1. European Parliament February 2008 3rd energy package Customers point of view Effects of the Package on Consumers prof. Krzysztof Żmijewski Warsaw University of Technology Independent Energy Consultancy Board

2. Independent Energy Consultancy Board 2/282/28 13 feb 2008 Contents Contents 2 Policy dilemma 3 customer demands 4 customer dreams 8 Regulatory dilemma 10 contradiction 11 common regulation 13 In one Europe we are different 16 Conclusions 24

3. Independent Energy Consultancy Board 3/283/28 13 feb 2008 Policy dilemma (1) Customer demands Customer dreams Low prices High security High comfort No threats Clean earth Welfare society How can we make it all come true?

4. Independent Energy Consultancy Board 4/284/28 13 feb 2008 Customer demands(1) Low prices low billslow costslow energy intensity high energy efficiency High security EU-15+2high quality (80%) + low disruptions (20%) EU-10high quality (20%) + low disruptions (80%) High comfort EU-15+2keep the standard high EU-10increase quality of life

5. Independent Energy Consultancy Board 5/285/28 13 feb 2008 Customer demands(2) Low prices low bills low costs low energy intensity and the answer is high energy efficiency

6. Independent Energy Consultancy Board 6/286/28 13 feb 2008 Customer demands(3) High security EU-15+2high quality (80%) + low disruptions (20%) EU-10high quality (20%) + low disruptions (80%) and the answer is common policy must be balanced

7. Independent Energy Consultancy Board 7/287/28 13 feb 2008 Customer demands(4) High comfort EU-15+2keep the standard high EU-10increase quality of life and the answer is common measures are possible intelligent/smart networks distributed/dispersed generation passive/active demand side management

8. Independent Energy Consultancy Board 8/288/28 13 feb 2008 Customer dreams No threats3rdEP diversification single energy market Clean earth 3x20 reduction of emissions waste management Welfare society7thFP new innovative technology reconstruction of awareness ????

9. Independent Energy Consultancy Board 9/289/28 13 feb 2008 Consumer issues within the 3rd EP overcoming obstacles in cross-border supply standardised, automated and electronic data exchange quick and easy switching procedures for customers enhancement of a retail market (DSO owner- ship unbundling?)

10. Independent Energy Consultancy Board 10/28 13 feb 2008 Contents Contents 2 Policy dilemma 3 customer demands 4 customer dreams 8 Regulatory dilemma 10 contradiction 11 common regulation 13 In one Europe we are different 16 Conclusions 24

11. Independent Energy Consultancy Board 11/28 13 feb 2008 Regulatory dilemma (1) Customer demands Customer dreams Low prices High security High comfort No threats Clean earth Welfare society How can we make it all come true? Market mechanisms Regulatory mechanisms

12. Independent Energy Consultancy Board 12/28 13 feb 2008 Regulatory dilemma (2) Customer demands Customer dreams Market Behaviour against Sustainable Development as much market and as little regulation as possible – – is it possible? How can we make it all come true? Market mechanisms Regulatory mechanisms

13. Independent Energy Consultancy Board 13/28 13 feb 2008 The answer to the Regulatory Dilemma green - renewable red- cogeneration yellow- gas & small CHP white- energy efficiency orange- no emission - CCS blue- super generation colourless- non-supported rainbow certification –regulation through market tools Keep the dreams cost low

14. Independent Energy Consultancy Board 14/28 13 feb 2008 There are no panacea How to make them come true? fundamental question - what do we support? wind - investment green biomass- exploitation red- solid cogeneration - investment + exploitation yellow- gas & small CHP - exploitation white- energy efficiency - investment orange- no emission – CCS - investment + exploitation blue- super generation - investment What do we support: investments or exploitation?

15. Independent Energy Consultancy Board 15/28 13 feb 2008 Fundamental question(2) How to make them come true? single versus local market How do we want to integrate local markets ? Do we want to integrate local markets ? Arent we members of one EU ?

16. Independent Energy Consultancy Board 16/28 13 feb 2008 Contents Contents 2 Policy dilemma 3 customer demands 4 customer dreams 8 Regulatory dilemma 10 contradiction 11 common regulation 13 In one Europe we are different 16 Conclusions 24

17. Independent Energy Consultancy Board 17/28 13 feb 2008 In one Europe we are different Structure of energy mix – generation Power plants CO 2 emissions Energy prices in EU countries CO2 emissions intensity Energy intensity Investments in new technologies

18. Independent Energy Consultancy Board 18/28 13 feb 2008 Structure of energy generation Dependence of Polish power generation on coal is the highest in EU, but also provides Poland with the greatest security of supply (own resources of coal and lignite). Fuel mix of power sector by (%) No other large country is as dependent on coal for its power generation as Poland. *Source: Eurostat EU- 25 coal share in fuel mix

19. Independent Energy Consultancy Board 19/28 13 feb 2008 Power plants CO 2 emissions average Poland average A further significant reduction of CO 2 emission is possible only in the next 6-7 years, by building new and more efficient units. CO 2 emissions of certain European hard coal and lignite power plants (g CO 2 / kWh) GR - GreeceDE – GermanySP - SpainPT - PortugalCZ – Czech RepublicUK – United Kingdom Source: WWF

20. Independent Energy Consultancy Board 20/28 13 feb 2008 Energy prices in EU countries In real terms, Polish electricity prices are relatively low. However, taking into account the purchasing power of Polish society, a drastic price increase could trigger social unrest. Final electricity prices for households in PPP on 1 January 2007 (EUR/MWh) In terms of PPP, Polish power prices are among the highest in the EU

21. Independent Energy Consultancy Board 21/28 13 feb 2008 CO 2 emission Source Eurostat 2006

22. Independent Energy Consultancy Board 22/28 13 feb 2008 Energy intensity Source Eurostat 2006

23. Independent Energy Consultancy Board 23/28 13 feb 2008 The age of Polish power plants Investments in new technologies Source: ARE Estimation of necessary investments in Poland 2008 – 2015 Necessary investments amount to approx. 20 bln, compared with max 6 mld worth of missing allowances.

24. Independent Energy Consultancy Board 24/28 13 feb 2008 Contents Contents 2 Policy dilemma 3 customer demands 4 customer dreams 8 Regulatory dilemma 10 contradiction 11 common regulation 13 In one Europe we are different 16 Conclusions 24

25. Independent Energy Consultancy Board 25/28 13 feb 2008 Conclusion (1) There is one EU with 27 members but There are two different zones: EU-10 & EU-15+2 The common policy and its tools should consider this fact. A / B =3=3

26. Independent Energy Consultancy Board 26/28 13 feb 2008 Conclusion(2) We need liberalisation in the market area but We need regulation in the field of investment and efficiency (i.e. sustainable development) A common certification policy and certification market are needed A / B =

27. Independent Energy Consultancy Board 27/28 13 feb 2008 Conclusion(3) We need more power and independence for national regulators but We need better mechanisms for transnational cooperation (i.e. transboundary investments, single certification market, ETS etc.) A common regulatory policy and tools are needed (say ACER) A / B =

28. Independent Energy Consultancy Board 28/28 13 feb 2008 Keep the dreams cost low! Thank you Krzysztof Żmijewski 20