Recent Trends in Energy Regulation IEA-FTS of Russia Workshop on Global Energy Market Scenarios...
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Transcript of Recent Trends in Energy Regulation IEA-FTS of Russia Workshop on Global Energy Market Scenarios...
Recent Trends in Energy Regulation
IEA-FTS of Russia Workshop on Global Energy Market ScenariosParis, 28 May 2009
Kieran McNamaraCountry Studies Division
Why Liberalise and/or Regulate?
Monopoly regulation- The theory
Regulation- the building blocks
Electricity Market Design
Market designs differ but all share common features;• Regulatory oversight• Network unbundling• Regulated third party access• Competitive generation and retail markets• Comprehensive trading arrangements • Demand participation• Consumer protection
What’s a generation market??• Get the structure tight first time
– Single buyer– Bilateral contracts market– Centralised Pool
• Net pool• Gross Pool
– Trading and Balancing Mechanisms– Capacity Schemes
What are ancillary services?• Ancillary Services are products, other than
energy, that are required to ensure the secure operation of the transmission system.– Operating reserve– Reactive power– Frequency control– System support– Black start
The Final Frontier- Competition in Supply to Domestic and Small Consumers
Electricity Market Design
• No short cuts, liberalisation is not a one off event
• Strong and sustained political commitment required – a long-term vision
• Thorough and extensive preparation required• Consultation with all stakeholders• Process of continuous evolution• No one there yet!
Issues - When to benchmark..• How to determine the maximum
allowable revenues ?• How to determine the tariffs that yield
these revenues?• Operating costs – asymmetry of
information• The benchmarking challenge
Issues - Licensing Market Players
• Generation, transmission, distribution, supply, metering• Potential market participants must demonstrate:
– Capital resources– Management and technical skills– Relevant environmental and planning consents– Relevant connection and use of system agreements – gas and
power systems – financial codes (T&S)
• Administrative burden should proportional• Right to appeal
The EU as a driver for change -
• Electricity and gas directives• Third energy package• Unbundling debate• Still a long way to go• Competition policy the real tool – it
delivers results
European Competition Policy
• 2005 Energy Sector Enquiry• Vigilant when controlling mergers• Controlling State aid to energy companies • Anti-trust activities• Challenges long-term supply contracts• May 2010 – E.ON settlement• Many other successes
European Regulatory Agencies
Climate change challenge
Source: OFGEM
Sustainability and Energy Security
Source: OFGEM
Recent Trends in Energy Regulation
IEA-FTS of Russia Workshop on Global Energy Market ScenariosParis, 28 May 2009
Kieran McNamaraCountry Studies Division