Electricity Market Design: Unbalanced governance could affect proper working of EU DSO Entity

Today, the European Parliament’s ITRE committee voted on the Electricity Regulation and Directive which are the center pieces of the new electricity market design. EDSO welcomes many of the committee’s adopted provisions. Also, the new DSO Entity is a crucial stepping stone towards a future-proof European electricity market. However, by opting for an unbalanced representation in the body’s Board of Directors, MEPs have chosen an approach that will make future work in the Entity much more difficult.

Since the European Commission’s proposal, EDSO has wholeheartedly welcomed the setting up of the future DSO Entity. It is absolutely crucial that DSOs are able to forge strong cooperation and unite their voice via a strong industry representation. EDSO supports an industry approach that centres around the expertise of the many European DSOs, large and small, to meet the challenges of an increasingly flexible, decentralised and digitized energy system.

“We support the Parliament’s position to open the eligibility for membership to all DSOs across Europe, who are at different levels of unbundling” said Roberto Zangrandi, Secretary-General of EDSO for Smart Grids, the association of European leading electric power distributors, connecting between 70 and 80% of EU customers.

“However, what the Parliament fails to acknowledge is that giving equal weights to different DSO categories in the steering structure of the new Entity is grossly overlooking the realities of the European DSO landscape and actual market shares. Assigning one third of votes in the Board of Directors to distributors with less than 100.000 grid users that, by comparison, connect much fewer customers is not only gravely disproportionate but a political rather than a practical choice. Larger DSOs will ultimately be expected to provide the organisational capabilities, resources and technical expertise to ensure the effective running of the DSO Entity.”

EDSO supports a fair and proportional governance structure and voting system of the future Entity, whereby voting rights are assigned according to the number of DSOs’ customers. EDSO is therefore disappointed with the Parliament’s position as this impairs effective governance of the Entity.

In coping with the energy transition, DSOs’ core priority is to ensure safe and secure system operation, while also acting as key facilitator of energy markets and customers’ interactions. With this, EDSO supports the possibility to extend DSOs’ tools in using flexibility – including DSOs’ right to own and operate grid-connected storage installations for ensuring grid security as part of their networks – a view which is more accurately highlighted in the Council’s position.

Lastly, EDSO would like to caution against going for one-size-fits-all solutions to network tariffs and formats for data exchanges as this most certainly means inefficient and overlapping solutions. Details on network tariffs structures are most adequately defined by the national regulatory authorities in each Member State.

“We hope to see some of these changes in the upcoming Trilogue negotiations, that would truly enable DSOs to act as key facilitators of the energy transition. In this way, DSOs will be able to best serve their customers and empower both individual prosumers and energy communities”, concluded EDSO’s Secretary General.