Following the Energy Council on 19 June, when the European energy ministers failed to finalise their position on the reform of the electricity market (see EUROPE 13204/1), negotiations are continuing in parallel in the European Parliament, with some similar points of political disagreement.
In an interview with EUROPE, Maria da Graça Carvalho (EPP, Portuguese), rapporteur on the REMIT regulation to combat manipulation of the wholesale electricity market and shadow rapporteur on the new Electricity Market Design (EMD), reacts to the decisions taken by the EU Council and takes stock of the negotiations underway in Parliament. (Interview by Pauline Denys)
Agence Europe: You are the general rapporteur on the REMIT regulation. What is your reaction to the agreement reached on this point by the EU Council on 19 June?
Maria da Graça Carvalho: The Commission's proposal was very reasonable and what the Council has done is to improve it in line with what I have amended. It therefore gave more powers to ACER (Agency for the Cooperation of Energy Regulators), but limited itself to investigation. It has increased the number of cases that ACER will investigate and has left enforcement to the Member States. So that’s exactly the line I'm taking. I'm happy with that. There is also greater transparency.
What’s happening in Parliament with the REMIT negotiations?
We haven't yet reached that point in Parliament, because some of our colleagues want ACER to have less power and focus more on national regulators. On the contrary, some political groups want ACER to have more power than in my proposal and that of the Council, such as Renew Europe, S&D and the Greens/EFA.
Are you confident about future negotiations?
In a way, yes. In certain areas, we will probably go further than the Council in terms of research powers. We are including all cross-border initiatives in our proposal to ACER because we are reducing the number of countries to two. This includes all cross-border cases involving two countries. We’re also going a little further than the Council in terms of implementation, but I'm quite optimistic on this issue. I was a bit afraid that the Council would be too protective of its own national authorities, but today its position is fairly balanced. So I’d say we can find a good compromise, which is positive.
What do you think of the Council’s negotiations on EMD?
I'm a bit disappointed because I expected them to reach an agreement. So I'm still hoping they’ll find one under the Swedish Presidency. There are still a few days to go.
Several points of debate were still on the Council's table, in particular concerning two-way contracts for differences (CFDs) for existing generation capacity. What do you think?
The position of our group in my amendments is very clear: we defend CFDs not as an exclusive mechanism, but as an option and for new assets. And these new assets may be new investments in existing production capacity, but which correspond to a substantial rate of development or increase in capacity. That’s our position. We’ll see what the Council’s position is in the end.
Do you understand France’s position on the application of CFDs for existing nuclear power plants?
Yes, because they are in a peculiar situation compared to the rest of Europe. They have EDF, which is quote dominant, with around 50 nuclear reactors. You have to understand that. And we are trying to draw up legislation that applies to Denmark, France, Cyprus... So we have to take account of the specific features of these countries.
You have previously mentioned your concerns about capping infra-marginal revenues in times of crisis (see EUROPE 13186/2)...
We need clear criteria for declaring a crisis at European level. We cannot live in a permanent crisis, because that will create uncertainty for investment. And without investment, we cannot embark on the energy transition. I was a little surprised that a group of five countries (Spain, Portugal, Cyprus, Greece and Romania) supported this proposal. We shall therefore see whether the Council’s proposal succeeds and what the majority in Parliament is on this point, or whether we find a compromise that eliminates this concept of capping incomes.
The Swedish Presidency has opened the door to subsidising coal-fired power stations through capacity mechanisms (in particular to accommodate Poland). Is this something you understand?
Of course, some political groups will not like the proposal. It’s always a question of compromise, because the proposal is not in line with most of the political priorities of many groups, starting with the Greens/EFA; but even the EPP line is decarbonisation. However, we must take into account the fact that some countries are in a more difficult situation than others. This is the case in France. So we need to see if we can negotiate something that also takes account of Poland’s specific characteristics.
What progress has Parliament made on this issue?
We have not yet negotiated the capacity mechanisms, but we have reached a great deal of agreement on a number of points, and this has been achieved fairly quickly. The atmosphere during the negotiations was very pleasant. We have already secured agreements on virtual hubs and futures markets, gate closure time of the cross zonal intraday market, public-private partnership agreements, energy sharing. All these chapters were discussed and generally agreed. The technical part now remains to be written.