Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

ERGEG Electricity Regional InitiativeCentral-East Europe

Tahir KapetanovicE-Control

2 Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

Highlights

ERGEG Electricity Regional Initiative – the whatabouts

Central East Europe region: history, present status, prospects

3 Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

Highlights

ERGEG Electricity Regional Initiative – the whatabouts

Central East Europe region: history, present status, prospects

4 Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

ERGEG Electricity Regional Initiative

5 Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

ERGEG ERI – Rationale and Underlying Thoughts

Regulators as the main motivating force

Participation, initiative and actions from other key players are crucial: MS governments, TSOs, stakeholders, etc.

Extensive consultation of all parties by a variety of methods

Complement, not duplicate any existing initiative

Flexible approach is mandatory – but specific actions and deliverables required too

Monitoring and reporting are key tools

Focus on coherence in governance and framework since powers and duties vary between the different Member States

6 Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

ERGEG ERI – Organisation

ERGEGRegional Co-ordination Committees (RCCs). Each RCC :- comprises regulators from the region;- autonomy, own decision making process, chairs stakeholder groups (mini fora)

IMPLEMENTATION GROUP

Includes TSOs, Market Operators (where appropriate) and other

stakeholdersThis is the ‘do-er’ for each Regional

InitiativeChaired by RCC

STAKEHOLDER GROUP(mini-fora)

Wide participation including market players

Each SG chaired by RCC and used for consultation

FLORENCE FORUM

Overall forum for discussing progress in regional initiatives and pan-

European consistency

MEMBER STATES

Input into identifying and solving market integration issues – e.g.

legislative proposals, Member State to Member State interface

EU COMMISSION

7 Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

Highlights

ERGEG Electricity Regional Initiative – the whatabouts

Central-East Europe region: history, present status, prospects

8 Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

ERGEG RI CEEwww.ergeg.org->RI Electricity->CEE

First initiative already end of 2003

1st CEE Mini Forum 01/2005

RCC kickoff 05. April 2006, followed by regular RCC meetings

1st Implementation Group* 25. April 2006

2nd CEE Mini Forum / Stakeholders Group 22. June 2006

2nd Implementation Group* 14. July 2006

3rd Implementation Group* 29. Sept 2006

4th & 5th* IG 13-14. Dec 2006

* IG on CM and Transparency

GermanyGermanyPolandPoland

CzechCzechRepublicRepublic

AustriaAustria

SlovakiaSlovakia

HungaryHungary

SloveniaSlovenia

9 Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

Priority Issues

Short term 2006/2007:Congestion Management with full implementation of CM Guidelines

Information management and transparency in line with the ERGEG Guidelines

Identification of and dealing with market entry barriers

Coherence and harmonization of the regulatory competences

Mid term >2007Balancing markets integration

Market design issues of relevance for regional market

The degree of market evolution in CEE countries varies - The degree of market evolution in CEE countries varies - priority issues to foster market development !priority issues to foster market development !

10 Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

CEE CongestionManagement 09/2006

10/2006

12/2006

11/2006

07/2007

08/2007

09/2007

08/2006

07/2006

01/2007

02/2007

03/2007

04/2007

05/2007

06/2007

Draft concept of technical parameter calculation

Trial operation

Determination of revenue distribution

modelDescription and acceptance of data

transfer process

Test calculations

Multilateral agreement with

external TSOs on data provision

Installation of tools for data transfer with TSOs inside and outside CEE

region

HLM 5.Dec.

HLM 25.Oct.

IT installation

IT Specification sheet and

Tender for IT

Description and acceptance of implementation

design

Changes in UCTE Operation Handbook

Description of scheduling process

Notification EC merger regulation

Syndicate agreement and/or Inter TSO contract

Determination of tasks of Auction

Office (AO),Business plan,

Legal framework,Decision on AO

location

Board decisions

Articles of association

Foundation of AO

Staff recruiting

Preparation of Auction Rules (AR)

10/2007

Criteria for approval of concept of technical

parameter calculation

Approval of concept of technical parameter calculation by HLM

Approval of concept of technical parameter

calculation by IG

Approval of revenue distribution model by HLM

Market Information

Approval of AR by IG

Approval of inter TSO contract by IG

Approval of revenue distribution model by IG

Approval of MLA with external TSOs by IG

Contractual issues

Technical issues

Regulatory issues

Project plan (preliminary)

11/2007

Work progress:

Draft concept of technical parameter calc. (daily process).

First test calculations started (on technical parameter concept).

Description of scheduling process.

Update of business plan and decision on location of Auction Office.

Letter to UCTE submitted in order to impose changes in Policy 2, Operation Handbook.

Revenue distribution allocation scheme already started.

11 Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

CEE Information Mgmt & Transparency

Objectives: (i) achieve adequate transparency by ensuring (ii) harmonized data publication and (iii) easy information access

Dedicated Implementation Group for quick implementation

Evaluation of the current situation against the ERGEG Guidelines on Information Management and Transparency

CEE Regulators to ensure stepwise approach: (i) Transparency cf. Regulation and CM Guidelines in 2006; (ii) Implement with „best effort“ ERGEG Guidelines in 2006/2007; (iii) contribute to the establishment and implementation of the legally binding EU framework on transparency, within the scope of ERGEG work

12 Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

CEE Market Entry Barriers

Wholesale marketBureaucratic licensing procedures

Lack of appropriate market places

Insufficient coordination of TSOs

All stakeholders commited to remove these obstacles

Practical solutions with roadmap to be defined Q1/2007

Retail market barriers to be addressed at a later stage

13 Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

CEE Regulatory Competences

EU Directives legal implementation, regulatory models and competences differ in the CEE countries

In order to remove undesired impacts on the market functioning and evolution (e.g. in cross-border issues) better coherence and compatibility of regulatory competences is needed

Member States‘ representatives informed at the 2nd CEE Mini Forum / Stakeholders Group 06/2006

Dedicated Implementation Group with CEE Regulators and Member States‘ representatives to address this issue 2007

14 Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

CEE Summary

Degree of market evolution and the related framework differ

Resolving the defined priority issues will foster market integration and help deliver benefits to the customers

All involved parties are committed to practical solutions

The ongoing work shows already important results

Further effort required to achieve the (ambitious !) objectives

Coherence with other regions is ensured through ERGEG

15 Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

Actual Information: www.ergeg.org

16 Creating a Single European Energy Market – the Regulatory PerspectiveLondon, 30. January 2007

Thank you for your attention !

Tahir KapetanovicDirector Electricity

Energie-Control GmbHAustrian Energy Regulatory AuthorityRudolfsplatz 13a, A-1010 Vienna,

Austria

Tel: +43-1-24724-500tahir.kapetanovic@e-control.atwww.e-control.at