Overview Of The Regulation Of The Electricity Sector In Ireland

Author:Mr Alex McLean, Nicole NR Ridge and Niall Esler
Profession:Arthur Cox
 
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INTRODUCTION

The principal legislation governing the electricity industry in Ireland is the Electricity Regulation Act 1999, as amended ("1999 Act"), which provides for the establishment of a regulatory framework for the introduction of competition in the generation and supply of electricity in Ireland. The 1999 Act also established the Commission for Energy Regulation ("CER") as the national regulatory authority responsible for overseeing the liberalisation of Ireland's energy sector including granting licences for the generation, transmission, distribution and supply of electricity.

POLICY AND REGULATION

Overall policy responsibility for the electricity sector in Ireland lies with the Minister for Communications, Energy and Natural Resources (the "Minister") and his Department ("DCENR"). In this capacity, the Minister is advised by a range of other statutory bodies including the CER and Sustainable Energy Authority of Ireland.

Government policy in the Irish electricity sector is driven principally by the relevant EU directives, for example:

the European Communities (Internal Market in Electricity) Regulations 2000 (the "2000 Regulations") completed the transposition of Directive 96/92/ EC of the European Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity; the European Communities (Internal Market in Electricity) Regulations 2005 (the "2005 Regulations") were introduced to transpose the requirements of Directive 2003/54/ EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC; the European Communities (Internal Market in Electricity) Regulations 2010 (the "2010 Regulations") represent the first step taken in Ireland towards the transposition of Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity. The Directive repeals Directive 2003/54/EC. The 2010 Regulations provide, inter alia, for the strengthening of independent regulation, better levels of consumer protection, the licensing of a public electricity supplier, the designation of a supplier of last resort and the enhancement of security of supply provisions. The European Communities (Internal Market in Electricity and Gas) (Consumer Protection) Regulations of 2011 give further legal effect to consumer protection provisions of Directive 2009/72/EC; and the European Communities (Renewable Energy) Regulations 2011 (as supplemented by the Sustainable Energy Act 2002 (section 8(2)) (Conferral of Additional Functions - Renewable Energy) Order 2012) have transposed Directive 2009/28/EC on the promotion of use of energy from renewable sources. Responsibility for day-to-day regulation of the sector rests with the CER. In the context of the SEM, the CER is required to liaise closely with its counterpart in Northern Ireland, the Utility Regulator. All decisions concerning SEM matters must be made by the SEM Committee, a committee of the CER and the Utility Regulator, and comprised of three CER representatives, three representatives of the Utility Regulator in Northern Ireland, an independent member and a deputy independent member.

The CER's roles include establishing arrangements for trading in electricity; determining electricity tariffs; issuing licences and authorisations; approving terms of access to the distribution and transmission systems and resolving disputes in respect of the same; advising the Minister on the effect of electricity generation in relation to sustainability and international agreements and the development of the electricity industry; promotion of competition and renewable energy generation; ensuring security of supply; and protecting the interests of final customers. Recent amendments to the 1999 Act give the CER power to take all actions it considers necessary to participate in the SEM and provide for the CER's objectives and functions as they relate to the SEM. The CER is also the national regulatory authority for purposes of Directive 2009/72/EC (concerning common rules for the internal market in electricity).

The CER is the independent national regulatory authority and is entirely independent of the electricity market participants, including the state owned Electricity Supply Board ("ESB").

However, the Minister retains certain reserve powers to give directions to the CER. The Minister may direct the CER to impose public service obligations in relation to the security of supply, regularity, quality and price of supplies, environmental protection (including energy efficiency and climate protection) and use of indigenous energy sources on the ESB or holders of licences to generate or to supply electricity. Extensive use has been made of this power with public service obligations imposed in relation to renewable support, indigenous fuel sources and for security of supply. Historically, only the ESB had been subject to public service obligations. However, since 2008, requirements have been imposed on other suppliers to have available to them and purchase an amount of electricity contracted under the various Renewable Energy Feed-In Tariff ("REFIT") schemes. The Minister may also give the CER directions in respect of the criteria in accordance with which an application for an authorisation may be determined by the CER and the definitions of combined heat and power, and renewable, sustainable or alternative sources of energy. The Minister may not give policy directions in relation to SEM matters.

Decisions of the CER on the granting of an electricity supply or generation licence under section 14 or an authorisation to construct a generating station under section 16 of the 1999 Act, and decisions of the CER on modification of the terms of such licences or authorisations already granted can be appealed to the Minister within 28 days of the making of the decision.

The Minister must then set up an independent appeal panel that will have all the powers and duties of the CER that are necessary to carry out its function. The panel will have certain...

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