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Austria Power Market Overview

Austria Power Market Overview. Eligibility: Currently Open : > 20 GWh (32%) 1 st Oct 2001: >All customers (100%) Regulator: No independent regulator Production : Verbund dominates production; 70% hydroelectric, 25% CHP

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Austria Power Market Overview

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  1. Austria Power Market Overview • Eligibility:Currently Open: > 20 GWh (32%) 1st Oct 2001: >All customers (100%) • Regulator:No independent regulator • Production: Verbund dominates production; 70% hydroelectric, 25% CHP • Transmission & Distribution: Austrian Power Grid (Verbund subsidiary) operates supra-regional transmission network • Access:Third party access is regulated

  2. Austria Power Market Factors • Delays to full market opening by October 2001 likely as many aspects of the revised electricity industry law (Elwog 2000) passed in July require implementation by the 9 regions • All imports of Czech power to be blocked by Austria due to start up of Temelin nuclear plant • EU Competition Authority currently evaluating stranded costs • Rates have been cut by 50% by Austria utilities to retain industrial customers since deregulation began • Regulator should be in place in 2001

  3. Austria Gas Market Overview • Eligibility:Currently open: > 25 mcm (49%) Oct 2002: > All (100%) • Regulator:No independent regulator – should be in place by Oct 2002 • Production & Storage: OMV (controls 97% of storage) and RAG • Transmission & Distribution: OMV transports gas to the majority of the Landes-Ferngas-Gesellschaften (LFG’s), the utilities which are mainly owned by the provincial governments and which distribute gas to end-users • Access:TPA will be regulated on the distribution level but not on the transit level (OMV monopoly)

  4. Austria Gas Market Factors • Although law governing deregulation passed in July, implementation has been slow as provincial laws and transport tariffs have not been established • Austria imports more than 80% of its gas supply (85% of which comes from Russia) • Gas price increases due to oil linkage

  5. Belgium Power Market Overview • Eligibility: Customers consuming above threshold, or distribution companies’ supply intended for their eligible customers. • Currently Open: > 100 GWh, 31/12/00: >20 GWh, 31/12/02: >10 GWh, 31/12/06: All customers • Eligible customers must register each year with the ministry by Feb. 1 • Regulator: The CREG has been established as the regulator • Access: TPA will be regulated • Production: 80% of electricity generated by Electrabel, most of which is supplied by nuclear generation • Transmission & Distribution: CPTE will control transmission activities until a TSO is appointed. 90% of distribution is controlled by municipal utilities in conjunction with Electrabel

  6. Belgium Power Market Factors • The government has been very slow in implementation of the law by signing Royal Decrees (Designation of the TSO, TPA access, Tariffs,…) • Transmission grid: The TSO has yet to be designated by the government; Until then access conditions are unclear; TSO designation expected early 2001 • CPTE has established transitional tariffs transport tariffs but does not offer back-up or balancing. Electrabel is the only option for back up services • Distribution contracts. Under contracts signed in 1996, Electrabel will remain the exclusive supplier to most distribution companies until 2011. Exclusivity will be lifted in 2007 on only 25 percent of distributors.

  7. Belgium Gas Market Overview • Eligibility: Customers consuming above threshold, or distcos’ supply intended for their eligible customers. • Currently open: > 15 mcm and power producers, 31.12.00: > 5 mcm (possibly > 1 mcm, decision by 1.12.2000), 10/06: All • Regulator: The CREG has been established as the regulator. • Production & Storage: Belgium has no indigenous production and is also relatively short of gas storage. • Transmission & Distribution: Distrigas controls transportation activities until independent operator is appointed. • Access: TPA will be regulated (Government proposal – needs change in law)

  8. Belgium Gas Market Factors • Transmission grid: the TSO has yet to be designated by the Government. Current access conditions are unclear • Distrigas has established transitional transportation tariffs. TPA access will be regulated. Royal decree yet to be promulgated • Interconnector: Belgium is currently operating as a corridor for UK and NL gas (depending on direction of gas flow) • Development of spot markets e.g. Zeebrugge, Zelzate • Very little customer switching

  9. Denmark Power Market Overview • Eligibility:Currently : > 10 GWh distco’s (90%) Jan ‘01: >1 GWh Dec ‘02: All customers (100%) • Regulator:Energy Inspection Council (part of Competition Authority) • Production: 8 generating companies serving 2 independent systems in Denmark; production mainly from coal-based CHP & autoproduction • Transmission & Distribution: The Elsam and Elkraft systems are the 2 high-voltage grids in Denmark. There are roughly 100 local distribution entities which retain exclusive rights of supply to captive customers within their area • Access:Third party access is regulated

  10. Denmark Power Market Factors • Denmark recently fully incorporated into NordPool • Emissions trading to begin on 1 January 2001 & will cover the power sector which is responsible for 40% of the country's CO2 emissions, mostly from coal-fired power plants • As a result of initiatives to reduce CO2 emissions, no more coal-fired stations will be built; coal-fired units have been closing down and converting to natural gas • The daily hour-based auctions of west Denmark-Germany cross-border transmission capacity has recently begun • Eltra concerned that bottlenecks at Denmark-Norway interconnector may impede new deals

  11. Denmark Gas Market Overview • Eligibility:Currently: 30% (eligibility not decided) • Regulator:No independent regulator • Production & Storage: Dansk Undergrunds Consortium (DUC) produces gas. DANGAS owns storage facilities • Transmission & Distribution: DANGAS (owned by DONG) owns and operates the national transmission system & is purchaser of all natural gas from DUC, 60% of which is sold to the 5 regional distco’s, the municipalities of Copenhagen and Frederiksberg & power plants - Owned by the municipalities, the 5 regional distco’s own & manage the low & medium voltage transmission and distribution networks • Access: Currently no third party access to Danish gas infrastructure

  12. Finland Power Market Overview • Eligibility: All customers eligible (100%) • Regulator:Energy Market Authority • Production: Over 100 producers; the largest 2 (Fortum Power/ Heat Oy and TVO) generate 60% of total Finnish supply • Transmission & Distribution: Fingrid is the transmission operator. There are more than 100 distribution companies, mainly owned by municipalities • Access:Third party access is regulated

  13. Finland Power Market Factors • Access to liquid wholesale market through NordPool, however, lack of cross-border capacity contributing to reduction in level of competition in NordPool • Fingrid is to compensate its customers (generators, distributors, suppliers, large industrials)Euro 8m for price spikes in Nordic power market over 2000. Fingrid plans to increase transmission capacity between Finland and Sweden to limit price spikes in the future • Fortum has entered into an agreement with the Russian electricity export company TPE on new electricity imports (300MW over 7-year term)

  14. Finland Gas Market Overview • Eligibility:Currently: >5mcm (90%) • Regulator:Energy Market Authority • Production: No domestic gas reserves. Currently, all natural gas imported from Russia • Transmission & Distribution: Gasum Oy operates gas transmission. 36 regional companies control distribution activities • Access: Third party access is regulated

  15. France Power Market Overview • Eligibility: Customers’ sites for which consumption of the previous year meets the threshold. • Currently Open: > 16 GWh (28%), 1/1/01: >9 GWh (33%) • Eligible customers must address, every year, before 01/15, a declaration to the minister of energy. • Regulator: The CRE has been established as the regulator. It will be the CREG possibly by mid 2001. • Production: State-owned EdF dominates generation (~95%). CNR, SNET and auto-producers generates the rest. EdF operates all the hydro facilities owned by CNR. 75% of production nuclear. • Transmission & Distribution: RTE, unbundled from EdF in 1999, is responsible for running the transmission network. 95% of distribution controlled by EdF and remaining 5% by municipalities • Access: TPA is regulated

  16. France Power Market Factors • Current transportation tariffs and ancillary services are transitory and offered by EdF. • Although the electric law has been signed, the implementation is a slow process ( 9 out of 33 decrees signed) • A decree setting tariffs is expected to be in effect end of 2000 beginning of 2001. • The French Government is supporting the opening (Q3 2001) of a power exchange pool in France. EdF supports the project and is willing to allocate some capacity in the process. • Balancing services have been improved (possibility of multi-sites contracts, +/- 10% tolerance level). A market will be set up, RTE submitted a request for bids for balancing supply for 2001. • Early signs of trading

  17. France Gas Market Overview • Eligibility: Customers’ sites for which consumption meets the threshold or distcos’ supply intended for their eligible customers. • Currently open: > 25 mcm and electricity producers (20%), 8/03: > 11 mcm (28%), 8/08: > 5 mcm (33%) • Regulator: The CREG will be established as the regulator. • Production & Storage: Very low indigenous production (95% of consumption imported); GdF owns storage facilities (25% of annual consumption). One year of reserves before needing to interrupt firm customers • Transmission & Distribution : • Transmission: GdF owns 75% of the system. Others are CFM and SNGSO who own and operate their own networks and storage facilities. • Distribution: 95 percent of gas distribution is owned by EdF and GdF. The rest is in the hands of municipal companies. • Access: TPA to be determined – likely to be regulated

  18. France Gas Market Factors • The French Government has yet to pass a law and associated implementation decrees. The law unlikely to be implemented till early 2002 • GdF has been proactive e.g. GdF has established transitional TPA tariffs. It has not been determined whether or not TPA will be regulated or negotiated • 95 % of domestic gas consumption is imported from Norway (29 %), Russia (27 %), Algeria (26 %), and the Netherlands (13 %) • Not all storage is likely to be open to TPA

  19. Germany Power Market Overview • Eligibility: All end customers (100%) are eligible to switch suppliers • Regulator:No independent regulator • Production: About 50% of generation comes from coal fired generation, about 35% from nuclear; most generators are still heavily integrated with the distributors • Transmission: 6 high voltage transmission operators with published access rates • Distribution: Over 1000 low voltage companies operate at the low voltage level • Access: TPA is negotiated

  20. Germany Power Market Factors • All end customers (100%) are eligible to change suppliers, but the market is not economically open (about 2% of customers have switched) • Large customers have received significant discounts. Switching believed to be mainly between incumbents • Significant cross subsidies exist between customers who stay on bundled tariffs versus those choosing third party supply • Access: • Access tariffs are published and unbundled for customers that switch; non-switcher customers receive a bundled rate for service • Costs for service vary dramatically between areas despite similar asset bases • No regulatory body or policies that guide the direction of liberalisation; Cartel office will hear official complaints; Enron first to get access

  21. GermanyGas Market Overview • Eligibility: Theoretically, all end customers (100%) are eligible to change suppliers • Regulator: No independent regulator. • Production: 80% imported (Norway, Russia, NL, UK), 20% domestic • Transmission: 2 competing high voltage operators (Wingas & Ruhrgas). In addition, 15 supra-regional operators • Distribution: The local & regional distribution networks are highly fragmented – approximately 700 companies • Access: Germany has introduced negotiated TPA under the V.V.

  22. Germany Gas Market Factors • European Commission is taking legal action against Germany for failing to implement the gas directive • Access is difficult – Enron first foreign company to gain access • Increasing concentration parallel to electricity industry • E.On attempting to gain control of Ruhrgas? • High transmission prices • No access to storage

  23. Greece Power Market Overview • Eligibility: Greece was given an additional 2 yrs to comply with electricity directive - 2001: >100GWh • Regulator: RAE has just been set up • Production: PPC, the state-owned monopoly, controls 98% of generation; remaining 2% by private companies. Lignite provides roughly 80% of production • Transmission & Distribution: PPC dominant in both activities • Access:Third party access is unclear

  24. Greece Power Market Factors • Draft trading arrangements just released • Greece’s geographic isolation from the European UCTE grid and strict licensing laws will contribute to PPC’s defence of its dominant position • Partial flotation of PPC likely to begin in 2001, however, the state-owned monopoly will still operate as generator and majority owner of grid

  25. GreeceGas Market Overview • Eligibility: Greece is considered "emergent market" and under the provisions of the directive can delay market opening until 2006 • Regulator: RAE expected to be regulator • Production & Storage: No domestic production. DEPA responsible for storage • Transmission: DEPA controls transmission system • Distribution: Three local gas distribution companies (EDAs) have the exclusive right to distribute and sell gas within their own areas of Attica, Thessaloniki, and Thessaly • Access: Not yet decided

  26. Ireland Power Market Overview • Eligibility: Currently: >4GWh2002: 40% (threshold not decided)2005: all (100%) • Regulator: Commission for Electricity Regulation • Production: ESB dominates production except for 100MW of independent power plants and CHP • Transmission & Distribution:Eirgrid is the new state-owned company that manages the grid, however, ESB retains ownership. ESB has complete monopoly on all distribution activities. • Access: Third party access is regulated

  27. Ireland Power Market Factors • ESB generation capacity running short; no independent generation capacity before 2002 and only limited interconnector capacity available with Northern Ireland (although this is being upgraded). • Independents can access ESB capacity in several ways: • Power shortfalls can be covered (top-up) from and sell power surpluses (spill) to ESB whenever generated electricity does not match aggregate demand of customers. • VIPP auction - 600MW of ESB capacity auctioned in 1MW tranches • Supplementary top-up tariff • A 1999 report indicated that Ireland breached its Kyoto ceiling in 1998, because of high economic growth. This implies increased green policies.

  28. IrelandGas Market Overview • Eligibility:Currently: 25mcm (gas-fired power generators & other large customers) - 75% • Regulator: No independent regulator although CER likely to take on this role. The Department of Public Enterprise currently oversees gas industry • Production: Imports through Ireland/Scotland interconnector and indigenous declining reserves off the south coast. • Transmission & Distribution:Bord Gais Eireann is fully state owned and is responsible for transmission and distribution • Access: Third party access is regulated

  29. IrelandGas Market Factors • Gas supply capacity becoming constrained as Kinsale gas field is nearly depleted and gas through Ireland/Scotland interconnector increases, however, recent exploration in the Atlantic Frontier has led to discoveries of national gas, notably the Corrib gas field. • The Gas (Amendment) Bill published in April 2000 provides for a scheme to allocate gas capacity to new power stations; gas allocated to Huntsdown Power Company, Dungarven Power & Synergen (joint venture between ESB & Statoil) • Uncertainty about which of the several competing gas pipelines will bring new gas to market

  30. Italy Power Market Overview • Eligibility: Currently:> 20 GWh (35%) Jan ‘02 > 9 GWh (40%) • Regulator:Autorita per l'Energia Elettrica e il Gas (AEEG) • Production: Large portion of power is oil-fired; ENEL controls 73% of the generation but 15000 MW will be divested so that no one entity may own more than 50% of all production • Transmission: Gestore della Rete, established in 1999, is responsible for running the national network • Distribution: ENEL • Access: Third party access is regulated

  31. Italy Power Market Factors • Aging power plants, largely oil-fired. • High gas prices • Regulatory issues relating to power imports • Small power import capacity net of LT contracts • Vertical integration of the dominant players ENEL and ENI • Power pool in 2001? • Difference between supply and demand in the free power market • The market started in 1999 with insufficient liquidity • Lack of transmission regulation in some neighbouring countries which tends to erode the benefits of imports • Lack of a valid and definitive capacity allocation procedure

  32. Italy Gas Market Overview • Eligibility: Currently: > 200,000 m3 (96%) Jan ’03: All customers • Regulator: Autorita per l'Energia Elettrica e il Gas (AEEG) • Production: Only 28% of gas is locally produced; the rest is imported from Russia, Algeria & the Netherlands • The difficulty is that all 3 points are contracted for 2 years; there may be an opportunity during off seasons because the pipeline may not be fully contracted • However, there are also onerous restrictions for importing gas • Transmission & Distribution: Snam (affiliate of ENI) dominant in both activities • Access: Third party access is regulated

  33. Italy Gas Market Factors • T&D rates to be published shortly • ENI to be separated to form independent transmission company • New gas supply from Libya to commence in 2004 • No one company will be able to control more than 60% of gas supply. This has led to ENI agreeing to sell its future gas contracts • Some restrictions on imports from non-EU countries

  34. Netherlands Power Market Overview • Eligibility:Currently : > 2MW or 20GWh (33%); January 2002: >3*80 A (61%) 2003: All customers (100%) • Regulator: DTe • Production: the four major generators are (Electrabel) EPON, (E.On) EPZ, (Reliant Energy) UNA, and (an independent made up of distributors) EZH; nascent exchange markets exist alongside bi-lateral market; prices have been high this past year • Transmission & Distribution: Central transmission network operator (TenneT) with around 20 distribution companies • Access: Third party access is regulated

  35. Netherlands Power Market Factors • No clear winner in race for index point; APX has had limited success liquidity is not where it needs to be • Consolidation among the distributorswill create cost efficiencies • Wholesale commodity prices for captive customers to be determined quarterly from 50/50 mix of supplier specific prices and market prices • Stranded costs (CTC) will be a significant issue which is currently undefined • Capacity auctions/allocations • Price of balancing in 2001

  36. Netherlands Gas Market Overview • Eligibility: A customer’s consumption level for the total of its facilities above the threshold. • Currently: 10 mcm and power plants and cogenerators 1/1/02: 1 mcm 1/1/04: all customers • Regulator: Dte • Production & Storage: Mostly domestic production 80 bcm, around ½ exported. Storage: virtual, expensive, access • Transmission & Distribution: • Transmission: Gasunie - limited unbundling • Distribution: Provincial and municipal authorities largely own and control the distribution companies-of which there are approximately 30. Law requires more unbundling than for Gasunie • Access:Negotiated TPA (point to point only)

  37. Netherlands Gas Market Factors • Complex access arrangements to Gasunie system • Small fields policy • Dte has issued preliminary gas guidelines (gas companies interpret it as regulated access). Final guidelines being consulted upon • Gasunie lost 30% of free customers to third party suppliers • Hourly balancing

  38. Norway Power Market Overview • Eligibility: All customers eligible since 1991 • Regulator:Norwegian Water Resources and Energy Administration (NVE) • Production: Over 100 power producers; state-owned Statkraft produces one third of Norway’s hydropower; 99% of generation from hydro • Transmission & Distribution: Statnett SF operates transmission network. There are more than 100 distribution companies mainly owned by municipalities. Vertically integrated utilities are also common, owning both the local distribution grid and production facilities. • Access: Third party access is regulated NB Norway not a member of European Union

  39. Norway Power Market Factors • Norway member of NordPool • 3 new gas plants approved by government. Controversial move as Norway struggling to meet Kyoto target • Very high hydropower generation volumes has led to transmission capacity constraints and price differences between regions: - In 1999 prices in mid-Norway on average 9.4% higher than in southern Norway - Stanett planning new mainland high-voltage line to curb constraints • Plans for a Norway-England interconnector

  40. Norway Gas Market Overview • Eligibility: Market not open to competition • Regulator:Norwegian Water Resources and Energy Administration (NVE) • Production & Storage:Norway holds 41.4 Tcf of natural gas reserves; no storage facilities • Transmission & Distribution: State-owned Staoil owns and operates all gas pipelines • Access: Currently no third party access to Norway’s gas infrastructure NB Norway not a member of European Union

  41. Norway Gas Market Factors • Norway has to comply with the Gas Directive (due to its membership of the EEA) • EC has refused Norway a 5 year derogation from gas directive requirements • Two-thirds of Statoil to be privatised • EC calling for break-up of Gas Negotiating Committee (GFU) which currently controls all Norwegian gas sales

  42. Poland Power Market Overview • Eligibility:Currently: >40GWh, 1st Jan ’02: >10GWh, 1st Jan ’04: >1GWh, 5th Dec ’05: All customers • Regulator: Energy Regulation Authority URE • Production:Installed capacity of 33,000MW; 97% of total power output generated by 30 coal-fired (hard coal and lignite) plants • Transmission & Distribution: PSE SA owns, operates and maintains the high-voltage grid. 33 regional distribution companies own and operate the medium- and low-voltage grid • Access: Energy Law adopted in 1997 provides for domestic third-party access NB Poland not a member of the European Union

  43. Poland Power Market Factors • Poland has large domestic market with a potentially competitive structure (i.e. many buyers and sellers) although this may be under threat from vertical integration mergers • Privatisation of transmission network (PSE) planned for 2002 • 70% of generation is contracted forward long-term • Lack of effective balancing and settlement rules • Barriers imposed on new entrant suppliers - must have trading tariffs approved by URE • Power Exchange (Gielda Energii) opened for trading in July & about 1% of demand transacted daily through Gielda • The new Commodity Exchange law (will enter into force in first half of 2001) will require GE to become regulated and licensed

  44. Poland Gas Market Overview • Eligibility:Currently: >25mcm, 1st Jan ’04: >15mcm, 5th Dec ’05: All customers • Regulator: URE • Production, Transmission & Distribution: All 3 activities dominated by Polish Oil and Gas Company (POGC) • Access: Poland has applied for a 3 year derogation from the third party access provisions of the EU Gas Directive NB Poland not a member of the European Union

  45. Poland Gas Market Factors • Planned restructuring of POGC by 2002 will lead to: • One privatised exploration & production company • 4 privatised gas distribution companies • A gas transmission and storage company which will remain state-owned for at least 5 years • A major long-term contract for Norwegian gas is planned to diversify supply away from Russian imports, which constitute the bulk of current imports • Domestic underground gas storage facilities to be expanded from 1.1 bcm today to 5.5 bcm in 2010

  46. Portugal Power Market Overview • Eligibility:Currently >20 GWh (34%) 2001: >9 GWh (56%) • Regulator: Entidad Reguladora Sector Eléctrico (ERSE) • Production:EdP is the state-owned holding company for electricity production. EdP's generation company, (CPPE), produces about 85% of Portugal's electricity • Transmission & Distribution: Rede Electrica Nacional (REN) is the national grid company (subsidiary of EdP). 99% of distribution is controlled by EdP through four regional distribution companies who buy from REN and sell to end users. • Access: Third parties have regulated access

  47. Portugal Power Market Factors • Potential eligible customers can buy eligibility in advance of the legal date • Transmission grid, REN, is unbundled legally, managerially and for accounts • The Portuguese government is due to sell a stake of up to 25% in EDP in autumn, reducing its stake to a minority. This will be preceded by the sale of a 70% stake in EdP's grid subsidiary, REN, which the government has agreed to buy. • EdP will not receive any stranded cost compensation. The regulator, ERSE, has agreed not to cover the costs of transition and the government does not intend to apply for compensation from the EC.

  48. Portugal Gas Market Overview • Eligibility: • Currently: none, possible opening in 2005 (emergent state – first long term take or pay contract less than 10 years old) • No obligation to open the market to build and/or operate natural gas facilities, no need to specify eligible customers, no phase-in requirement, no opening requirement for TPA, while emergent state status remains. • However, GdP has stated they must be ready for liberalization in 2005. • Regulator: None yet(A 1999 protocol could lead to a regulator) • Transmission and Distribution: • Transmission: Transgás is responsible for imports and for the construction and operation of the transportation network. • Distribution: The distribution market is in the hands of four regional companies. GdP owns small interests in two of them. • Supply: All gas is imported Algerian long-term contracts: c 2.5 bcm per year until 2020. Nigerian liquefied natural gas (LNG). • Access: TPA not defined

  49. Spain Power Market Overview • Eligibility:Currently Open: 1 kV connection or > 1GWh consumption (Over 60,000 customers eligible) January 2003: All customers • Regulator: Comisión Nacional de Energía (CNE) • Production: the four major generators are Endesa (45%), Iberdrola (35%), Union Fenosa (15%) and Hidrocantabrico (5%) • Transmission & Distribution: Central transmission network operator (REE) with 8 distribution companies all owned by the generating companies. Although some unbundling has taken place, the major utilities effectively remain vertically integrated. The 4 utilities own 40% of REE and their chairmen sit on its board of directors • Access: Third party access is regulated

  50. Spain Power Market Factors • Iberdrola/Endesa merger • Combined entity would own 80% of installed generation capacity • If the merger is approved, 16,000MW of installed capacity will have to be divested. Remaining ownership will be approx 45% • Uncertainty regarding % ownership within marginal cost range • Combined entity may be required to divest of some distribution assets or face increased pressure for vertical unbundling • 90% of largest 8,000 customers have already switched. 55,000 100-200 kW customers are switching due to 15-25% discounts. • While the pool has provided price transparency, structural issues exist both at the wholesale and retail levels • Low liquidity in the financial market • Most counter parties trade short term

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