REGULATORY AUTORITIES

SETTING-UP AND MISSION DURING MARKET OPENING

Nina Grall-EDLER3rd MEDREG IMME Seminar – 11/12 September 2013 - Tunis

1. MARKET OPENING – THE ROLE OF REGULATORS

2. WHAT IS NEEDED FOR EFFECTIVE REGULATORY WORK?

3. MARKET INTEGRATION / HARMONISATION – THE IMPACT OF REGULATORY CROSS-BORDER COOPERATION

4. WHAT CAN BE EXPECTED FROM EFFECTIVE REGULATION?

OVERVIEW

STARTING ASSUMPTIONS FOR ELECTRICTY NETWORKS

natural monopolies – investment costs

essential facilities

regulation required to ensure fair competition

AREAS OF POTENTIAL BARRIERS TO COMPETITION DEFINE ROLE / RESPONSIBILITIES OF REGULATORS

THE ROLE OF REGULATORS [1]

THE ROLE OF REGULATORS [2]

POTENTIAL DISCRIMINATION / MISFUNCTIONING

REGULATORY ACTIONS / RESPONSIBILITIES

access to network

connection to network

level / equality of network fees

network use

abuse of dominant market position / anti-competitive behaviour

setting TPA and CAM rules

setting connection fees

setting network fees

ensure transparency, setting balancing rules and CMP

favorable market conditions

e.g. capacity / volume release in cooperation with COMP

authorities

facilitating investmentsensuring security of supply

RES integrationcustomer protection

REGULATORY INDEPENDENCE

Practical implementation

Compliance and committment of other state bodies

ACTIVE REGULATORS

defining, not administrating the market!

active cooperation with COMP authorities – ref. ex ante / ex post role

FULL SET OF REGULATORY POWERS

Implementation by letter and spirit

WHAT IS NEEDED [1]

INDEPENDENCE [Third Energy Package]

Legally distinct and functionally independent

Acting indepently

Taking autonomous decisions

Exercising powers impartially and transparently

Annual budget

Human and financial resources

Management

STRONG REGULATORY POWERS [Third Energy Package]

Issue binding decisions

carry out investigations on functioning of the market

Impose proportionate measures to promote competition

Require any information from undertakings

Impose effective, proportionate and dissuasive penalties

WHAT IS NEEDED [2]

WHY MARKET INTEGRATION / CROSS BORDER TRADE ?

increased liquidity / competition impact of more suppliers / traders increased security of supply more generation sources supporting network operation (security) generation reserves,

balancing Some markets cannot function properly on national level only – lack of

liquidity, lack of market players cost of non-integration economies of scale, competitive structures

MARKET INTEGRATION REQUIRES HARMONISED MARKET RULES ACROSS BORDERS

technical / operational rules market rules – network access, capacity allocation, congestion

management, balancing financial rules – transit compensation

CROSS BORDER COOPERATION[1]

EXAMPLES

voluntary [1] formally established but non binding: ERGEG, ECRB

voluntary [2] formally established but non binding: CEER, ERRA

obligatory binding : ACER

EXPERIENCE - VOLUNTARY VS. OBLIGATORY COOPERATION

Impact on committment – by regulators and stakeholders

CROSS BORDER COOPERATION [2]

ECONOMIC GROWTH / INCREASE OF SOCIAL WELFARE

Breaking up inefficient national monopolies cost efficiency positively impacts state budget

Strengthening the economic conditions of national energy network industries – by ensuring cost-reflective tariffs

Increasing service quality and consumer protection

Additional job opportunities

Controlling network security

Coordinated treatment of energy policies that affect each other RES integration – infrastructure development – energy efficiency – sustainability – security of supply – competition

WHAT CAN BE EXPECTED FROM EFFECTIVE REGULATION

„HONEST“ LIBERALISATION POLICY IS KEY

Regulated energy prices

Regulated chain – generation, single buyer models

No political interventions into regulatory work / strong regulator

REFLECT IMPACTS OF OTHER POLICY AREAS

RES infrastructure

BUT...

THANK YOU VERY MUCH FOR YOUR ATTENTION!

QUESTIONS?

DISCUSSION

CONTACT

Nina Grall-Edler

Head of ECRB Section – Regulatory Affairs

Energy Community Secretariat

E: nina.grall@energy-community.org

W: www.energy-community.org

BACKGROUND SLIDES

1. Legally distinct and functionally independent

- Independent from industry (2nd p) + any public body

- Decide on own management no hierarchy-links, no office / personell sharing

2. Act indepently

a. Not seek or take instructions

b. No other institution to give instructions

3. Take autonomous decisions

a. Ex ante

No external interference in decisions

` Develop own Work Program without need for consent

b. Ex post

Decisions immediately binding

Decisions cannot be subject to review / approval / veto exemption juridical review

IN DETAIL – INDEPENDENCE [1]

4. Separate annual budget with autonomy in its implementation

- Can be part of the state budget

- Approval by parliament possible but limited to global financial framework, no influence on NRA priorities!

- Appointment of NRA baord members possible but not resulting in instructions!

5. Human and financial resources

- Adequate to execute powers [ref. ITO!]

- Benchmark: other NRAs / bodies (e.g. national banks)

6. Management

- Fix term 5-7 years, renewable once

- Rotation scheme

- Members appointed before the implementation of the 3rd package: max 7 years +

- Relief from office only if not compliant with independence criteria

IN DETAIL – INDEPENDENCE [2]

7. Exercising powers impartially and transparently

- „Impartially“: neutral, based on objective criteria and methodology

- „transparently“

- Adopt and publish procedures / decision making rules

- Publish information on organisation and structure, including contact points

- Consult stakeholders before taking decisions – at least by publishing drafts, ideally including PCs / hearings / publication of comments and their reflection

- Reasoned opinions – appropriate for juridical review

Remarks

- Setting of national energy policy by government not affected

- Independence does not contradict cooperation

IN DETAIL – INDEPENDENCE [3]