Implementing the 3rd Energy package, Commission’s role

1.  Implementing the 3rd Energy package, Commission’s role “IFIEC Europe Energy Forum” Brussels 22 September 2009 Ana Arana Antelo Electricity and Gas Unit EUROPEANCOMMISSION

2. Outline of the presentation • Status and content of the third package • What to do in the interim period? • Commission’s role • Conclusions

3. Chronology of the packages

4. 3rd package: main measures • EU Regulatory Agency • Stronger powers for national regulators • Cooperation of network operators (ENTSO) • Effective unbundling of transmission networks • Also • Transparency • Retail market & consumer protection • Third country clause • Level playing field • Closed distribution systems

5. Adoption and implementation • 3rd package entered into force 3 September 2009 • 3rd package applies from 3 March 2011 • Agency operational • ENTSOs become official bodies • Ownership unbundling by 3 March 2012 at the latest, certain aspects in 2013

6. Setting up the Agency • Budget & Staff: • About 40-50 people • Annual budget around €6-7 million • ACER resources will depend on work and know-how contributions from NRAs • Seat: • Decision expected under Swedish presidency • Candidates are Romania, Slovakia and Slovenia • Director: • The vacancy will be published soon

7. National Regulatory Authorities • Management • Budget implementation autonomy • Board appointments for 5 to 7 years – renewable max once • Tasks and duties • Energy efficiency and consumer orientation • Recommendations on investment plans • Monitor transparency of wholesale prices • Monitor restrictive contractual practices & contractual freedom • Ensure enforcement of effective consumer protection • Information on TPA refusal and network expansion • TSOs to submit congestion management rules to NRA • Fix provisional tariffs • Justify and publish decisions • Coordination on a regional level: • Codes and congestion management • Co-operative agreements between NRA’s

8. TSO co-operation in the third package, tasks • Annual work programme and annual report • Network codes • Monitoring of implementation of codes • 10-year network development plan and generation adequacy outlook every two years • Summer and winter generation adequacy outlooks • Network operational tools • Co-ordination of research • Recommendations on technical cooperation between Community and third-country TSOs • Regional co-operation

9. Retail markets and protection of vulnerable customers • Smart meters • Implementation subject to cost benefit analysis within 3 years • Preparation of timetable for implementation • Interoperability of metering systems • Change of supplier within 3 weeks • Final account closure after 6 weeks • Supply to all customers by any supplier in the EU • Subject to trading, balancing and SoS rules • Define the concept of vulnerable customers • Consumers ’ access consumption data • Single contact point for consumer rights & Energy Ombudsman

10. Closed distribution systems (CDS) • CDS do not constitute a new and separate category of system • within the scope of the Directive, Member States may design targeted and proportionate rules for Closed DSO • NRAs may exempt Closed DSOs from the requirement that tariffs are approved prior to their entry into force • NRA retains a review function in this case. • a CDS must be located on a geographically confined industrial, commercial or shared services site. • no households connected (except incidental use in limited circumstances). • additionally either: • integrated operations of the users of the system for specific technical or safety reasons - it will be for Member States to more precisely define this criterion; OR • the system distributes electricity primarily to the owner oroperator of the system

11. Interim period • Electricity TSOs have established ENTSO-E, Gas will follow • ERGEG prepares the work of the Agency • Framework guidelines and codes • 10-year network development plan • Annual work programmes

12. Network codes

13. Network codes, Article 8 of Electricity regulation • network security and reliability rules including rules for technical transmission reserve capacity for operational network security; • grid connection rules; • third party access rules; • data exchange and settlement rules; • interoperability rules; • operational procedures in an emergency; • capacity allocation and congestion management rules; • rules for trading related to technical and operational provision of network access services and system balancing; • transparency rules; • balancing rules including network related reserve power rules; • rules regarding harmonised transmission tariff structures including locational signals and inter-TSO compensation rules; • energy efficiency regarding electricity networks

14. Legally binding guidelines Article 18 of Electricity regulation • Inter TSO compensation mechanism • Tariff harmonisation rules • Congestion management rules • Safety and operational rules • Provision of information rules • Trading of electricity rules • Investment incentive rules … and all items on the Article 8 list

16. Commission’s role • Commission puts up the Agency • Certification of TSOs • Priority setting for work programmes, codes and guidelines • Comitology • Exemptions on new infrastructure

17.  Regional market approach Wind power Nordic UK/IE IPS/UPS Baltic CEE CWE SEE SWE CSE

18. Summarised • Third package provides mandate to meet technical and market challenges • legally binding network codes and guidelines • Expectations for the Agency and the ENTSOs are high • The package provides new tools to cope with the increasing European Network infrastructure needs • Independent TSOs • 10 year network deelopment plans