Introduction to the Bundesnetzagentur (BNetzA)

Visit of FTSBonn 01.03.2010

Annegret GroebelInternational Relations / Postal Regulation

Bundesnetzagentur

2

Brief overview

01.01.1998: Regulierungsbehörde für Telekommunikation & Post (RegTP)• regulation of two sectors: telecommunications and

postal services

New responsibilities:• electricity, gas (both Jul 2005) and railways (Jan 2006)

regulation• RegTP renamed Bundesnetzagentur (BNetzA) in

July 2005

BNetzA’s task: • market intervention (deregulation) in order to• develop and promote sustainable competition

competition in these markets

3

BNetzA’s mission

• Establish and secure fair competition (all sectors)

• Provide and safeguard user interests, e.g. low-priced, efficient & eco-friendly supply of energy

• Efficient and reliable network operation (power & gas)

• Encourage efficient investment in infrastructure and promote innovation (telecoms)

• Promote development of the internal market of the European Union (all sectors)

• Ensure provision of elementary telecoms and postal services throughout Germany

4

The electricity market value chain

Transport and

Distribution networks Supply

Generation/Production

Wholesale trading

Potentially competitive market segmentsPotentially competitive market segments

„Natural monopoly“

►Regulation

„Natural monopoly“

►Regulation

> 1500 network

operators

4 electricity TSOs

22 gas TSOs

5

1 EnBW Transportnetz

2 E.ON Netz

3 RWE Transportnetz Strom

4 Vattenfall Europe Transmission

Source: VDN, Daten und Fakten 2005

Electricity Transmission System Operatorsin Germany

6

The Federal Network Agency

Sector-specific authority tasked with ensuring effective competition in the net-bound sectors

Telecommunications and Posts (since 1998),

Electricity and Gas (since 2005), and Railways (since 2006) HQ in Bonn

BNetzA employs ca. 170 staff in energy regulation, overall ca. 2600

Independent higher federal authority in the scope of business of the Ministry of Economics and Technology (BMWi)

7

Organization chart (1)

Headed by President and two Vice-Presidents• nominated by government upon proposal of Advisory Council• appointed by the President of Germany

Advisory Council• members of Upper House of Parliament & Lower House of

Parliament• advise BNetzA on various issues

Ruling Chambers key regulatory decisions executed by Ruling Chambers one chairman and two vice chairs clear rules for ruling chamber proceedings

o hearingso oral proceedingso participation in proceedingso investigation rights

independent rulings Departments: Economic, Legal and Technical for all five

sectors

8

Organization chart (2)

PresidentVice President Vice President

Management Office

President's Chamber (Ruling

Chamber 1)

Ruling Chambers2

3

4

5

6

7

8

9

Information Technology and

Security

Human Resource Accounting Dep.

Regional Offices of BNetzA

Department for International

Coordination & Postal Regulation

Department for Energy Regulation

Department for Railway Regulation

Department for Economic

Regulation Telecoms incl. numbering

Department for Legal Telecoms Regulation

Frequency Management

Technical Telecoms Regulation incl. standardisation

9

Organisation chart (3) Energy regulation – Ruling chambers

BK 6

BK 7

BK 8

BK 9

Ruling Chambers

BK 4BK 4Investment Budgets, Individual Electricity Network

Charges, Pipe-to-pipe competition

Electricity Network Access

Gas Network Access

Electricity Network Charges

Gas Network Charges

10

Ruling Chamber 6Access to Power Grids

Ruling Chamber 7Access to Gas Grids

Ruling Chamber 9 Gas Tariff Approval

Ruling Chamber 8Electricity Tariff

Approval

601 Economic Policy Issues

607 Gas Distribution Network Access

602 Incentive Regulation, Benchmarking

608 Electricity Transmission Grid Access, Cross Border

603 Market Watch, Monitoring Electricity/Gas

609 Gas Transmission Network Access, Cross Border

604 Unbundling & Legal

610 Use of System Charges, Electricity

605 IT based Data Processing, Renewables

611 Use of System Charges, Gas

606 Electricity Distribution Grid Access

612 Cooperation with State authorities

Department 6 Energy Regulation

Ruling Chamber 4Investment Budgets

Organization chart (4)

11

Independent regulator ?

BNetzA = higher federal authority located in scope of business of Ministry of Economics & Technology

What about independence? no influence by market players no influence on daily business by Ministry

Regulator has to be impartial

How can independence be guaranteed? clear separation of responsibilities rules that clearly define the roles institutional set-up

12

Independent regulator !

Transparency• consultations• oral hearings• publication of docs

Ruling chambers’ decisions• independent (consistency requirement)• no overruling by Ministry

No control at all?• Ministry can give directives, but they have to be

published• BNetzA decisions subject to legal review by independent

courts

13

Accountability

Annual report on all five sectors Activities report every two years on status and

development of telecoms & energy markets Monitoring report of energy sector Report of the Monopolies Commission to be

submitted every two years to report whether there is effective competition in the telecoms & energy markets

Report to the European Commission on energy matters to be submitted annually

Principles of its administration to be published at regular intervals

14

Energy Industry Act aims at a secure, low-priced, consumer-friendly, efficient, and environmentally compatible supply of electricity and gas (§ 1 (1))

Competition and security of supply are equal aims of regulation (§ 1 (2))

Electricity and gas networks have to be neutralised in order to create competition

Division of labourSectoral regulation vs. Competition law (1)

15

Basic split of energy competences between the Federal level authorities:

Federal Network Agency: Network regulation under the Energy Industry Act, inter alia: approving network access charges ex-ante setting-up an incentive regulation scheme ensuring non-discriminatory network access and set conditions taking steps against abuse of market position by network operators monitoring unbundling provisions setting fines, where appropriate

Federal Cartel Office:Application of competition law in Generation/production and supply: Abuse of market power in wholesale markets, control of end-user prices, merger control

Division of labourSectoral regulation vs. Competition law (2)

16

BNetzA & BKartA (1)

Regulatory body for sector regulation:• economic and technical regulation• economic regulation: ex-ante & access regulation,

ex-post control of abusive practices• technical regulation: frequency allocation, technical

standards, radio monitoring etc. Cartel office for competition policy Clear line between regulator and cartel office:

• definition of regulated services laid down in:• separate laws (e.g. Telecommunications Act, Energy

Industry Act)• legal provision for information exchange to ensure legal

security and avoid misunderstanding and double work

17

BNetzA & BKartA (2)

Collaboration between regulator and cartel office:• comments by cartel office prior to publishing decisions• agreements on defining relevant markets & determining

SMP• facilitates investigating for both authorities

Applying same standards:• same threshold for dominance applied to all sectors to

ensure close link between common competition policy

and sector regulation

18

Split of regulatory competencies Regional competence for networks with fewer than 100.000

customers Regional competence for networks not crossing State borders

Regional Regulatory Authorities control tariffs, system responsibilities, unbundling provisions, conduct abuse proceedings for their operators

BNetzA has in addition sole responsibility for EU level contact Transfer of competencies from the States to BNetzA is possible

(currently 6 out of 16 States have indeed transferred their competencies to BNetzA, all in all BNetzA regulates 245 electricity and 220 gas networks)

Uniform regulation ensured through a joint Committee of BNetzA andthe 10 existing Regional Regulatory Authorities

Division of labourFederal vs. regional level

19

Baden-Württemberg

Saarland

Rheinland-Pfalz

Hessen

Nordrhein-Westfalen

Hamburg

Brandenburg

Sachsen-Anhalt

Sachsen

Bayern

Division of labour10 Regional Regulatory Authorities

20

Thank you for your attention!

Annegret Groebel

Department for International Relations / Postal Regulation

Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen

P.O. Box 80 01, 53105 Bonn, Germany

E-Mail: annegret.groebel@bnetza.de

Phone: +49-228-14-9040