determine the schemes and mechanisms which would be most efficient to meet DSO targets.
• Grid customers and society as a whole should be at the centre of this debate, and benefit from the regulatory process and increasingly encouraged innovative solutions.
• EURELECTRIC agrees with CEER on the adoption of a holistic approach of regulatory frameworks that will enable assessment of regulatory decisions aiming at the improvement of the electrical energy system in its entirety, rather than on individual segments (Transportation, Distribution, etc.) (attached) ( Β3).

D. ACER-CEER White Paper on The Role of the DSO

The Agency for the Cooperation of Energy Regulators (ACER) and the Council of European Energy Regulators ( CEER ) in a joint white paper on the Clean Energy Proposals of the “Clean Energy for All Europeans” Package discussing the role of DSOs briefly state the following:
DSOs as Neutral Market Facilitators
 ACER and CEER support prohibition on DSO ownership/operation of storage and electric vehicles insfrastructure.
 They support the case for enhancing unbundling requirements to ensure DSOs act as neutral market facilitators.
 They stress the importance of transparency of a medium-term forecast of network needs/service requirements, so that market participants are able to react and offer solutions.
Better Network Planning and Coordination
 They agree on the development plans of distribution networks but advocate that DSOs and TSOs should consult stakeholders on their network plans and take responsibility for their quality.
 They believe that it is better to lend the National Regulatory Authorities the discretion to define the network plan requirements of small DSOs rather than have them exempted from such requirements .
 They agree on the need for the European Electricity Regulation to include an obligation for ENTSO-E and the proposed EU DSO entity to cooperate (attached) (Β4).

Ε. CEER White Paper on Distribution and Transmission Network Tariffs and Incentives

CEER published its White Paper on May 11, 2017. The White Paper presents the views of the National Regulatory Authorities for energy in the Council of European Energy Regulators (CEER) on the European Commission's proposals in the framework of the Clean Energy Package (CEP) as regards the distribution and transmission network tariffs, and the appropriate incentives for DSOs to meet the targets set as part of this bundle of measures.

Although CEER welcomes the general principles of the CEP on network tariffs reflecting the cost of use and providing incentives for efficient use of networks, it does express in a clear and explicit manner its stand against the overall approach for network tariff harmonisation across Europe promoted in the CEP, especially Grids. More specifically:

 CEER recommends that provisions on Network Code regulating distribution and transmission network tariffs should be removed and appointment of ACER to submit a proposal for a progressive harmonisation of distribution and trasmission network tariff methodologies should be avoided.
 CEER considers there is no need for a mandatory approach to regulatory incentives on DSOs. CEER recoemmends that decisions should allow for National Energy Regulators to decide on the incentives, whenever they determine that incentive costs mirror consumers' benefits.
 As a final note on DSO incentives, CEER recommends that a clear distinction is made between DSO incentives through allowed revenues and those incentives given to Network Users through network and connection tariffs (attached) (Β5).

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