|NC RfG and DCC - astonishing divergences in derogation procedures|
|Tuesday, 30 April 2013 08:19|
It is probable that legislative efforts to elaborate on the two fundamental Internal Electricity Market network codes:
will effect in the coming months in the adoption of regulations with European-wide binding force.
It merits noticing that both network codes impose sometimes strict technical and legal requirements on, respectively, Power Generating Modules and Demand Facilities.
Those unable to meet these obligations are granted the possibility, under special procedure, to apply for derogation.
It appears, however, that the communication between the ENTSO-E task forces assigned with the relevant works has to some extent failed, since certain important aspects - generally similarly regulated in both network codes - diverge significantly and there seems to be no visible motivation to justify discrepancies in this regard.
Vivid example of the above assertion is Article 54 of the DCC. This provision stipulates that:
1. An Existing Demand Facility or Existing Distribution Network Connection, deemed significant in accordance with the procedure set forth in Article 36, which is not compliant with at least a requirement of the Network Code, shall apply for a Derogation from these requirements in accordance with Article 52, within twelve months from the date the requirement, with which it is not compliant, becomes applicable.
3. If at the expiry of the twelve‐month period, the non‐compliant Existing Demand Facility or Existing Distribution Network Connection referred to in paragraph 1 has not applied for a Derogation, the Relevant Network Operator shall have the right to disconnect the Existing Demand Facility or Existing Distribution Network. The decision on disconnection shall be motivated.' (underlining added).
It is clear from the above language that Demand Facilities are given additional protection, resulting from the obligation imposed on the Network Operators, to be reminded of the expiry of the twelve‐month period - which lacks its equivalent with respect to Power Generating Modules in the NC RfG.
Maybe the reason for this was a belief that electricity generators are operated to a greater than Demand Facilities extent by professionals, but in the modern Internal Electricity Market such a distinctions appear no longer justifiable. In any case, on the ground of existing regulatory drafts electricity consumers are given more regulatory protections than electricity producers, while, pursuant to the network codes, both these groups sometimes provide equally important services for the electricity market (for instance demand side response).
Revoking the granted derogation under DCC - must the vested interests be reserved?
The said ambiguity arises from the wording of Article 54(11) of the NC RfG pursuant to which the 'National Regulatory Authority shall have the right to issue a motivated decision revoking the granted derogation under the conditions and pursuant to the provisions of national law reserving the vested interests of the concerned grid users, in the cases where the prerequisites for granting the derogation no longer exist for reasons attributable to the concerned grid users.' (underlining added).
The analogous Article 53(12) of the DCC states only that 'The Relevant National Regulatory Authority shall have the right to issue a motivated decision revoking the granted Derogation, in the conditions set forth in the national law, in cases where the prerequisites for granting the Derogation no longer exist.'
Assuming the lawmakers always act reasonably, the logic of the comparison of these formulations indicates that under DCC when revoking the granted derogation the vested interests of the owners of demand facilities do not matter.
If it weren't, it could be argued that under these network codes, the interests of generators' owners are much better protected than the analogous interests of owners of demand facilities. The only remaining issue to be resolved in that regard is what are the reasons for placing these groups - being in similar situation - in such divergent legal position. Generally, without objective justification, such unequal treatment seems to be unacceptable in the perspective of evenly significant roles of the above groups for the functioning of the Internal Electricity Market.