BALANCING IN THE BALTIC REGION WG CONCLUSIONS Ingrid Arus Riga/ Baltic Mini-Fora meeting, 24 th of April 2009

ERGEG Guidelines of Good Practice for Balancing Markets Integration ERGEG is committed to the development of an effectively competitive single market for electricity across the whole EU, while at the same time taking into account security of supply and system reliability. Balancing market integration - as a key issue for an internal electricity market. Directive 2003/54/EC assigns to the regulator the sole competency for the functioning of the balancing market within a Member State. According to the Article 23, Paragraph 2: “The regulatory authorities shall be responsible for fixing or approving, prior to their entry into force, at least the methodologies used to calculate or establish the terms and conditions for the provision of balancing services”.

Principles and Benefits of Efficient Electricity Balancing Markets THE PURPOSE of balancing markets is to serve short-term operational security of supply (security of grid operation) in a market oriented way and to deal with imbalance settlement. BALANCING MARKETS: should further promote effective competition should not aggravate market power should be non-discriminatory BALANCING MARKET shall have clear and transparent processes governing the proposals for modifications of the balancing market rules. THE RESPONSIBLE REGULATORS must clarify the regulatory route by which the integrated balancing market is monitored and its rules enforced. Appropriate STANDARDS for AUTOMATIC DATA and INFORMATION EXCHANGE between BRP and market actors during planning, operation and settlement phases of balancing shall be in place to ensure secure system operation and to facilitate transparency. IMBALANCE ARRANGEMENTS and PRICING RULES shall be made compatible in a truly integrated balancing market.

WG on Balancing Ingrid Arus - OÜ Põhivõrk/Estonian TSO Aivar Sarv - OÜ Põhivõrk/Estonian TSO Liis Aasmann - OÜ Põhivõrk/Estonian TSO Tiina Maldre – Estonian Competition Authority Airi Asperk – Estonian Competition Authority Giedrius Radvila - Lietuvos Energija AB/Lithuanian TSO Aistija Zubaviciute – Lithuanian National Control Commission for Prices and Energy: Dace Bite - Public Utilities Commission of Latvia Arnis Staltmanis - AS Augstsprieguma Tīkls/Latvian TSO

Final Report on Balancing  Description of current system  Harmonized model for Baltic Balance Management  Reserve cost allocation  Settlement and balancing energy price calculation  Future contract system  Advantages and disadvantages of model implementation in Baltics  Intraday market and gate closure time  Conclusions and next steps

Advantages and disadvantages  Advantages +Accuracy in the planning process +More capacity in the (Baltic) regulating market +Same conditions for big and small players +Harmonised rules for bigger market – Baltics + Nordel More market players Stronger competition Trust to the market  Disadvantages –Risk of speculations (theoretical) –May emerge the need for additional financing – volume fee for imbalance? –New routines for TSOs and for other market players –Increased costs for IT- systems for TSOs and for other parties

Future contract system

Conclusions (1)  to follow in harmonization process the Nordic model for balancing;  to conclude the WG work and to deliver the “Final Report of the Balancing in the Baltic Region”  after the market opening requirements are fulfilled (BIP results) to start the harmonization process, where  TSOs are responsible for elaborating proposals how to implement the agreed model and needed methodologies.  Regulators are responsible for approval the relevant procedures and methodologies

Conclusions (2)  We announced, that there is a need for the new WG to study and to implement the common regulating (and reserve) market principles  We propose d to create a Congestion Management WG for finding common solutions regarding congestion issue s. WG will be governed by Lithuanian TSO.

Thank you for your attention!