TSO Unbundling – CEER Status Review 2016
The Council of European Energy Regulators (CEER) recently published a Status Review on the Implementation of Transmission System Operators’ (TSOs) Unbundling Provisions of the Third Energy Package.
The Third Energy Package requires TSOs to be certified by National Regulatory Authorities (NRAs) under one of the unbundling models provided for in the Directives. The models comprise:
- Fully Ownership Unbundling (OU);
- Independent System Operator (ISO);
- Independent Transmission Operator (ITO); or
- The so-called ITO+ model (applicable in special cases where the TSO satisfies the test for a derogation under Article 9(9) of the Directives).
The Third Energy Package required that all electricity or gas infrastructure that fell within the definition of a TSO must be certified under one of the aforementioned unbundling models by March 2012. CEER has published some interesting findings.
1. There are differences in how Member States have transposed the Directive. In some Member States, only the OU model has been transposed into national law; in other Member States several models have been implemented.
2. 109 TSOs in Europe have been certified as compliant with one of the Third Package's unbundling models.
3. There are differences between the certification of electricity and gas TSOs. For example, 70% of electricity TSOs have been certified under the OU model, while only 40% of gas TSOs have been certified under the OU model.
4. The ownership of TSOs are diverse. Ownership in the gas sector is more diverse than that of the electricity sector. For example:
- Half of the electricity TSOs are under 100% public ownership, compared to six out of 26 gas TSOs under 100% public ownership;
- Two out of 26 electricity TSOs are under fully private ownership, compared to four out of 26 gas TSOs under private ownership.
5. Only GB and Portugal have fully private ownership of their TSOs.
6. So far, no joint undertakings have applied under Article 9(5) of the Directives, which provides that the unbundling requirement of owning the transmission system and acting as a TSO shall be deemed to be fulfilled, when two or more undertakings which own transmission systems have created a joint venture which acts as a TSO in two or more Member States for the transmission systems concerned.
7. The major hurdles and obstacles identified in the TSO certification process by the European Commission mostly concerned:
- The ownership structure(s);
- The unclear exercise of control and rights in an OU;
- The low level of resources available to manage the financing, maintenance and development of the TSO;
- The unclear definition of the ITO Task;
- The lack of independence of the management, the board members and the Supervisory Body and the issue of conflict of interest after the end of term of office;
- The lack of separation between the competent ministers within the State (powers of the Department for Energy over the TSO; powers of the Department for Energy conferred by law over dispatching) for state owned companies;
- The lack of clarity when it comes to services provided to ITO by vertically integrated undertakings (VIU) contracts for services between the VIU and the ITO;
- IT consultants and contractors are not clear enough and should often be revised; and
- The exercise of control and rights with the VIU often does not ensure proper unbundling and issues such as generation interests of an investment fund; interests of minority shareholders; shareholding in subsidiary of VIU.
8. NRAs use a variety of tools to monitor TSO compliance. They include:
- TSOs providing NRAs with regular compliance reports,
- TSOs providing NRAs with information as requested,
- TSOs providing NRAs with commercial and financial agreements;
- TSOs providing NRAs with agendas of the Board; and
- TSOs notifying NRAs of any circumstances or transactions that may affect the TSO's certification.