Select Committee on European Scrutiny Ninth Report


14 Safeguarding security of electricity supply and infrastructure investment

(25225)

5118/04

COM(03) 740

Draft Directive concerning measures to safeguard security of electricity supply and infrastructure investment

Legal baseArticle 95 EC; co-decision; QMV
Document originated10 December 2003
Deposited in Parliament9 January 2004
DepartmentTrade and Industry
Basis of considerationEM of 23 January 2004
Previous Committee ReportNone, but see footnote 31
To be discussed in CouncilNo date set
Committee's assessmentPolitically important
Committee's decisionNot cleared; further information requested

Background

14.1 On 21 January, we reported on a Commission Communication[31] dealing with the measures on security of supply and infrastructure needed to develop the Community's internal energy market in ways which also help to meet its environmental and sustainable development commitments. In particular, the Communication noted that the Commission had previously brought forward legislative proposals setting out common rules for the internal market in electricity and natural gas, and for the conditions governing access to the network for cross-border exchanges in electricity. It also noted that the Commission intended to bring forward further proposals in this area, including one on safeguarding security of electricity supply and infrastructure investment. The proposal in question is set out in the current document.

The current proposal

14.2 The rationale for this proposal is essentially that set out in the recent Communication — that, although demand management remains a priority, new investment (not least in areas such as renewable energy and cogeneration) will be needed if the Community is to avoid disruptions in supply. In addition, the Commission points to the need to increase interconnection between Member States, and the importance of investors being faced with a clear regulatory regime.

14.3 Against that background, the proposal would require Member States to clarify the roles and responsibilities of transmission system operators and suppliers in ensuring security of supply, taking into account such factors as the potential for cross-border cooperation, the importance of ensuring continuity of supply, the need to encourage energy efficiency or adequate levels of reserve generation, the promotion of renewable energy, and the more general need for diversity in generation.

14.4 More specifically, it would

  • require Member States:
    • to lay down performance standards which transmission and distribution system operators would need to meet in avoiding supply interruptions;
    • to ensure that the supply of, and demand for, electricity, are in balance, not least at times of peak demand;
    • to ensure that the investment plans of transmission and distribution system operators prioritise demand side management, and facilitate the connection of renewable energy sources and combined heat and power;
  • require regulators, after consulting the Commission, to endorse the plans of transmission system operators for investment in cross-border inter-connectors;
  • give regulators the power to penalise those operators if their inter-connector investments fall behind schedule, and to arrange for the work to be put out to tender, if the necessary investment is not made by the operator.

The Government's view

14.5 In his Explanatory Memorandum of 23 January 2004, the Minister for Energy, e-Commerce and Postal Services at the Department of Trade and Industry (Mr Stephen Timms) says that the arrangements in the UK largely comply with the provisions in the proposal, and that the Government fully supports its aim, particularly as regards the clarification of the roles and responsibilities of market players in ensuring continuity of supply and transparency in security of supply policies. However, he also says that the Government would like to see a dilution in the involvement of the regulator and the Commission in the detail of the decisions of systems operators.

Conclusion

14.6 In general, the proposal is couched in broad, and unexceptionable, terms, and we note that the Government fully supports its aim. However, the Minister has also highlighted concern over the role of the regulator and the Commission in this area, and we therefore think it right to hold the document under scrutiny, pending further information from the Minister as to whether any changes can be made to the proposal to reflect that concern.




31   (25198) 16262/03; see HC 42-vii (2003-04), para 8 (21 January 2004). Back


 
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