Baltic Electricity Market Mini-Forum June 3, 2006 Riga, Latvia Electricity Licensing Rules in Lithuania Kestutis Zilenas Head of Licensing department National Control Commission for Prices and Energy of Lithuania

Electricity Licensing Rules K. Zilenas, NCC 2 Basic Legal Acts  Law on Energy (adopted on 16 May 2002)  Law on Electricity (adopted on 1 July 2004)  Licensing Rules of the Activities in the Electricity sector (adopted on 16 May 2003)

Electricity Licensing Rules K. Zilenas, NCC 3 I. Main Principles of Licensing System  Permissions are issued by Governmental authority (for electricity generation, import, export)  Licenses are issued by the Commission  electricity transmission (1 licensed company)  electricity distribution (7 licensed companies)  public electricity supply (7 licensed companies)  independent electricity supply (19 licensed companies)

Electricity Licensing Rules K. Zilenas, NCC 4  Electricity transmission and distribution licenses may be obtained by entities possessing a network within a defined area by the right of ownership or other legal form  Distribution companies are Public Suppliers and supply energy for all customers located in their respective territories at public prices  Independent Suppliers supply energy for any eligible customer on the bilateral contracts’ basis  Licenses are issued for term less period. II. Main Principles of Licensing System

Electricity Licensing Rules K. Zilenas, NCC 5 Requirements to receive a License (Independent Suppliers)  Application of the established form and attach the following documents to the application:  copies of the registration certificate and of the Statutes of the Company;  information about the internal organizational structure of the company;  commitment to fulfil the license terms;  a list of licenses and statutory authorizations for activities in electricity sector obtained by the enterprise and its branches;  balance sheets and auditor’s reports for the last two years (if the enterprise performed business activities for less than two years – just for the last year).  State fee for issuing of the License (~ 348 EUR) III. Main Principles of Licensing System

Electricity Licensing Rules K. Zilenas, NCC 6 Main requirements into a license (Independent Suppliers):  Rights to trade and duty to provide service;  obtain separate authorizations (permits) for electricity import and export in order to trade in electricity with foreign countries;  provide public service obligations if such services are fixed;  maintain separate accounting of the activities of the independent electricity supplier;  upon the end of the year audit the costs of the licensed activities and inform the Commission about the results of the audit;  provide information and reports on the licensed activities and state of settlements with producers and suppliers to the Commission within 40 days after the end of each quarter. IV. Main Principles of Licensing System

Electricity Licensing Rules K. Zilenas, NCC 7 Harmonization of licensing provisions in the market area – will it be possible? Yes, it will be… But when? Possible solution: Simplified Procedure Issuing Licenses Conclusion

Electricity Licensing Rules K. Zilenas, NCC 8 Thank you for your attention! Questions ?