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STATE ENERGY AND WATER REGULATORY COMMISSION

STATE ENERGY AND WATER REGULATORY COMMISSION. Role and functions of the Energy Regulator on the liberalized energy market with changing structure of the generating capacities in the electricity system. Stephan Gerchev Member of SEWRC. 1 1 December 20 12 Sofia.

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STATE ENERGY AND WATER REGULATORY COMMISSION

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  1. STATE ENERGY AND WATER REGULATORY COMMISSION Role and functions of the Energy Regulator on the liberalized energy marketwithchanging structure of the generating capacities in the electricity system Stephan GerchevMember of SEWRC 11 December2012 Sofia

  2. STATE ENERGY AND WATER REGULATORY COMMISSION Main powers of the national energy regulatorSEWRC in the electricity sector are: • Monitoring and control of all measures in performing the public service obligations pursuant to the Energy Act (EA), including energy services users protection; • Price regulation in the cases provided for in EA; • In the execution of its duties the Commission is led by the following general principles: - to ensure balance and equal treatment between the interests of the energy companies and customers; - to create incentives for the development of a competitive market electricity sector activities; - fair division of the economic consequences from the electricity market liberalization. 11 December2012 Sofia

  3. STATE ENERGY AND WATER REGULATORY COMMISSION Main tools and obligations of SEWRCin execution of the above mentioned are: - Adoption of Electricity Trading Rules at the proposal of energy companies; - Adoption and control of its application of a Methodology of balancing electric power price formation, as part of Electricity Trading Rules; - Adoption and control of its application of a Methodology for the price formation of electric power supplied by Supplier of Last Resort and others. Pursuant to the provisions of EA, the secondary legislation, developed with the active participation and control by SEWRC (the Commission), should provide: - balanced changing of the prices for the end consumers taking into consideration the Public Provider’s, end suppliers’ and transmission and distribution networks operators’ obligations, concerning the provision of common public interest services; - necessary measures for customers’ supply at entirely comparable, transparent and objective prices at level playing field. 11 December2012 Sofia

  4. STATE ENERGY AND WATER REGULATORY COMMISSION One of the main regulated components of the final selling energy price for the end users, are the network services. • Network services include: - Prices for access and transmission through the electricity transmission network, and - Prices for access and transmission through the electricity distribution network depending on voltage level. These prices are regulated in accordance of the Ordinance on regulating electricity prices following the „revenue requirements” method, based on justified by the transmission and distribution companies expenditures for the networks maintenance and development and their operational management 11 December2012 Sofia

  5. STATE ENERGY AND WATER REGULATORY COMMISSION Electricity market development • With the latest amendments and supplements of EAof July 2012, the electricity market development in Bulgaria is harmonized with the requirements of the European Commission and the Directives of the Third Liberalized Package. Main provisions and requirements of the Third Liberalized Package concerning the free transmission and balancing of renewable energy sources (RES) electricity generation, are: - optimization of transmission capacities of the transmission and distribution electricity networkswithin the territories of different countries; - development of cross-border interconnections (transmission capacities ) for exchange and balancing, including that of electricity generated from RES. - transmission network development plans are carried out at the close cooperation of the Bulgarian system operator within ENTSO-E, in the performance of the ten-year development plan of the European transmission networks TYNDP. 11 December2012 Sofia

  6. STATE ENERGY AND WATER REGULATORY COMMISSION Conventional electricity generating capacities structure in electricity system - HPPs installed capacitiesowned by NEK – 2 630 MW - PSAPP installed capacities – 937 MW; - coal TPP available capacities – 4 200 MW; - natural gas TPP – co-generations – 790 MW And current abilities for compensating and balancing the RES generation at summer consumption minimumsof about 3000 MW 11 December2012 Sofia

  7. STATE ENERGY AND WATER REGULATORY COMMISSION In view of the graph data, the PV capacities balancing range within twenty four hoursmay reach over 800 MW in the spring-summer-autumn period. Situation is similar, though not in such dimension, with wind plants, HPPsunder 10 MWand biomass plants. • Current situation, technical balancing abilities for the intermittent RES generation and consequences for the generating capacities used in the balancing: - balancing abilities from HPP; - balancing abilities fromPSAPP; - balancing fromconventionalTPPs and consequences; - EESdoes not have at its disposal maneuver natural gas TPPs; As a result of the reported by the network operators in the period June – August2012 sudden increaseof the RES generating capacities and their essentially increased costs for balancing and dispatching, based on operators’ application, by Decision № Ц-33 of 14 Sep 2012, SEWRCset temporary access prices to be paid by RES generators. SEWRC’s Decision is based onart. 84, para 2 of EA in force since 17 July 2012 11 December2012 Sofia

  8. STATE ENERGY AND WATER REGULATORY COMMISSION • Technical abilities and measures for the increase of the electricity system balancing capacities: - putting into operation of Tsankov kamak dam; - complete the construction of Yadenitsa dam to increase the production capacity of Chaira PSAPP; - Gorna Arda cascade construction; - construction of maneuver natural gas TPPs, in view of the stable and expected reduce of the natural gas prices. • Necessity of transmission capacity increase and modernization of separate parts of the transmission system and the distribution networks. 11 December2012 Sofia

  9. STATE ENERGY AND WATER REGULATORY COMMISSION • Electricity market in the country – a fundament to place the changed structure of the generated capacities in the country on a developed market base: • SEWRC carries out the necessary actions for the secondary legislation to get into compliance of the adopted amendments of EA in July 2012. • The target date for the creation of efficient integrated internal market under EA is 2015. • Currently SEWRC has a procedure for the amendment and supplement of Electricity Trading Rules, based on the new provisions of EA, of the fulfilled testing period set in the Rules and the energy companies proposals. • Market organization envisages balancing groups formation, which groups to compensate and minimize potential imbalances of the generators and customers members of the balancing group. 11 December2012 Sofia

  10. STATE ENERGY AND WATER REGULATORY COMMISSION • Currently the Commission has issued respectively amended and supplemented licenses for the activity „special balancing group coordinator” to the Public Provider and to the electricity system operator. The licenses of the DSO and End suppliers are in a procedure of amendment and supplement. • Currently the Commission has issued respectively amended and supplemented 12 licenses with included powers and duties of the market participants for the fulfillment of the activity „standardbalancing group coordinator“. • After the changes in the Ordinance on licensing the activities in the energy sector, licenses shall be issued for the fulfillment of the activity „supplier of last resort“. 11 December2012 Sofia

  11. STATE ENERGY AND WATER REGULATORY COMMISSION Market monitoring SEWRC has the role to carry out electricity market monitoring and the main objectives refer to: • Efficient market operation under the adopted Rules; • Non-allowance of abuse and market power; • Timely identification of the shortcomings of the Market Rules and the system operator’s and participants’ procedures, as well as the need of changes; • Markets structure and participants market shareanalysis. 11 December2012 Sofia

  12. STATE ENERGY AND WATER REGULATORY COMMISSION As a conclusion of the above statements, we can make the summary that the achievement of an integrated national and internal European energy market will provide the necessary competitiveness, the efficient distribution and use of power and will be in benefit of the generators, transmission companies and the electricity consumers. 11 December2012 Sofia

  13. Thank you for the attention M.Sc.Eng. Stephan GerchevMember of SEWRC e-mail: sgerchev@dker.bg STATE ENERGY AND WATER REGULATORY COMMISSION 11 December2012 Sofia

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