©ICIS HEREN - Eurelectric slates CEE delays but regulator defends progress
An official from Eurelectric's market committee has hit out at slow progress towards a regional market in Central and Eastern Europe (CEE), where the flow-based allocation of cross-border capacity project has stalled. Gunnar Lundberg, chairman of the power industry association's market committee, questioned whether politicians in CEE countries really want a liberalised, EU-wide market. "How can you spend five years without taking any action to create a regional market? Did these countries work better under communism?" Lundberg - known for being outspoken - asked at a European Commission conference in Brussels on Thursday. "We don't believe the stakeholder meetings exist anymore - perhaps they are attended by some junior bureaucrats, but we don't see any regulators or TSOs (transmission system operators) there." The stakeholder meetings are organised by the regional initiative groups under the umbrella of the European Regulator Group for Electricity and Gas (ERGEG). They give power suppliers and traders in insight into what watchdogs and system operators are doing to relieve reform capacity allocation and boost transparency. This work takes place within the implementation groups. Commitment questioned Many market players - not just Lundberg - say they doubt all politicians in CEE really back ERGEG's work. Liberalisation might be the cornerstone of European energy policy, but decision makers in national capitals are not always chanting the same mantra as those in Brussels. Even regulator sources privately agree this is the case. But Tahir Kapetanovic, the director of electricity at the CEE lead regulator, Austria's Energie-Control, told ICIS Heren that it was unfair to compare the region with countries that have had liquid, transparent markets for years. Some of the CEE members - which include Germany, Poland, the Czech Republic, Slovakia, Hungary, Slovenia and Austria - came from a very different starting point. He said the reason there have not been many stakeholder meetings lately is not a sign the CEE regional initiative has stopped working. Rather, it is because it has focused all its efforts on getting the key flow-based capacity allocation project up and running. A meeting list shows that the last stakeholder meeting was held in November 2007. But since then, the implementation group has met 13 times and regional co-ordination committee seven times. With flow-based capacity allocation so high on the agenda, there simply has not been resources to hold many stakeholder meetings, Kapetanovic said. In any case, Eurelectric will have a chance to attend the next one, planned for October 2010. The initial plan was to have flow-based capacity in place early this year, but this did not happen (see EDEM 4 February 2010). A second target date of March 2010 also passed without the new system coming into action. Kapetanovic said TSOs had been derailed by technical problems. Other sources say that the system is unpopular, with Czech power incumbent ČEZ particularly vocal in its opposition to the project. "We're worried that this could have very detrimental effects on markets and liquidity," Alan Svoboda, ČEZ executive director of sales and trading, told a conference in Budapest in June last year (see EDEM 4 June 2009). And opposition has not yet been won over. "If a grid operator can't explain what it's doing and traders can't understand, something is wrong," one source said at an energy trading conference in Warsaw last month. The regional initiative is going forth with the project despite this opposition. The regulators think it will be key to managing congestion in the meshed grid of both CEE and its western neighbours in the long run. "The implementation is to be expected as soon as the system works properly," Kapetanovic said. The market will find out more about the reasons for the delay at the next implementation group meeting on 21 July. The progress of flow-based allocation in CEE could affect other regions too. ERGEG wants to use it for a pilot model that could be rolled out across Europe. There would be no point in other TSOs starting from scratch, when their CEE counterparties are "almost there", Kapetanovic said. (THE ICIS HEREN REPORTS - EDEM 14.131/ 9 July 2010)

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