All-Island Market

Single Market Committee

The Electricity Regulation (Amendment) Single Electricity Market Act 2007 established a Single Electricity Market Committee.  This helps the framework for the performance of functions of the CER (now the CRU) relating to the single market. It provided for information sharing between various parties to the SEM to facilitate the effective operation of the market.

• The Act provided objectives of the Minister and the CER in relation to matters which affect or are likely to affect the single electricity market.
• It provided a licensing framework for the establishment of SEM market operators to carry out trading and settlement functions of the market.
• It established a licence modification process to ensure both existing and new licenses can be traded in the new market.
• It established the terms and conditions of appointment of the SEM committee and provided how it would transact with the business.

The Electricity Regulation Act was amended to provide for the Single Electricity Markey Committee.  This enables effective decision-making for the market and sets out the performance of the functions of the Commission relating to the single electricity market.

Committee Functions

The SEM committee deals with matters having a material impact on the operation of the single electricity market. There is provision for drawing up and publication and procedures and working arrangements in respect of the SEM.

The functions of the SEM in relation to the single market include

• establishment of the single electricity market together
• the procedures to be adopted for  giving effect to the market and
• making new regulations for trading in electricity on an all-Ireland basis.

This is to include trading and settlement codes.

All licensees are to make available all the electricity they generate for trading in the SEM threshold that applies in relation to different classes of license.

Objectives & Directions

The principle objectives and functions of the Minister Commission (CRU) and SEM committee in carrying out their function in relation to the single electricity market  include

• the need to protect in the first instance, the interests of the consumers of electricity on an all-Ireland basis
• to ensure all Ireland demands for electricity are met and
• coordinated regulation and
• the need to have transparent pricing.

There is provision for Ministerial policy directives.

A market operator may be established to carry out on a day-to-day basis the trading and settlement of the new market.  It will initially be jointly carried out by the transmission systems operators north and south.

EirGrid

The Electricity Regulation Amendment EirGrid Act 2008 expanded the function of EirGrid, the electricity transmission system operator, to include construction ownership and operation of an interconnector.  This was in subject to the grant of the relevant licence and authorization by the Commission for Energy Regulation.

It provided primary legislation for subsidiaries of EirGrid for an increase in the amount of money that EirGrid could provide and for its total capital expenditure.

The 2008 Act amended the Electricity Regulation Act in relation to interconnectors. EirGrid is authorized to construction the interconnector and to transport electricity across and maintain the interconnector.  The construction and operation are subject to license by the CER.

EirGrid may own an interconnector.  It may not be leased or disposed of without the consent of the Minister for Communications, Energy and Natural Resources with the approval of the Minister for Finance.  It is an offence to operate the interconnector, an interconnector without an appropriate licence.

EirGrid’s borrowings may not exceed maximum €750 million.  It may not incur capital expenditure without the approval of the Minister.  Total capital expenditure is not to exceed a sum specified by the Minister from time to time.

Carbon Allowances

Electricity Regulation Amendment Carbon Revenue Levy Act 2011 provided for the imposition of a carbon levy.  It inserted new parts in the Electricity Regulation Act 1999.  Under EU directives, electricity generators receive an annual allocation of carbon allowances for free.  If their emissions exceed this amount, they must purchase additional allowances.  If they are below this limit they may sell excess allowances.

The allowances are monetized by decisions by the SEM committee.  The SEM committee is made up of representatives of the CER (now the CRU), the Northern Ireland Authority for Utility Regulation, an independent chair, and a deputy chair.

Allocation of Allowances

Electricity generators receive allowances from the EPA and must participate in the single electricity market. They are subject to the levy.  Every three months, the levy is paid based on the amount of revenues received by generators through their participation in the SEM.

The amount is calculated based on the formula E x P where E is the total emissions and P is the average daily price of allowances over the period. E is to be calculated in accordance with the methodologies specified in the EU.  If the greenhouse gas emission trading regulations, P is calculated by the average of the daily prices and allowances in the levy period as published in an index which is determined by the commission.