CEER - Status Review on the Transposition of Unbundling Requirements for DSOs and Closed Distribution System Operators
Executive Summary
Distribution System Operators (DSOs) are an important and visible actor in the energy industry. Their duties not only include the delivery of electricity and natural gas to customers through the operation and maintenance of distribution systems, but we now see that DSOs are playing a role in the efficient functioning of Europe‟s energy markets; acting as “entry gates” to retail markets in most countries, making them an important influence on the level of competition as well.
Under the Third Energy Package (3rd Package) Directives 2009/72/EC and 2009/73/EC, European energy networks are subject to unbundling requirements which oblige Member States to ensure the separation of vertically integrated energy companies, resulting in separation of the various stages of energy supply (generation, distribution, transmission and supply).
This report monitors the status and real implementation of those unbundling requirements for DSOs in line with the 3rd Package provisions. Information on the current status of DSO unbundling was collected through a survey completed by 24 of the 30 national regulatory authorities (NRAs) of CEER member and observer countries, based on the information available to them in summer 2012. Please also note that the report only reviews the status of implementation of the 3rd Package at that time.
The survey aimed to assess the status of legally unbundled DSOs with more than 100,000 connected customers. Topics explored included unbundling-related issues such as:
  • Branding - ensuring that there is clear communication with regards the separation of identity/rebranding between DSOs and other energy actors;
  • Resources - ensuring that the necessary human, technical, physical and financial resources are available to meet unbundling requirements so that a DSO can fulfil its role effectively;
  • Compliance officers - independent observation and monitoring of DSOs to ensure no discriminatory conduct occurs;
  • Closed distribution systems - the classification of systems which distribute energy in a confined industrial or commercial setting and not to household customers.
Key findings
The following key findings emerge as a result of the analysis conducted in the present Status Review:
  • There is limited progress on DSO unbundling in countries which have yet to fully transpose the 3rd Package. In many countries, the process of unbundling is on-going and it remains too early to fully evaluate the results. In practice, most countries have a much larger proportion of DSOs with less than 100,000 customers; these may be exempted from EU unbundling requirements;
  • In those countries where unbundling has taken place, the rebranding of DSOs is sometimes not fully satisfactory and could still leave room for confusion among customers. Although NRAs have a limited role in this process, rebranding needs to be addressed further in several countries;
  • In general, NRAs found that the majority of DSOs have sufficient resources to fund the unbundling process;
  • Where unbundled DSOs are required to establish a compliance programme, there is a general sense that the appointed officer and/or established programme is functioning satisfactorily;
  • Most countries do not have closed distribution systems as defined in Directives 2009/72/EC and 2009/73/EC.
Next steps
More generally, CEER believes that the role and potential of DSOs should be better recognised and reconsidered, particularly as new technologies and market models come into play through renewables, energy efficiency, smart networks, distributed generation and demand side management measures. The efficient and independent functioning of those operating the distribution networks will become increasingly important as the networks take on a bigger role in facilitating these new market elements (and services).
Going forward, CEER will continue its monitoring of DSO unbundling (along with that of TSOs), building on various related previous reports and recommendations (see related documents). CEER is also planning to analyse DSO services for consumers, acknowledging that energy efficiency and customer activity are two key areas in which DSOs play an essential role. In addition, reliability and quality of service, and the manner in which these services are defined and carried out is an important part of market design. We recognise the key challenge as being to provide a smart regulatory framework which encourages access to the benefits that smart grids and meters can provide for capabilities, including demand response. Given our responsibility in regulating these natural monopolies, we are considering other work in this area in future, particularly as regards the future roles and responsibilities of DSOs.
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