Electricity Restructurings: The Legal Perspective

1. Electricity Restructurings: The Legal Perspective Robert LaneCMS Cameron McKenna (London)

2. Laws and documents underpin and support the structure

3. Restructuring and reform: Overview Gs Vertical Integration Wholesale Market Retail Market Generation RESTRUCTURING Transmission Distribution Gridco Principal Buyer Supply COMPETITION

4. Whatever the market structure • Principal Buyer • Bilateral Trading • Combination Basic requirements for documents are the same

5. RESTRUCTURING: THE LEGAL FRAMEWORK ELECTRICITY LAW TIER ONE IMPLEMENTING REGULATIONS TIER TWO PRINCIPAL BUYER LICENCE GRIDCO LICENCE DISTRIBUTION LICENCES TIER THREE CO-GENERATION LICENCES LICENCE STANDARDS TARIFF ARRANGEMENTS NETWORK CODES ECAs/PPAs CONNECTION AGMTS TIER FOUR SYSTEM SERVICES WHEELING AGMT INDUSTRY DOCUMENTS

6. "Unbundled" Restructured Industry G G G G Principal Buyer Independent Transmission Company (“GRIDCO”) D D D C C C Contractual power flows

7. Legal Arrangements Example: GridCo Electricity Law and Implementing Regulations - rights and obligations Principal Buyer GridCo Licence obligations Connection and UoS Arrangements Transmission Code Scheduling and Dispatch System Services Tariffs Connection Code Generators Planning Code Distrib. Cos Operating Code Customers Metering Code Data Exchange Interconnectors

8. Legal Arrangements Example: Principal Buyer GridCo Electricity Law and Implementing Regulations - rights and obligations Principal Buyer Licence obligations Energy Sale Agreements Scheduling Procurement activities Energy Conversion Agreements Generators Fuel Supply Distrib. cos Fuel Supplier Customers

9. International Example: UK - Northern Ireland IPP IPP G G G G Principal Buyer Transmission Distribution Non-Eligible Customers Eligible Customers

10. Key Considerations • Robust legal and regulatory regime with flexible governance arrangements – capable of evolving • Defining roles, such as: • Role of GridCo: e.g. • Structuring of tariff arrangements • Role in system planning • Role of Principal Buyer: e.g. • Structuring of ECAs • Role in generation / wires procurement

11. Overall Conclusions • Legal and Regulatory Framework supports and implements successful restructuring process • Restructuring supports KSA’s policy objectives in the sector • Staged introduction of competition allows incremental changes and fine tuning • Other elements will also be important: e.g. revenue sufficiency, stakeholder involvement, investment planning

12. Background information on presenter Robert Lane • Head of Electricity Team at CMS Cameron McKenna, which is consistently ranked as an industry leader in electricity, nuclear and renewables by legal directories • Formally recognised by UK Government (with appointment as CBE) for his work • Has advised energy clients throughout the world for over 18 years, since advising on the England & Wales privatisation in 1990 • Acts for governments, regulators, utility companies, investors and others on transactions in the energy sector and on the establishment of complete legal and regulatory frameworks • Areas involved in include the following: E&W Restructuring Northern Ireland Restructuring Ireland Restructuring Kingdom of Saudi Arabia Greece Italy Russia South Africa Australia Canada Belgium India

13. Electricity Restructurings: The Legal Perspective Robert LaneCMS Cameron McKenna (London)