text: OJ L 158, 14.6.2019, p 54. 2 OJ L, 2024/1789, 15.7.2024.

text: This estimate is based on internal projections provided by the EU DSO Entity and gas and hydrogen DSO associations, as set out in the revised list of registered members, and reflects indicative assumptions on future membership following the integration of gas and hydrogen DSOs.

identifier: ACER Opinion No 04/2026

title: ACER Opinion 04-2026 on the draft updated statutory documents of the EU DSO entity

text: No 04/2026

text: OPINION

text: on the draft updated statutory documents of the EU DSO entity

text: 12 March 2026

text: A C E R O P I N I O N N O 0 4 / 2 0 2 6

text: Executive summary

text: This Opinion, submitted to the European Commission, concerns draft updated statutory documents of the European entity for distribution system operators (EU DSO entity), revised to reflect the integration of natural gas and hydrogen distribution system operators as required by

text: Regulation (EU) 2024/1789

text: . ACER has assessed whether the proposed amendments comply with the applicable legal framework, and whether they ensure fair and balanced representation across electricity, gas and hydrogen sectors, support effective, transparent decision-making, and enable the EU DSO entity to perform its tasks efficiently in a cross-sectoral context. Overall, the proposed changes represent a reasonable adaptation of the governance framework to an expanded and more diversified membership and task set. In particular, the introduction of sectorspecific Councils, adjustments to Board composition and the revision of decision-making rules move the governance in the right direction. However, ACER identifies instances where the draft statutory documents fall short of the principal rules and procedures established in

text: Article 54 of Regulation (EU) 2019/943

text: . ACER also flags certain aspects for further improvement to strengthen governance in practice, such as clearer arrangements for joint decision-making, robust safeguards to preserve sustained sectoral balance over time and enhanced transparency and consistency in the organisation of technical work.

text: A C E R O P I N I O N N O 0 4 / 2 0 2 6

text: 1. Background

text: 1 The European entity for distribution system operators (EU DSO entity) was established in 2019 under

text: Regulation (EU) 2019/943

text: on the internal market for electricity to enable cooperation among European electricity distribution system operators, promoting the completion and functioning of the internal electricity market, optimal management and a coordinated operation of distribution and transmission systems.

text: Regulation (EU) 2024/1789

text: on the internal markets for renewable gas, natural gas and hydrogen expanded the scope of the EU DSO entity to include distribution system operators operating a natural gas system and hydrogen distribution network operators (collectively ‘gas and hydrogen DSOs’). To this end, Article 40(3) of that Regulation requires the EU DSO entity to submit to the European Commission and to ACER draft updated statutory documents. This includes the articles of association (i.e. the statutes), a code of conduct, a list of registered members, draft updated rules of procedure, including rules of procedure on the consultation with stakeholders, and financing rules.

text: 3 Pursuant

text: Article 40(4) of Regulation (EU) 2024/1789

text: , ACER is required to provide an Opinion to the European Commission on the draft updated statutory documents, after consulting organisations representing all stakeholders, in particular distribution system users, including customers.

text: 4 This Opinion is based on

text: Article 4(1) of Regulation (EU) 2019/942

text: read together with

text: and concerns the draft updated statutory documents of the EU DSO entity, submitted to ACER on 4 November 2025. ACER’s assessment is limited to the proposed amendments, considered both individually and in the context of the EU DSO entity’s existing statutory documents; a full review of the entire set of statutory documents is not part of the current review. The Opinion is addressed to the European Commission.

text: 2. Procedure

text: 5 On 4 November 2025, the EU DSO entity submitted to ACER the draft updated statutory documents.

text: 6 On 19 November 2025, at ACER’s request, the EU DSO entity provided a revised membership list encompassing both current electricity DSO members as well as prospective gas and hydrogen DSO members.

text: 7 Between 21 November and 19 December 2025, ACER consulted stakeholder organisations and received 12 responses from organisations across the electricity, gas, and hydrogen sectors.

text: 8 On 24 February 2026, ACER’s Gas and Electricity Working Groups provided a joint advice, endorsing the proposed draft. A C E R O P I N I O N N O 0 4 / 2 0 2 6

text: 3. Summary of the submission

text: 10 The EU DSO entity submission consists of a submission letter and the following annexes: Annex 1 – draft updated Statutes Annex 2 – draft updated Rules of Procedure Annex 3 – draft updated Code of Conduct Annex 4 – draft updated Rules of Procedure on Consultations Annex 5 – draft List of Members featuring prospective gas and hydrogen DSO members Annex 6 – draft updated Financing Rules

text: 11 The submission is complemented by a letter of support for the updated drafts, signed by four organisations representing gas DSOs: CEDEC, GD4S, EUROGAS, GEODE.

text: 12 EU DSO entity proposes amendments in five main areas: • Board composition and representation; • Councils and internal governance structure; • Decision-making procedures; • Rules of procedure and conduct; • Budgetary and financial arrangements.

text: 3.1.1. Board composition and representation

text: 13 The revised Statutes maintain the two existing EU DSO entity governing bodies, i.e. the General Assembly (consisting of all Members) as the leading body of the EU DSO entity and the Board of Directors as its managing body. Separate electricity and gas/hydrogen Councils are introduced as additional internal organs to address sector-specific matters related to electricity and gas/hydrogen. (Gas and hydrogen are handled as one vector for all purposes, including representation, decision-making and financing.)

text: 14 It is proposed that the Board of Directors is composed of up to [33 Directors], replacing the previous maximum of 27. Board seats are allocated between Electricity Directors (up to 21) and Gas/Hydrogen Directors (up to 12) and across three size categories defined on the basis of the number of connected customers:

text: 15 Electricity Directors • Category 1 with fewer than 100 000 connected customers: Seven Directors; • Category 2 fewer than 1 million connected customers: Seven Directors; and • Category 3 with at least 1 million connected customers: Seven Directors.

text: 16 Gas/hydrogen Directors • Category 1 with fewer than 100 000 connected customers: Four Directors; • Category 2 and fewer than 1 million connected customers: Four Directors; and • Category 3 with at least 1 million connected customers: Four Directors. Page 5 of 14 A C E R O P I N I O N N O 0 4 / 2 0 2 6

text: 17 Starting after the second Board election following the integration of Gas/Hydrogen Members, the Statutes provide for a periodic reassessment of the allocation of Board seats between electricity and gas/hydrogen. This reassessment is triggered where either the average variation in the number of connected customers represented by Electricity Members or Gas/Hydrogen Members, compared to the first year of integration, exceeds 20%, or where Electricity Members or Gas/Hydrogen Members represent less than 60% of the total connected customers of electricity, gas and hydrogen DSOs in the EU. In such cases, the General Assembly is required to amend the composition of the Board, in accordance with the applicable voting rules, in order to reflect the revised representativeness of the Members.

text: 18 The EU DSO entity has proposed to increase the maximum number of Directors per Member State from three to four.

text: 3.1.2. Councils and internal governance structure

text: 19 Separate Councils are established for electricity and for gas/hydrogen pursuant to Article 18 of the Statutes with a maximum of 39 members for each. The Councils are organs of the EU DSO entity and form part of the governance structure supporting the Board of Directors. Their role is to prepare proposals originating from Expert Groups and Task Forces and to provide sectorspecific input prior to their submission to the Board.

text: 20 Each Council is composed of Board members, Board reserve list members and other participants appointed in accordance with the Rules of Procedure, with a view to ensuring appropriate representation of Members, technical expertise and continuity between preparatory work and Board-level decision-making. The Councils operate under the authority of the Board, which determines their composition, mandates and working arrangements.

text: 21 Topics addressed within the Councils may be classified by the Board as single-vector or doublevector topics. For single-vector topics, the relevant Council prepares and endorses proposals within its respective energy vector. For double-vector topics, both the Electricity Council and the Gas/Hydrogen Council are involved in the preparation of proposals, which require endorsement by both Councils before being submitted to the Board. This structure is intended to support coordinated preparation across energy vectors while preserving sector-specific expertise. Final decision-making authority remains with the Board of Directors.

text: 22 The Rules of Procedure set out qualitative appointment criteria for Council members, notably expertise and seniority, geographical balance and gender balance.

text: 3.1.3. Decision-making procedures

text: 23 Under the governance framework established by the Statutes, decision-making powers are allocated between the Board of Directors and the General Assembly according to the nature of the act concerned. The Board of Directors acts as the primary managing body of the EU DSO entity, and adopts decisions within its remit, applying the applicable decision-making procedures. The General Assembly exercises decision-making powers in strategic matters related to the activities of the EU DSO entity in the cases explicitly expressly provided for in the Statutes. It also formulates policy guidelines for the Board of Directors and may be required to adopt or endorse certain acts prepared by the Board, including network codes and related deliverables, in accordance with applicable Union law.

text: 24 Decision-making within the Board follows a consensus-based approach. It is proposed that where consensus is not reached on joint electricity and gas/hydrogen topics, decisions are subject to a double vector majority. Under this mechanism, adoption requires a simple majority of votes cast within each energy vector.

text: 25 The double vector majority is complemented by procedural rules applicable to topic allocation, voting and escalation. During the initial integration phase, all topics are subject to this decisionmaking framework. In accordance with Article 17.9 of the Statutes, the Board must review the A C E R O P I N I O N N O 0 4 / 2 0 2 6 application of this decision-making procedure on an annual basis, on the basis of a factual overview provided by the Secretariat and must decide whether to continue applying it. Where the Board decides not to continue its application, Board decisions will be governed by the standard decision-making procedures set out in

text: Articles 17.4

text: to 17.8 of the Statutes, which only require a joint approval for those topics that are explicitly classified as joint (i.e. double-vector) topics, and for other areas only require the simple majority of votes from either the Electricity Directors or Gas/Hydrogen Directors.

text: 3.1.4. Rules of procedure and conduct

text: 26 The revised Rules of Procedure establish the possibility for the Councils, Expert Groups, the Country Expert Group and the Strategic Advisory Group to adopt their own Terms of References in order to regulate their internal procedures.

text: 27 The revised Rules of Procedure on consultations extends the rules governing the scope, timing, duration and procedural steps of consultations, as well as the treatment of consultation responses and confidentiality requirements to consultations on gas and hydrogen topics.

text: 28 The revised Code of Conduct is extended to apply its rules on rules on conflicts of interest, independence, compliance with competition law and handling of non-commercially sensitive information to Members, Observers and the Secretariat across all energy vectors.

text: 3.1.5. Budgetary and financing arrangements

text: 29 The revised Financing Rules maintain a fixed and a variable membership fee. The variable fee is based on the number of connected customers. The budget is structured by activity, distinguishing electricity-only, gas/hydrogen-only and joint (i.e. double-vector) activities.

text: 30 The Statutes and the Financing Rules specify fixed-fee arrangements for entities active in both vectors and for affiliated electricity-gas DSOs. Associate Members and Third Country Partners are subject to reduced fees. The General Assembly approves the annual budget and membership fees.

text: 31 For the integration phase of the new Members, the financing framework provides for a budget for gas and hydrogen related activities starting in 2026, including transitional arrangements and one time integration costs, subject to approval by the General Assembly based on the proposal submitted by the Board.

text: 4. ACER assessment

text: 4.1. General remarks

text: Article 54 of Regulation (EU) 2019/943

text: sets out the principal rules and procedures under which the EU DSO entity currently operates. These principal rules and procedures provide a legal framework governing the EU DSO entity that must be reflected in its statutory documents. In particular,

text: Article 54

text: defines key rules and procedures for its principal decision-making bodies: the General Assembly and the Board of Directors, as well as for supporting structures, i.e. the Expert Groups (including the country expert group) and the Strategic Advisory Group.

text: Article 40 of Regulation (EU) 2024/1789

text: foresees changes to the principal rules and procedures for the EU DSO entity to enable the integration of gas and hydrogen DSOs.

text: Article 40(1)

text: provides that the principal rules and procedures set out in

text: Article 54 of Regulation (EU) 2019/943

text: shall also apply to gas and hydrogen DSOs. Furthermore,

text: Article 40(2)

text: explicitly requires that the Strategic Advisory Group include representatives of associations representing European gas and A C E R O P I N I O N N O 0 4 / 2 0 2 6 hydrogen DSOs. Finally,

text: Article 40(3)

text: , second subparagraph, establishes the principle of fair and balanced representation of all participating DSOs, including gas and hydrogen DSOs.

text: 34 A literal reading of

text: Article 40 of Regulation (EU) 2024/1789

text: would suggest that, except for the changes expressly specified in that Article, the rules and procedures set out in

text: Article 54 of Regulation (EU) 2019/943

text: remain unchanged and continue to apply to the EU DSO entity following the integration of gas and hydrogen DSOs. In practice, however, and as explained in the sections that follow, it has proven very challenging for the EU DSO entity to comply fully with all requirements of

text: Article 54

text: when governance is extended to cover electricity, gas and hydrogen under a single entity. Consequently, while the draft updated statutes incorporate most of the requirements of

text: Article 54

text: correctly, several provisions are not fully reflected, as further detailed in the sections below.

text: 35 ACER’s assessment of the statutory documents proceeds from a literal interpretation of

text: Article 40 of Regulation (EU) 2024/1789

text: . Within that framework, ACER's primary focus is whether the principle of fair and balanced representation is ensured and whether the principal rules and procedures from

text: Article 54

text: are preserved. ACER has identified four specific instances where the requirements of

text: Article 54

text: appear not to be met. Given the practical difficulties of a strict literal application of this Article, ACER has also examined how each of these instances affects the principle of fair and balanced representation and how the resulting governance arrangements compare with those that would arise if the relevant

text: Article 54

text: requirement were fully implemented. Finally, ACER considers whether any failure to meet a specific requirement gives rise to risks that could materially undermine the effective functioning of the EU DSO entity.

text: 36 With this exercise, ACER seeks to assist the Commission in forming its opinion and to inform consideration of any justified, proportionate flexibility in applying the relevant provisions, taking into account that the submitted draft statutory documents are the product of extensive negotiation and preparatory work and reflect compromises designed to balance the interests of existing and future members while safeguarding both representativeness and operational efficiency of the association.

text: 37 ACER’s assessment is also informed by the views of stakeholder organisations, consulted as part of this procedure. Concerns were raised mainly by organisations representing electricity stakeholders and focused on the revised composition of the Board of Directors and the decisionmaking under double vector majority beyond joint electricity and gas/hydrogen matters, geographical balance, legal certainty, decision-making efficiency and the role of the Councils within the overall governance framework.

text: 4.2. Board composition, representation and duration

text: Article 54(2)

text: (a) of

text: Regulation (EU) 2019/943

text: requires that the Board of Directors of the EU DSO entity is composed of the President of the Board and 27 Members’ representatives, allocated equally across three categories based on the number of grid users. This requirement forms part of the safeguards intended to ensure fair and proportionate representation, while reflecting the diverse geographical and economic structure of the EU DSO entity’s membership (see

text: Article 54(2)

text: , first paragraph). In this respect, the size-based allocation logic underpinned by the number of connections grouped in three categories retained in the draft updated statutes remains consistent with these safeguards.

text: 39 The revised Statutes propose to increase the maximum number of Directors from 27 to 33, with Board seats allocated between Electricity Directors (21 seats) and Gas/Hydrogen Directors (12 seats) following the integration of gas and hydrogen distribution system operators. While this proposal is motivated by the expansion of the EU DSO entity’s mandate pursuant to

text: Regulation (EU) 2024/1789

text: and seeks to preserve balanced representation across energy vectors and size categories, the increase in the absolute number of Board members goes beyond the numerical composition explicitly set out in

text: Article 54(2)

text: (a) of

text: Regulation (EU) 2019/943

text: . A C E R O P I N I O N N O 0 4 / 2 0 2 6

text: 40 Articles

text: and

text: of Regulation (EU) 2019/943 set requirements regarding the composition and functioning of the Board of Directors, in particular with regard to balanced representation, proportionality, effective decision-making, and finally, the number of Directors which make up the Board. In this context, ACER notes that the revised draft updated Statutes increase the maximum number of Directors from 27 to 33 and raise the maximum number of Directors representing the same Member State from three to four exceed both the total 27‑Director limit established in

text: Article 54(2)

text: (a) of

text: Regulation (EU) 2019/943

text: and the limit on the number of Directors from a Member State established in

text: Article 54(2)

text: (c).

text: 41 Keeping the size of the Board of Directors to 27 representatives would not, in itself, undermine the representation of the membership in the EU DSO entity’s, especially when considering that total membership is expected to reach 1250 members , as the difference between the percentage of members having seats on the Board in the two cases is less than 0.5 percentage points. On the contrary, the existing structure based on three size-categories and balanced by the geographical constraints already provides a robust mechanism to reflect the diversity of DSOs across the Union. Therefore, the same vote proportion provided by the increased number of directors can be achieved by keeping their number at 27 and by also decreasing the number of Directors per category and vector by one less, compared to the proposal, indicating that the balance of representation between different categories is minimally harmed by adhering to the legal limits.

text: 42 From a governance perspective, the proposed increase can be understood as an attempt to accommodate additional sectors and expertise without diluting existing representation. Based on ACER’s assessment, the increase of seats does not appear to cause any obvious or significant practical harm and may increase relevantly the trust in the revised organisational structure, as reported by the representatives of the EU DSO entity. However, and in particular when assessed in combination with the establishment of the Councils, a larger Board may potentially increase coordination costs and further complicate the decision-making, particularly in a context where the Board already operates under complex quorum and majority rules, including the Double Majority. These risks may or may not outweigh the marginal gains won by the changed representation structure achieved by adding additional Board seats.

text: 43 Moreover, representativeness within the EU DSO Entity is not ensured solely through the number of Board seats. It is reinforced through complementary governance layers, notably the General Assembly with weighted voting rights, the electricity and gas Councils, the Strategic Advisory Group and the Country Expert Group. While ACER views that the potential number of organs may result in excessive layers of bureaucracy, these organs provide structured channels for sectoral, national and association-level input, ensuring that perspectives not directly represented on the Board are nonetheless integrated into decision-making processes. As such, increasing the number of Directors could neither be the only, nor the necessarily most proportionate mean of safeguarding inclusiveness.

text: 44 ACER also notes that the representativeness of the Board and the potential to include more Members in its composition can also be achieved by other statutory measures, such as providing shorter Board mandates. Such measures could result in more members’ representatives becoming Board Directors, while remaining consistent with the requirements of the Regulation.

text: 45 ACER notes that fixing the proposed share of Board seats for electricity and for gas/hydrogen for two periods of the Board’s mandate (that is, eight years) provides a safeguard for the newly integrated sectors, ensuring representation even if membership upkeep initially remains below expectation. This provides a good incentive for gas/hydrogen DSOs to join the organisation.

text: 46 Directors of the Board may be nominated by those electricity and gas/hydrogen members that have at least 5% share of their customers in the given sector. Neither the definition of electricity/gas/hydrogen DSOs, nor the rules for determining the fixed part of the membership fee A C E R O P I N I O N N O 0 4 / 2 0 2 6 for multi-sectoral DSOs include a similar threshold. As Council members also come primarily from Board members and members on the reserve list, this also limits the representation of these multi-sectoral DSOs in the Councils. Based on discussions with the EU DSO entity, ACER understands that the 5% limit was introduced in order to ensure that the represented DSOs have a material stake in the given sector and limited sectoral presence does not lead to overrepresentation. The EU DSO entity also clarified that the discrepancy could be solved by providing greater clarity in the revised draft updated statutes. ACER recommends to either clarify or harmonise the classification criteria for electricity/gas/hydrogen DSOs to ensure that the rules on membership fee payment and representation for multi-sectoral DSOs remain well-aligned across sectors.

text: 4.3. Councils and internal governance structure

text: Regulation (EU) 2019/943

text: set the governance framework for the EU DSO entity defining the General Assembly and the Board of Directors as the two decision-making bodies of the entity. This is unchanged by the addition of the new vector. In addition to these two core governing bodies, the EU DSO entity’s work is supported by several auxiliary and advisory organs.

text: 48 ACER recognises that the Councils (Electricity and Gas/Hydrogen) are sector-specific organs proposed by the EU DSO entity in addition to the bodies envisaged in the Regulation. Their role is to prepare and draft technical deliverables, provide sector-specific input, and support the Board by addressing topics that require dedicated expertise.

text: 49 On the one hand, ACER sees merit in establishing the Councils, in that they can provide a forum for Members of a given sector to have more in-depth, focused vector-specific technical discussions on near-final deliverables in preparation of their submission to the Board. ACER also considers the Councils to be a suitable layer which may facilitate inclusion of more Members into the activities of the EU DSO entity. On the other hand, placing the Councils between the Expert Groups and the Board may increase governance complexity and hinder a streamlined flow of information between the two.

text: 50 The rules governing the selection of Councils’ members are not sufficiently clear, in ACER’s view. The proposed rules include criteria of seniority/expertise, geographic representation and gender balance, but lack a clear election procedure, an actionable formula for ensuring that these criteria are taken into account, or an explicit right for each individual Member to be represented in the Councils. While the proposed approach aims to support competence and diversity, as the Council composition is largely dependent on the Board, and the Board’s reserve list membership and discretionary appointments, it is difficult to assess how the consideration of the stated selection criteria (seniority, geographic representation, gender balance) can be taken into account. For example, ACER notes that despite the current statutes require the EU DSO entity to strive for an acceptable level of gender balance on the Board of Directors, the current Board has only one female member, indicating that the gender-balance criterion is insufficient to ensure meaningful gender representation. Given that Board members have an automatic right to become Council members too, if they wish to do so, this inadequacy might be carried forward to the composition of the Councils.

text: 51 ACER also notes that Council members who are neither Board members nor on the Board reserve list are appointed at the Board’s discretion, without an open nomination or voting procedure. This process could be perceived as one that lacks transparency and may further hinder the objective of ensuring full representation of all Members of the Association. The EU DSO entity communicated to ACER that the selection of Council members for those places not filled by Board members and reserve list members, would happen mainly from Expert Group members. This is something that is not evident from the revised draft updated statutes and would warrant explicit clarification in them.

text: 52 Overall, ACER finds that the proposed structure is a workable starting point for the integrated EU DSO entity, while emphasises the importance of monitoring its effectiveness in practice to allow A C E R O P I N I O N N O 0 4 / 2 0 2 6 for its future simplification and adjustment once the new governance arrangements are operational. ACER would consider formalising the monitoring of the effectiveness of the new organisational structure, for example by periodically monitoring the satisfaction of the members with the agreed arrangements, as a good practice.

text: 4.4. Decision-making processes

text: 53 The decision-making framework of the EU DSO entity introduces the double majority rule as a core safeguard to manage the integration of electricity, gas and hydrogen distribution system operators within a single governance structure. Under this approach, certain Board decisions require the support of both a simple majority of Electricity Directors and a simple majority of Gas/Hydrogen Directors, ensuring that neither energy vector can be outvoted on matters of common relevance. The mechanism is complemented by a structured classification process that distinguishes between single-vector and joint topics, allowing sector-specific decisions to be taken by the relevant Directors while reserving the double majority for issues with cross-vector implications.

text: 54 ACER acknowledges that the double majority system provides a strong safeguard from majority dominance. The introduction of this system prevents interference from the non-affected energy vector on technical topics that are classified as single vector topics.

text: 55 ACER notes, however, that

text: Article 54(1)

text: (h) of

text: Regulation (EU) 2019/943

text: foresees that decisions of the board of directors are adopted by an absolute majority. As the proposed Board member numbers for the two vectors are 21 Directors for electricity and 12 Directors for gas/hydrogen, it is possible in both vectors to reach a single vector majority (11 votes for electricity, 7 votes for gas) without reaching absolute majority (17 votes altogether). Moreover, in the case of the gas vector, even unanimous voting would be insufficient to reach 17 votes. To fulfil the requirement of the Regulation, namely absolute majority would mean to have in the case of single vector topics the requirement that the non-affected vector votes in line with the majority of the affected vector.

text: 56 ACER also notes that the double majority system can also be used to obstruct decision-making, as technical topics and emerging technical topics require classification as single or joint topics with a double majority vote, before the Board is allowed to decide on them. Lacking a fallback option for cases of no double majority agreement, this potentially enables any vector to indefinitely block the decision on any topic. Therefore, ACER finds important to complement the proposed setup with a fallback mechanism acting on such cases (for example, in case of no agreement, automatically classifying a topic as single majority, if it originates from the respective regulation and as double majority, if lacking such clearly defined connection).

text: 57 ACER, however, notes that the newly proposed

text: Article 4(5)

text: and (6) introduces obligations for all Members and Directors to act in good faith and forbids them from exercising their rights in an unreasonable and arbitrary manner. These requirements might have a positive effect on mitigating the risk of obstruction.

text: 58 ACER also notes that the existing rules on the decision-making procedures of the General Assembly, which affect amongst others the final approval of strategic decisions and the endorsement of Board decisions on Network Codes, have remained unchanged. Therefore, these decisions are adopted based on vote shares calculated on the basis of the total membership, without any distinction for joint or sector-specific decisions.

text: 59 Finally, ACER sees the risk that the proposed setup could effectively grant the Councils veto power over Expert Group proposals. Under Article 7(1) of the updated draft Rules of Procedure, single vector decisions of the Board must be prepared the relevant Council based on Expert Group proposals, while for proposals related to both vectors require approval from both Councils. This setup would empower an internal organ, not established by legislation, to prevent Expert Group proposals from reaching the Board. To mitigate this risk, ACER suggests removing the A C E R O P I N I O N N O 0 4 / 2 0 2 6 requirement of Councils’ approval and replace it with Councils’ formal advice provided to the Board regarding the proposals of the Expert Groups.

text: 4.5. Expert Groups and technical work

text: 60 The Rules of Procedure establish four main technical and consultative groupings: the Strategic Advisory Group, the Expert Groups, the Country Expert Group, and the Councils, the first three of these already existing and being foreseen by

text: Article 54 of Regulation (EU) 2019/943

text: . Expert Groups are intended to carry out detailed technical drafting and analysis, including work on network codes, guidelines and other regulatory deliverables, while the Country Expert Group is designed to provide national-level coordination and to relay information and views between EUlevel processes and DSOs within each Member State. Councils sit above the technical level and are meant to provide sector-specific coordination and endorsement of proposals before they are submitted to the Board.

text: 61 While the general intent of each group is identifiable, the Rules of Procedure remain relatively high-level and, in some respects, vague as regards the precise scope of their responsibilities, decision-preparation roles and interaction between these organs. In particular, there is a potential overlap between Expert Groups and the Country Expert Group in terms of consultation and input, and between Expert Groups and Councils in the handling of technical matters prior to Board consideration. The absence of more detailed procedural delineation may lead to duplication of work, unclear ownership of outputs, and extended decision-making timelines.

text: 62 In this context, it would be beneficial for the Rules of Procedure to more clearly define the specific scope, tasks of each group and how these groups interface with each other. Given the complexity of the integrated governance structure, it would also be appropriate to assess the effectiveness and clarity of these arrangements after an initial operational period, with a view to refining and simplifying their roles where necessary.

text: 63 As with the number of Board members, the proposal for the number of Country Expert Group members from one Member State also exceeds the number set forth in

text: Article 54 of Regulation (EU) 2019/943

text: . While the Regulation foresees the Country Expert Group consisting of one representative of DSOs from each Member State, the submitted draft proposal instead would allow one electricity and one gas/hydrogen member from each Member State. This approach seems reasonable, as it strikes a balance while prevents a situation where the interests of one of the vectors in a Member State remain without representation (as the interests of gas/hydrogen electricity DSOs might differ) or even the whole Country Expert Group is composed solely of members from a single vector. ACER notes that a strict application, limiting the representation to a single DSO representative per Member State could undermine the principle of fair and balanced representation established by

text: Article 40(3) of Regulation (EU) 2024/1789

text: 4.6. Terms of reference and internal regulations

text: 64 The proposed amendments to the Rules of Procedure include provisions that allow the Councils, the Expert Groups, the Country Expert Groups and Strategic Advisory Group to adopt their own respective Terms of Reference regulating their internal procedures, working methods, and operational arrangements. These Terms of Reference are required to be consistent with the Statutes and the Rules of Procedure and need to be approved by the Board.

text: 65 ACER acknowledges that internal regulations of an organisation like the EU DSO entity need to be flexible, when regulating minute, practical arrangements related to day-to-day work. ACER however also notes that great care needs to be taken to ensure that this flexibility aligns with the requirements set out in the Electricity Regulation for the Rules of Procedure.

text: 66 ACER would consider helpful a clear division between those topics and rules that need to reach the level of the Rules of Procedure, therefore requiring increased scrutiny and transparency, and A C E R O P I N I O N N O 0 4 / 2 0 2 6 those that can stay below this level. ACER would also consider sharing the Terms of Reference with ACER and the European Commission a useful safeguard to ensure that they do not contain rules of higher importance or effect that would warrant their approval. Publishing the composition and the Terms of Reference for all affected internal bodies and organs on the EU DSO entity’s website, together with the organisational structure detailing these groups would also be a useful measure serving increased transparency for the represented sector and the broader stakeholder community served by the distribution system operators. A C E R O P I N I O N N O 0 4 / 2 0 2 6

text: 5. Conclusions

text: 67 ACER’s assessment in section 4 examines whether the draft updated statutory documents comply with the applicable legal framework, ensure fair and balanced representation across electricity, gas and hydrogen sectors, support effective, transparent decision-making, and enable the EU DSO entity to perform its tasks efficiently in a cross-sectoral context.

text: 68 Overall, the proposed amendments constitute a reasonable adaptation of the governance framework to an expanded and more diversified membership and tasks set. In particular, the introduction of sector-specific Councils, adjustments to Board composition and the revision of decision-making rules move the governance in the right direction fostering inclusivity.

text: 69 The proposed Councils provide a pragmatic mechanism to broaden participation by DSOs in sector-relevant discussions and activities of the EU DSO entity, while remaining within the existing legal thresholds. ACER nevertheless recommends that the statutory documents clarify the selection criteria and procedures for Council membership.

text: 70 The adoption of double‑ or single‑majority voting rules could help prevent majority dominance. However, ACER notes that this approach may increase the risk of deadlocks and recommends implementing a fallback mechanism to mitigate that risk.

text: 71 ACER has identified specific provisions of the draft updated statutory documents that do not consistently reflect the principal rules and procedures set out in

text: Article 54 of Regulation (EU) 2019/943

text: . While ACER recognises the practical difficulties of applying

text: Article 54

text: , originally framed for a single‑vector association, to a prospective multi‑vector entity with a significantly larger and more versatile membership, it does not see a compelling necessity to diverge from these rules and procedures in all the identified instances.

text: 72 ACER recognises that the proposed amendments are the product of extensive negotiations and compromise among incumbent and prospective members. ACER acknowledges the challenges involved in integrating gas and hydrogen DSOs into an established association while preserving both representativeness and operational efficiency.

text: 73 ACER further notes that involvement of gas and hydrogen DSOs presents sector‑specific challenges: the currently applicable gas network codes exert more limited influence on gas DSO operations than electricity network codes do on electricity DSOs, reducing participation incentives; hydrogen markets remain nascent and its governance framework is still under implementation. ACER welcomes that, notwithstanding these challenges, the proposed statutes were drafted in a manner acceptable to gas DSO organisations, as evidenced by their letter of support.

text: 74 Until the proposed statutes enabling inclusion of gas and hydrogen DSOs are adopted, those DSOs will have no formal representation within the EU DSO entity. Should adoption be delayed, ACER recommends that the EU DSO entity proactively engage gas and hydrogen DSO organisations in any work affecting their sectors, as was done during preparation of the draft updated statutes, to mitigate the absence of formal representation. This Opinion is addressed to the European Commission. Done at Ljubljana, on 12 March 2026. — SIGNED — V. ZULEGER, ACER Director ad interim


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text: OJ L158, 14.6.2019, p. 22.

text: Opinion No 05/2020

text: Opinion No 05/2020

text: Opinion No 05/2020

text: 3 and economic structures. Its members should be treated fairly and proportionately. The new EU DSO Entity’s proposed working methods should ensure efficiency, proportionality and transparency. Overall, the statutory documents should enable the new EU DSO Entity to comply with its tasks as laid down in

text: Article 55 of Regulation (EU) 2019/943

text: Cf.

text: Article 54(2) of Regulation (EU) 2019/943

text: . 3 Idem. Cf.

text: recital 60

text: of

text: Regulation (EU) 2019/943

text: . 5 Cf.

text: Article 16.9

text: .4(2)(e) of the Statutes and

text: Article 54(2)

text: (a) of

text: Regulation (EU) 2019/943

text: . 6 The input received via the consultation with respect to the proposed fee structure was ambivalent. Whereas one stakeholder advocated for a fixed and equal amount per connected customer regardless the number of customers, another stakeholder lauded the membership fee as a good balance between all DSOs’ interests. 7 It thus formally complies with the requirements set in

text: Article 53(2) of Regulation (EU) 2019/943

text: Opinion No 05/2020

text: Articles

text: and

text: .4(1) of the Statutes and

text: Article 54(1)

text: (e) of

text: Regulation (EU) 2019/943

text: . 9 Article 16.21 of the Statutes and

text: Article 54(1)

text: (f) of

text: Regulation (EU) 2019/943

text: . 10 Articles 16.4 and 16.22 of the Statutes and

text: Article 54(1)

text: (e) of

text: Regulation (EU) 2019/943

text: . 11 Cf

text: Article 16.9

text: .4(2)(d) of the Statutes.

text: Opinion No 05/2020

text: I.e., for a decision to be validly adopted, 65% of the votes attributed to the members need to be cast, and the decision needs to be adopted by a majority of 55% of the members. ACER notes that the Statutes add a further threshold, i.e. “50% of votes attributed to the members” (see Statutes, art. 15.13(b)(i)). As discussed in recitals 54 to 60 of this opinion, ACER considers that this additional threshold is important to avoid as much as possible the risk of stalemate in the voting procedure of the EU DSO Entity. 13 Cf.

text: Article 16.9

text: .4(2)(f) and (g) of the Statutes. 14 An alternative interpretation of the two paragraphs would consist in considering the two paragraphs as separate from one another. Following this approach,

text: Article 54(1)

text: (e) and (f) lays down the appointment process (election of board members, and nomination of the President and Vice-Presidents), whilst

text: Article 54(2)

text: (a) of

text: Regulation (EU) 2019/943

text: provides rules on the composition of the board of directors.

text: Opinion No 05/2020

text: Articles

text: and

text: .4(1) of the Statutes and

text: Article 54(1)

text: (e) of

text: Regulation (EU) 2019/943

text: . 16 Article 16.21 of the Statutes and

text: Article 54(1)

text: (f) of

text: Regulation (EU) 2019/943

text: . 17 Articles 16.4 and 16.22 of the Statutes and

text: Article 54(1)

text: (e) of

text: Regulation (EU) 2019/943

text: . 18 Similarly, 8 out of the 9 stakeholders that pronounced themselves on this issue during the consultation expressed a preference for the majority option. 19 One stakeholder pointed out that, on the basis of the list of initial potential members, the DSOs with less than 100,000 customers would represent 3.1% of customers in Europe, whilst having a 33.3% representation in the Board of Directors.

text: Opinion No 05/2020

text: Opinion No 05/2020

text: Opinion No 05/2020

text: Article 54(1)

text: (j) of

text: Regulation (EU) 2019/943

text: allows one third of the Expert Groups to come from outside the membership of EU DSOs, such as external experts. 24 With respect to Article 2(3) of the Rules of Procedure on consultations, one stakeholder suggested to consult also on best practices for optimising the use of the existing distribution network and increasing the networks energy efficiency.

text: Opinion No 05/2020

text: Cf. 2019 Report on equality between women and men in the EU, EU Commission, Justice and Consumers, 2019. 26 A number of participants in the consultation pointed out that the overall majority of customers is served by medium-size or large DSOs. Invoking the need for fair and proportionate treatment of the members, they argued that this reality should consequently be reflected in the voting rights and decision-making procedure of the General Assembly. ACER notes however that the balance between the various DSO categories within the EU DSO Entity, either in terms of composition of the Board or in terms of the voting thresholds for the General Assembly, is defined in

text: Article 54 of Regulation (EU) 2019/943

text: and needs to be respected.

text: Opinion No 05/2020

text: An example of a deadlock situation would be an instance as follows: 10% of the members abstain, and the remaining 90% reach 65% of the votes cast. 60% of the members vote in favour, whilst 30% of the members vote against. In such case, the decision would be both approved and rejected.

text: Opinion No 05/2020

text: Opinion No 05/2020

text: See for example the DSOs in Latvia.

text: Opinion No 05/2020

identifier: ACER Opinion No 05/2020

title: ACER Opinion 05-2020 on the Statutory Documents on the Establishment of the EU DSO Entity

text: PUBLIC

text: OPINION No 05/2020 OF THE EUROPEAN UNION AGENCY FOR THE COOPERATION OF ENERGY REGULATORS of 25 August 2020 on the statutory documents on the establishment of the EU DSO entity

type: rubrik

text: THE EUROPEAN UNION AGENCY FOR THE COOPERATION OF ENERGY REGULATORS, Having regard to

text: Regulation (EU) 2019/942

text: of the European Parliament and of the Council of 5 June 2019 establishing a European Union Agency for the Cooperation of Energy Regulators , and, in particular,

text: Article 4(1)

text: thereof, Having regard to

text: Regulation (EU) 2019/943

text: of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity, and, in particular,

text: Article 53(3)

text: thereof, Having regard to the outcome of the consultation with the Agency’s Electricity Working Group, Having regard to the favourable opinion of the Board of Regulators of 25 August 2020, delivered pursuant to

text: Article 22(5) of Regulation (EU) 2019/942

text: , Whereas:

text: 1. INTRODUCTION

text: Article 52 of Regulation (EU) 2019/943

text: requires the distribution system operators (‘DSOs’) to cooperate at Union level through the EU DSO entity, in order to promote the completion and functioning of the internal market for electricity, and to promote optimal management and a coordinated operation of distribution and transmission systems. As an expert entity working for the common Union interest, it is assigned with a variety of tasks related to distribution as listed in more detail in

text: Article 55 of Regulation (EU) 2019/943

text: . The EU DSO Entity is expected to cooperate closely with transmission system operators and ENTSO-E, amongst others when network codes touching upon distribution matters are being prepared, amended or implemented. The cooperation and expertise provided by the new EU DSO entity should increase

text: efficiencies in the electricity distribution systems in the Union as well as foster innovation, necessary to cope with challenges of decarbonisation and digitalisation.

text: (2) In order to establish the new EU DSO entity, the DSOs are required to submit its statutory documents to ACER and the Commission at the latest by 5 July 2020, in accordance with

text: Article 53(3) of Regulation (EU) 2019/943

text: lays down that, within a period of two months after receipt of the statutory documents, ACER provides an opinion, after having consulted the organisations representing all stakeholders, in particular distribution system users.

text: (4) On 24 June 2020, ACER received, on behalf of the four European DSO associations (CEDEC, E.DSO, Eurelectric and GEODE), the statutory documents on the establishment of the new EU DSO Entity.

text: (5) Between 13 and 27 July 2020, ACER held, via its website, its consultation of the organisations representing all stakeholders, in particular distribution system users. Following the consultation, ACER received 17 submissions, which were taken into account in the adoption of this opinion.

text: 2. SUMMARY OF THE STATUTORY DOCUMENTS

text: (6) The statutory documents of the EU DSO Entity contained 5 documents, i.e., the statutes of the EU DSO Entity AISBL (association internationale sans but lucratif), the Rules of Procedure, including the rules of procedure on consultations, its code of conduct and a list of initial potential members.

text: (7) The Statutes are the articles of association of the new EU DSO Entity. Apart from defining its general purpose and activities (Chapter I), it contains articles on the status of its Members, Associate Members and Observers (Chapter II), describes the composition, powers and tasks of its Bodies (Chapter III), and sets out the financial arrangements (Chapter IV).

text: (8) With respect to the provisions related to the election of the President, the Statutes contain both a ‘majority’ and a ‘minority option’. Whereas the majority option is integrated in the main body of the Statutes, the minority option is added as an annex, together with an explanatory note.

text: (9) The difference between both options essentially concerns the fact whether or not the Statutes can lay down that the President can be both President of the Board and President of the EU DSO Entity. The majority option favours such approach, and describes in the statutes the two procedures for the appointment of the President of the Board and the EU DSO Entity. Pointing out the lack of clarity in

text: Article 54 of Regulation (EU) 2019/943

text: , the explanatory note advocates that the proposal is in line with the Regulation, noting that the approach avoids dual leadership and the risk for a resulting lack of effectiveness in leadership of the Entity, and argues that the President should have full support from the Board of Directors and the General Assembly.

text: (10) The minority option questions the distinction between the President of the Board and the EU DSO Entity and strongly disagrees with the role given to the General Assembly in the election procedure of the President. Pointing out the lack of clarity in

text: Article 54 of Regulation (EU) 2019/943

text: , it therefore proposes that the Statutes should only lay down that the President is the President of the Board, nominated by the Board from amongst its members.

text: (11) The Rules of Procedure define the practical and technical matters and procedures governing the operations of the EU DSO Entity, such as the functioning of the Strategic Advisory Group and the (Country) Expert Groups or arrangements related to the handling of personal or confidential information. Article 1 of the Rules of Procedure stipulates that the Statutes prevail over the Rules of Procedure, in case a difference in interpretation would occur. The Rules of Procedure on the consultation lays down the consultation process and describes how the EU DSO Entity would handle the responses received from its consultations.

text: (12) The Code of Conduct describes the core values of the EU DSO Entity and the ethical principles and standards that apply to its Members, Observers and Secretariat.

text: (13) Finally, the submission contains a list of initial potential members, distinguishing the DSOs coming from EU and non-EU Member States, and stating, for most of the potential members, the number of connected customers.

text: 3. ASSESSMENT OF THE STATUTORY DOCUMENTS

text: Overall assessment

text: (14) Chapter VI of

text: Regulation (EU) 2019/943

text: , and in particular Articles

text: and

text: , prescribe the various essential elements which need to be taken into account in the new EU DSO Entity’s statutory documents, and which should ensure its proper functioning.

text: Article 53 of Regulation (EU) 2019/943

text: requires the ‘distribution system operators’ to submit the statutory documents to ACER and the Commission. Due to the sheer amount of DSOs (more than 2,500 DSOs are active in the European Union), the submission was done via four DSO Associations (CEDEC, E.DSO, Eurelectric and GEODE), which jointly effectively represent the DSOs at EU level. The consultation held by ACER also did not register any critical comment in terms of representativeness of the submission.

text: (16) Taking into account the large number and diversity of electricity DSOs in the European Union, the principal rules and procedures of the new EU DSO Entity should ensure a balanced representation of its members and reflect their diverse geographical

text: (17) As an overall comment, ACER considers that the various statutory documents of the EU DSO Entity meet the standards and various criteria set out in Chapter VI of

text: Regulation (EU) 2019/943

text: . The requirements of the relevant articles of

text: Regulation (EU) 2019/943

text: have correctly been integrated in the Statutes, and where necessary developed in further detail.

text: (18) Thus, the Statutes appropriately set out that, when a Board member is nominated as President of the Board, another Director would be appointed from the list of alternates, in order to comply with the criterion that the Board of Directors is composed of the President of the Board and 27 members’ representatives.

text: (19) Similarly, ACER supports the manner how the fees are calculated. The proposed approach whereby the fixed fee is set as a small value and is combined with a variable fee related to the number of connected customers is reasonable and proportionate. The cost allocation is a very important aspect and should not create constraints in smaller markets or energy systems which are on the periphery of the Internal Energy Market.

text: (20) Where necessary, the Statutes also reiterate the guiding principles that need to be respected. Thus, in case of the Nomination Committee, a body which is not explicitly foreseen in

text: Regulation (EU) 2019/943

text: Article 16.9

text: .1.1 appropriately requires that it “must ensure fair representation of Members diversity in terms of geography, size and economic structure among its Members”.

text: Remarks on particular aspects of the statutory documents

text: 3.2.1. President of the Board of Directors – President of the EU DSO Entity

text: (21) Whilst the submission itself contains one set of Statutes , the fact that the proposed Statutes contain both a majority and a minority option related to the position of the President, as described above in recitals 8 to 10, is not a sustainable construct. According to

text: recital 60

text: of

text: Regulation (EU) 2019/943

text: , the EU DSO Entity’s working method “should ensure efficiency”. In order to avoid endangering the process for the

text: establishment of the EU DSO Entity, this opinion will examine both the majority and minority option as to their compliance with the various criteria laid down in

text: Regulation (EU) 2019/943

text: , and assess whether, on this basis, any of the two options is to be preferred.

text: (22) In general, ACER considers that both approaches are compliant with

text: Regulation (EU) 2019/943

text: for the following reasons.

text: (23) Firstly, the majority option (as reflected in the main body of the proposed Statutes) duly implements the various articles of

text: Regulation (EU) 2019/943

text: which contain explicit requirements as to the nomination of the members of the Board, its President and the three Vice-Presidents. Thus, the Board of Directors is elected by the General Assembly ; the Board of Directors nominate the President of the Board and the three Vice-Presidents from among the members of the Board ; and the mandate of the Directors is for a term not exceeding four years .

text: (24) As proposed in the Statutes, the General Assembly is involved in the election procedure of both the President of the Board and the President of the EU DSO Entity. The minority option challenges this involvement, and questions its compliance with

text: Regulation (EU) 2019/943

text: (25) With respect to the election procedure for the President of the Board of Directors, the General Assembly indeed votes, according to the voting power of the Members, for a single candidate from the list of 27 Directors, whom the General Assembly then recommends to the Board members.

text: (26) However,

text: Article 22.9

text: .4(2)(c) of the Statutes explicitly states that this proposal by the General Assembly concerns a “non-binding recommendation”, from which the Board members can thus deviate.

text: Article 22.9

text: .4(2)(f) of the Statutes supports this aspect, as this provision describes the procedural steps when the Director nominated by the Board as President is not endorsed by the General Assembly as President of the EU DSO Entity. Due to the recommendation’s non-obligatory character, the two election procedures (Board and EU DSO Entity) may indeed have different dynamics and lead to possible different outcomes.

text: (27) Once the members of the Board of Directors nominate the President, the General Assembly is then called upon to decide whether or not to endorse the latter as President of the EU DSO Entity. The endorsement decision follows the same rules as for any regular decision to be adopted by the General Assembly . This decision procedure is laid down in Article 15.13 of the Statutes, and duly implements the dual threshold

text: prescribed in

text: Article 54(1)

text: (c) of

text: Regulation (EU) 2019/943

text: . The General Assembly’s endorsement decision of the President of the EU DSO Entity thus respects the institutional balance and fair representation of all participating DSOs.

text: (28) Article 17 of the Statutes links the position of the President of the Board to the Presidency of the EU DSO Entity.

text: Regulation (EU) 2019/943

text: is silent, or at most ambiguous, about such a combined role.

text: (29) However, it also implies that the Regulation does not prevent the President of the Board to also assume the responsibilities of the President of the EU DSO Entity, as long as such combined position does not hinder the President of the Board in any way in his rights as foreseen in

text: Regulation (EU) 2019/943

text: . With respect to the nomination procedure of the President of the Board, ACER recalls in this respect that the General Assembly does not have any decisive role in the nomination procedure, but only provides a non-binding recommendation. In case of a discord in the nomination/endorsement of the President of the Board and the President of the EU DSO Entity, the President of the Board can still continue to exercise his competences and legal mandate. The fact that the General Assembly is involved via a nonmandatory recommendation in the nomination procedure and that the Statutes aim for a combined position do therefore not seem to be in contradiction with the requirements laid down in Articles

text: and

text: of Regulation (EU) 2019/943.

text: (30) Depending on how one interprets

text: Article 54 of Regulation (EU) 2019/943

text: , the required involvement of the General Assembly in the election of the President of the Board may even go well beyond what is foreseen in the Statutes.

text: (31) One possible interpretation would indeed consist of a combined reading of

text: Article 54(1)

text: (e) and

text: Article 54(2)

text: (a) of

text: Regulation (EU) 2019/943

text: . As

text: Article 54(2)

text: (a) of

text: Regulation (EU) 2019/943

text: makes clear that the board of directors is composed of the President of the Board and the 27 board members, the reference to the “board of directors” in

text: Article 54(1)

text: (e) of

text: Regulation (EU) 2019/943

text: would imply that the General Assembly also has to elect the President of the Board, following the nomination process by the board members in accordance with

text: Article 54(1)

text: (f) of Regulation 2019/943.

text: (32) If this interpretation is correct, neither the majority option nor the minority option would fully implement the Regulation. The Statutes would respect the nomination procedure of

text: Article 54(1)

text: (f) of Regulation 2019/943, given the non-binding character of the General Assembly’s recommendation. However, the subsequent procedure only sets out that the General Assembly “endorses” (albeit following its decision-making procedure) the President of the EU DSO Entity (and not the President of the Board of Directors). Still, as Article 17 of the Statutes states that the “President of the Board is the President of the EU DSO Entity”, the approach in the majority option arguably would most closely grant the General Assembly its role as foreseen by the Regulation under this interpretation.

text: (33) In contrast to the majority option, the Statutes in the version of the minority option does not foresee the role of the President of the EU DSO Entity. The procedure for nominating the President of the Board also does not retain any role for the General Assembly. The only articles related to the nomination procedure duly implement the various articles of

text: Regulation (EU) 2019/943

text: which contain explicit requirements as to the nomination of the members of the Board, its President and the three Vice- Presidents. Thus, the Board of Directors is elected by the General Assembly ; the Board of Directors nominate the President of the Board and the three Vice-Presidents from among the members of the Board ; and the mandate of the Directors is for a term not exceeding four years .

text: (34) If the combined interpretation of

text: Article 54(1)

text: (e) and

text: is to be followed, the minority option is silent about the election of the President of the Board by the General Assembly, following the nomination by the Board members. As the minority option does not prevent the General Assembly from using the regular decision procedure of Article 15.13 of the Statutes, the Statutes in the version of the minority option would still be compliant with the Regulation under this interpretation, be it that the General Assembly’s role in the procedure would be less clear and explicit as compared to the majority option.

text: (35) As is clear from the above analysis, ACER considers both proposals compliant with

text: Regulation (EU) 2019/943

text: . However, ACER does note that the Statutes as reflected in the majority option have the support of three out of four European DSO 18 19 Associations (representing significantly more than 50% of connected customers ),

text: and, depending on the interpretation, may more closely implement

text: Article 54 of Regulation (EU) 2019/943

text: (36) For reasons of legal certainty, the Statutes that will be finally adopted by the EU DSO Entity should only have one option regarding the election procedure of its President. Given the need to have an efficient and stable set of Statutes (in particular at the outset of the Entity’s establishment), ACER recommends that, if the members do not find an agreement amongst themselves which of the two options to decide on, preference should be given to the version that most closely implements

text: Regulation (EU) 2019/943

text: under the various possible interpretations of its

text: Article 54

text: , and thus to the majority option. As the majority option adds more links between the Board of Directors and the General Assembly, the approach may in addition help the internal decision making process and facilitate dialogue and leadership both within the EU DSO Entity and with external parties.

text: 3.2.2. Balanced representation

text: (37) It is very important that the organisational set-up of the new EU DSO Entity ensures a balanced representation of all participating DSOs. Taking into account the large number and diversity of electricity DSOs, the rules and procedures should reflect the diversity of the DSO landscape, both economically and geographically.

text: (38) Yet, a sizeable number of reactions which ACER received in the consultation related to the EU DSO Entity’s ability to sufficiently represent their interest, or to be adequately heard by the organisation. The concern for a balanced representation touched upon geographical representation, representation of the different economic structures of the members, as well as the interests of the stakeholders at large.

text: (39) With respect to the geographical representation, ACER acknowledges that, whilst the Board of Directors is composed of 27 Directors and the President of the Board, it is not guaranteed that every Member State would be represented in the Board of Directors.

text: (40) However,

text: Article 16.9

text: .3(2)(f) of the Statutes takes this criterion into account, as it encourages the members of the EU DSO Entity, when nominating their candidate Director, to “strive to reach an acceptable level of (…) geographical representation in the composition of the Board of Directors”.

text: (41) Also Art. 16.9.3(2)(g) of the Statutes provides further guarantees for a balanced representation of all participating DSOs, by requiring that “the elected Directors in the Board in all three Categories should as much as possible reflect the diversity of their respective group of DSOs. Balanced representation of all participating DSOs will

text: consider the size, country, industrial group of the DSO, also its service area (i.e. local, national, transnational, urban or rural) and its scope of service”.

text: (42) In addition, and in compliance with

text: Article 54(2)

text: (f) of

text: Regulation (EU) 2019/943

text: , the statutory documents of the EU DSO Entity foresee the establishment of a Strategic Advisory Group, which is composed inter alia of one DSO representative of each Member State which is not represented in the Board of Directors. The Strategic Advisory Group provides opinions on relevant decisions and projects related to the EU DSO Entity, which the Board of Directors has to duly take into account in its decision-making process.

text: (43) ACER understands that a complete geographic representation within a single mandate of the Board of Directors may not be feasible, in particular given its already complex governance structure. Yet, in order to avoid possible long-term gaps in the representation of the Member States in the Board of Directors, ACER recommends to amend

text: Article 9.3

text: (2) of the Statutes on this point and to include a commitment that the members of the EU DSO Entity take appropriate action in the next nomination procedures to avoid that such lack of direct representation in the Board of Directors would persist over time.

text: (44) A similar issue is present with respect to the economical representation of its members. During the consultation, the concern was raised that medium-sized DSOs, which typically have between 1 and 2 million customers and would thus fall in the “more than 1 million grid user” category, risk not to be represented in the Board of Directors, as the largest DSOs could outweigh the voting power of the smaller DSOs in this category. Also here, ACER would recommend the EU DSO Entity to monitor the implementation of the objectives and principles laid down in

text: Articles 16.9

text: .3(2)(f)- (g) of the Statutes, and where necessary to take remedial action in the next nomination procedures to guarantee the balanced representation of all members.

text: (45) On a broader level, 6 stakeholders recalled the important regulatory tasks that the EU DSO Entity will need to carry out, in a neutral manner, and in a way that would aim for the most efficient operation and planning of the electricity system. They emphasised the resulting need for the EU DSO Entity to actively and structurally engage with all relevant stakeholders, including retailers, aggregators, and other service providers in the electricity supply chain.

text: (46) The stakeholders had divergent proposals as to the manner in which the EU DSO Entity should act. Whilst one stakeholder organisation argued that they should be represented within the EU DSO Entity on the basis of their distribution activities (i.e., the operation of closed distribution systems), the other stakeholders instead argued that the EU DSO Entity should closely involve stakeholders throughout its processes.

text: Such involvement could either be via admission of stakeholders in expert groups , a much wider use of the status of observer, or by broadening the scope of a given type of consultation . Furthermore, the stakeholders encouraged the EU DSO Entity to closely cooperate with other entities such as ENTSO-E or the EU gas DSO associations, to establish a data exchange platform between TSOs and DSOs, and in general to aim for a high level of transparency.

text: (47) The high amount of responses in the consultation (roughly half of all reactions received) indicate the degree of importance that the stakeholder organisations attribute to the EU DSO Entity for reaching out and involving all stakeholders as much as possible in its processes. As the EU DSO Entity will play a key role in the development of the new technical rules on grid management, it is indeed key that its work takes into account the input, vision and technical experience of all operators in the energy value chain. ACER recommends to heed the strong message arising from ACER’s consultation and encourages the EU DSO Entity to actively involve the stakeholders as much as possible in its processes.

text: 3.2.3. Diversity and gender balance

text: (48) Apart from the geographical and economical representation, the Statutes also contain a provision on the diversity and gender balance of the Board of Directors. Thus, point (f) of

text: Article 16.9

text: .3(2) of the Statutes urges the members of the EU DSO Entity inter alia to “strive to reach an acceptable level of diversity and gender balance” of the Board of Directors.

text: (49) ACER highly welcomes the inclusion of this diversity and gender balance objective in the Entity’s Statutes, which was not explicitly foreseen in

text: Regulation (EU) 2019/943

text: but which entirely connects with the regulatory objectives set out under both national and European legislation. Unfortunately, the wording of point (f) remains very weak, as it limits itself to a declaration of intent, which on its own does not ensure an acceptable level of balance.

text: (50) ACER recalls hereby the European Commission's new EU Gender Equality Strategy 2020-2025 adopted on 5 March 2020 and the Commission President’s wish to unblock the 2012 proposal for a Directive on improving the gender balance on corporate boards, which sets the aim of a minimum of 40% of non-executive members of the under-represented sex on company boards.

text: (51) At national level, ACER notes that the Belgian Electricity Market Law of 29 April 1999 similarly foresees the mandatory participation of at least one third of each gender

text: at the Board of Directors of grid operators. Also the Belgian federal law of 28 July 2011 requires that at least one third of the Board of Directors of large public companies and large registered private companies should be female.

text: (52) Pursuant to Article 3 of the Statutes, the EU DSO Entity will be established under Belgian law. However, no legal provision on gender-balance would impact International Associations IASBL under Belgian law, other than through explicit provisions in their statutes.

text: (53) Given that binding quotas drive more rapid progress than soft measures to reach gender-balanced participation , ACER recommends the EU DSO Entity to examine ways for imposing stronger requirements in the Statutes in order to reach a sufficient equilibrium at the Board of Directors. In particular, ACER encourages the inclusion in the statutes of a mandatory gender quota to be respected by the Nomination Committee when proposing a Board of Directors.

text: 3.2.4. Deadlock in the voting procedure

text: (54) Articles 15.13 and 15.14 of the Statutes lay down the criteria as to when a decision of the General Assembly is either adopted or rejected. The thresholds contained in these articles contain however a risk that a proposal is at the same time adopted and rejected, thus effectively leading to a deadlock in the voting procedure.

text: (55) The risk contained in the Statutes actually does not come from the DSOs, but stems directly from the wording of

text: Article 54(1)

text: (c) and (d) of

text: Regulation (EU) 2019/943

text: , which the Statutes have duly followed.

text: (56) Indeed, according to

text: Article 54(1)

text: (c)(i) and (ii) of

text: Regulation (EU) 2019/943

text: , the members of the EU DSO Entity are given a number of votes proportional to the number of their connected customers. 65% of the votes cast (in favour or against a proposal) would be necessary to get the quorum to take a decision.

text: (57) According to

text: Article 54(1)

text: (c)(iii) of

text: Regulation (EU) 2019/943

text: , a decision is adopted when 55% of the members vote in favour (according to the principle of one member, one vote). The number of consumers served by each member (a proxy of the population) therefore does not play a decisive final role in the adoption of the decision.

text: (58) Based on the combined reading of

text: Article 54(1)

text: (c)(iii) and

text: Article 54(1)

text: (d)(iii) of

text: Regulation (EU) 2019/943

text: , a decision of the General Assembly can therefore simultaneously be adopted and rejected, which thus entails a risk for the efficient governance of the EU DSO Entity.

text: (59) The proposed Statutes of the EU DSO Entity appear to have taken into account this risk, be it partially.

text: Article 15.13

text: (b)(i) of the Statutes introduces a new criterion for the approval of the decision, by requiring that more than 50% of the votes attributed to the members present or represented need to be in favour of the proposed decision.

text: (60) The additional criterion attenuates the risk of a stalemate situation in the voting procedure. However, as the risk is not entirely annulled by the measure, ACER encourages the EU DSO Entity to take a pragmatic and constructive approach in case the event would nonetheless occur, in order to allow for an efficient decision-making process. If this situation would however become a recurrent problem in the future, ACER would in that case recommend the EU DSO Entity to revisit and amend the Statutes on this particular aspect.

text: 3.2.5. Conflict of interest

text: (61) In order to ensure the integrity and reliability of the procedures of the EU DSO Entity, conflict of interest provisions are appropriately included in the Statutes. Whereas Article 15.19 of the Statutes address the possible risk for procedures at the Assembly, Article 16.25 of the Statutes contains the conflict of interest obligations for the Board of Directors.

text: (62) Although the nomination committee is not entrusted with any decision-making power, its role in the election procedure can under certain circumstances be influential. Yet, apart from the relevant obligation regarding the diversity of this committee, few obligations rest upon the members of the nomination committee themselves.

text: (63) In order to ensure that the election procedure of the Director and President occurs in full impartiality, ACER recommends that a similar conflict of interest clause is also foreseen for the members of the nomination committee, established pursuant to Article 9.1 of the Statutes.

text: 3.2.6. Tasks of the EU DSO Entity

text: (64) During the consultation, 4 stakeholders proposed that the EU DSO Entity should set for itself additional tasks alongside those listed in

text: Article 54 of Regulation (EU) 2019/943

text: . Proposals were thus made for the Entity to be fully involved in the drafting of the TYNDP, a process currently led by ENTSO-E and ENTSOG, and also to set up

text: a TYNDP for electricity distribution to complement the existing TYNDP for electricity transmission. Furthermore, it was argued that the EU DSO Entity should play a role in the Trans-European Networks for Energy (TEN-E) Regulation, whereby the TYNDP for electricity distribution could provide a basis for the identification and selection of smart distribution grid projects. Other stakeholders recommended the EU DSO Entity to be more engaged in the coordinated planification of gas and electricity networks and coupling of gas and electricity networks/technologies (smart grids), to reflect the EU decarbonisation objectives in the Statutes or code of conduct, or to promote best practices on RD and innovation and to set up a dedicated Expert Group thereto.

text: (65) The proposed additional tasks and objectives do not appear to contradict the tasks already assigned to the EU DSO Entity by

text: Regulation (EU) 2019/943

text: . Yet, given that the EU DSO Entity still needs to be established, it does not seem opportune at this stage to already explicitly foresee new statutory tasks or Expert Groups. Instead, ACER recommends the EU DSO Entity to work on the basis of Article 4 of its Statutes, be it that the tasks defined herein should be interpreted broadly to take into consideration the European Green Deal policy objectives.

text: 3.2.7. Funding of the EU DSO Entity

text: (66) Article 23(4) of the Statutes relates to the funding of the EU DSO Entity, and clarifies that the EU DSO Entity “can be funded by, amongst other things, subsidies, membership fees, contributions, loans and own revenue. The EU DSO Entity can obtain funding by any legal means”.

text: (67) It is not entirely clear what is meant by the “contributions” referred to in Article 23(4) of the Statutes. If interpreted broadly, the term could be understood as also allowing contributions from e.g. the industry or other particular stakeholders.

text: (68) If so, ACER would have serious concerns with such broad interpretation. It recalls that

text: Article 53(7) of Regulation (EU) 2019/943

text: requires that “The costs related to the activities of the EU DSO entity shall be borne by the distribution system operators that are registered members and shall be taken into account in the calculation of tariffs. Regulatory authorities shall only approve costs that are reasonable and proportionate”.

text: (69) In addition, ACER notes that Article 13(1) of the Statutes states that “The funds required to carry out the tasks of the EU DSO Entity will be raised by contributions from the Members and Associate Members.”

text: (70) ACER wishes to underline that the mission of the EU DSO Entity as working for the common Union interest is of primary importance. The European legislator indeed envisaged the EU DSO Entity as a neutral expert entity which would “neither represent particular interests nor seek to influence the decision-making process to promote specific interests”.

text: Article 13(1)

text: and Article 23(4) of the draft Statutes should be read together, and in line with

text: . In order to create and maintain trust amongst all stakeholders that the core principles mentioned in the previous recital will be complied with, ACER considers that the Entity shall not receive any funding from stakeholders, other than from its own members. The funding of the EU DSO Entity should not induce, or be perceived to induce, the EU DSO Entity to act as a lobbying organisation.

text: (72) In addition, ACER recommends to communicate from the outset publicly, regularly and in a transparent manner about the funding of the EU DSO Entity and its use of the various sources referred to in Article 23(4) of the draft Statutes, and to insert a provision in this respect in the Statutes.

text: 3.2.8. List of initial potential members

text: (73) ACER notes that the list of initial potential members requires further revision.

text: (74) Thus, the list of initial potential members indicates that Slovenia would be having 5 DSOs.

text: (75) However, this is not correct, as Slovenia has only one DSO, i.e. SODO d.o.o. This DSO has signed contracts with five individual electricity distribution companies (EDCs) in Slovenia: Elektro Celje, d.d., Elektro Gorenjska, d.d., Elektro Ljubljana, d.d., Elektro Maribor, d.d., and Elektro Primorska, d.d. The signed contracts concluded between SODO d.o.o. and the aforementioned EDCs cover the use of the electricity infrastructure and the provision of services for the electricity DSO for all connected customers to the distribution system in Slovenia. The number of all connected customers from all EDCs can thus be used as connected customers on the DSO grid.

text: (76) In addition, it appears that some DSOs are mentioned twice in the list. For some DSOs, the information related to their number of connected customers is also missing.

text: (77) ACER recommends to correct the identified inconsistencies and lacunas in line with the above comments,

text: HAS ADOPTED THIS OPINION:

text: ACER considers the statutory documents of the EU DSO Entity to be overall compliant with the specific criteria and guiding principles of Chapter VI of

text: Regulation (EU) 2019/943

text: On particular aspects, this opinion has highlighted possible ways to improve the statutory documents even further or indicated situations to which the EU DSO Entity should pay

text: particular attention (eg, with respect to the level of transparency in the funding of the EU DSO Entity, the deadlock in the voting procedure, or the need to ensure a balanced geographic representation of the Board of Directors).

text: For the reasons laid down in this opinion, ACER considers both the majority option and the minority option related to the election of the President to be in compliance with

text: Regulation (EU) 2019/943

text: . However, ACER does note that the Statutes as reflected in the majority option have the support of three out of four European DSO Associations, and, depending on the interpretation, may more closely implement

text: Article 54 of Regulation (EU) 2019/943

text: Given the need to have an efficient and stable set of Statutes, ACER recommends that, if the members do not find an agreement amongst themselves which of the two options to decide on, preference should be given to the version that most closely implements

text: Regulation (EU) 2019/943

text: Article 54

text: , and thus to the majority option. Due to the various links between the General Assembly and the Board of Directors, the approach may in addition help the internal decision making process and facilitate dialogue and leadership both within the EU DSO Entity and with external parties.

text: This opinion is addressed to the European Commission.

text: Done at Ljubljana, on 25 August 2020.

text: - SIGNED -

text: Fоr the Agency The Director

text: C. ZINGLERSEN