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29.11.2011
Ownership unbundling is by far the preferred option
Jacques de Jong, Senior Fellow at Clingendael Institute
AUTHOR: Atanas Georgiev

Mr de Jong, recently you presented lectures in Bulgaria in an Energy Diplomacy training. What is the position of Bulgaria in geopolitical and energy diplomacy aspect from the view of the Clingendael Institute?

- Bulgarian position could be seen along 3 lines:
1) As a member of the EU and its role in the formation of the EU’s energy policies;
2) As a partner in the SE-EU region and the specific position it can take in the context of the regional gas and power markets, where Bulgaria is taking an important position as a net electricity exporter and as a potential gas-transit country;
3) The bilateral relation with Russia, in terms of gas and of nuclear power.


Recently Günther Oettinger suggested a new policy for concluding energy deals with third countries. Is it possible for the EU to negotiate “in one voice” with other partners and what would be the benefits and setbacks?

- It would be useful if there would be a clear division between the role and responsibility of the EU and the national capitals. The “external trade model” could be guiding when the EU is responsible for external energy trade policy and the capitals for external trade promotion.


As a former chairman of the Dutch energy regulator, what is your view on the changing position of energy regulators in Europe? Are the more independent, powerful, and fair now than they were a decade ago?

- Regulatory authorities in the EU, for energy and for other sectors, is a process. The 3rd package added further to the strengthening of that process by further specifying both their independence and their duties and mandates. It is also a learning process, including the creation of ACER which would also help to develop inter-NRA cooperation in cross-border issues.


If there are enough formal guarantees for the independence of the energy regulatory authority, what should be the “de facto” requirements for independence? Is it possible to have a fully independent energy regulator?

- Perception of independent decision making is key. That means internal integrity and external trust in decision-making processes, without any interference from political and business interests. NRAs (national regulatory authorities) should not lock up themselves in ivory towers, but be very much aware of the overall societal and political climate they are working in.


Bulgaria has to unbundle the national transmission company. The selected model is “independent transmission operator”, which does not include ownership unbundling. What are the pros and cons for such a decision?

- Ownership unbundling is by far the preferred option due to full real and perceived independence of the TSO. TSOs will also have the possibility to develop as a real business servicing market and consumer needs in an effective and efficient way, without being hindered by specific commercial interests from its mother company.

The ITO-model is a very detailed and complicated system, with lots of regulatory and administrative burdens, leading de facto to nothing more or less the legal unbundling of the 2-nd Directive, but in a much more complicated way. It’s a nightmare for the NRA and for the TSO.


More and more markets in the EU go through “market coupling”. In the case of Bulgaria and Romania, where different renewable energy support schemes exist (feed-in tariffs vs. green certificates trading) what should be done in order to join the two national markets successfully? What is the future of the EU renewable energy targets?

- Market coupling as introduced in the NW-EU power market will only make sense if there is congestion on the interconnection capacities and if the two markets have a power exchange in a liquid spot market.
So far cross-border RES-markets are not existing within the EU due to the different national support systems. Especially for the post 2020 period this needs to be changed if RES in power is to grow further. National targets should be abandoned and a real RES market with for instance tradeable certificates needs to be implemented.


Shale gas exploration and production is about to begin in Bulgaria shortly. In the same time environmentalists claim that this would be a disaster. What is the attitude towards shale gas in the Netherlands and could you suggest a pros-and-cons model for decision on this matter?

- The Netherlands do also have interesting shale gas prospects, but licensing for exploration is stalled due to the growing concerns and perceptions on its environmental risks.

_____________

Jacques de Jong has a long experience in government energy policy making. Born in The Hague in 1947 and after completing the international economics in Erasmus University Rotterdam, he joined the foreign economic relations department of the ministry of economic affairs in 1971. At the time of the oil crisis he was transferred to the oil directorate in the energy department, where his main duties were directed to international oil and energy discussions. He participated in many international energy discussions, notably in the negotiations that resulted in the IEA-Treaty and in consumer/producer dialogues. In 1980 Mr. de Jong became deputy director for Electricity, responsible for nuclear energy policies and coal. In that period he held several international positions as (vice-) chairman in EU- and OECD fora.

During the 1990’s he was account manager for the energy utility sector and heavily involved in the liberalisation process. He was instrumental in drafting Dutch policy on energy liberalisation and the Electricity and Gas Acts. In 1998 he was appointed director of the new Dutch Office for Energy Regulation, DTe. He was also active in European affairs, as a co-founder of the CEER (Council of European Energy Regulators) and as a co-chairman of its electricity working group, heavily involved in the Florence and Madrid Fora. From 2003 mr. de Jong was continuing in non-executive functions, advising the Dutch government on energy policy issues and as a senior fellow associated with the CIEP, the Clingendael International Energy Program. Mr. De Jong retired in may 2010, but continues on a part-time basis with his work for CIEP. He has published a number of papers etc. since then.


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