Webinar: Regulating the investment in Projects of Common Interest: any role for the EU?
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Transcript of Webinar: Regulating the investment in Projects of Common Interest: any role for the EU?
www.florence-school.eu
FlorenceSchoolof Regulation
Regula'ng the investment in Projects of Common Interest: any role for the EU?
Leonardo Meeus Part-‐'me Professor, Florence School of Regula'on Associate Professor, Vlerick Business School
15/10/2014, Webinar
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Projects of Common Interest
TYNDP PCIs
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Progress monitoring
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Poll: What is the main reason for the delay?
• A: Permi*ng related problems • B: TSO incen:ves
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Poll: Response A
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Poll: Response B
TSO Rate of Return
TSO
Ris
k
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TEN-‐E Regula'on, Ar'cle 13 Incen'ves
• 1. Where a project promoter incurs higher risks for the development, construc4on, opera4on or maintenance of a project of common interest …, Member States and na3onal regulatory authori3es shall ensure that appropriate incen3ves are granted…
• 6. By 31 March 2014, each na4onal regulatory authority shall publish its methodology and the criteria used to evaluate investments in electricity and gas infrastructure projects and the higher risks incurred by them.
• 7. … the Commission may issue guidelines regarding the incen4ves laid down in this Ar4cle.
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Italy, 2004
• Lack of strategically important investment, 2003 blackout Context
• Eligible projects: interconnection and congestion reducing domestic lines
• Incentives: 12 years (risk) and +2% WACC premium (return)
Solu'on
• 8 billion invested since 2008 • 28 ongoing strategic projects
Experience
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USA, 2006
• Lack of strategically important investment, 2003 blackout
• Eligible projects: Interstate investment improving regional reliability and reducing regional congestion
• Case-by-case assessment by FERC with possibility to reduce risk and increase return, e.g. Duquesne Light (#3)
• Over 85 cases representing 60 billion in potential investment
Context
Solu'on
Experience
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Poll: How should EU guidelines deal with PCIs?
• A: case-‐by-‐case assessments and investment incen:ves
• B: no guidelines at all
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Poll: Debriefing
Argument for case-by-case: same return for all investments implies overpaying for low risk projects and underpaying for high risk projects
Arguments against case-by-case • Benefit can be limited for some countries: depends on how
heterogeneous projects are in terms of risk • Costs can be high for some countries: requires new skills and resources
for regulatory authorities and companies
Response A
Response B
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Recommenda'ons (EU Guidelines)
• Benchmark national investment frameworks • Spread good coordination practices, e.g. UK-Belgium experience with a
joint incentive package for the NEMO
• ACER could be given the competence to assist NRAs on a voluntary basis withy case-by-case assessments
• ENTSO-E could do the same for skills-bounded TSOs
Ensuring an adequate frame for all
For countries that want case-‐by-‐case
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FSR research on this topic Jan 2013 CBA electricity Jan 2014 CBA gas Jan 2014 CBCA Sep 2014 TSO incentives
Research agenda • 2014: Update CBA – CBCA power & gas
• 2015: 1st evaluation of 1st infra package
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FlorenceSchoolof Regulation
Thanks for your a_en'on! [email protected] [email protected]