Energy Agency of the Republic of Serbia Regional electricity market I panel: How to integrated electricity market in South East Europe - Regulatory aspects - Ljiljana Hadzibabic Council member Energy Agency of the Republic of Serbia Belgrade, 25. April 2013.

Content The objectives of SEE Regional market integration EU Target Model for Electricity Market Integration The 8th Region - SEE Regional and national programs Allocation of roles and responsibilities of relevant institutions Regulatory role Current state and development possibilities for Serbian market Market model and market participants in Serbia The dynamics of the Market Openning The legal framework for the functioning of National Market Comparative Electricity Prices for the industry in some EU countries

The objectives of SEE Regional market integration The main goals are: Creating a competitive integrated Regional energy market – more efficient than national markets Efficient management of interconnection capacities: Capacity Allocation and Congestion Management (CACM) Attracting investments in energy Providing a secure and sustainable supply of customers at reasonable prices

EU Target Model for Electricity Market Integration Common vision for completion of Internal Electricity Market (IEM) by 2014 Electricity markets across Europe must share a set of common features and be linked by efficient management of interconnection capacities In order to achieve this: CACM and Balancing have been identified as priority areas → 3rd Legislative Package

The 8th Region - SEE 9 Energy Community Treaty Contracting Parties the neighboring countries Bulgaria, Greece, Hungary, Romania and Slovenia Italy with regard to the interconnections between Italy and the CPs to the EnC Treaty (DC undersea cables) + Moldova and Ukraine are not technically in parallel synchronous operation within ENTSO-E, and thus cannot perform operationally CACM mechanisms in the 8th region SEE 9 contracting parties >20 borders Population: 137 million The ultimate goal is to achieve a single platform for yearly, monthly and daily implicit auctions for the SEE region.

Legal Basis Directive 2009/72/EC 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC Regulation (EC) No 713/2009 of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators Regulation (EC) No 714/2009 of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No 1228/2003 EU Legislation implementation within SEE Region Contracting Parties (CP) shall bring into force the laws, regulations and administrative provisions necessary to comply with Directive 2009/72/EC, Directive 2009/73/EC, Regulation (EC) No 714/2009 and Regulation (EC) No 715/2009, as adapted by the PHLG Decision (Jun/Oct 2011), by 1 January 2015

New EU institutions based on the 3rd Package: New Institutions New EU institutions based on the 3rd Package: ENTSO-E (TSOs) ACER (Regulators) Joint preparation of: Framework Guidelines Network Codes Target models for capacity allocation and congestion management ..............

Regional and national programs /1 National development Regional cooperation Parallel development of regional and local electricity market? SEE local markets are underdeveloped in average - mainly bilateral markets Markets are largely illiquid Dominant existing production company Legislative changes are still ongoing Obstacles to market development in each jurisdiction in SEE (except Hungary, Italy, Moldova and Ukraine) Parallel

Regional and national programs /2 The committed institutions: TSOs  to develop concepts and make proposals Consultants  to moderate and make recommendations Regulators  to decide or approve Supports and encourages the adopted policies and market development in line with the EU Target Model Approves of TSOs proposals related to organizational, commercial and legal aspects Verifies of compliance with national legal framework and development schedules and with EU legal framework Energy Community joint projects: Wholesale Market Opening (WMO) Balancing Energy Market Market monitoring Supplier switching

National Market Electricity Market By the Energy Law 2011 Bilateral Balancing Market Power Exchange

The Legal Framework for the Market Functioning EU directives - mandatory baseline The Energy Law 2nd package 3rd package by 2015 Transmission and Distribution Grid Codes Cross-border transmission capacities - Rules governing the allocation of rights Market Code Power Excange Code Supplier changing Rules Methodologies for the determination of the price for access to electricity transmission and distribution system

Market Participants Electricity Producers Suppliers (60) Public Suppliers (1) The final buyers (3.6 million) Transmission System Operator Distribution System Operator Market Operator Balancing responsibilities of all market participants; Relations of Market participants are regulated by agreements.

Current state of Serbian electricity market - model

The Dynamics of the Market Opening Potentialy, 43% of market was oppend in 2008 (all non-household) The markets will be 100% be open from 1 Jan 2015, but the households and small consumers may choose from the market or the public supply

Current state of Serbian electricity market - data 2012: GWh % Transmitted electricity 40,197 100 Transmission losses 2.55 Maximum daily gross consumption 141.43 Maximum hourly load MW 6,622 Total consumption 28,457 70.8 Transit 8,176

Traders activities in the 2011 and 2012

The physical flow of the interconnectors in 2012

Comparasion of the Electricity Prices for the Industry (31) - The second half of 2012 -

The trend of electricity prices in the future Price now Price after 2020. Profit Costs rationalization New power plants and ecology Renewable Energy Cost Cost of CO2 ?

The trend of electricity prices in Serbia Regulated / Free Market + Public Supply + Distribution + Transmission - Electricity production and purchase Regulated prices approved by the Regulator since October 2012

Thank you for your attention! Ljiljana Hadzibabic Council member Energy Agency of the Republic of Serbia www.aers.rs