Guidelines on Transmission Tarification ERGEG Public Hearing 30. June 2005

2 Contents Background - Regulation Guidelines on Transmission Tarification Work in the later stage on Guidelines Future steps

3 Background Need to introduce arrangements facilitating efficient access to the network – no pancaking Need to make transmission tariffs consistent across EU such that a level playing field is preserved Legal framework adopted in June 2003 in the Regulation 1228/2003 on conditions for access to the network for cross-border exchanges in electricity taking into force from 1 July 2004

4 Regulation – Article 4 (Charges for access to networks) Charges Transparent Non-discriminatory No distance-related Provide locational signals at European level (not preventing national application) Charges for producers (G charge) Be lower than load charges Provide appropriate and efficient locational signals Setting charges ITC payments and receipts Actual payments made and received as well as future estimates

5 Regulation – Article 8 (Guidelines) Rules leading to a progressive harmonisation of principles for setting of charges applied to producers and consumers (load) under national tariff system Includes reflection of ITC mechanism in national network charges Provision of appropriate and efficient locational signals

6 Discussions in Florence Fora & Tarification Guidelines EC Document on Harmonisation of Network access charges for the 10th Florence Forum in July 2003 Draft Guidelines in March 2003 on Transmission Tarification Refined text of Guidelines for the 11th Florence Forum in September 2004 Further work on text for present draft Guidelines set to Public Consultation

7 Guidelines on Transmission Tarification Explanatory note Background Current situation Proposals in Guidelines Harmonisation of charges for generators European locational signals ANNEX: DRAFT GUIDELINES Harmonisation Removal of international supply transaction based charges Reporting

8 Harmonisation- Annual national average G Defined as annual total transmission tariff charges paid by generators divided by the total measured energy injected annually by these generators to the transmission network Excludes Connection charges (also upgrade of the connection) Ancillary services Any specific network loss charges

9 Harmonisation – value of annual national average G The value within a range of 0 to 0.5 €/MWh, with the exceptions below Nordel system within the range of 0.25 to 0.7 €/MWh GB system at maximum 2.5 €/MWh Republic of Ireland and Northern Ireland at maximum 2.5 €/MWh

10 Removal of international supply transaction based charges Charges for access to networks applied to producers and consumers shall be applied regardless of the countries of destination and origin, respectively, as specified in the underlying supply agreement Exception charges resulting from market based congestion management methods Include all import, export and transit fees

11 Reporting – From regulators to Commission By 28 February 2006 TSO charging structures – compliance with guidelines By end of July 2007 Value of the annual national average G After 2007 annually by end of July Amendments to charging structures and G values

12 Work in the later stage on Guidelines Harmonisation of G charges on other voltage levels Harmonisation of tariff structure Locational signals Harmonisation of charges covering cost of losses and other ancillary services for short term locational signals Long term locational signals through G and L charges

13 Future steps Finalise the ERGEG proposal for Guidelines ERGEG Advise to Commission on Guidelines Commission decision to put Guidelines to Comitology (approval of Guidelines by Committee of Member States representatives Tarification Guidelines are adopted for the first time, they have to be adopted in a single draft measure with Guidelines related to inter TSO compensation mechanism

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