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
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| Legal base | Article 95 EC; co-decision; QMV
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| Document originated | 10 December 2003
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| Deposited in Parliament | 9 January 2004
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| Department | Trade and Industry
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| Basis of consideration | EM of 23 January 2004
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| Previous Committee Report | None, but see footnote 31
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| To be discussed in Council | No date set
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
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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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