In its legislative proposal to review the organisation of the EU power market, the European Commission proposes the emergence of transnational entities, the Regional Operational Centres, to enable transnational decision-making for the security of electricity power supply. This decision is controversial as ensuring a secure system operation is currently a national prerogative.
Towards a new form of regionalism?
Regionalism is often flagged as a critical vehicle for European integration, as both political approaches conflict with the nation-state paradigm. In the early 1990s, Liesbet Hooghe and Gary Marks developed the concept of multi-level governance, a new political science theory based on the structure that emerged with the implementation of the Maastricht treaty in 1992. If this theory explains how “the supranational, national, regional and local governments are enmeshed in territorially overarching policy networks” (Marks, 1993), the creation of a new transnational layer between Member States and the European Union was not foreseen. Yet, the Clean Energy Package released by the European Commission in November 2016 and currently at its last stage of negotiation (Trilogue or plenary vote) in the European institutions introduced a new structure, the Regional Operational Centers (ROC), covering several Member States and which are to take binding decisions to ensure the security of electricity supply. This transnational entity would gather the Transport System Operators (TSOs) of each Member State which are national stakeholders in charge of maintaining the real-time balance between power demand and power supply. The resulting ROCs would then ensure supranational monitoring, conduct regional studies, advice and compel TSOs to coordinate national actions – thus strengthening the security of supply.
A proposal based on existing structures created at the initiative of TSOs
The precedent for this proposal is CORESO, an entity created at the initiative of several TSOs following the 2006 European blackout that left 15 million people without power for several hours due to a lack of coordination between TSOs in the Central Western Europe area. This outage, triggered by a routine disconnection as a German TSO allowed a boat to pass beneath overhead cables without notifying its neighbours, proved how valuable further coordination could be in an increasingly integrated European power market. This entity, covering the United Kingdom, Northern Ireland, France, Spain, Portugal, Italy, Spain, Belgium and parts of Germany, computes national grid assessments and proposes improvements based on a supranational approach in different time frames (2 days ahead, day ahead, intraday). This model spurred several initiatives across Europe which are now called Regional Security Coordinators (RSCs). As the number of services provided by CORESO kept increasing to make the most out of national markets interdependency, the European Commission decided to take over this success story and to oblige all European TSOs to gather to form Regional Operational Centers, a rebranded RSC with more competencies.
ROCs: regional scope and competencies
Article 32 of the Commission’s proposal for the Regulation on the Internal Market for Electricity provides that all EU TSOs shall establish Regional Operational Centers at the latest twelve months after the entry into force of the Regulation. The text also stipulates that the geographical scope of these ROCs should be determined by the European Network of Transmission System Operators for Electricity (ENTSO-E) under the supervision of the Agency for the Cooperation of Energy Regulators (ACER) and considering the existing regional security coordinators such as CORESO. In addition to security of power supply reinforcement, the European Commission outlines that an enhanced cooperation could improve the profitability of cross border interconnectors only exploited at 25% of their maximum capacity partly due to lack of coordination. Among the 17 competencies allocated to the ROCs, the European Commission proposes to introduce compulsory regional calculations and analysis to further improve cross-border knowledge of TSOs, thus leading to better decision making. However, the European Commission shifts from CORESO’s model envisioned as an advisory body, as the Regulation states that ROCs will be entitled to take biding decisions over national TSOs, notably when sizing the regional capacity needed as well as cross border capacity involved in the national capacity mechanisms. Although the rationale behind these provisions is that national power markets are ever more intertwined, they also contribute to promoting a new form of transnational regionalism and consequently set forth a new stage of European integration.
An extensively discussed proposal
These provisions, which structurally affect decision-making, have been extensively debated in the Council of the EU and in the European Parliament, where the initial proposal has been significantly amended, as well as by actors from the private sector. Most stakeholders do acknowledge that effective coordination is needed to successfully achieve the Internal Energy Market while raising the share of intermittent renewable sources of energy in the European energy mix. The European association of TSOs (ENTSO-E) however stresses that Member States remain politically responsible for the security of supply, and that a splitting of decision-making powers would therefore lead to political and legal gaps. The European Parliament report was written by K. Karins (a Latvian MEP from the European People’s Party), leading to a vote in the Parliament’s ITRE Committee on February 21st 2018, which renamed the Regional Operational Centres to Regional Cooperation Centres in order to underline that TSOs will remain the key stakeholders for secure system operation. In contrast with this rebranding, the ITRE Committee voted to reinforce the independence of this new entity without hampering its capability to take binding decisions: “the regional coordination centres shall act independently from individual national interests and from the interests of transmission system operators”. If voted as such during the April plenary, the European Parliament will stand in favour of the emergence of a partially-independent regional entity with strong competencies to ensure the security of power supply over the continent. On the other hand, the Council of the European Union amended the text so as to reduce the ability of this entity to take binding decisions and to postpone to 2025 the deadline for the implementation of these provisions. In contrast with the ITRE report, Member States advocate to keep the TSOs at the heart of the decision-making structure, starting with the geographical scope as the Council proposes to let TSOs submit the initial proposal on the region covered by the coordination centres.
In fine, if the interinstitutional negotiations will be critical to determine the governance approach of these cooperation centres, they should nevertheless endorse the emergence of mandatory regional entities with binding competences over national stakeholders. These new transnational stakeholders will need to prove their relevance by striking a delicate balance between macro analyses at the regional level while taking into consideration issues that might emerge at a local stage through the TSO’s operational expertise. All in all, this development breaks a new ground in the integration of the EU power market and lays the first milestone towards the development of an EU principle of solidarity for power supply.
References
European Commission, Press release: Clean Energy for all Europeans – unlocking Europe’s growth potential (link)
European Commission, Proposal for a revised electricity regulation
European Parliament, Report for a regulation on the internal market for electricity (recast) - link
ENTSO-E, Clean energy Package: ENTSO’s position on the ROC proposals - link
Council of the European Union, General Orientation on the regulation on the internal market for electricity (recast)
Hooghe Liesbet, and Gary Marks. Multi-level governance and European integration. Rowman & Littlefield, 2001.
Gary Marks, Structural Policy and Multilevel Governance in the EC. In A. Cafruny, & G. Rosenthal (Eds.)