The Commission for Energy Regulation and the Utility Regulator - collectively “the RAs” - wish to update stakeholders on the CAG project.
On 8 April last the RAs published a “Briefing Note on the High Level Work Plan” for CAG which, among other things, set the following high level timelines for CAG implementation:
~ By October 2012 an All-island Unified Transmission & Distribution (T&D) Code with opt-outs for Northern Ireland Distributors. The code will facilitate common emergency procedures.
~ By October 2014 an All-island T&D Code with no opt-outs and common retail arrangements, including a single change of supplier process.
It went on to set out in some detail the main work streams involved covering:
~ Legislation & Licensing
~ CAG System Operator (SO) Establishment & Implementation
~ All-island Unified T&D Code (with opt-outs) development
~ Transmission Tariffs
~ All-island Unified T&D Code (no opt-outs) development
~ Common Retail Market arrangements
The RAs followed this up with a series of intensive consultation exercises and workshops with stakeholders. The RAs appreciate very much the considerable input from stakeholders to these consultation exercises. They also note points made by a number of stakeholders on the perceived speed of these consultation exercises and their relationship with work streams on ensuring compliance with Regulation 1775/2005/EC in both jurisdictions. They also note points made by stakeholders on the need to provide regulatory certainty for investors and to set out and deliver a CAG work plan.
The RAs have since 2008 worked closely with each other, with the Departments and with the industry, in seeking to progress the CAG project. It should be acknowledged, however, that there are still substantive outstanding issues awaiting resolution. We have also briefed and engaged with our respective Departments on these issues.
The CER is anxious to consider the full implications for the CAG project of recent evidence which has emerged on the physical capacities and limitations of the respective networks. The CER’s concerns focus on how a single balancing zone should operate under CAG. In addition, the CER considers there is a need to keep the original Cost Benefit Analysis for CAG under review to ensure that it will provide benefits to gas customers in Ireland.
The Utility Regulator considers that the network constraint at Gormanston should not materially inhibit the operation of a single balancing zone, and that in any case the constraint can be addressed with a modest investment. The Utility Regulator is also confident that the project as originally envisaged provides real benefit to NI customers and is fully committed to investing the time and resource to finalise CAG.
In the light of the above, and given the legal obligations on both jurisdictions to deliver compliance with EU requirements, the RAs wish to advise stakeholders of the following next steps in the CAG project:
~ A consultancy study on single balancing under CAG is being commissioned jointly by the RAs. This is expected to be completed within three months. The RAs will regularly update the Department of Enterprise, Trade and Investment and the Department of Communications, Energy and Natural Resources through the Joint Steering Group, and bilaterally as necessary, during the study and on its completion.
~ In parallel, the CER is carrying out its own more general CBA update study on CAG to ensure that the underlying goal of delivering mutual benefits to Irish customers is likely to be met. This study should be concluded very shortly after the joint balancing study.
~ In the immediate term, the two Departments have jointly requested that the RAs urgently focus their resources, and the resources of the system operators, on ensuring immediate compliance with the Gas Regulation in the EU Second Package in their respective jurisdictions. This work will involve close coordination and cooperation between the RAs, TSOs and the industry, with regular updates to the Departments. Delivering immediate compliance with the Gas regulation in the EU Second Package is the priority while the studies proceed on the dimensions of CAG outlined above. The work on EU Second Package compliance will not be contingent upon CAG.
~ The Departments are continuing to progress the draft legislation for CAG while immediate compliance with the EU Second Package is achieved North and South and while the studies are being undertaken.
The RAs will keep stakeholders updated on CAG developments and expect to be in a position to issue the next update in the second quarter of 2012.