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Gas & Electricity Workshop

The CER/13/122 consultation workshop, organized by EAI, focused on critical issues impacting the gas transportation system's tariffs and financing. It explored the implications of reduced capacity bookings, regulatory flexibilities, and equity in cost distribution among customer categories. Key proposals aimed to enhance regulation and ensure a sustainable energy future, addressing transparency and accountability in regulatory practices. Participants discussed the need for a comprehensive review of tariffs and the importance of adapting to market changes while prioritizing economic efficiency.

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Gas & Electricity Workshop

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  1. Gas & Electricity Workshop CER Consultation CER/13/122 Access Tariffs & Financing the Gas Transportation System 03 July 2013

  2. Outline • About EAI • Overview of the Consultation Paper • The issues • The proposals • Principles of Better Regulation Scorecard • Conclusions

  3. About EAI • Trade Association representing the electricity industry on the island of Ireland (SEM geographic area) • Eurelectric national member for Ireland • Membership Networks Generation Supply AES BGE Bord na Móna Indaver Ireland ESB Tynagh Energia SSE Airtricity BGE Energia Electric Ireland Power NI ESB Networks NIE Vayu • A Sustainable Future Powered by Electricity

  4. Overview of CER/13/122 • A Sustainable Future Powered by Electricity • The Issues • Primary Capacity Bookings • A drop off in capacity bookings and erosion of this core revenue base • Too much flexibility offered to system users • Equity issue • Ensure that the required system is remunerated in a fair and equitable way across customer categories, with costs imposed in proportion to the service provided

  5. Overview of CER/13/122 The Issues The Real Issues Reduced Demand Recession & Weather Changes in Power Gen Relative Fuel Prices & Carbon Wind EWIC BGN Forecasts Regulatory Decisions PC3 Short Term Tariffs • Primary Capacity Bookings • Too much flexibility offered to system users • A Sustainable Future Powered by Electricity

  6. Overview of CER/13/122 The Issue The Real Issues Is this a genuine issue? Connection Policy Power Gen NDM Capacity/Commodity split Is Power Gen subsidising NDM? Yes (CER/10/089) Does CER/10/089 create this “issue”? The proposals and the “equity” issue • Equity Issue • A Sustainable Future Powered by Electricity

  7. Overview of CER/13/122 • The Proposals (to be applied at exit only) • Removal of secondary capacity transfers • Removal of the ability to buy/transfer capacity “within day” • Other Proposals • Mandatory Bookings • Removal of Mandatory Bookings for NDM • Long Term Booking Incentives

  8. Overview of CER/13/122 The Proposals The Real Issues & Impacts Transfers improve efficiency Agree: CER/10/089 (p.18) Disagree: CER/13/122 (p.9) All within category (LDM) secondary capacity transfers require a primary booking Redundant capacity Cost & Revenue implications Flexibility is increasingly important to Power Gen Demand for flexible products recognised by CER • Removal of Secondary Capacity Transfers • A Sustainable Future Powered by Electricity

  9. Overview of CER/13/122 The Proposals The Real Issues & Impacts Power Gen & Flexibility Central dispatch Double payment? Demand destruction? EU Compliance Regulation (EC) 715/2009 Art. 13, 14, 16, 22 “Equity” issue Increased cost for reduced service? • Removal of ability to buy/transfer capacity “within day” • A Sustainable Future Powered by Electricity

  10. Better Regulation • Better Regulation White Paper (2004) • Dept of An Taoiseach Consultation (2013) • The Principles • Necessity • Effectiveness • Proportionality • Transparency • Accountability • Consistency

  11. Better Regulation Scorecard F F • Necessity F • The specific proposals are not necessary • Some change may be required • All options should be considered after the issues are properly defined • Effectiveness • The proposals are not properly targeted as the issues are poorly or inappropriately defined • The proposals will have consequences contrary to their intended impact

  12. Better Regulation Scorecard NG F • Proportionality • A comprehensive assessment of the drivers of change has not been undertaken • No assessment of alternatives has been undertaken • The expected costs to outweigh the benefits as the proposals have a disproportionate impact on flexibility • Transparency • The consultation paper has no analysis, just statements • The paper has no supporting legal opinion, just statements • The timeline for consultation is inappropriately short

  13. Better Regulation Scorecard F NG • Accountability • CER are responsible for regulating shippers and networks • Many of the arguments forwarded in support of CER’s approach are taken from BGN correspondence • There is no effective appeals process • Consistency • The consultation does not adhere to best practice • Proposals are inconsistent with; • Wider gas and energy market objectives • The intended outcomes stated by the CER

  14. Conclusions • A poor paper on top of a poor process (PC3) • Proposals are based on conjecture and prioritise stability of network revenue • The appropriate time to address tariffs was PC3 • If this is a systemic long term issue, it requires a comprehensive review over an appropriate period • Flexibility must be accommodated, not ignored • The concept of economic efficiency is misunderstood • The “equity” issue is misconceived and is an anomaly in the context of CER/10/089 • Next Steps…

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