In 2007 DG TREN commissioned Moffatt Associates to conduct a detailed market research programme to assess the likely impact of the Commission’s proposals relating to TSO unbundling and improved wholesale market transparency.
Objectives of this study were as follows:
- A. Ownership Unbundling
Impact on non-discriminatory access on tariff levels and price information transparency - Subsequent impact on the increase in competition in both generation and supply
- Required conditions and propensity for unbundled TSOs to (a) increase levels of investments in improving the quality of the network, (b) increase investment in cross-border capacity, (c) work with other TSOs to create regional networks, and operate in such a way that would reduce or eliminate the need for new pan – European regulator and reduce or eliminate the need for heavy national regulation relating to network tariffs and investment incentives
- Potential benefits to the incumbent of selling network assets – in terms of either returning funds to shareholders and/or channeling new investment into higher margin non-regulated generation and supply businesses locally and/or in other territories in the EU and elsewhere
B. Market Transparency
- Relative importance and significance of different data in terms of its value in promoting liquidity and competition in different regional markets
- Type, timing and sourcing of data required in both gas and power by regional market – i.e. including exchange, TSO and OTC data
Whether it would be better to opt for high mandatory minimum standards across the whole of the EU from day one or opt for variable benchmarks and a regional incremental approach with Nordpool and the UK leading the way - Whether most benefit could be secured in the short term by opting to prioritise transparency in power rather than gas
In a period of less than 5 weeks, Moffatt Associates were able to complete a total of 56 in-depth interviews with key participants in the EU energy market including:
- Stakeholder associations
- Energy market regulators
- TSO network operators
- Financial investors
- Energy exchanges
- Dominant incumbents
- Market traders
- Market analysts
Our conclusions were included in the EU Commission’s Background Paper accompanying the 3rd Package Directives