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Commission For Energy Regulation

Commission For Energy Regulation. Padraig Fleming Manager, Distribution & Retail 22 nd July 2004. Structure of Presentation. Role of CER Licencing Network Access & Charges Electricity & Gas Market Environment Support Mechanisms Electricity Prices. CER’s Functions & Duties.

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Commission For Energy Regulation

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  1. Commission For Energy Regulation Padraig Fleming Manager, Distribution & Retail 22nd July 2004

  2. Structure of Presentation • Role of CER • Licencing • Network Access & Charges • Electricity & Gas Market • Environment • Support Mechanisms • Electricity Prices

  3. CER’s Functions & Duties • Establish Trading Mechanism • Licencing • 3rd Party Access to Networks • Promote Competition • Promote Renewable/Alternative Energy • Encourage Efficient Use of Energy

  4. Licencing • Authorise the construction of Generators • Licence Generators/Suppliers/Shippers & Network Operators • Seeking a deminimus level for Licence • Review Technical, Financial and Business Plan

  5. Network Access • Connections from ESB Networks/Eirgird & Bord Gas • Connection Charges • Contestable Connection to Electricity Transmission system & Gas System

  6. Network Charges • Review Revenue Requirements & Investment Plans • Charges Depend on Contracted Capacity & Usage • Review of Tariff Structures • Promote Efficient use of Energy

  7. Markets • Electricity - Bilateral Contracts • Best New Entrant / Top-Up / Spill • VIPP Auctions • Gas – UK Market • Bilateral Contracts • Balancing Market – UK NBP • Annual Entry/Exit Charging at Present with Point to Point Capacity • Moving to Entry/Exit Capacity and Charging

  8. Support Mechanism The Commission favours supports outside of the trading/market arrangements in order to: • allow true market signals to be seen; • minimise market distortion; • minimise system and market operation costs to the final customer; • afford greater transparency.

  9. Types of Support • €17m - PSO Generators - AER 1 – 6 • €75m - PSO Generators – Peat Stations • €30m- Networks – Cluster Program • €60m - Consumers - Free Electricity Allowance

  10. Environmental Issues • Energy Efficiency • Passive Approach - Cost Reflectivity • Active Approach – Winter Peak Demand Reduction Scheme & Winter Demand Reduction Incentive • Loss Reduction Incentives • Carbon Trading • 23% Not Allocated – Valued @ €10/Tonne • Recycling Scheme – Pass-through 100% CO2 • Impact on Overall Market

  11. Tariff Approval Process • 5- Year Revenue Review • Incentive Regulation • Generation – Market Based Price • Supply – Profit Margin • Networks – Cash Flow • PSO – Set by Government

  12. Cost Drivers • Generation • Fuel & Carbon Costs • Capital Investment • Operations Costs • Networks • Capex Program – Largest Non-Government Investment • Growth 5% over 10 Years • 90,000 New Connections • PSO • Increase in AER 6 and New Peat Plants • ESB Submission for 12.5% Price Increase

  13. Future Trends • Fuel Prices? • Capital Investment in Generation • Operating Cost of Generation • Network Investment – Growth Levels • PSO – AER under Carbon Trading

  14. Questions / Comments

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