TELP#001: Dr. Wolfgang Urbantschitsch, E-Control Austria, Executive Director

Hello and welcome to the Energy Law Podcast where we delve into the fascinating world of energy law and policy. My name is Mark Spomgart. As an expert in energy law, I'm going to guide you through the discussions with my guests from academia and practice. Before we dive in, I invite you to connect with me on LinkedIn for further engagement and to stay updated on the latest episodes. In today's episode, I'm thrilled to have Dr. Wolfgang O'Bunchich, Executive Director of E-Control Austria as our special guest. Among other topics, we will be exploring the role of National Regulatory Authorities in Energy Markets. According to the Electricity Market Directive and the Gas Market Directive, each member state shall designate a single regulatory authority at national level. Further, member states shall guarantee the independence of the regulatory authority and shall ensure that it exercises its powers impartially and transparently. Key requirements that sometimes even challenge the member states constitutional framework. Lots of fun with this episode. From what made you Director of such an important institution? Thank you very much for this invitation. Yeah, I studied law in Gratz at the University of Gratz in Sturie and Austria. Also in Germany, by the way, in Regensburg, I was one of the first Austrian students in the framework of the Erasmus program. Later on, I started working as a research assistant at the University of Gratz Institute for Constitutional Law and Administrative Law. Then I had the opportunity to gain some experience at the European level. So I did an internship at the Legal Service of the European Parliament, at the European Court of Justice. I also was working for a couple of months for an Austrian MEP at the European Parliament. Then I went back to university. This time it was the College of European Bruges, where I studied European at that time, it was called European Community Law. Coming back to Austria, or then it was the big decision staying in Brussels at the European institutions or going back to Austria. I got a job offer at the Austrian Constitutional Court, which was a great experience to work for cases in all kinds of constitutional law cases. At the Constitutional Court, I had first also cases for telecommunications law. This was actually my next step. I went to the telecom regulator in Austria, which was founded a couple of months before, and gained my first working experience in the regulatory field. Later on, when e-control was founded, I became head of legal of e-control, the National regulatory authority for energy in Austria. Since then, I'm in this field of energy law. And then, at one point, also becoming the director of e-control itself? Yes, that was back in 2016, and I was appointed for the first time for a term of five years. I was reappointed in 21, so I have another two and a half years to go. As executive director of e-control, together with my colleague, we are responsible for, basically, more or less, for the majority of the decision at e-control as National regulatory authority. And it seems also that your personal background reflects a little bit what is e-control itself, because you do have a strong national training, but you also worked and studied outside of Austria. You have a lot of experience on the European level. E-control is also not so much only a national institution. It is also very much regulated by EU law. Can you explain a little bit more what is e-control, and how do you see e-control as a national and/or European? Yes, that's right. E-control, even though, of course, it's called National Regulatory Authority. Our decisions are, of course, influenced by European Union law. And I would go even further by saying that e-control is not only a purely national regulatory authority, a national authority, but also a European authority, because e-control is also part of ASA, of the European agency for the cooperation of European energy regulators. There is, of course, the director of ASA was taking the decisions, but he needs also the cooperation with the so-called Board of Regulators, and the Board of Regulators consists of representatives of the National Regulatory Authority. So I'm, for instance, member, the Austrian member of the Board of Regulators. And there you can see that we have, in a way, even more than a cooperation of national and European agencies in this field of energy. And, of course, we are, as I said before, strongly influenced by European Union law, because energy law is European law, is national law. And in a way, what we see now is, yeah, maybe even at the end of the day, kind of a melting pot of authorities, of European authorities. So e-control is a regulatory authority, but maybe could you explain a little bit also to our listeners what does a regulatory authority do? So what is the notion of the definition, the role, the task of a regulator in the energy market? A regulatory authority in this field of energy, but also in other businesses, such as in the telecom business or railroads and so on, is kind of a referee in this competitive field, for instance, in the energy field. So it was decided when these markets became competitive markets, for instance, for energy, that because of the fact in most of the states, the states hold chairs of energy utilities, that the national states or that the member states need neutral regulatory authorities, which have nothing to do with the national energy utilities. So this is why these national regulatory authorities were founded and that they were installed as independent national authorities. And basically, we are in a first step, we are responsible for the grid operators. The grid operators are still monopolies and therefore you need a regulation for these grid operators. So the grid operators would be the companies that operate the electricity and gas grid. That's right. That's right. So we are always talking of electricity and gas grids. But in the meanwhile, we also have quite some monitoring roles also when it comes to the competitive markets. So when you think of remit, for instance, that's a regulation for market in checkered and transparency. There we also have monitoring roles and we also can intervene in case there is an infringement of legal provisions, for instance, but our main duty, at least at the beginning, is to regulate the energy grids. But in the meanwhile, we have many, many other tasks already mentioned the monitoring of the markets, but we also have duties when it comes to, for instance, the security of supply, renewal energies and so on. So we have quite a big basket of tasks to do. And mainly we have to implement, of course, the Aki communitaire regarding energy in the national states. And yeah, that's a lot of tasks. So to summarize, e-control seems to be one of the main actors in energy law that is especially true for Austria, but also beyond, because there's also influence through Acer on the European level, for example, how would you define energy law for you? Let me just say yes. So we are, we are, I would really say the main authority when it comes to energy law. And the difference between a, let's say, normal authority and a regulatory authority is also out to you to to make the law. So we do not only implement certain legal provisions, but we also, we also create new acts and create new rules in order to make sure that we have competitive market. And coming back to your question, what is energy law? Energy law is, is a mixture of all different kind of laws. Of course, energy laws strongly influenced by European Union law. And in the meantime, we have many, many provisions at European level, which are, which are provisions regulating in a way, are setting the frame for the energy markets. So with a lot of regulations and directives, but then we have national law, of course, as well, in order to transpose this international law. And this is in most of the cases, I would say, it's administrative law, it's influenced by constitutional law. And what is also very important, because usually you have contracts, of course, between market participants. We also have quite many provisions which are civil law provisions. So as we can see, energy law is really very broad and this is why our people here working here, all lawyers, they have different backgrounds coming from civil law, administrative law, European law and so on. But this is what it makes it really interesting. What are the challenges for energy law and what are the challenges for e-control? Is there overlap in those two? I think in general, working in this field, the challenge is that and what is so interesting is that we have people working here with so many different backgrounds. So we have the legal background, with the technical, economical background and that makes it so interesting to work in this field of energy law and the challenges for us as a lawyer to explain to explain the legal framework to other colleagues who do not have this legal background. And on the other hand, we have to understand technicians, we have to understand the economy. So that's the challenge for working here together. When it comes to our challenges for the future, of course the main challenge is to transform this energy system to leave this system which is based on fossil fuels and to go to sustainable green energy system and that's our main challenge in the future. And so do you see e-control well-equipped for this? Oh yes, I think so because we have very good people working here with different backgrounds, people who speak the language of other colleagues in that sense. And I think we have quite good legal provisions to transform the system but nevertheless, this is transformation process which means we constantly have to adapt our rules, our provisions. We also need the legislator to give us new rules, new tools also to work on this transformation in order to meet the goals. As I said, the main goal currently is of course the transformation of the system to make a sustainable system but at the same moment of course we have to guarantee the security of supply and of course at an affordable price. So we need a competitive system because the competition is the main tool also to guarantee fair prices. So somebody working for e-control, what skills do they need to bring with them besides this capacity to understand their colleagues? Well the skills from a legal point of view the skill is also to have the capability to be involved in other legal systems I think. So not only national legal systems but also at international level. So what we also need is of course people who have international experience because what we're doing at European level is working together with other national regulatory authorities. This means we need people who can speak also other languages of course and have had the chance maybe in the past to work at international level because here for us it's extremely important to understand each other also at this level. I would like to look at a little bit also into the judgments, into a recent judgment by the European Court of Justice, the case that was decided on the second September of 2021. There the European Court of Justice decided that German national regulatory authority, the Bundesnet second to work is not independent enough from the German legislator. So what are the consequences for e-control? Does this judgment also have consequences for Austria? Well this is a very interesting case and of course we also read this judgment with great interest and of course in the next step we also evaluated whether this judgment has impact on Austria. I should say that we the institutional setup is different. So e-control is a the notion, the German notion is unstart öffentlich in rights so it's established by law. It's a fully independent institution and of course we as a national authority have to follow not only European Union law but also national law but in our case we do not have regulations, which come from the federal government and where we have to follow these regulations. So that's the difference to Germany because in Germany you have the various regulations from the federal government and pinnets are has to follow these regulations. We only have law which was established and decided on by by all parliament. So that's the main difference and as I said also the regulatory setup or the institutional setup is is quite different but nevertheless there might be consequences because the European Court of Justice stated that that also a legal act which is binding or an act which is binding the national regulatory authority is under certain circumstances not possible according to the European Union law and what happened is that for instance our ministry and also we evaluated our energy law and came to the conclusion that there might be some provisions which are too much detailed and binding the national regulatory authority and that might be changed in future. So there is to conclude there is a certain impact of this judgment of the European Court of Justice but nevertheless not in that sense as we could see in Germany and as far as I understand also the German legislator is currently working on this and recently I think a decision was taken that pinnets A now has a new legal framework in order to to work on this network terrorists. So do you think that also your colleagues from Germany take e-control as an example? I don't know whether we are we can be an example for for other member states because we all know that the constitutional frameworks in the member states is is always different but I think Austria or e-control is quite the good example when it comes to to the independence of a national regulatory authority our provisions for the institutional setup and also for the work what we are doing is I think these provisions are very good I personally can take based on on the law of course always on the law independent decisions there is no influence by politicians or political stakeholders so when it comes to these frameworks I would say Austria compared to maybe some other not German but some other regulatory authorities we are a good example and we are very independent. In Austria as you said in the beginning this period of being a director at e-control is limited to an election that can only happen twice. Yes so only one reappointment is possible when it comes to the to the regulator the only thing is that the member states can choose so there can be in some member states we have only one term but maybe for a longer period such as seven or up to 10 years but if reappointment is possible then it's only one reappointment which is possible but that's it so in our case we have five years and then another term of five years but as far as I remember this goes back to the directive where it is stated that only one reappointment is possible. So looking at the question of independence of a national regulatory authority one may conclude that e-control is already quite independent and that there may not be the necessity to make big changes after the judgment of the second September of 2021. I would even say e-control is fully independent. Fully independent. When it comes to the terrorist setting there might be some provisions where we think of maybe or where the legislator thinks of changing these provisions in the light of this judgment of the court of justice. So maybe that is also a good point when we just need to explain that e-control kind of has two lines let's say one is the independent one that is executing the obligations coming also from the European level and then there's also a second part in e-control that is a little bit more influenced by politics let's say. Yes I mean as a national regulator we have to do our our job based on European Union law and whatever is there in the directives and the regulation which is which is transferred to the national regulator we have to do this job. So this is I would say 95% of our job so the regulatory duties such as regulating the networks, market monitoring and so on. We have also some duties these are minor parts of our work which we do also for our ministry and in these small parts we are not fully independent so in these parts we are doing the job for the ministry of course there is a separation of of these duties and what is also important to note is that normally for our work the the customers pay so the network customers they pay and they found the budget of e-control but where we do this this job for our ministry such as security of supply issues for instance then this is paid by the state budget but this is only a very small part of our work and therefore also of our budget but this part of our work became extremely important last year because during the gas crisis of course this duty of e-control to provide information to our ministry in case of emergency measures this became extremely important and it shows that it is also very good to have such an authority which has lots of information and to to give the basis and to provide the basis for emergency decisions so how politically is e-control itself e-control is not political at all of course our decisions when it comes to the network terrorists for instance or the monitoring of I don't know new generators windmills water power plants and so on has certain let's say is the basis for further political decisions but we are not political at all but nevertheless many people and the public has interest in our work and therefore we even more looked at that we are absolutely neutral when it comes to political parties and political interests in general so we are not we are not political at all with this work which I mentioned before for a security of supply even there we do not have a political role but of course we know that what we are saying and information we are providing to the political stateholders they are important for them for further political decisions because sometimes it looked also in these past years citizens want energy regulators to be more political in some way to to influence prices etc but somehow this influence is limited if you only refer to technical standards technical methodologies etc we are not part of the political landscape and we do not definitely do not take political decisions but what we know is of course that providing information about the energy markets can lead to political decisions which is which is fine but we are not the one who represent the people yeah we are just an authority at the end of the day and there is a clear separation of duties and it's up to the political stakeholders to the parliament to get the governments to take the political decisions and I think this is this is very important to know also as represented representative of a national authority I'm not a political stakeholder but of course we are we receive many questions and we we are answering to these questions whoever is asking us they they all getting the same answers and then it's up to the political stakeholders to to draw data conclusions and to take the political decision since Russia's invasion of Ukraine we have a totally different geopolitical landscape we had or maybe still have at least the gas price crisis how did and how is e-control reacting to this we we have based on our national law we have a certain role in first of all providing information to our government when it comes to security of supply and according to a special act in Austria we also have to make preparations in case emergency measures have to be taken so this is what we did also in the past so that's that's basically that's that's our role of course in the past as long as the the gas flows and everything is fine this role was not a very important role in practice let's say last year of course this became extremely important and and therefore we have very close cooperation with our ministry and with our government in this respect and what changed last year was also that the public interest was extremely big when it comes to information about security of supply and I have to say that quite well most of the energy companies they did not communicate at all and and therefore we were asked even more often and we gave answers also when journalists came and and were asking questions to us and and especially this last year was was in a way a game-change of for us that the public interest was was extremely big regarding the work of of e-control and I think we played also an important role in in giving information to the public what's happening at the moment what's the status of of the supply and what what is done in order to guarantee the supply when you look at academic papers for example there is a tendency where you see that some scholars are trying to move from the traditional approach of energy regulation with its three goals of affordability sustainability availability to a more general approach called energy justice that is kind of focusing especially on the needs of also vulnerable consumers do you see this somehow also reflected in e-control in e-control daily work yes since the price is also high this this topic became more and more important and we tried to support this or to achieve this goal by giving even more information to the people and what we also have is is within e-control the possibility that people which are which have problems with their energy provider can can go to and can come to e-control and we try to settle these disputes this is a job we have since several years but of course last year since the prices were so high and also this year this job has become even more important the the question of vulnerable customers and and supporting them is also an important topic for us but of course it's it's something which has to be or let's say these questions have to be answered mainly by political stakeholders and political decisions because at the end of the day we are talking about support schemes for special group of customers but in this context we also helping the political stakeholders to take the decisions because we can provide them with information how many people are affected what are the prices what would be the impacts of certain support scheme as in Germany also we in Austria have special support schemes for electricity and and we were involved when the decision was taken how to organize this support scheme because all these supports have of course a certain impact on the competition of the markets and and therefore we were involved and now for instance together with our general competition authority we also monitor in the effects of not only these supports but also of these energy crisis and in case there is there infringements of maybe cartel law or other provisions we of course will intervene inside of Austria or do you mean also in regards to other member states that other member states are introducing support schemes that may be bad for Austrian companies for example well these task force which we founded together with the competition authority is is only for the Austrian markets but of course there are in other member states support schemes which might affect other the markets are let's say the internal market but this is of course and would be also a question for the European competition for the European Commission this is a question of state aids and that's that's a task of the European Commission but what we see is that certain decisions of other member states can and have an effect also negative effect for us namely for instance in Germany it is so called gas Speicher Umlage can have an negative effect for the Austrian markets because the gas Speicher Umlage has also to be paid by when gas is exported to Austria and this has an effect on the trade between Austria and Germany also you do see for example in Germany the discussion to introduce a lower price for industry and lower electricity price for industry that may support German industry, German companies, but that may be a disadvantage for energy intensive companies in Austria. Yeah, absolutely. These are also other kind of decisions which might have an negative effect on the markets. But in general, I mean, when it comes to the to the competencies of the authorities, this is something what we can also we can look at it, we can we can talk about it. But at the end of the day, in this case, it's up to the European Commission to intervene. Or the Austrian government to file an infringement procedure as they did, for example, the highway toll. Germany tried to introduce. Of course, it's also up to the governments and the member states to find ways at the political level, but also legal ways to to be against it. Yes, infringement procedures initiated by other member states is such a tool. But as far as I know, this is not happening very often. E-control is responsible for the regulation of grid operators. We said that E-control is responsible for the regulation of electricity and gas operators. And then we also see that there's a distinction between distribution grid operators and transmission grid operators. Can you elaborate on this? Yes, the distinction is that the so-called distribution system operators, they're the ones they really bring the energy to the households. So these are the smaller networks. Whereas the transmission system operators, they transport the electricity or the gas for several hundred kilometers. They are these really high voltage power lines. And this is the distinction between these two grid operators. At the end of the day, they are both regulated. And at the end of the day, we need these two system operators in order to bring the energy to the to the customers, especially the big power lines. We need them because now, for instance, the windmills in Germany, also in Austria, they are placed where we do not have the big industrial consumers. And therefore we have to bring and transport the energy from these places where it is produced to hundred kilometers away, maybe also cross-bought lines to the big consumers. And this is why we need this grid infrastructure. And our job is to have the regulatory basis and to decide on the regulatory basis that they can invest into the grid infrastructure. This is, by the way, was just done a couple of days ago in Austria. We decided on the basis for the next five years for the distribution system operators. So now they have a good legal basis and economical basis to invest. The role of hydrogen, especially green hydrogen, is more and more discussed on the national and also the European level. Hydrogen is seen as this key lever to achieve both climate neutrality and energy sovereignty, energy independence from the import of energy into the European Union. What is changing in Austria in regard to hydrogen? Yes, hydrogen and namely green hydrogen will play an important role. It's one part of the energy system. Green hydrogen meaning green hydrogen means hydrogen produced based on green energy electricity. Green solar. Green solar. But what is important is that this green hydrogen is mainly important for industrial consumers. So at least in Austria, I know about the discussion in Germany, but at least in Austria, we will not heat with green hydrogen in future. So of course we need, we still need natural gas for heating the households. But the goal is of course to come away from natural gas for heating the households and to substitute it with other kind of forms of heating systems, district heating and so on. But we will not have the hydrogen coming into the households. So the hydrogen will be used for industrial use only and for heating we will have other systems such as heat pumps and so on. And then for the future you will also see that e-control will be responsible for electricity, gas and pure hydrogen grids. Yes, I think so. We just right now we have a political discussion on this. I think it's quite obvious that the national regulatory authority responsible for the gas pipeline system will also in future be responsible as regulatory authority for the hydrochained system. But nevertheless, hydrogen will be regulated in a different way I think. But we have to make sure is that there is also not a payment from the gas infrastructure to the hydrogen infrastructure because we have, as I said before, other groups which can can work with hydrogen. So it's not the hundreds thousands of households which are now heating with natural gas and in future using this hydrogen. And therefore we have to make sure as it will be stated in the carbonization package that there is no payment from the gas infrastructure directly to the hydrogen infrastructure. What we heard today is what is the role of e-control. We were talking with Dr. Wolfgang O'Banchich. There are one of the two directors of e-control. E-control, the national regulatory authority of Austria having a very important role in the regulation of electricity, gas and maybe also the future pure hydrogen grids. Thank you very much that you that you've been here. Thank you very much. The first season of the Energy Law podcast was made possible with funds of the Dutch starter grant program awarded by Tilburg University for my project. Transformation processes in European and national economic law, energy law is law of socio-technical change. A special thanks for production support, go south to Mac or on Dough from Irgenwasmertrecht.