VERBUND against suggested partitioning of German-Austrian electricity price zone

12/4/2015vienna

VERBUND opposes the suggested partitioning of the German-Austrian price zone and supports E-Control's administrative appeal to ACER as well as the subsequent action for annulment before the ECJ.

VERBUND opposes the suggested partitioning of the German-Austrian price zone and supports as an intervener E-Control's complaint to ACER as well as the subsequent action for annulment before the ECJ.

In September 2015, ACER, the EU Agency for the Cooperation of Energy Regulators, recommended the division of the common German-Austrian electricity price zone. This policy is not consistent with the relevant legal framework and exhibits grave material as well as procedural flaws. E-Control is thus legally combating the suggested division of the electricity price zone shared with Germany, submitting a complaint before the Board of Appeals of the EU energy agency ACER, as well as an annulment action before the European Court of Justice.
VERBUND, Austria's largest electricity company, shares this legal perspective and, as an intervener, aligns itself both with E-Control's complaint before ACER as well as with the subsequent annulment action before the European Court of Justice:  The common German-Austrian bidding zone as it exists today achieves in an exemplary fashion the common internal electricity market that the European Union strives for and is of great economic utility. An arbitrary division of this functioning price zone would be economically inefficient and expensive, as well as contradicting the EU objectives and existing EU law.

No bottleneck along the German-Austrian border
Studies demonstrate that no bottleneck exists along the border between Germany and Austria, contrary to the ACER's observations. The border between Germany and Austria is not physically overloaded. In fact, the physical utilisation, with a capacity of around 11,000 MW, has in recent years seldom exceeded 4,000 MW. According to applicable EU legislation, the deferral of bottlenecks on national borders is prohibited unless there are technical justifications, and no milder measures to address the problem are possible. The bottleneck must be eliminated exactly in the place where it actually, physically occurs. An artificial division of an until now united German-Austrian price zone would, by contrast, be a massive violation of the principle of proportionality in regulatory interventions, upon which all European energy law is based.
Temporary grid overloads come up much more often within Germany due to the as yet incomplete expansion of its grid. In order to bridge the period of time before the planned grid expansion within Germany has been implemented and relax the current grid situation, cross-border utilisation of flexible generation capacities in the form of a reserve represents the most efficient and economical solution.

Unjustifiable excess costs
The unjustified splitting of the existing price zone would have wide-ranging negative consequences. The results would include reduced market liquidity, higher barriers to market entry, hindrance to European market integration as well as to the integration of renewable energy, as well as an increase in CO2 emissions. In the end, this would manifest itself in unnecessary additional costs for market participants and end customers, as well as negatively affecting the effort to establish the strived for energy union.

ACER violates European bidding zone process

Currently, a comprehensive review of the ENTSO-E, the European Transmission System Operators Association, is underway concerning the configuration of the European price zones. The results of this "Bidding Zone Review" process are expected in the first quarter of 2016. Instead of awaiting these proceedings, ACER already submitted its own recommendation in September of this year and would like to create a fait accompli, thus pre-empting the result of the authorised process. Through this overstepping of competences, the Agency for the Cooperation of Energy Regulators has itself created uncertain regulatory framework conditions for market participants.

For the sake of Austria's position as an economic hub, VERBUND will continue to support the preservation of the common market area with all available means. A division of the German-Austrian price zone would be unjustified, would have massive negative macro-economic effects, would contradict valid EU law and would run contrary to the creation of an integrated, internal European electricity market.

Ingun Metelko Ingun Metelko

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