SEE Wholesale Market Opening Electricity Industry View Eurelectric

8/10/2019 SEE Wholesale Market Opening Electricity Industry View Eurelectric

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15th Athens Forum

Wholesale Market Integration

SEE Wholesale Market Opening:

Electricity Industry Views

Tomaz Lajovic

Chairman of the Ad-hoc Group South East Europe

Athens, 26 November 2009


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Wholesale market reform will be a fundamental solution of the

main barriers to the market opening and investments climate

attractiveness.

Energy Community plays a key role in the harmonisation of the

market rules in SEE thus creating long term regulatory

predictability and visibility; however Governments and

Regulators commitment is essential. Market design should provide for incentives to remunerate new

entrants and appropriately address the possibility of the existing

generation power plants (not committed to EU emission

standards) exercising dumping on the market. 2

SEE Market Opening Study:

EURELECTRIC feedback (1)


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4/11

Political commitment to market liberalisation both in legislation

and in implementation of best practices

Credible and stable regulatory framework to attract investors

Efficient market infrastructure to enhance liquidity and trade

End of price regulation (wholesale and retail) to give correct

price signals and stimulate competition

Abolishment of import/export and other transaction based fees

Non-discriminatory Third Party Access

Adequate transparency and customer information

Pre-requisites for SEE Market Opening:

Completing the Liberalisation process

4


5/11

Price Regulation in SEEDirect ways:

Regulation of price for end consumers (to end by 2015)

Regulation of producers sale price

Indirect ways:

Export/import restrictions to influence a national merit order

Decrease of ATC offered by TSO lowering the energy price in the local

market

Various transaction-based grid fees applied to wholesale transactions Administrative measures impairing market access

Consequences: no liquidity increase, no price convergence

No Market Integration!5


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7/11

Amended Congestion Management

Guidelines provide detailed provisions.

Point 1.2 forbids restrictions to access to the network if

there is no congestion

Point 2.9 forbids any kind of reserve prices in capacity

allocation

7

Any kind of monetary pre-condition for execution of cross-border

transaction applicable in the cases of no congestion is forbidden.


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Transaction-based grid fees have to be

abolished!

8

Flow = 0 MW

Grid fees charged for

10 MWh injected +10 MWh extracted

Transaction-based grid fees are not justified as they have no

direct influence on the flows, while reasonable scheduling fees

might be acceptable. Regulation 1228/2003, Article 4/1

10 MWh

Country 1

Trader CTrader C Trader DTrader D

Trader BTrader BTrader ATrader A

Country 2

10 MWh 10 MWh

Country 1

Trader CTrader C Trader DTrader D

Trader BTrader BTrader ATrader A

Country 2

10 MWh

Nominations for the same hour


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Fees Applied to Wholesale Transactions in

SEE: Some examples (1) Bulgaria: Export/import fees 8,97/MWh

Comment: These cross-border fees are transaction-based and applied to internal

metered injections/withdrawals as well

Greece: Import injection charges 2,5% (Athens Forum has beenaddressed a letter by the Greek regulator justifying these fees)

Comment: These cross-border charges are transaction-based and applied to internal

injections scheduled via Greek pool as well; however a specific problem with these

charges is that they are applied retroactively in the form of pro-rata decrease of the

volumes paid for resulting from the Greek pools day-ahead matching

DISCLAIMER: The figures above may not be entirely accurate and we

apologise for any inconsistency; however, based on a thorough scrutiny of

the legal texts, we believe this is the best information market participants

can gather from existing provisions. 9


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Fees Applied to Wholesale Transactions in

SEE: Some examples (2) Romania: Export/import fees 0,71/MWh 6,29/MWh

Comment: These cross-border fees are transaction-based and applied to internalmetered physical injections/withdrawals as well

Bosnia: Export fees 4,65/MWhComment: These cross-border fees are transaction-based and applied to internalmetered physical withdrawals as well

DISCLAIMER: The figures above may not be entirely accurate and weapologise for any inconsistency; however, based on a thorough scrutiny ofthe legal texts, we believe this is the best information market participantscan gather from existing provisions.

10

Any kind of grid fee has to be charged only for actual metered flows, as

wholesale transactions have no direct effect on the system.

Abovementioned practices limit market integration potential.


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Legal reliability and long term regulatory visibility (including CO2treatment and ETS Directive phase-in) required to guarantee security ofinvestments

Poor transparency of market rules and complexity of procedures (includingsome licensing processes)

Interconnection capacity still low: need to maximise existing andincentivise new grid investments

Powers and independence of regulatory authorities still insufficient

CAO is positive initiative but limited progress: participation of BG and SR iscrucial for success

Wholesale liquidity very limited: need to establish harmonised day-aheadcapacity allocation and scheduling processes, facilitate power exchanges

Progress in implementation of the EU acquis can be improved: more

enforcement needed

Other relevant issues in SEE:

some conclusions

SEE Wholesale Market Opening Electricity Industry View Eurelectric

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