Northern Mini Forum Copenhagen, 27 June 2006 Gunnar Lundberg Chair of the EURELECTRIC WG Wholesale Markets & Trading Vice Chair of the Markets Committee

Market Transparency Conclusions from the 12th Florence Forum : “EURELECTRIC agreed to provide a list of information that it considers market agents need to have in order to trade efficiently, where possible in co-ordination with traders, power exchanges and customers, with the aim to provide this list by November 2005.”

Liquid day-ahead and forward markets and open balancing and intra-day markets with trustworthy prices Sufficient number of market participants in the day- ahead and forward markets on both demand and supply side Transparent access to common sets of market information Coordinated and market-based mechanisms to manage congestion Set of sufficiently harmonized market frameworks to allow cross-border trading on all markets Develop interconnection where economically feasible Prerequisites for a European wholesale market

Benefits of Market Transparency Promote market liquidity and enhance market efficiency –To effectively risk-manage their positions and cater for demand and supply uncertainties –To take “make or buy” generation decisions Facilitate new entry Engender market confidence Facilitate regulatory oversight

Market Transparency – Key Principles Relevant data should Be available to all Be authoritative Be based as far as possible on common standardised definitions and formats Be issued at the same time in a regional market Be easily accessible Be based on best estimates in good faith Provide sufficient degree of confidence

Market transparency – the need to make a balanced assessment costs: the cost of collecting not yet available data has to be proportional to the benefits level of details: the degree of details should be determined by the range of data relevant to price formation confidentiality: market participants must be able to operate without revealing commercially sensitive information

Pan-European market EURELECTRIC approach towards market transparency is embedded in its Road Map to a European Electricity Market: Integration at European level Coordination between regions Development within regions Continued liberalisation of national markets

Market Transparency – Transmission and Access to Interconnectors Year-, Month-, Week- and Day-ahead forecast of available commercial capacity on borders Planned maintenance of borderlines Unplanned line outages Legacy contracts and reservations for legacy contracts Remaining available commercial capacity for day- ahead and intra-day allocation Total nominated capacity per hour Realised physical flows on borders per hour Long-term evolution forecast of the transmission infrastructure, etc.

Market Transparency – Generation Installed generation capacity by fuel type (ex ante) Available generation capacity –Ex ante information to be made available following a 2- phase-approach Actual hourly aggregated generation by fuel type (ex post) Unplanned loss of generation capacity –Ex post information by fuel type on price area level; 2- phase-approach Water levels in hydro reservoirs Further information on projected maintenance, mothballing, etc.

Market Transparency – Load Year-, Week- and Day-ahead aggregated forecast of load Actual system load in MW/h

Market Transparency – Balancing and reserve power Price and volumes for balancing power Aggregated capacity margin supply-demand System balancing status Actual use of secondary and tertiary reserve

Market Transparency – Wholesale market Prices and volumes on power exchanges or for OTC standard contracts by brokers in the –Day-ahead markets –Intra-day markets –Forward and derivatives markets

Market transparency – HOW TO CREATE A LEVEL PLAYING FIELD? 2 ways can be envisaged: ■ Implementation via Europe-wide Regulation Pro’s: a tested route, will avoid potential for market distortions Con’s: lengthy process, risk to align it to the country with the lower pace of development ■ Implementation via regional cooperation Pro’s: tailored and pragmatic approach, quicker process Con’s: untried approach on European scale, greater trade distortions may result in absence of appropriate guidance

Market transparency – Way forward I Provide a list of data for benchmarking existing market transparency arrangements in order to 1.Harmonise transparency requirements within regions 2.Progress towards harmonisation between regions  Use upcoming regional Mini-Fora to create momentum for levelling up transparency standards in the regions (provided that all categories of market players are represented)

Regional approach for market transparency requires Putting in place the necessary governance arrangements Using the Mini-Fora as the natural vehicle for development Follow ‘level up’ benchmark in the regions Genuine cooperation between all stakeholders and in particular the regulators –ERGEG proposal for market transparency in public consultation  EURELECTRIC input –Different approaches relatively close in majority of issues Market transparency – Way forward II

Thank you for your attention. Representing the European Electricity Industry