September 10, 2003SVSE Praha1 EU Single market for energy Expectations of the European industrial consumers Peter CLAES President Ifiec Europe

September 10, 2003SVSE Praha2 What is IFIEC Europe ? European federation of national federations of industrial energy consumers Issues : Market liberalisation (electricity – natural gas) Environmental aspects of energy policy European Climate Change Policy Renewables / nuclear energy / CHP / … Energy taxation …

September 10, 2003SVSE Praha3 IFIEC Members EU-members Future EU- members Members D – F – GB B - NL – IRL I – GR – SF A – P H Non-members S – DK – LUX E (?) CZ – EST – LV LT – PL – SLO SK – M – CY

September 10, 2003SVSE Praha4 1. Does the single market work ? Performance indicators:  How many users changed suppliers?  Did prices fall or (at least) converge ?

September 10, 2003SVSE Praha5 How many users changed suppliers ? ( , Source: DG Tren, Eurostat) ElectricityIndustrialElectricityDomesticGasIndustrialGasDomestic Austria20-30%5-10%<2% Not eligible Belgium2-5% ??? France10-20% 20-30% Germany20-30%5-10%<2%<2% Italy>50% 10-20%2-5% Netherlands20-30% 30-50% Spain10-20% 20-30% UK>50%30-50%>50%>50%

September 10, 2003SVSE Praha6 Did prices fall or (at least) converge ?

September 10, 2003SVSE Praha7 Did prices fall or (at least) converge ?

September 10, 2003SVSE Praha8 Did prices fall or (at least) converge ?

September 10, 2003SVSE Praha9 Did prices fall or (at least) converge ?

September 10, 2003SVSE Praha10 2. What went wrong ? 2.1. Does unbundling work ? Accounting unbundling (“Japanese Walls”) Management unbundling Legal unbundling Ownership unbundling (“Chinese Walls”)

September 10, 2003SVSE Praha11 2. What went wrong ? 2.1. Does unbundling work ? 2.2. The impact of subsidiarity

September 10, 2003SVSE Praha12 The impact of subsidiarity Source : Second benchmarking report DG Tren

September 10, 2003SVSE Praha13 Source : Second benchmarking report DG Tren

September 10, 2003SVSE Praha14 2. What went wrong ? 2.1. Does unbundling work ? 2.2. The impact of subsidiarity 2.3. Cross-border Transmission

September 10, 2003SVSE Praha15 Cross-border Transmission Suboptimal use of existing capacity e.g. Belgian-French border (electricity) available capacity : app MW available for market : MW ULF : peaks of > MW

September 10, 2003SVSE Praha16 Cross-border Transmission Lack of cross-border transmission capacity

September 10, 2003SVSE Praha17 Cross-border Capacity Electricity In % of installed production capacity (Source: DG Tren) Potential competition from imports Market share of Top 3 producers Austria21%45% Belgium25%96% France12%92% Germany11%64% Italy14%69% Netherlands19%59% Spain4%83% UK3%36%

September 10, 2003SVSE Praha18 Cross-border Transmission No efficient congestion management system no agreement within ETSO no efficient exchange of information between TSOs no single European CM-system re-dispatching auctioning rationing market splitting

September 10, 2003SVSE Praha19 2. What went wrong ? 2.1. Does unbundling work ? 2.2. The impact of subsidiarity 2.3. Cross-border Transmission 2.4. Complexity of energy policy

September 10, 2003SVSE Praha20 Complexity of energy policy European Climate Change Programme renewables CHP CO 2 -emissions nuclear energy ? financing of other policies (public services, local entities, …) security of supply + NIMBY-syndrome !

September 10, 2003SVSE Praha21 3. Recommendations of Ifiec full ownership unbundling (Chinese walls) full market opening for all users publication of all relevant information by TSOs and regulators

September 10, 2003SVSE Praha22 3. Recommendations of Ifiec Electricity cost-based, fair CBT financing mechanism (non-distance related, fair share to be paid by producer) non-discriminatory, transparent and efficient congestion management system (no auctioning)

September 10, 2003SVSE Praha23 3. Recommendations of Ifiec Gas (gas-to-gas competition) cost-reflective and simple tariff structure non-discriminatory, cost-reflective access to gas infrastructures (incl. Storage, off-shore facilities) clear, non-discriminatory, transparent balancing rules (preferably daily balancing) capacity rights subject to “use-it-or-loose-it”