The European Commission has as part of the draft Guideline on Capacity Allocation and Congestion Management (hereinafter the Guideline) suggested rules that should lead to competition between Nominated Electricity Market Operators, NEMOs. The Guideline outlines a structure that can be characterised as a development of the newly-launched NWE market coupling for the day-ahead markets. In order to facilitate competition within this setup, the Guideline allows for more than one NEMO in a specific bidding zone, given that these NEMOs are designated in at least one Member State. In this setup all NEMOs shall also be responsible for developing, implementing and operating the joint MCO (Market Coupling Operator) functions.
The Nordic Regulators have taken an united position on the matter. Our position will also be communicated to the Nordic Ministries.
NordREG welcomes any effort to make markets in general more competitive, given that this also increases overall efficiency and does not entail decreased system security or additional costs. As regards the market structure described in the current draft, NordREG is concerned that it does not present a market structure that will prove to be efficient over the long term, in the sense that it will not lead to efficient competition. The current version proposes a structure that makes it possible for existing Nominated Electricity Market Operators (NEMOs) to enter each other’s home markets and thus offer some kind of competition. The current guideline is far from sufficient for providing the necessary means to also open the market to new entrants.
NordREG believes that one of the keys to designing a structure that actually would open the market for NEMO services to real competition is to make a clear distinction between natural monopoly functions and functions/tasks that can be provided by competitive companies. The potential shortcomings that we have identified in the structure currently proposed stem from this basic principle not being applied.
NordREG encourages Member States to suggest to the Commission to issue an impact assessment on alternative governance structures required when introducing competition between NEMOs. Similarly one should make an assessment and define, which functions should be included under the MCO and which functions would naturally be suited for competitive NEMOs.