Electricity without borders: a plan to make the internal market work. Bruegel Blueprint Series 20, 5 September 2013

The most straightforward European single energy market design would entail a European system operator regulated by a single European regulator. This would ensure the predictable development of rules for the entire EU, significantly reducing regulatory uncertainty for electricity sector investments. But such a first-best market design is unlikely to be politically realistic in the European context for three reasons. First, the necessary changes compared to the current situation are substantial and would produce significant redistributive effects. Second, a European solution would deprive member states of the ability to manage their energy systems nationally. And third, a single European solution might fall short of being well-tailored to consumers’ preferences, which differ substantially across the EU. To nevertheless reap significant benefits from an integrated European electricity market, we propose the following blueprint: First, we suggest adding a European system-management layer to complement national operation centres and help them to better exchange information about the status of the system, expected changes and planned modifications. The ultimate aim should be to transfer the day-to-day responsibility for the safe and economic operation of the system to the European control centre. To further increase efficiency, electricity prices should be allowed to differ between all network points between and within countries. This would enable throughput of electricity through national and international lines to be safely increased without any major investments in infrastructure. Second, to ensure the consistency of national network plans and to ensure that they contribute to providing the infrastructure for a functioning single market, the role of the European ten year network development plan (TYNDP) needs to be upgraded by obliging national regulators to only approve projects planned at European level unless they can prove that deviations are beneficial. This boosted role of the TYNDP would need to be underpinned by resolving the issues of conflicting interests and information asymmetry. Therefore, the network planning process should be opened to all affected stakeholders (generators, network owners and operators, consumers, residents and others) and enable the European Agency for the Cooperation of Energy Regulators (ACER) to act as a welfare-maximising referee. An ultimate political decision by the European Parliament on the entire plan will open a negotiation process around selecting alternatives and agreeing compensation. This ensures that all stakeholders have an interest in guaranteeing a certain degree of balance of interest in the earlier stages. In fact, transparent planning, early stakeholder involvement and democratic legitimisation are well suited for minimising as much as possible local opposition to new lines. Third, sharing the cost of network investments in Europe is a critical issue. One reason is that so far even the most sophisticated models have been unable to identify the individual long-term net benefit in an uncertain environment. A workable compromise to finance new network investments would consist of three components: (i) all easily attributable cost should be levied on the responsible party; (ii) all network users that sit at nodes that are expected to receive more imports through a line extension should be obliged to pay a share of the line extension cost through their network charges; (iii) the rest of the cost is socialised to all consumers. Such a cost-distribution scheme will involve some intra-European redistribution from the well-developed countries (infrastructure-wise) to those that are catching up. However, such a scheme would perform this redistribution in a much more efficient way than the Connecting Europe Facility’s ad-hoc disbursements to politically chosen projects, because it would provide the infrastructure that is really needed.

The EU-Ukraine Action Plan on Visa Liberalisation: an assessment of Ukraine's readiness. OSW Commentary No. 45, 2011-01-17

The Action Plan on visas adopted during the recent EU-Ukraine summit is a success for Ukraine. It is the first time that Kyiv has succeeded in obtaining a definition of the conditions and criteria whose fulfilment will enable Ukraine to apply for the lifting of EU visas for its citizens. Ukraine's strong point has been its political will; the lifting of this visa regime has been a priority for all Ukrainian governments since 2005. Since Viktor Yanukovych became president, Ukraine has adopted or prepared key legal acts that brought it nearer to European standards in the area of border and migration management. One of Kyiv's strengths is also its relatively well reformed and efficiently managed border service. Moreover, illegal transit migration via Ukraine is decreasing, and fewer Ukrainians are trying to enter or stay in the EU illegally. Also, Kyiv has efficiently implemented the EU-Ukraine readmission agreement. The hardest task for Ukraine will be to meet the EU’s expectations concerning values, the condition of Ukrainian democracy, and the rule of law. Corruption remains the main barrier to Ukraine's development and modernisation; the courts are weak and the judicial system inefficient. The main undertaking of the new migration service that is being formed at the moment will be to create a civil system of registration, monitoring and regulating the stays of foreign nationals. This may prove difficult, as the supervisory authority (the Ministry of the Interior) remains an unreformed, police-type bureaucratic institution. Ukraine is lagging behind countries such as Russia, Belarus and Moldova when it comes to the introduction of biometric documents. Another problem is the lack of an electronic information system on foreign nationals, visas and border crossings which would be accessible to all the relevant services and institutions. For these reasons, the complete abolition of visas seems to be a longterm perspective, especially considering that many EU countries, which themselves are faced with the problem of migrants’ integration, are rather sceptical about the further liberalisation of movement of people with their eastern neighbours. In the immediate future, if Ukraine meets some of the requirements set by the EU, it will be able to seek the extension of the visa facilitations that have been in operation since 2008.