The Challenge

The Danish Government wished to examine the issue of regulatory independence of the Danish Energy Regulatory Authority (DERA). The Danish energy regulatory framework exhibited several issues that required addressing, with a perception the current set-up may be ineffective. For example, responsibilities and handovers were unclear and poorly documented. There was also little ownership of the effect of regulation. The government wanted consultancy support to address these concerns.

Our Solution

To address these and other issues, the Government wished to understand good practice for a typical European energy sector regulator in terms of how regulation was developed, handled and monitored, so that this could be, where applicable, applied to the Danish regime. IPA supported Implement Consulting Group in its international review of best practice approaches that could be applied to the Danish energy regulatory regime.

First, IPA assisted with the development of criteria to assess the independence of regulatory authorities. Then, drawing upon its previous energy regulatory work in the UK and Ireland, IPA assessed the independence and the operation of the Office of Gas and Electricity Market (Ofgem) and the Commission for Energy Regulation (CER) under the following criteria:

  • Structure and governance;
  • Independence;
  • Organisation and competences;
  • Quality and effectiveness of the regulation.

Finally, IPA supported arranged visits with Implement and Ofgem, the Department of Energy and Climate Change (DECC), and Centrica, to allow them to gain a better understanding of the practicalities of regulation from the regulator’s, policymaker’s and regulated utility’s perspectives. The results of IPA’s work were disseminated at a presentation to the two Ministries in Copenhagen. The Government re-organised the Regulator in alignment with the recommendations identified through this project.