Europex response to the ACER Public Consultation on the Bridge Beyond 2025

Brussels, 9 September 2019 | Europex welcomes the opportunity to contribute to the present consultation. Below, we provide comments on selected aspects thereof. To facilitate the discussion, we use the same topic headings as proposed in the consultation document.

Targeted regulation and market functioning

1. Is the proposed response set out above appropriate to address the challenges the sector faces? What should be done differently and why?

In particular:
1a. For monitoring the GTM metrics and prompting action, should the threshold values be set out at EU level? What should they be? Who should set these values?

1b. Should there be new principles for tariff and allowed revenue methodologies in legislation – e.g. ensuring a level playing field between the gas and electricity sectors? What principles would be crucial?

Market monitoring as a basis for action

Monitoring of the metrics of the 2014 Gas Target Model (GTM) provides an indication of the state of evolution of specific market characteristics. However, using these threshold values, assessed against TTF and NBP performance, as a formal basis to trigger targeted regulatory action is inappropriate. The indicators/metrics of the market ‘success’ or ‘health’ of markets which may be relevant when applied to regions such as North West Europe (NWE), may not be suitable to assess market performance in Central Eastern Europe (CEE) and South East Europe (SEE). Given these limitations and the fact that the screening approach does not constitute a robust basis for action, we advise against enshrining this into EU legislation.

Furthermore, a self-evaluation against the GTM metrics is at present foreseen in the current GTM, and targeted measures in the regulatory toolkit are already available. If a problem is confirmed following detailed analysis, tailored solutions to local issues should be explored and put in place using a bottom up approach. A detailed cost benefit analysis (detailing projected costs, benefits and responsibilities) should always accompany any such proposal.

Liquid and well-connected markets develop as a result of a “bottom-up” process stemming from market participants’ trust in the market environment and in trading venues, rather than any regulatory design that is imposed “top-down”. Regulatory action to artificially increase market liquidity can only be a second-best solution and should only be taken in case of clear and evidenced market failure. The existing regulatory framework and market mechanisms already provide efficient tools for the connection of European gas markets towards a single Internal Gas Market. Efforts should therefore be focused on the full and comprehensive implementation of the Third Energy Package across Europe.

Please download the attachment for the full response.