Transcript www.gie.eu

Prospects of a Regional Gas Regulatory
Framework Fostering a Sustainable Market-Based
Investment Climate
Michael Caramanis
Greek Regulatory Authority for Energy (RAE)
GIE Annual Conference, Athens, 3 November 2005
The natural gas markets in the SEE region…
 Small and emerging national markets in Western Balkans, more
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mature national markets in Eastern Balkans
In some countries gas market development has stalled,
especially regarding distribution and gas fired power plants
Existing gas network interconnections are far from optimal
Long Distance pipelines used for Transit embody significant
interconnection capacity but are not always open to TPA
=>There are Physical as well as Legal Barriers to market
based flow of gas between the SEE countries
Limited indigenous production in the region
Very few upstream suppliers
=>Need to diversify sources and enhance upstream competition
Also significant Demand for Transit through SEE of Caspian
and Middle Eastern gas to EU
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Need for Infrastructure Investment in:
 Distribution networks:
 Following
in-depth studies showing invetments are
feasible and and financially sound
 Transmission networks and entry points supporting:
 Transit of gas from East to West
 Interconnection of existing national
networks and
reinforcement of existing interconnections and/or national
grids
 Diversification of supply sources to SEE countries and te
EU (LNG Terminals may play important role)
 Storage facilities
 Possibly of lower priority at this point (risky, long
implementation periods), but consideration at an early
stage may prove beneficial
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Investor Needs
 Quoted from GIE presentation:
 Clear roles and responsibilities
 Predictable and stable regulatory
and
legislative
environment
 Independent national regulatory authorities
 Appropriate framework for developing infrastructure
 Healthy investment climate
 Quoted from EC and PHLG presentations:
 Harmonization
between Regulators and TSOs of
Guidelines for Gas Infrastructure Investment Regulation
(GIIR) in Energy Community
 Limited possibility for revision and not subject to
regulatory policy change
 Concerted Application of Art 22 on exemptions
 Support new sources of supply
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Consumer Needs
 Security of supply
 Affordable gas prices obtainable from:
 Enhancement of competition at a national, regional and
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upstream level
Access to new gas sources
Efficient and cost reflecting infrastructures
Proper allocation of the costs
Proper balancing of the risks between investors and
consumers
 Environmental protection
 For EU Consumers SEE represents an additional
source of gas supplies (4th corridor)
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Major Priorities of Recently Constituted SEE GRG
 Urgent Priority: work on the development of guidelines
for the regulation of gas infrastructure investments in
SEE (including long distance gas transmission pipelines)
EU and SEE Regulators have joined forces with the aim of
delivering the first output within 2005.
 Additional Priority: Formulate and agree upon strategy
for the development of a substantial SEE gas market.
Long Term Institutional Arrangement: Following the entry
into force of the ECSEE Treaty and the establishment of
the ECRB, the tasks of the GRG will be transferred to the
ECRB (perhaps evolve into an ECRB working group?)
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Regulatory Guidelines for Transit Pipelines
 Consistent
evaluation process applied to exemption
requests (Art. 22 of the Directive 55/03/EC)
 Third Party Access Regime and its implementation:
 Capacity allocation and congestion management
 Tariff methodologies
 Balancing regime (including charges)
 Transparency and monitoring
 Coordinated action of implicated Regulatory Authorities
(and TSOs)
 Effort to Propose Guidelines and Achieve Consensus
should Carefully consider the relevant legal framework
(national, EU and SEE)
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Regulatory Guidelines for Transit Pipelines (cont.)…
Guidelines for exemptions pursuant to Article 22:
 As a minimum these should include:
a) The procedure to be followed by a regulator in deciding on
exemptions from all or selected Articles of the Directive (for
example only from Article 18, or no exemption from Article 25, or
partial exemption from Art. 25, etc.);
b) The information (studies, financial data, etc.) that investors should
submit in support of claims that a project fulfils the criteria of Art.
22.1 and is eligible for exemption;
c) A common evaluation procedure and the criteria it will rely upon
(possibly more detailed and concrete than those described in
Art.22.1);
d) Any additional conditions and facts to be considered, especially
regarding the regional dimension (e.g. criteria for the evaluation of a
project’s impact on the regional market’s competition environment)
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Guidelines
for transit
pipelines
(cont.)…
Regulatory
Guidelines
for Transit
Pipelines
(cont.)…
Third Party Access:
 EU Directive will define the default regime;
 Relevant EU practice will be incorporated and fine-tuned
(Guidelines for Good TPA practice and the Gas Regulation);
 Forthcoming results of the EU-Wide consultation on the
process (e.g. balancing, determination of available capacities)
will be taken into advisement;
 Minimum (based on the specificities of the SEE markets)
capacity to be reserved for TPA;
 Factor into the guidelines ways to take advantage of synergies
in existing and forthcoming regional gas infrastructures;
 Mitigation of barriers to entry;
 Define a procedure for a coordinated approach in
implementing the guidelines by Regulators and TSOs
responsible for new gas infrastructures;
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Collaboration
Work on Guidelines
with other
for stakeholders
transit pipelines
is imperative
(cont.)…
Now that the ECSEE Treaty has been signed, the
establishment of the Regulatory Board (ECRB) and other
Institutions under the Treaty is underway; A Gas
Regulatory Group (GRG) and a Gas Infrastructure
Investment Group have already been established.
 The GRG intends to work closely with the Gas Industry
(first meeting already held)
 The GRG wishes to share information on planned regional
transit projects
 Regulators welcome the gas market economics study
sponsored by the WB and believe that all parties involved
will gain if Regulators are consulted regularly. The detailed
study contents will be useful to the Regulatory decision
making process and will be taken into advisement if
applications for exemptions materialize.
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A forward looking process…
 What is happening now in SEE (and not only regarding
the gas market) is of great importance that transcends
SEE confronting stakeholders with a historical challenge
regarding the realization of investments under a Europewide energy market liberalization process.
 It is not an easy task, but we all have to take the challenge
and proceed jointly to make it happen!
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