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Energy Market Reforms in Transition Economies: Lessons from Central and Southeast Europe

This presentation discusses the key aspects of energy market reforms in transition economies, focusing on the experiences of Central and Southeast Europe. It covers topics such as policy definition and institutional set-up, market regulation, operation of energy services, energy demand and environment, and the performance of reforms. The importance of clear market rules and restructuring of energy companies to international standards is highlighted. The presentation concludes with the need for regional cooperation and effective regional energy markets.

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Energy Market Reforms in Transition Economies: Lessons from Central and Southeast Europe

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  1. OHR/OECD Conference on Regulatory Governance and Network IndustriesSarajevo, April 19 2002SESSION II:Economic Regulation and Network IndustriesPolicy and Regulation: Key Aspects of Energy Markets Reforms in Transition Economies Emmanuel BergasseInternational Energy Agency/OECD

  2. Presentation Map I. Energy Market Reforms in Central Europe: a decade of experience II. Southeast Europe perspectives III. Conclusions

  3. I. Energy Market Reforms in Central Europe: a decade of experience • Goal: decentralised and market based energy system bringing overall economic benefits • Integrated approach: • Separate State role on policy (Ministry), regulation (regulator) and operation/ownership of energy companies • Sequencing of reforms & transition • Means: Policy/strategy, institutional and regulatory framework to support market based operation

  4. Energy Policy Foundation • Goal: Policy definition and institutional set-up • Why? infrastructure need medium/long term guidelines and overall co-ordination • How? Policy paper with objectives/priorities and missions of state bodies • Who? Energy Department of Economy/Industry, Parliament • Eg: Czech Energy Policy (2000)

  5. Regulation: Market Basis • Goal: a regulated energy market • How? Energy Law sets market regulation (licensing, pricing, control of services) enforced by an independent regulator • Who? Government and Parliament (energy Law), Ministry (secondary regulation) and regulator • Eg.: Polish Energy Law (1997)

  6. Operation of Energy Services • Goal: decentralised and efficient market operators • How? Restructuring: good governance, corporisation, customer orientated strategy; Privatisation to strategic investors when conditions for competition met • Who? Ministry of Econ./industry for reforms; Min. of Finance for privatisation • Eg.: Polish power sector

  7. Energy Demand & Environment • Goals: integrated policy on energy & its impacts; reduce demand and pollution  cost reduction • How? Demand side and environment strategy management • Who? Energy and environment agency • Eg.: Energy Centre Hungary

  8.  Performance of Reforms in CE • Energy policies consistent with EU & IEA standards • Regulation aligned with EU Directives • Energy companies at international level and in part privatised • Energy intensity and pollution reduced • Hungary and Czech Rep. IEA members, 1st wave of EU accession countries

  9. Energy Intensity in the Czech Rep. & Hungary (Impacts of Policy Mix: price adjustment, investment, tax incentives, closure of obsolete units) 1973-2010 (Toe per thousand US$ at 1990 prices and purchasing power parities)

  10. II. Southeast Europe Perspectives Similarities/differences SEE & CE of early 90’s: = Economic system transition, low energy efficiency, prices below cost, power overcapacity, high environmental impact # post-war reconstruction, industry collapse, political instabilities

  11. Reform Progress • Energy policy: limited advancement, Bulgaria-1998 & Croatia-1999 • Regulation: some reforms (tariff adjustment) but no overall legal framework. Energy Law in Bulgaria-1999 & Croatia2001 • Energy sector restructuring: first steps (corporatisation) • Demand management-environment: low progress

  12. Regional Co-operation Clear need for regional approach-convergence of energy policies: • Supply complementarities • Networks interconnection • Transit projects  Effective Regional Energy Market (REM) if viable markets and legal compatibility between electric systems

  13. III. Concluding remarks 10 years experience in CE proved importance of: • Policy foundation for objectives and institutional responsibilities • Clear market rules enforced by an independent and competent regulator • Restructuring of energy companies to market conditions & international standards

  14. IEA Contribution on Policy • Web site: http://www.iea.org/about/nmccee.htm • Contact: Emmanuel Bergasse, Administrator for Central and Southeast Europe email: emmanuel.bergasse@iea.org Fax: 33 1 40 57 65 79

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