ERO welcomed to Prague Christian Zinglersen, ACER Director, who had arrived as part of his long planned calls on regulators across the EU. In addition to discussing European energy regulation and long-term cooperation between the organisations, Stanislav Trávníček, Chairman of the ERO Board, and Christian Zinglersen also touched upon the current situation in the Czech Republic.
“I am not aware of any of the European regulators overseeing the selection of a business strategy by a particular energy supplier or the way the supplier manages its risks or grasps market opportunities. This is not a basic role for regulators. But, naturally, the current situation in Europe spurs debates amongst us, the regulators, on the way to address suppliers’ reliability and to protect consumers when the supplier’s stability fails,” says Christian Zinglersen.
For the ACER Director, Stanislav Trávníček described the impacts of the largest alternative supplier’s and other smaller suppliers’ recent collapse, which had affected some 900,000 consumers who then migrated to their supplier of last resort. He suggested that this experience should result in reflections on boosting the European regulatory framework with a view to preventing such risks.
Christian Zinglersen noted that he saw similar developments, albeit with not so serious impacts, in a number of EU countries.
Stanislav Trávníček described the situation in the Czech Republic as a representative example of the impacts caused by collapsing suppliers’ business strategies that verged on moral hazard. He emphasised that these suppliers did not honour their contract obligations to their consumers and failed them in a most regrettable manner; the competent authorities should now investigate this.
Christian Zinglersen commented on the unusual situation in the market, also regretting that ERO’s independence was being challenged in certain areas.
In respect of the lesson potentially learned from the current developments Christian Zinglersen pointed to the upcoming preliminary evaluation of high energy prices in Europe, carried out by ACER based on a request from the European Commission. He specifically noted that the current price shock at the wholesale level, which was the basis of the problems in retail markets, was entirely unprecedented and had primarily been caused by global shifts in supply and demand. As such, it occurred completely beyond control of the EU, let alone the member states themselves.
According to Christian Zinglersen, it is all the more necessary that ACER reflects on adequate protection of final consumers against the risk of excessive wholesale prices and potential collapse of suppliers who do not honour their contract obligations to their consumers. The EU’s current legal framework is designed so that energy regulators across Europe are not in a position to oversee suppliers’ risk management and business strategy; and even when uncovering any irregularities, they have virtually no options for intervening. At the same time, the current experience clearly reflects the need for tools that will suppress the risk of the recurrence of these situations, which fundamentally undermine consumers’ confidence in the energy market.