Actions for establishing a Single Auction Office for CSE

9th IG Meeting

 

Milan, 18th July 2008

AGENDA

Legal study

Mission and Perimeter of the SAO

Governance of the SAO

Draft Business Plan

Indicative Implementation

Achievements so far

Legal Study (1)

What was investigated by the W&S Study?

Corporate Governance

Share Capital / Shares

Allocation of Profits

Minority shareholder’s Rights

Distinction between one-tier system and two-tier system

Tax Study Corporate Taxes VAT on activities of the Company Wage Taxes Withholding Taxes

Legal Study (2)

Relevant Results and major findings of the W&S Study:

For each participating Country the best suited Company Form has been evaluated and recommended

There are differences in the organizational structure of preferred Company Forms, however they are of minor importance from operational business point of view of the SAO

Taxation is very similar in AT, FR, GR and IT, whereas CH and LI have advantages in this issue. Caused by the fact, that the SAO will operate as an NPC, this issue should be also of minor priority.

The detected differences between the recommended Company Forms mainly concern the organizational structure (MD, SB or BoD, GA) and their flexibility ( Contractual Issues, By-Law’s,…)

Independent of the country chosen, each legal form recommended per country is suitable for the needs of the SAO!

AGENDA

Legal study

Mission and Perimeter of the SAO

Governance of the SAO

Draft Business Plan

Indicative Implementation

Achievements so far

Mission and Perimeter of the SAO (1)

Mission

Perimeter of SAO

Activities to be further performed by TSOs

Governance

Contractual Issues

Staff and estimated costs

Indicative Implementation

Mission and Perimeter of the SAO (2)

Mission:

SAO of CSE Region is acting as a Service Provider for TSOs (and on behalf of TSOs).

SAO shall perform explicit cross border capacity allocations on the Italian borders. Other borders may be added in the future.

Mission and Perimeter of the SAO (3)

Perimeter of SAO:

Registration of Market Participants

Long and mid term explicit auctions (yearly, monthly)

Daily explicit auctions

Secondary Market activities

Clearing and Settlement

Auction Income Sharing and Distribution (the definition of sharing rules remains TSO’s responsibility)

Market Information and Transparency services

Reporting to TSOs

Other potential activities:

Intraday Capacity Allocation (to de decided further)

Mission and Perimeter of the SAO (4)

Activities to be further performed by TSOs :

As a general principle, all sensitive issues shall stay within the activities of TSOs (NTC, ATC, products, market design, rules,…)

Customer Relationship can further be done by relevant single TSOs on strategic and sensitive activities

Claims handling and ‘new’ services have to be elaborated in detail in the relevant documents

Decentralized Matching is proposed and recommended

Decentralised Nomination is proposed (at least for the beginning)

Relation with Regulators

general principle: all strategic issues shall stay in the responsibility of TSOs!

AGENDA

Legal study

Mission and Perimeter of the SAO

Governance of the SAO

Draft Business Plan

Indicative Implementation

Achievements so far

Governance of the SAO – main principles

Governance:

Joint TSOs define jointly the SAO mandate and each TSO shall have

the same rights of access to and control of the. Each TSO shall hold the same amount of shares of the SAO.

Independency The SAO shall not be a subsidiary of a single TSO acting as a

full independent legal entity. The SAO shall have full legal rights.

Transparency Clear and easily accessible information towards national

authorities and market participants (e.g. auction rules, auction results,…).

Clear and easily accessible and controllable information towards the SAO shareholders (i.e. clear business processes).

AGENDA

Legal study

Mission and Perimeter of the SAO

Governance of the SAO

Draft Business Plan

Indicative Implementation

Achievements so far

Business Plan – first preliminary estimation

Staff and estimated costs – a first preliminary estimation:

Based on a very preliminary draft business plan a staff and cost estimation has already been performed.

Up to 13 people are deemed as necessary to ensure SAO’s services towards the market.

Overall cost are estimated 2,5 to 3 Mil. EUR pa, (starting with 2010, aliquot for Q3 and Q4 in 2009).

Assuming 6 shareholding TSOs, this would be around 400.000,- to 500.000.- EUR pa for each TSO.

It is important for TSOs that Regulators recognise such costs!

AGENDA

Legal study

Mission and Perimeter of the SAO

Governance of the SAO

Draft Business Plan

Indicative Implementation

Achievements so far

Missions, Perimeter & ind. Implementation (9)

Indicative Implementation

An indicative Project Plan, in their different Project Phases (Orientation, Implementation, Operation) is as follows:

2008 2009 2010

Q1Q2 Q3Q4 Q1Q2 Q3Q4 Q1Q2 Q3Q4

SAO – activities            

Orientation X X X

Implementation X X

Operation X X X

For reaching that goal* further actions have to be taken!

Active support of Regulators is precondition!

* e.g. the merger/cartel notification and IT tendering process have to start late 2008!

AGENDA

Legal study

Mission and Perimeter of the SAO

Governance of the SAO

Draft Business Plan

Indicative Implementation

Achievements so far

Achievements so far

All TSOs committed themselves for the creation of a regional Single Auction Office acting as a service provider

SAO missions & perimeter of activities have been agreed

Agreement on location and governance structure has not been reached yet

Possibility to extend SAO to other borders of different Regions

MoU has been drafted and currently is under the approval of TSOs relevant bodies