Draft guidelines ‘Transmission tarification’ EURELECTRIC’s position ERGEG public hearing 30 June 2005

THE NEED TO CREATE A LEVEL PLAYING FIELD There are several market distortions in the EU electricity market due to a lack of harmonisation. Varied Gs is one of these distortions. Current Directives/ Regulation provide a sufficient basis. Further progress can be made via cooperation of all stakeholders.

G harmonisation is needed & relatively straightforward: would contribute to reducing trade distortions & putting generators on an equal footing indispensable to any sound EU long-term locational signals (when appropriate).

DRAFT GUIDELINES The draft guidelines do not propose any change to the current situation. Neither do they envisage a review mechanism at some point in time to ensure progress. Therefore EURELECTRIC can not support the current draft!

DRAFT GUIDELINES Conclusions of the 10th Florence Forum: there should be, as a 1st step, harmonisation through the determination of a range. EURELECTRIC is at least calling for this agreement to be reflected in the guidelines: ranges only as a 1st step (transitory period)!

EURELECTRIC’s POSITION After the transitory period, dissociate harmonisation from locational signals: harmonise the BASIC G (i.e.: G without signals). Harmonise the BASIC G to an absolute value, identical all over the EU.

EURELECTRIC’s POSITION EURELECTRIC’s preferred solution: BASIC G=0. Same position in the Comillas study (Feb. 2002): “Distortions can be eliminated or minimised by setting the transmission charges of generators to zero (…).”

EURELECTRIC’s POSITION Generators do not refuse paying for the use of networks. With G = 0: no payment for infrastructure costs but maintained contribution to losses & congestion. BASIG G=0 also does not rule out locational signals. Generators may eventually have a lower or higher charge as a result of these signals.

TO SUM UP EURELECTRIC’s comments to the draft guidelines in a nutshell: STEP 1: convergence of G during a reasonable transitory period STEP 2: harmonisation of the BASIC G to the same absolute value all over the EU. Preferably: BASIC G=0. Simple, ensures a level playing field & can easily be combined with locational signals.