Table of contents
The last building blocks of the European regulatory LEGO have just clicked into place with the missing network codes, underpinning the first coordinated European capacity auction and the race for fair and indiscriminate competition. However, the results are puzzling. Within one day, the network capacity usage was cemented for 20 years in favour of the dominant player. Market abuse and distortive practices in Eastern Europe run directly counter to the European Union’s investment of billions of euros to strengthen security of supply and diversification by means of infrastructure development.
In early March 2017, long-term capacity bookings were held on the PRISMA auction platform, which covers most of the European Union’s natural gas transmission grid. In this short analysis we highlight a market distortive phenomenon that may be the result of an information advantage of the dominant gas supplier in Europe. By paying about EUR 9 Bn capacity booking fees for the post-2020 period, Gazprom has again secured its control over the Central-Eastern European region and gas trade to the Ukraine.
Donald Trump, the president of the United States of America, promised during his election campaign that, if elected, he would remove the United States from the Paris Climate Agreement. The Presidential Executive Order „Promoting Energy Independence” on 28 March 2017, aiming to reverse the climate policy initiatives launched by the Obama administration, provided the first indication that he would fulfil his promise. Soon after, in the beginning of the summer, he publicly announced his intention to leave the Agreement, and on 5 July he informed the United Nations in an official letter. Although the rules of the agreement do not allow an exit before 2019 and the process may be completed only shortly before the end of Mr. Trump’s term, the announcement provided a signal to market participants, while also making it clear that the government seeks to terminate support to the Green Climate Fund. This is the fund through which developed economies provide voluntary support to enable the achievement of the climate policy goals of developing countries as well as their adaptation to the adverse environmental impacts of climate change. It is debatable if, by keeping his promise, Mr. Trump was attempting pander to voters, since surveys show that 71% of registered voters view global warming as a real problem, 58% agree that climate change is anthropogenic, while 77% would like policymakers to take steps to limit emissions.
The last Network Code enforcing the harmonised and transparent transmission tariff regulation of the European gas market was published in March 2017. This put an end to a nearly 10 year process, with the preparatory work of the first Network Codes starting in 2007. The Tariff Network Code (TAR NC) itself is also a sustained undertaking after first consultations regarding tariff formation started in 2011. The first version of the document was the ‘Framework Guidelines on rules regarding harmonised transmission tariff structures for gas’, published in 2013. It included the main changes and directions for the new regulation, allowing NRAs and TSOs to start to prepare for the regulation that finally came into force this past spring.
However, the finalization of the document was not easy. ENTSOG submitted the first version to ACER in 2014, and another version with significant changes was submitted in July 2015. The final network code includes a less restrictive framework on tariff calculation methodologies. The aim of the regulation is the same, but as it is presented in this paper, NRAs have more freedom to decide between the applied methodologies.
In June 2017, the International Energy Agency (IEA) published its analysis on the Hungarian energy sector. The report gives an overview about the current state of the country’s energy markets and recommends
further policies for the Hungarian government to implement. The last such report was published by the IEA in 2011, so it is worth presenting and examining the main findings of the study. Although the report makes
several recommendations for future improvement, overall it finds that the energy situation in Hungary has improved in many aspects since 2011.
The issue of energy poverty received more than its typical share of attention in the energy regulatory package published at the end of last year. While this should not be considered a breakthrough, the Commission continues to soften its traditional view that energy market regulation should be considered separately from social policy. The amended Electricity Directive would require member states to define energy poverty, measure the number of affected households, and regularly publish the measures applied. The proposed amendment to the Energy Efficiency Directive also articulates that a certain proportion of energy efficiency measures should be implemented in households that are classified as energy poor. In order to coordinate the measures implemented among the member states, the European Commission has announced that it will publish regular reports under a 'European Energy Poverty Observatory' in order to monitor energy poverty and support member state actions.
