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GIE Annual Conference 3 November 2005, Athens

GIE Annual Conference 3 November 2005, Athens. How trading contributes to security of gas supply Colin Lyle Chairman of the Gas Committee European Federation of Energy Traders Colin.Lyle@EFET.org. EFET’s basic position. “ Proper long-term functioning of markets

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GIE Annual Conference 3 November 2005, Athens

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  1. GIE Annual Conference 3 November 2005, Athens • How trading contributes to • security of gas supply • Colin Lyle • Chairman of the Gas Committee • European Federation of Energy Traders • Colin.Lyle@EFET.org www.EFET.org

  2. EFET’s basic position “Proper long-term functioning of markets will guarantee energy security of supply and attract investors” EFET (Electricity committee) Press statement 24 February 2005 www.EFET.org

  3. Reliability and diversity are risk management issues “security of supply comes down to a risk management strategy… there is ample of evidence that the market can be an efficient tool for achieving security of supply” Centre for European Policy Studies Reports and articles 2004/5 www.EFET.org

  4. Security of supply is not absolute What is the cost of reducing the risk of disruption (to consumers) compared with the value of improved continuity of delivered supplies? … are we paying too much already? www.EFET.org

  5. Were integrated ‘single buyers’ successful in delivering supply security? Integrated grid and merchant Monopolies had some clear advantages regarding supply security • Purchasing power & economies of scale … but with all costs (good or bad) passed to consumer • Centralised operation, supply planning and system design … but did this lead to the right investments and the most efficient operation? • Sole responsibility for emergency response • … used frequently for managing blackouts! www.EFET.org

  6. Integrated Monopoly model is gone 2003/55/EC changed EU gas market structure, with unbundling of infrastructure from supply. • The old security of supply model is no longer available to the European gas industry • The competitive market has the potential to provide at least the same level of supply security more efficiently. • Half turning back to old ways could lead to disaster. www.EFET.org

  7. And new combinations exist… • Governments can set the required outputs in Security of Supply Policy • Markets can delivermore cost-effective and innovative energy supply solutions • The TSOs must still provide timely capacity to deliver energy to consumers through sufficiently diverse routes. www.EFET.org

  8. How can trading help? • Transparency provides confidence, and ensures capacity is made available. • Ability of market to use resources more efficiently than by central planning. • Market price signals & freedom to invest brings forward supplies and infrastructure. • Demand signals become meaningful and customers respond. www.EFET.org

  9. Trading is essential for Europe’s gas security of supply “The greatest danger to the future security of Europe’s gas supplies is the continuing uncertainty and delay in implementing a single energy market.” EFET (Gas Committee) Position paper October 2002. www.EFET.org

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