Transcript No Slide Title

European Commission
Regulation of electricity markets
in the European Union
Lars Hollner
European Commission
Directorate General for Energy and Transport
APEX annual
conference 2005
Development in time
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1996 and 1998: 1st Internal Market Directives on gas
(98/30/EC) and electricity (96/92/EC)
Directives effective in Member States as from 1998
and 2000
Deficits and shortcomings resulted in 2nd package
Directive 2003/54/EC and 2003/55/EC adopted in
November 2003
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Effective as from 1 July 2004
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However, lack of timely transposition in national law
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CommissionProgress Report this month
Directorate General for Energy and Transport
The European approach
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Creation of one internal market for energy rather
than 25 liberalised, but separated national markets
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Principle of subsidiarity
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Approach based on Directives, that means:
Mandatory with respect to objectives, but free
with respect to the means to achieve the
objectives
Directorate General for Energy and Transport
Summary of New Directives
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Full market opening timetable
Legal and functional unbundling of
networks
Regulated Access to Networks with
published tariffs and methodology
approved in advance by regulators
Deadline July 2004 for most
provisions
Deadline July 2007 for full market
opening and DSO unbundling
Directorate General for Energy and Transport
Role of regulators
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Regulator is in charge of
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network access tariff methodology:
Art. 23(2)(a)
balancing methodology: Art 23(2)(b)
cross border capacity allocation:
Regulation Art 9
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regulators must have access to
information (e.g. accounts of system
operators)
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regulators must have some form of
sanction against companies to ensure
compliance
Directorate General for Energy and Transport
Separation of network operators
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Unbundling
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Legal unbundling of TSO from July
2004,
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Additional measures to ensure
independent acting
- Management may not participate in
other activities of the integrated
undertaking
- No conflict of interest
- Compliance programme
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Legal unbundling of DSO not later than
July 2007, but management unbundling
applies from 2004 onwards
Directorate General for Energy and Transport
Market Opening
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Market Opening
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deadline for non-households July 2004
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deadline for all customers July 2007
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Generation market open since 1999 (first
Directive). Anybody can build generation
capacity; e.g. large users, CHP producers.
Directorate General for Energy and Transport
Role of European Commission
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Propose EU legislation, for
adoption by Council and Parliament
Monitor and enforce compliance
with EU rules
Adopt implementing measures in a
limited number of issues related to
cross-border transmission –
regulatory decisions at EU level.
Apply EU competition rules to the
energy sector
Directorate General for Energy and Transport
Role of Member States
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Implement effectively EU framework
rules at the national basis
Take all necessary measures to
make the market work in practice
Ensure that regulatory authorities
have the necessary powers and
means (budget, staff) to effectively
play their role
Directorate General for Energy and Transport
Role of regulators
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Co-operation of national regulators
important – national regulatory
decisions impact on EU market
Commission set up advisory group
of energy regulators, to promote cooperation and encourage
harmonised approaches to
regulation
Directorate General for Energy and Transport
Role of power exchanges
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Number of power exchanges has increased
over time.
At the moment 11 power exchanges exist
in the EU electricity market
Liquidity in most power exchanges is still
limited but increasing
Power exchanges play an important role in
ensuring transparency in the market and
facilitating integration of national markets
into regional markets
Need to re-enforce oversight on power
exchanges to exclude anti-competitive
practices?
Directorate General for Energy and Transport
The EU electricity market – remaing deficits
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Late transposition of new directives
– not yet fully effective
Lack of integration of national
markets – no price convergence,
largely due to insufficient
infrastructure
Market structure: dominant
positions of incumbents in many
national markets
Directorate General for Energy and Transport
The EU electricity market – remaing deficits
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Effectiveness of regulators appears
to differ between Member States
Unbundling of network business
not yet satisfactory in practice,
despite a growing trend towards
ownership separation at TSO level
Customers response still
underdeveloped
Directorate General for Energy and Transport
Summary
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EU Energy Law is reaching a state of
maturity after a long period of
development
Main measures are in place for a
competitive sector but they need to
be effectively implemented at
national level
Further integration of national
markets is key – power exchanges
play an important in this respect
Directorate General for Energy and Transport