Electricity – Power plant in Belchatow
(LUXEMBOURG) – Despite ambitious projections, the EU has made slow progress towards its goal of connecting electricity markets to ensure access to cheap power for citizens and businesses, EU auditors said Tuesday.
The report by the European Court of Auditors says delays in coupling national power markets have piled up because of weaknesses in EU governance and a complex system of regulatory tools for enabling cross-border trade, which has held back the implementation of market rules. Nor has market monitoring by the European Commission and ACER, the EU’s energy agency, brought sufficient improvement. Surveillance measures to restrict abuse and manipulation have not gone far enough, meaning that the main burden of risk on the EU electricity market has been passed on to final consumers.
In 1996, the EU embarked on a complex project to fully integrate national electricity markets. The goal was to deliver the cheapest possible electricity prices for consumers and make the EU’s energy supply more secure. However, nearly ten years after the project’s scheduled completion in 2014, the market is in practice still governed by 27 national regulatory frameworks. As the current energy crisis has emphasised, wholesale prices differ significantly between member states and retail prices remain heavily influenced by national taxation rates and network charges, rather than being open to competition.
Notwithstanding certain major achievements, progress towards the coupling of all national electricity markets was slow between 2015 and 2021, and uneven across EU regions and market segments. No EU guidelines, though binding, had been fully acted on in member states, and there had also been no substantial progress on increasing cross-border transmission capacity. The auditors attribute delays to the Commission’s choice of network guidelines to be implemented through terms and conditions or methodologies, which made approval the responsibility of national regulatory authorities (NRAs) and ACER. This overly complicated and delayed the harmonisation of cross-border trade rules. The auditors stress that in its impact assessment, the Commission did not sufficiently analyse the impacts of its market design and governance decisions. Monitoring of the consistency of member states’ enforcement of the rules was largely devolved to ACER. The auditors found, however, that ACER’s monitoring and reporting were insufficient, particularly because of insufficient data, scarce resources and poor coordination with the Commission.
Market surveillance to detect and deter market abuse and manipulation was also incomplete. The auditors conclude that ACER’s approach to data collection was not comprehensive, and its assessment of the data it did collect covered too narrow a range of abusive behaviour. ACER also allocated insufficient resources to data analysis and was unable to support investigations into the growing volume of suspected cross-border market abuse. The auditors warn that electricity producers, suppliers and brokers may all exploit loopholes or worse that member states may compete to provide the most permissive environment in terms of penalties and enforcement. At the same time, ACER does not have the power to ensure that member states enforce the rules consistently.
ECA Special Report 03/2023: Internal electricity market integration
