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An Overview of ICER’s Security of Supply Report
LOGO
THE NATIONAL, REGIONAL AND GLOBAL DIMENSIONS ROLE OF ENERGY REGULATORS IN GUARANTEEING RELIABILITY AND SECURITY OF SUPPLY
ICER’s rationale for its review of international case studies
T
he report by the International Confederation of Energy Regulators (ICER) on the “Role of Energy Regulators in Guaranteeing Reliability and Security of Supply
- National, Regional and Global Dimensions” deals with the role of energy regulation in addressing security of supply issues with a particular focus on the promotion of investments.
The ICER Security of Supply Replies and the interplay between port is the outcome of a 3-year energy regulation and infraproject carried out with the parstructure investments to reduce ticipation of worldwide regional these risks on a regional and and national regulatory authoriworld wide scale. ties (NRAs) within the framework of ICER activities. Role of energy regulators in The ICER Security of Supply Resecurity of supply port also reflects input obtained through extensive contact and Although many regulators are interaction established by ICER not formally responsible for sewith some of the world’s curity of supply (SoS), regmost influential instiulatory decisions can tutions involved impact significantly in the energy on energy secusector: EBRD, rity. Tariffs for Energy infrastrucEnergy Charenergy transture development ter, IDB, IEA, port, storage on a regional UNECE, VLPand distribution scale can offer GO and the feed directly substantial cost World Bank. into the resourcreductions The Report es available for highlights the investment by the diverse energy resystem operators and source endowments, entherefore in the tariffs paid ergy supply policies and regulafor the use of infrastructure. The tory framework of the countries ability of consumers to pay for covered by the regional regulatheir energy needs depends on tory authorities which contribprices, which are in turn affected uted to the report. by the operation of wholesale The report examines the risks markets, over which regulators for the security of energy suphave at least a monitoring role.
The reliability and quality of supply depend substantially on regulatory decisions regarding standards, rewards and penalties. Overall, regulatory decisions impact directly or indirectly industry performance and sector outcomes in terms of output and consumption levels, productivity and efficiency, continuity and quality of supply, financial performance, capacity levels and reserve margins, costs and prices, competition, affordability of supply and impacts on economic development.
Good regulatory decisions ultimately: - Ensure that investors have the necessary resources for maintenance and investment expenditures, including a reasonable rate of return; - Help establish and maintain sustainable commercial operations and provide an efficient industry with good cost performance; - Protect consumers (current, potential and future) by facilitating the production and distribution of energy at accessible prices; - Achieve government policy objectives such as connection targets, fuel diversity goals and efficiency targets; - Provide governments with perceptions and motivations for rational energy sector policies (for example, in relation to rural electrification and subsidisation).
The most important message learned at all stages of development of regional energy infrastructure projects is the need to accompany capacity expansion and cross-border trade with adequate forms of sector restructuring, institutional and regulatory reform.
Main Conclusions Regulators can play an important role in contributing to the achievement of SoS in countries where regulatory systems work well and where governments allow them to operate effectively, also by identifying problems and making adequate proposals for their solution. Regulatory associations can contribute significantly to the achievement of SoS, by aiming at attaining greater compatibility in the regulation of energy in their member countries.
• Energy sector reform is needed to enhance market efficiency: indispensable to attract private investments • Regulatory independence is a key prerequisite to enable market reform • Harmonisation of rules on a regional scale must be achieved to facilitate cross-border projects • Cross-border coordination between regulatory bodies should be established to achieve effective regulation of projects with a regional scope • Best practice exchange is essential, particularly in the development of cross-border projects
Recommendations
FOR GOVERNMENTS • To clearly separate generation/transmission/ distribution/supply functions • To provide guarantees on project development • To simplify and speed up authorisation procedures • To recognise the role of energy regulation as distinct from government energy and social policy • To endow regulators with stable responsibilities and an appropriate level of independence and autonomy
FOR REGULATORS • To clearly recognise the impact of their decisions on energy security • To ensure that their decisions promote investments in infrastructure • To work towards the harmonisation of rules with those of neighbouring countries • To improve monitoring of quality of supply and reliability standards • To support domestic energy resource development and end-use efficiency
International Confederation of Energy Regulators (ICER) The International Confederation of Energy Regulators (ICER) was created at the Fourth World Forum on Energy Regulation (WFER), in 2009. It is a voluntary framework for the cooperation of energy regulators from around the globe. Its aim is to improve public and policy maker awareness and understanding of energy regulation, and to play a role in addressing a wide spectrum of socio-economic, environmental and market issues. Through ICER, energy regulatory issues transcending regional and national boundaries can be addressed through dialogue and cooperation on a global scale. ICER’s membership includes over 200 regulatory authorities over six continents.
The virtual work of ICER ICER is a virtual organisation, the backbone of which is its website (www.icer-regulators.net) and its four virtual working groups (VWGs):
VWG1: Opening & Integration of Regional Markets VWG2: Technology Change VWG3: Consumers Issues VWG4: Education, Training & Best Practices
ICER Reports:
Publications
• Examples of Methodologies Utilized to Manage Competitiveness and Affordability Issues related to the Introduction of Renewable Forms of Electricity Generation and New Technologies: An Overview Report of a Compilation of Four Case Studies, April 2012, Ref. I12-C&A-11-04 • Experiences on the Regulatory Approaches to the Implementation of Smart Meters, April 2012, Ref. I12-C&A-08-01 • Role of Energy Regulators in Guaranteeing Reliability and Security of Supply - National, Regional and Global Dimensions, March 2012, Ref. I12-SoS-08-03 • Renewable Energy and Distributed Generation: International Case Studies on Technical and Economic Considerations, February 2012, Ref. I12-CC-17-03 • ICER Response to the European Commission Public Consultation on the External Dimension of the EU Energy Policy, Ref. I11-SC-05-05, 21 February 2011 • ICER Energy Efficiency Report, Ref. I10-SC-02-04, June 2010 • ICER Work Plan 2010-2012 • ICER 2010 Annual Report • World Energy Regulators’ Statement on Climate Change, 20 October 2009
ICER Factsheets:
The full report, as well as all others listed here, can be found at
http://bit.ly/ICERreports
• ICER’s Renewables and New Technologies Report, Ref. FS-12-04, August 2012 • ICER’s Security of Supply Report, Ref. FS-12-01, May 2012 • ICER’s Renewable Energy and Distributed Generation Report, Ref. FS-12-02, May 2012 • ICER’s Smart Metering Report, Ref. FS-12-03, May 2012 • Brochure on the International Confederation of Energy Regulators (ICER), Ref. FS-12-05, May 2012 • Regulatory Practices for the Promotion of Energy Efficiency, Ref. FS-11-01, April 2011
The content of this leaflet does not necessarily reflect the opinion of the individual members of ICER. Photos: stockfresh.com
www.icer-regulators.net
Designed
by:
Factsheet Ref: FS-2012-01
Valentina CalĂ
office@icer-regulators.net
With the support of the European Commission. This publication reflects the views only of the author(s), and
the
Commission
cannot be held responsible for any use which may be made of the information contained therein.