Peter Lachinger from Austrian Power Grid (APG) speaks with Ben Naylor about working for a national transmission system operator in a changing European electricity market
Can you tell me a little about the legal team at APG and your role within it?
APG is Austria’s electricity transmission system operator. Our legal department consists of 10 people, mostly from a legal background. I started working for the company as a counsel in 2012. Before that, I was a barrister and at that time I wasn’t really involved in energy or power law, I was more a generalist. Now, my main topics of law are public procurement and European energy law, so I work on a lot of international projects.
What projects are you working on at the moment?
APG’s mother company is VERBUND, which is 51% owned by the Republic of Austria, so we have to comply with the provisions of the public procurement code. In most of my day-to-day business, I deal with questions on public procurement procedures.
My second area of work is APG’s participation in European market integration projects. There is a lot of EU legislation about different subjects – the operation of electricity but also the electricity market. It is an ongoing process for EU countries to develop standardised rules which partly have to be implemented into national law and partly are directly applicable. I am working on transforming technical requirements into legal acts as well as on assessing their consequences for APG and, therefore, for Austria.
What is your role in implementing the European Union’s (EU) energy package?
We are working on developing and implementing the EU network codes, there will be between 15 and 20 in total. The first of them are entering into force in summer this year and there are very short deadlines for implementation. We are collaborating with our technical experts to implement the guidelines.
I am also a counsel within ENTSO-E (European Network of Transmission System Operators for Electricity) where most of Europe’s transmission system operators are working together to develop these rules.
What are your main considerations when analysing EU regulation in an Austrian context?
Most of the regulation is directly applicable, but we have to assess the consequences for our system and our country.
Are there any EU rules or regulations that have been challenging to implement in Austria?
EU legislation on transparency and prevention of market abuse (Transparency Regulation and REMIT) has been difficult to implement. We are required to provide an EU-wide platform with sophisticated data. This is quite complicated to implement. That’s more for technical reasons and the legislation does not always precisely define what data is covered.
What type of data has to be reported?
It’s our system development data and we also have to inform about insider information. That’s one of the targets of this regulation – that insider information has to be published to stop market abuse.
Looking at the other side of your work, what public procurement processes are you typically involved in with?
There is a threshold in Austrian law of €100,000 and if this value is exceeded in one purchase order, we have to fulfil the provisions of the public procurement code. In a company like ours, there are many purchase orders that exceed the threshold. We have tenders for assets for our grid, like transformers, but, if the thresholds are exceeded, we also need to mandate external lawyers through the provisions of the public procurement code. The law defines very few exemptions.
What are the exemptions?
If there is only one specialist company that is able to provide a service or product, we do not have to follow public procurement procedures. In these circumstances, we have to demonstrate the supplier’s uniqueness.
When would you use external counsel?
We handle most matters internally but for our largest projects, related to system development, where we require environmental impact assessments, for example, we always require highly experienced and technically specialised external counsel. Also, there are highly complex case procedures, in the field of merger control or competition law, that call for external expertise.
In some cases, it is also mandatory under Austrian law to use external counsel. If we have law suits with a high value in litigation, we need to be represented by a barrister.
How do you select your local counsel?
My selection is always based on the counsel’s expertise and their familiarity with the special sphere of our company and any relevant topics. In terms of the process, as required under law, we carry out competitive tendering procedures to choose our partners. Whenever the contract value exceeds €414,000, we need to publish an announcement with the European Commission and everybody in Europe can apply for the tender. If the value of the contract is between €100,000 and €414,000, we can choose three law firms to offer us their services.
What issues do you often face when undertaking energy infrastructure public procurement projects?
As you can probably imagine, with our projects it takes quite a long time to complete such formal procedures like tendering according to law. For a more complicated procedure, it takes a couple of months. If it’s an EU-wide announcement, I would say at least six. You always have to calculate a long time ahead, to schedule the timing, for when you want to receive an order of, for example, a transformer for a substation. Sometimes it’s very urgent that we need something, some product, and if certain thresholds are exceeded we cannot say, ok, they did good work for us in the last year we will use this company, we have to use this tendering procedure. A lot of scheduling and planning work is always needed due to obligations of the public procurement law.
Have you had legal challenges from bidders feeling they were unfairly treated in a tender process?
Austrian law allows any bidder who is not awarded the tender to appeal at the administrative court, which decides whether or not the contractor has successfully fulfilled the public procurement requirements. Fortunately, none of my projects has come to a law suit yet.
You mentioned some of APGs biggest projects are related to developing the transmission system. Is this an area which is creating work for you at the moment?
Yes. Recent trends in the European energy market and new forms of power generation require us to make major investments in our assets.
Are there any legal obstacles that consistently arise when you are working on these large infrastructure projects?
Environmental impact assessment procedures are always difficult to handle because of the duration of the procedure. There is a new trans-European regulation on energy infrastructure that should help to facilitate the process in future but, at present, Austrian legislation doesn’t define any sanctions if procedures take longer than provided by law.
Currently under Austrian law, a first instance decision on the environmental impact assessment has to be made within nine months. But in our largest recent project in Salzburg, there has been no decision after 36 months. There are no consequences under law when the deadline is not met. It’s a big problem. It’s a question of cost, but also a threat to the security of supply of Austria. It is very important to accelerate this procedure in the future.
Are there plans to amend Austrian law to address this issue?
There is an ongoing process to implement trans-European regulation into national law and we hope we can accelerate the procedure by establishing sanctions if deadlines are exceeded.
Has the increasing use of renewable energy in Europe had an impact on APG?
The more renewable energy is generated and put into our system, the higher the need for investments in our assets. A strong grid infrastructure is the basis for Austria’s security of supply.
What are the main challenges facing APG in the current electricity market?
I would say the system development due to the increasing amount of renewable energy being generated in Europe is one of the main issues as it is our task, under law, to maintain Austria’s electrical power supply.
Also, we are on our way to a single European energy market, which requires close cooperation with our European partners in order to further optimise the power supply system across borders.
Austrian Power Grid
Peter Lachinger studied law at the University of Salzburg and was admitted to the bar in 2010. After working at a law firm in Salzburg, he joined Austrian Power Grid, Austria s transmission system operator for electricity, as legal counsel in 2012. His main fields of activity are Austrian and European public procurement law (day-to-day legal support and project leadership of competitive tendering procedures by Austrian Power Grid as sectoral contracting entity; and, internal interface – compliance and procurement) as well as participation in different legal work-streams supporting international projects regarding European market integration in the field of electricity.