NEW CROSS-BORDER SINGLE ELECTRICITY MARKET GOES LIVE
A new electricity market for the island of Ireland will formally commence at midnight tonight (00.00 on 1 November 2007), the Regulatory Authorities for Energy in Ireland and Northern Ireland have announced.
The new market will be called the Single Electricity Market (SEM) and involves combining the two separate wholesale markets North and South into one cross-border market, which is more efficient and cost effective. The SEM is a ground-breaking cross-border project which involved the input and cooperation of all parties in the electricity industry North and South.
The Single Electricity Market is the first cross border market of its kind in Europe. All electricity produced on the island will now be sold into one large “pool”, while supply companies will then buy their power out of this pool. The market is specifically designed to set the cheapest possible price for electricity at all times. No one company will have an undue influence over electricity prices.
The single wholesale market introduces a new culture of cooperation in the energy field which will benefit all customers. In this regard, the SEM can be considered to be a unique and important development for the energy sector on the island.
What all this means for customers is that competition will be enhanced leading to improved choice across the island and an improved price outlook than would otherwise be possible. The integration of the two markets will also improve electricity security of supply.
Tom Reeves, Chairman of the CER and Iain Osborne, CEO of NIAUR, have both strongly welcomed the implementation of the SEM and have acknowledged the significant effort and co-operation across the industry in achieving this goal. Go-live of the SEM is the culmination of a number of years of cross border cooperation, as both Regulators worked towards the common goal of introducing a market that would benefit customers in all parts of the island.
The Regulators have now committed to continuing to work together to ensure the full advantages of the SEM are realised. Reflecting the joint nature of these new electricity trading arrangements the Commission for Energy Regulation (CER) and the Northern Ireland Authority for Utility Regulation (NIAUR) will refer all SEM Matters to a joint SEM Committee for decision. The SEM Committee, established under law in both jurisdictions, has been put in place and comprises members of both Regulatory Authorities as well as an Independent Member and Deputy Independent Member.
Further information on the SEM and Go Live can be obtained from the AIP Website. – WWW.allislandProject.org
Note to Editors
1. The Regulatory Authorities comprise CER and NIAUR;
a) The Commission for Energy Regulation (CER) is the independent body responsible
for overseeing the liberalisation of Ireland’s energy sector, and
b) The Northern Ireland Authority for Utility Regulation (the Authority) was established in
2003. Most of the Functions of the Directors General of Electricity Supply and Gas for
Northern Ireland were transferred to the Authority on 1 April 2003. The water and
sewerage functions were transferred to the Authority on 1 April 2007.
2. The new Single Electricity Market (SEM) arrangements relate to the trading of wholesale electricity in Northern Ireland and Ireland. In designing and implementing the SEM the Regulatory Authorities have been, and continue to be, committed to the principle of co-operation in order to ensure to the fullest extent possible the effective, efficient and competitive functioning of the SEM.
3. The Regulatory Authorities have designed the SEM arrangements to promote the creation of a single competitive, sustainable and reliable market in wholesale electricity in Northern Ireland and Ireland within the context of the European Union’s policy on the creation of an EU-wide internal market for electricity, while aiming to minimise the cost of establishing such a market.
4. In particular, the Regulatory Authorities have designed the SEM arrangements that they will, among other things:
(a) be transparent, integrated and promote competition in the sale and purchase of wholesale electricity on an all-island basis, and thereby enhance prospects for investment in the electricity sector in Northern Ireland and Ireland;
(b) facilitate the participation of renewable energy generators in the market;
(c) take into account the operation of arrangements in relation to the environment;
(d) incorporate a harmonised approach to transmission connection policy and planning criteria for transmission networks and activities, and appropriate regulatory and contractual arrangements for the planning, development, operation and contractual access for connection to and use of the transmission systems in Northern Ireland and Ireland being undertaken on an appropriately co-ordinated all-island basis;
(e) provide for the monitoring and regulation of the behaviour of market participants and including the imposition of bidding principles;
(f) incorporate a co-ordinated approach to address the issue of market power effectively in a transparent manner;
(g) include appropriate regulatory and contractual mechanisms to enable the arrangements to develop over time, in line with the aims of the SEM;
(h) promote, where possible, a harmonised approach on an all-island basis to security of supply issues; and
(i) provide for a harmonised approach to the investigation of licence breaches including, where appropriate, provision for on-site investigations.
5. An independent Cost-Benefit Study of the Single Electricity Market[1] for the Regulatory Authorities found;
a) that the social net benefits of the SEM (taken over a 10 year period) will be approximately €155M in Net Present Value (NPV) terms. In terms of the impacts on market participants it was estimated that the profits of market participants across the island will increase slightly.
b) in terms of the impacts on consumers it is estimated that there will be a marginal fall in end-user prices in both NI and ROI with consumers capturing the majority of the net benefits of SEM implementation, equal to NPV €127M, with a fairly even split between NI and ROI consumers.
c) in addition to the quantitative benefits mentioned above it is believed that a range of other benefits will accrue from the SEM. These include:
i) improved competition and reduced market power;
ii) improved co-ordination of transmission operation;
iii) better management of loop flows in the future;
iv) environmental savings; and
v) enhanced effectiveness of regulatory institutions from pooling of experience.
For further information please contact:
Conall McDevitt/ Chris Brown
Managing Director, Weber Shandwick Account Manager, Weber Shandwick
T: 028 90 347 300 T: 028 90 347 303
M: 07770886933 M: 0777886911
E: cmcdevitt@webershandwick.com E: chbrown@webershandwick.com