BEMIP implementation WG meeting summary 9 th Baltic Electricity Market Mini-Forum September 16, 2009, Vilnius

Main topics “Removal of regulated tariffs for eligible customers”; “Subsidized renewable energy can enter the market without losing subsidies”; “Separation of TSO activities/roles”; “Basic transparency rules (Nord Pool Spot rules)”; “Removal of cross-border restrictions, such as license and tariff in three Baltic States”; “Estonia, Latvia, Lithuania and Finland have a common position and trading principles towards non EEA third countries”; “Common market monitoring and surveillance rules”; “Network tariff harmonization for generators”.

“Removal of regulated tariffs for eligible customers”, Q1, 2010 Unregulated tariffs for 35% of the consumption by 2010; – Estonia: new draft Electricity Market Act amendment expected to be approved by – eligible consumers have to purchase electricity on the market. – Latvia: amendments to Electricity Market Law - all the households and commercial electricity consumers with less than 50 employees and yearly turnover less than 7 million LVL have the rights to use the universal service of electricity; – Lithuania: Lithuanian electricity market development plan (LEMDP) approved by Prime Minister - proposed changes in Electricity Law concerning removal of regulated tariffs for customers with allowed capacity above 400 kW (~35% of consumption) from Draft amendments to Electricity Law under public discussion; Full market opening by 2015 – Estonia: comes with full liberalization when new draft Electricity Market Act amendment to be approved; – Latvia: achieved except universal service; – Lithuania: a goal of LEMDP. Conclusion: all countries are in line to fulfill BEMIP targets of 2010 and 2015.

“Subsidized renewable energy can enter the market without losing subsidies”, Q1, 2010 Support mechanism – Estonia: two options - feed in tariff for sale of RES or premium for sale to the market; – Latvia: feed in tariff for sale of RES to the grid; – Lithuania: feed in tariff for sale of RES internally – market price and premium components. Conclusion: Latvia and Lithuania may be delayed in fulfilling BEMIP target by Q1, 2010

“Separation of TSO activities/roles”, Q1, 2010 – Estonia: Estonian TSO – separate company. To be unbundled from Eesti Energia Corporation at the latest by ; – Latvia: Latvian TSO – separate company under Latvenergo group; – Lithuania: Lithuanian TSO to be separated into daughter company of Lietuvos Energija; Conclusion: all countries are in line to fulfill BEMIP targets of 2010.

“Basic transparency rules (Nord Pool Spot rules)”, Q1, 2010 The topic will be moved under Transparency WG coverage.

“Removal of cross-border restrictions, such as license and tariff in three Baltic States”, Q1, 2010 Tariffs for export and import for other Baltic states – no tariffs; Licensing and permitting of import and export: – Estonia: import license required only for non-EU countries; – Latvia: no import or export licensing or permitting; – Lithuania: LEMDP and draft Electricity Law – import and export permits only for non-EU countries. Conclusion: all countries are in line to fulfill BEMIP targets of 2010.

“Estonia, Latvia, Lithuania and Finland have a common position and trading principles towards non EEA third countries”, Conclusion: Further discussion and agreement on same principles is needed.

“Common market monitoring and surveillance rules”, Proposition to have separate WG on this topic.

““Network tariff harmonization for generators”, G component: – Estonia: no G component; – Latvia: no G component; – Lithuania: no G component; however, discussion to have one in the future. Conclusion: Same principles at present. However, there are discussions about introduction of G component in Lithuania.