The Energy Regulation and Markets Review

Fourth Edition
Editor David L Schwartz

Law Business Research

EDITOR’S PREFACE

Our fourth year of writing and publishing The Energy Regulation and Markets Review has been marked by significant infrastructure development needs, low oil and gas prices, financial and economic sustainability measures, and carbon reduction programmes.

As many of the world’s economies have begun to regain their financial footing following the global economic crisis, we are seeing a strong focus on infrastructure development. India is heavily engaged in providing economic incentives for the development of generation, transmission and distribution facilities, and many countries have acknowledged significant generation development needs to meet growing demand, including in Central Africa, Egypt, Uzbekistan, Indonesia and Malaysia. In the wake of Russia’s annexation of Crimea, Ukraine is seeking IMF financing assistance to invest in power sector infrastructure, and New Zealand is looking to build large transmission projects.

We have also seen continued efforts to promote sustainability and development of green energy resources. Denmark has created a climate council and new regulatory requirements to encourage development of green energy and to promote conservation. France has adopted an aggressive new energy efficiency and conservation law that includes a new ‘carbon’ tax. The United States Environmental Protection Agency has proposed a Clean Power Plan to limit CO2 emissions from existing generation facilities by 30 per cent by 2030. At the same time, however, a federal court of appeals in the United States has determined that the Federal Energy Regulatory Commission (FERC) had no authority to treat demand responsiveness (a form of conservation) with the same economic value as generation. Korea has been exploring eco-friendly sources of energy independence, and Brazil has encouraged renewable energy development to make up for reduced hydropower in recent years. Even China appears to be working to develop clean, safe and sustainable energy that reduces reliance on coal generation.

Oil and gas prices remain low, which appears to have allowed largely energydependent countries (such as Japan) to secure longer-term oil purchases, but appears to have had negative impacts on countries that largely rely upon oil export revenues, such as Russia, Angola and Iraq. Efforts to reduce reliance on nuclear generation continue to create demand for other energy sources in Germany, Japan and France.

We have seen significant energy sector regulatory reforms in many countries. In Spain and Portugal, there have been efforts to reduce the tariff deficit and promote financial and economic sustainability. Poland has worked to reform its regulatory system to encourage competition and development, while, at the same time, protecting stateowned companies from hostile takeovers. Romania has sought to encourage competition and reduce political interference with the regulatory process. The United States has continued to struggle with how to allocate transmission costs fairly and efficiently under FERC’s Order 1000.

Certain countries have continued their efforts to privatise state-owned companies. Turkey has engaged in an effort to privatise its generation facilities. Cyprus is continuing its efforts to privatise its state-owned utility company. India is privatising its coal mines, and Mexico is encouraging private oil companies to bid for exploration and production rights.

On the nuclear energy front, Turkey has moved forward in its efforts to develop its first nuclear generation facility. At the same time, Japan and Korea have sought to reduce their reliance on nuclear energy, and Germany has continued on its path to shut down all nuclear facilities, all in the wake of the 2011 events at the Fukishima facility in Japan.

I would like to thank all the authors for their thoughtful consideration of the myriad of interesting, yet challenging, issues that they have identified in their chapters in this fourth edition of The Energy Regulation and Markets Review.

David L Schwartz
Latham & Watkins LLP
Washington, DC
June 2015

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