ERGEG report on compliance with Regulation 1228/2003

Report (22 pages, PDF) by the European Regulators' Group for Electricity and Gas on the current state of compliance with Regulation 1228/2003 on electricity interconnectors.

The report is dated 18 July 2007 but was PDFd and published on 31 July 2007.

One of the requirements of the regulation (Article 6.6) is that revenues from auctions of interconnector capacity (except where a relevant exemption applies) are used only for the operation or expansion of the interconnector, or to offset transmission charges. The paper states the following for the France-UK interconnector:

The situation regarding the [Interconnecteur France-Angleterre] between [the] UK and France is more complex: the auctions revenues collected by [National Grid Interconnectors Limited] on the British portion of the interconnector are mainly used for recovering the capital and operational expenditures supported by [National Grid Interconnectors Limited]. Any income that exceeds/are below those two main costs of a business corresponds to a return on investment/loss for [National Grid Interconnectors Limited]. [...] [Ofgem] will assess income from the British portion of the [interconnector], and will for the purposes of Regulation Article 6.6(c) take into account income to the interconnector in assessing whether interconnector tariffs should be modified.

The paper is not clear as to whether these arrangements are considered to be compliant with the regulation's requirements. The paper also states that:

Annually by 31 July regulators shall publish a report setting out the amount of revenue collected for the 12-month period up to 30 June of the same year and the use made of these revenues [...]

but does not point to any such report from either Ofgem or Ofreg.

For further information or advice please contact Franck Latrémolière.

Filed under Electricity, ERGEG.

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