ERERA AND ECOWAS ELECTRICITY MARKET DEVELOPMENT AND REGULATION Prof. Honoré BOGLER Chairman ERERA

Summary ECOWAS Energy outline figures Necessity of a Regional Market ECOWAS Electricity Market Implementing Strategy ECOWAS Legal & Institutional framework Missions of ERERA Directive on the Organisation of the Regional Electricity Market Status of the Regional Electricity Market Regulation documents

ECOWAS Energy outline figures 15 Member States Area : 6,1 millions km² Population (2013) : Estimated Pop. in 2030 330 millions inhabitants 515 millions inhabitants (UN) Access to energy (2013) : Access to energy (2030 Global access (beyond 2040) 30% 65% Specialised Institutions in charge of access to energy WAPP ECREEE ERERA

2. necessity of the regional electricity market Unexploited significant primary energy resources Limited availability of the installed capacity, Low electricity coverage rates Vertically integrated electricity companies and narrowness of national electricity markets Too much political inteference will of power independence at national level Poor performance level: Increased losses(between 14 and 45% according to country) Low tariff levels & no cost recovery tarrifs Limited cross-border interconnections & low electricity access Considerable financial requirements to develop power production and transmission infrastructures Difficulties in mobilising funding for investments : Narrowness of national energy markets High political & social risks

3. ECOWAS Electricity Market Implementing Strategy DEVELOPMENT OF A REGIONAL MARKET 3 phases for the development Phase 1: Harmonisation of regulations, Rules setting (Market rules, pricing, Dispute rules & Procedures) Phase 2: Day Ahead market, System-Market Operator, Market surveillance DEVELOPMENT OF PRODUCTION AND TRANSMISSION INFRASTRUCTURES Hydro & thermal Interconnections Renewable Energy Inadequacy of electricity offer and demand Abundant energy resources Unequal geographical dispatching of resources POWER POOL (WAPP/ERERA/ECREEE)  

4. ECOWAS Energy Legal & Institutional Framework The vision of a regional electricity market in West Africa is contained in the ECOWAS Treaty adopted in May 1978 and revised in 1993. The ECOWAS Energy Protocol (Protocol A/P4/1/03 of 31 January 2003) developed a strategy to achieve this Vision by putting in place a legal framework intended to promote a long term cooperation in the ECOWAS energy sector. The Decision A/DEC.5/12/99 of the Authority of Heads of State and Government of 10th December 1999 relating to the establishment of the West African Power Pool (WAPP).  The Decision A/DEC.6/01/05 of the Authority of Heads of State and Government of 19 January 2005 relating to the development of a regional regulatory framework for the power sector within ECOWAS The Regulation C/REG.23/11/08 of the ECOWAS Council of Ministers in 2008 provided the legal foundation for the ECOWAS Centre for Renewable Energy and Energy Efficiency (ECREEE) The Supplementary Act A/SA.2/01/08 of 18 January 2008 relating to the establishment of the ECOWAS Regional Electricity Regulatory Authority (ERERA). The Regional Regulation aims at increasing the confidence of the stakeholders of the market and consequently, increasing the involvement of the private sector in the development of the electricity infrastructures

5. Missions of ERERA (an ECOWAS specialised Institution) The core missions of ERERA are: regulate the cross-border trade of power among the ECOWAS member States. contribute to the setting up of regulatory and economic environment suitable for the development of the regional market. oversee compliance with the principle of freedom of electricity transit in accordance with the provisions of article 7 Energy Protocol. oversee the establishment of a clear transparent and predictable tariff setting methodology for regional power pooling. ensure technical regulation of regional power pooling and monitor regional market operations. Establish and implement effective dispute resolution procedures between the regional power market players and control its proper application. maintain partnership relations with national regulatory authorities in member States and provide them with technical assistance at their request.

6. The ECOWAS Directive on the Organisation of the Regional Electricity Market To attract investments for the development of the market, ERERA prepared market directive for necessary reforms of the regional electricity market. The directive was adopted by the ECOWAS Council of Ministers on the 21st June 2013. Objective of the Directive : To define the general principles ruling the Regional Electricity Market in the frame of the ECOWAS Energy Protocol. Contents of the directive : Market design: In line with the principles of the ECOWAS Energy Protocol, the development and establishment of the regional electricity markets shall evolve in three (3) phases according to the Regional Market Rules approved by ERERA. Structure of National electricity markets: Member States shall ensure that their existing Electricity Acts and relevant Regulations be adapted to provide functional separation of accounts in terms of Generation, transmission and distribution functions Currently: 3 SYNCHRONOUS AREAS

6. The ECOWAS Directive On The Organisation Of The Regional Electricity Market (cont’d) Contents of the directive (continued) : Tariff methodology: In accordance with its procedures after consultation of the stakeholders, ERERA will settle the cross border transmission of electricity tariffs methodology. Regional Transmission Network Open Access: ERERA shall specify by way of Regulation, specific conditions for third party access to the Regional Transmission Network after due consultations with Stakeholders Harmonisation of contracts: After consultations of Stakeholders, ERERA will develop and approve model bilateral contracts and standard Connection and Use of Network Agreement for access to the Regional Transmission Network Strengthening of National Regulatory Authorities : Member States are mandated to establish an independent regulatory authority where none exists and to expand the powers of the national regulators to include market monitoring and tariffs setting.

WAPP Operations Manual (Adopted by ERERA in September 2015) 7. Status of the Regional Electricity Market regulation documents Documents adopted by ERERA ECOWAS Regional Electricity Market Rules (Adopted by ERERA in August 2015) The Transmission Tariff Methodology for WAPP (Adopted by ERERA in August 2015) WAPP Operations Manual (Adopted by ERERA in September 2015) Documents yet to be adopted by ERERA Bilateral Contract Templates Regional Market Procedures ERERA’s Enforcement Rules ERERA’s Dispute Resolution Procedures The Transmission Pricing Model Third Parties Regional Transmission Grid Access rules

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