Asta Sihvonen-Punkka Director General of EMA Vice-Chair of ERGEG Baltic Electricity Mini-Forum 24 th of April, 2009 Riga The 3 rd Package – implied changes to NRAs and their European cooperation

2Baltic Electricity Mini-Forum 24 April 2009 Riga Issues to be addressed The National Regulatory Authorities Designation and independence Objectives Duties The Agency for the Cooperation of Energy Regulators The role and duties of the Agency NRAs participation in the Agency Concluding remarks

3Baltic Electricity Mini-Forum 24 April 2009 Riga Independence and designation of NRAs  NRA legally distinct and functionally independent  Shall act independently from any market interest  Shall not seek or take direct instructions from any government or other public or private entity when carrying out regulatory tasks MSs shall guarantee the independence of the NRA and ensure that it exercises its powers impartially and transparently

4Baltic Electricity Mini-Forum 24 April 2009 Riga What are the preconditions for NRA independence? Decision making: Autonomous decisions independently from any political body Budget: Separate annual budget allocations with autonomy in the implementation Resources: Adequate human and financial resources to carry out its duties Management: Board or top management for a fixed term of five up to seven years, renewable once

5Baltic Electricity Mini-Forum 24 April 2009 Riga General objectives of NRA include cross-border issues Promoting IEM Developing competitive and properly functioning regional markets Eliminating restrictions on trade in electricity between MSs including developing CB capacities and enhancing market integration Ensuring that system operators and users are granted appropriate incentives to increase efficiencies and foster market integration

6Baltic Electricity Mini-Forum 24 April 2009 Riga Duties of NRAs Fixing or approving ex ante Network tariffs or methodologies Terms and conditions for network access and connection Balancing services Terms and conditions for access to cross-border infrastructure including capacity allocation and CM Monitoring duties (e.g. Network security and reliability rules, transparency, market opening, competition at wholesale and retail level, ISO) Setting or approving standards or requirements for quality of service and supply

7Baltic Electricity Mini-Forum 24 April 2009 Riga Powers of NRAs To issue binding decisions on electricity undertakings To carry out investigations To require information from the electricity undertakings to fulfil the tasks To impose effective, proportionate and dissuasive penalties (for TSOs up to 10% of the turnover of the previous year)

8Baltic Electricity Mini-Forum 24 April 2009 Riga Agency for the Cooperation of Energy Regulators A community body with legal personality Purpose: “..to assist the regulatory authorities..in exercising at Community level the regulatory tasks...and to coordinate their actions” Agency shall comprise Administrative Board Board of Regulators Director Board of Appeals

9Baltic Electricity Mini-Forum 24 April 2009 Riga Agency’s tasks I Provide an opinion on draft statutes, list of members, draft rules of procedure of the ENTSOs to the Cion draft annual work programme of ENTSOs to the Cion draft network codes to the ENTSOs draft non-binding 10-year network development plan to ENTSOs Submit a draft framework guideline to the Cion Submit a network code to the Cion and recommend that it be adopted

10Baltic Electricity Mini-Forum 24 April 2009 Riga Basic timeline based on Regulation EC defines priorities for network codes 6 Months EC requests Agency to submit framework guidelines Agency prepares Framework Guidelines ENTSO prepares network codes 12 Months EC requests ENTSO to submit network code 3 Months Agency reviews network codes COMITOLOGY ENTSO submits network code to Agency Agency submits network code to EC when satisfied, recommending approval via Comitology

11Baltic Electricity Mini-Forum 24 April 2009 Riga Agency’s tasks II Monitor and analyse The implementation of the network codes and Guidelines Progress in implementation of projects to create new interconnector capacity and 10-year network development plan Regional cooperation of TSOs

12Baltic Electricity Mini-Forum 24 April 2009 Riga Agency’s tasks vis-á-vis the NRAs Provide an opinion at the request of any NRA or Cion on whether a decision taken by NRA complies Community legislation Follow compliance with the opinion, inform the Cion and MSs concerned At NRAs request, provide an opinion on the application of Community legislation (Cion to be consulted) Can propose to Cion to prepare binding rules on NRA cooperation

13Baltic Electricity Mini-Forum 24 April 2009 Riga Tasks as regards cross- border infrastructure If NRAs cannot agree within 6 months or upon a joint request from the NRAs, the Agency shall decide on regulatory issues, which include terms and conditions for access and operational security of cross-border infrastructure Procedure for capacity allocation Time frames for allocation Sharing of congestion revenues Charges levied on users of the infrastructure (merchant lines) Decisions on exemptions

14Baltic Electricity Mini-Forum 24 April 2009 Riga Concluding remarks The independence, duties and powers of NRAs levelled up and harmonised The new European regulatory framework with legally binding European rules! The cooperation of energy regulators institutionalized in the Agency (similarly for electricity and gas TSOs in ENTSOs) The regulatory gaps significantly reduced A huge step to enhance market integration

15Baltic Electricity Mini-Forum 24 April 2009 Riga Thank you for your attention! Mark your diary for the World Forum on Energy Regulation IV October 18-21, 2009 Athens, Greece