Introduction to the Bundesnetzagentur (BNetzA) Visit of FTS Bonn Annegret Groebel International Relations / Postal Regulation Bundesnetzagentur

2 Brief overview  : Regulierungsbehörde für Telekommunikation & Post (RegTP) regulation of two sectors: telecommunications and postal services  New responsibilities: electricity, gas (both Jul 2005) and railways (Jan 2006) regulation RegTP renamed Bundesnetzagentur (BNetzA) in July 2005  BNetzA’s task: market intervention (deregulation) in order to develop and promote sustainable competition competition in these markets

3 BNetzA’s mission Establish and secure fair competition (all sectors) Provide and safeguard user interests, e.g. low-priced, efficient & eco-friendly supply of energy Efficient and reliable network operation (power & gas) Encourage efficient investment in infrastructure and promote innovation (telecoms) Promote development of the internal market of the European Union (all sectors) Ensure provision of elementary telecoms and postal services throughout Germany

4 The electricity market value chain Transpo rt and Distribu tion network s Supply Generation/ Production Wholes ale trading Potentially competitive market segments „Natural monopoly“ ►Regulation „Natural monopoly“ ►Regulation > 1500 network operators 4 electricity TSOs 22 gas TSOs

5 1 EnBW Transportnetz 2 E.ON Netz 3RWE Transportnetz Strom 4Vattenfall Europe Transmission Source: VDN, Daten und Fakten 2005 Electricity Transmission System Operators in Germany

6 The Federal Network Agency  Sector-specific authority tasked with ensuring effective competition in the net-bound sectors  Telecommunications and Posts (since 1998),  Electricity and Gas (since 2005), and  Railways (since 2006) HQ in Bonn  BNetzA employs ca. 170 staff in energy regulation, overall ca  Independent higher federal authority in the scope of business of the Ministry of Economics and Technology (BMWi)

7 Organization chart (1)  Headed by President and two Vice-Presidents nominated by government upon proposal of Advisory Council appointed by the President of Germany  Advisory Council members of Upper House of Parliament & Lower House of Parliament advise BNetzA on various issues  Ruling Chambers  key regulatory decisions executed by Ruling Chambers  one chairman and two vice chairs  clear rules for ruling chamber proceedings ohearings ooral proceedings oparticipation in proceedings oinvestigation rights  independent rulings  Departments: Economic, Legal and Technical for all five sectors

8 Organization chart (2) President Vice President Management Office President's Chamber (Ruling Chamber 1) Ruling Chambers Information Technology and Security Human Resource Accounting Dep. Regional Offices of BNetzA Department for International Coordination & Postal Regulation Department for Energy Regulation Department for Railway Regulation Department for Economic Regulation Telecoms incl. numbering Department for Legal Telecoms Regulation Frequency Management Technical Telecoms Regulation incl. standardisation

9 Organisation chart (3) Energy regulation – Ruling chambers BK 6 BK 7 BK 8 BK 9 Ruling Chambers BK 4 Investment Budgets, Individual Electricity Network Charges, Pipe-to-pipe competition Electricity Network Access Gas Network Access Electricity Network Charges Gas Network Charges

10 Ruling Chamber 6 Access to Power Grids Ruling Chamber 7 Access to Gas Grids Ruling Chamber 9 Gas Tariff Approval Ruling Chamber 8 Electricity Tariff Approval 601 Economic Policy Issues 607 Gas Distribution Network Access 602 Incentive Regulation, Benchmarking 608 Electricity Transmission Grid Access, Cross Border 603 Market Watch, Monitoring Electricity/Gas 609 Gas Transmission Network Access, Cross Border 604 Unbundling & Legal 610 Use of System Charges, Electricity 605 IT based Data Processing, Renewables 611 Use of System Charges, Gas 606 Electricity Distribution Grid Access 612 Cooperation with State authorities Department 6 Energy Regulation Ruling Chamber 4 Investment Budgets Organization chart (4)

11 Independent regulator ?  BNetzA = higher federal authority located in scope of business of Ministry of Economics & Technology  What about independence ?  no influence by market players  no influence on daily business by Ministry  Regulator has to be impartial  How can independence be guaranteed?  clear separation of responsibilities  rules that clearly define the roles  institutional set-up

12 Independent regulator !  Transparency consultations oral hearings publication of docs  Ruling chambers’ decisions independent (consistency requirement) no overruling by Ministry  No control at all? Ministry can give directives, but they have to be published BNetzA decisions subject to legal review by independent courts

13 Accountability  Annual report on all five sectors  Activities report every two years on status and development of telecoms & energy markets  Monitoring report of energy sector  Report of the Monopolies Commission to be submitted every two years to report whether there is effective competition in the telecoms & energy markets  Report to the European Commission on energy matters to be submitted annually  Principles of its administration to be published at regular intervals

14  Energy Industry Act aims at a secure, low-priced, consumer-friendly, efficient, and environmentally compatible supply of electricity and gas (§ 1 (1))  Competition and security of supply are equal aims of regulation (§ 1 (2))  Electricity and gas networks have to be neutralised in order to create competition Division of labour Sectoral regulation vs. Competition law (1)

15  Basic split of energy competences between the Federal level authorities:  Federal Network Agency: Network regulation under the Energy Industry Act, inter alia:  approving network access charges ex-ante  setting-up an incentive regulation scheme  ensuring non-discriminatory network access and set conditions  taking steps against abuse of market position by network operators  monitoring unbundling provisions  setting fines, where appropriate  Federal Cartel Office: Application of competition law in Generation/production and supply:  Abuse of market power in wholesale markets,  control of end-user prices,  merger control Division of labour Sectoral regulation vs. Competition law (2)

16 BNetzA & BKartA (1)  Regulatory body for sector regulation: economic and technical regulation economic regulation: ex-ante & access regulation, ex-post control of abusive practices technical regulation: frequency allocation, technical standards, radio monitoring etc.  Cartel office for competition policy  Clear line between regulator and cartel office: definition of regulated services laid down in: separate laws (e.g. Telecommunications Act, Energy Industry Act) legal provision for information exchange to ensure legal security and avoid misunderstanding and double work

17 BNetzA & BKartA (2)  Collaboration between regulator and cartel office: comments by cartel office prior to publishing decisions agreements on defining relevant markets & determining SMP facilitates investigating for both authorities  Applying same standards: same threshold for dominance applied to all sectors to ensure close link between common competition policy and sector regulation

18  Split of regulatory competencies  Regional competence for networks with fewer than customers  Regional competence for networks not crossing State borders  Regional Regulatory Authorities control tariffs, system responsibilities, unbundling provisions, conduct abuse proceedings for their operators  BNetzA has in addition sole responsibility for EU level contact  Transfer of competencies from the States to BNetzA is possible (currently 6 out of 16 States have indeed transferred their competencies to BNetzA, all in all BNetzA regulates 245 electricity and 220 gas networks)  Uniform regulation ensured through a joint Committee of BNetzA and the 10 existing Regional Regulatory Authorities Division of labour Federal vs. regional level

19 Baden-Württemberg Saarland Rheinland-Pfalz Hessen Nordrhein-Westfalen Hamburg Brandenburg Sachsen-Anhalt Sachsen Bayern Division of labour 10 Regional Regulatory Authorities

20 Thank you for your attention! Annegret Groebel Department for International Relations / Postal Regulation Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen P.O. Box 80 01, Bonn, Germany Phone: