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REGULATORY AUTORITIES SETTING-UP AND MISSION DURING MARKET OPENING Nina Grall-EDLER 3rd MEDREG IMME Seminar – 11/12 September 2013 - Tunis
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1.M ARKET OPENING – THE ROLE OF REGULATORS 2.W HAT IS NEEDED FOR EFFECTIVE REGULATORY WORK ? 3.M ARKET INTEGRATION / H ARMONISATION – T HE I MPACT OF REGULATORY CROSS - BORDER COOPERATION 4.W HAT CAN BE EXPECTED FROM E FFECTIVE R EGULATION ? OVERVIEW
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S TARTING ASSUMPTIONS FOR ELECTRICTY NETWORKS natural monopolies – investment costs essential facilities regulation required to ensure fair competition A REAS OF P OTENTIAL B ARRIERS T O C OMPETITION D EFINE R OLE / R ESPONSIBILITIES OF R EGULATORS THE ROLE OF REGULATORS THE ROLE OF REGULATORS [1]
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THE ROLE OF REGULATORS THE ROLE OF REGULATORS [2] P OTENTIAL DISCRIMINATION / M ISFUNCTIONING R EGULATORY A CTIONS / R ESPONSIBILITIES access to network connection to network level / equality of network fees network use abuse of dominant market position / anti-competitive behaviour setting TPA and CAM rules setting connection fees setting network fees ensure transparency, setting balancing rules and CMP favorable market conditions e.g. capacity / volume release in cooperation with COMP authorities facilitating investments ensuring security of supply RES integration customer protection
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R EGULATORY I NDEPENDENCE Practical implementation Compliance and committment of other state bodies A CTIVE R EGULATORS defining, not administrating the market! active cooperation with COMP authorities – ref. ex ante / ex post role F ULL S ET OF R EGULATORY P OWERS Implementation by letter and spirit WHAT IS NEEDED WHAT IS NEEDED [1]
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I NDEPENDENCE [Third Energy Package] Legally distinct and functionally independent Acting indepently Taking autonomous decisions Exercising powers impartially and transparently Annual budget Human and financial resources Management S TRONG R EGULATORY P OWERS [Third Energy Package] Issue binding decisions carry out investigations on functioning of the market Impose proportionate measures to promote competition Require any information from undertakings Impose effective, proportionate and dissuasive penalties WHAT IS NEEDED WHAT IS NEEDED [2]
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W HY M ARKET INTEGRATION / CROSS BORDER TRADE ? increased liquidity / competition impact of more suppliers / traders increased security of supply more generation sources supporting network operation (security) generation reserves, balancing Some markets cannot function properly on national level only – lack of liquidity, lack of market players cost of non-integration economies of scale, competitive structures MARKET INTEGRATION REQUIRES HARMONISED MARKET RULES ACROSS BORDERS technical / operational rules market rules – network access, capacity allocation, congestion management, balancing financial rules – transit compensation CROSS BORDER COOPERATION CROSS BORDER COOPERATION [1]
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E XAMPLES voluntary [1] formally established but non binding: ERGEG, ECRB voluntary [2] formally established but non binding: CEER, ERRA obligatory binding : ACER E XPERIENCE - VOLUNTARY VS. O BLIGATORY C OOPERATION Impact on committment – by regulators and stakeholders CROSS BORDER COOPERATION CROSS BORDER COOPERATION [2]
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E CONOMIC G ROWTH / INCREASE OF SOCIAL WELFARE Breaking up inefficient national monopolies cost efficiency positively impacts state budget Strengthening the economic conditions of national energy network industries – by ensuring cost-reflective tariffs Increasing service quality and consumer protection Additional job opportunities Controlling network security Coordinated treatment of energy policies that affect each other RES integration – infrastructure development – energy efficiency – sustainability – security of supply – competition WHAT CAN BE EXPECTED FROM EFFECTIVE REGULATION
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„H ONEST “ L IBERALISATION P OLICY I S K EY Regulated energy prices Regulated chain – generation, single buyer models No political interventions into regulatory work / strong regulator R EFLECT IMPACTS OF OTHER POLICY AREAS RES infrastructure BUT...
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THANK YOU VERY MUCH FOR YOUR ATTENTION! QUESTIONS?DISCUSSION CONTACT Nina Grall-Edler Head of ECRB Section – Regulatory Affairs Energy Community Secretariat E: nina.grall@energy-community.org W: www.energy-community.org
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B ACKGROUND S LIDES
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1.Legally distinct and functionally independent Independent from industry (2nd p) + any public body Decide on own management no hierarchy-links, no office / personell sharing 2.Act indepently a.Not seek or take instructions b.No other institution to give instructions 3.Take autonomous decisions a.Ex ante No external interference in decisions ` Develop own Work Program without need for consent b. Ex post Decisions immediately binding Decisions cannot be subject to review / approval / veto exemption juridical review IN DETAIL – INDEPENDENCE IN DETAIL – INDEPENDENCE [1]
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4.Separate annual budget with autonomy in its implementation Can be part of the state budget Approval by parliament possible but limited to global financial framework, no influence on NRA priorities! Appointment of NRA baord members possible but not resulting in instructions! 5.Human and financial resources Adequate to execute powers [ref. ITO!] Benchmark: other NRAs / bodies (e.g. national banks) 6.Management Fix term 5-7 years, renewable once Rotation scheme Members appointed before the implementation of the 3rd package: max 7 years + Relief from office only if not compliant with independence criteria IN DETAIL – INDEPENDENCE IN DETAIL – INDEPENDENCE [2]
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7.Exercising powers impartially and transparently „Impartially“: neutral, based on objective criteria and methodology „transparently“ Adopt and publish procedures / decision making rules Publish information on organisation and structure, including contact points Consult stakeholders before taking decisions – at least by publishing drafts, ideally including PCs / hearings / publication of comments and their reflection Reasoned opinions – appropriate for juridical review Remarks Setting of national energy policy by government not affected Independence does not contradict cooperation IN DETAIL – INDEPENDENCE IN DETAIL – INDEPENDENCE [3]
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