Domestic constraints take many shapes: bypassing regulatory patchwork by Agency creation

Can European Administrative Networks (EANs) foster policy convergence in the EU? This paper addresses this question by examining the evolution of a European Regulatory Network (the European Regulatory Group for Electricity and Gas) into a European Agency (the Agency for the Cooperation of Energy Regulators). European Regulatory Networks were a type of EAN gathering sectoral economic regulators, created by the European Commission in the early 2000s. Some observers heralded ERNs as instruments of harmonised implementation of EU law in the Member States. Others were sceptical, noting that ERNs did not have any powers. This paper argues that both arguments overlook two key points: ERNs could not foster harmonisation because 1) coordination was entirely voluntary and 2) not all regulators had the same powers. Contributors often refer to the ‘patchwork’ of powers of national regulators to motivate the creation of European Agencies, but rarely provide concrete evidence. This paper investigates the regulatory powers held by European energy regulators in the electricity sector using survey data collected in 2011. The survey shows that regulators’ powers differed considerably, with some being fully empowered and others having only advisory powers. The gap is particularly pronounced in enforcement, investment planning and cross-border issues, i.e. the competences held by ACER. Supplemented by interview data, the paper argues that Agencies obviate the challenges faced by EANs by mandating collaboration (or let the Commission decide) and defining binding powers on issues concerning market integration. This means that the creation of Agencies furthers market integration while, at least temporarily, accommodating national diversity of regulatory powers, thereby splitting the supranational from the national level of regulatory policy.