1. Market Design of SE Europe: Reflections from the 3rd Forum on the Way Forward 6 th Permanent High Level Group Meeting Athens, 07 December 2003

2. 22 Commitments under the MOU The SEE Ministerial Council is expected to record its agreement to the MOU on the regional energy market in SEE and its integration into the EC internal energy market “The Athens Memorandum 2003” Pursuant to the MOU, the participants and the Member States belonging to the regional market, will join their efforts to adopt a strategy by June 2004 to establish a regional energy market in SEE. This strategy shall lay down the principles governing the market, the intermediate steps and the timetable to achieve it.

3. 33 Background (1)  During the Sofia Energy Week, a meeting on the SEE Market Design on the Way Forward was held, with the participation of EC, CEER, SETSO and the representatives of the Donors’ Community.  In this meeting, CEER presented the Position Paper on the Standard Market Design Model for the Regional Market along with a proposal for its implementation.  It was commonly agreed that the implementation scheme for the Standard Market Design of the SEE region will be as follows:

4. 44 Possibly at a later stage

5. 55 Background (2) Furthermore, it was decided that a detailed action plan should be developed and agreed before the end of 2003. This Action Plan sets the objectives, the specific actions to be undertaken by the various stakeholders for the fulfillment of these objectives, the issues to be further explored, the obstacles to overcome and the precise time schedule for their implementation. The Action Plan therefore addresses all issues related to the implementation of a Standard Market Design throughout the countries of SEE, as well as the necessary coordinated actions of all stakeholders, under the coordination of the EC. An indicative list of such issues has already been drawn: The Action Plan should be further introduced and endorsed in cooperation with the Permanent High Level Group.

6. 66 List of issues to be addressed by the Action Plan (1) Elaboration of the necessary regulatory framework harmonized throughout the SEE countries:  Detailed Market Rules, based on the SMD Basic Principles presented by CEER and on the basis of the elaborated Discussion Paper, which is developed by CEER in very close collaboration with all other stakeholders  Design of interaction between regional and national markets  Grid Codes and Market Operation Code  Harmonized Licensing Arrangements  Design of financial, hedging market and regulatory instruments  Economic analysis of the market functioning with respect to investment, affordability issues and development of competition

7. 77 List of issues to be addressed by the Action Plan (2) Technical Assessment:  Transmission System Planning and Simulation  Long term Planning with respect to Generation Capacity and Infrastructure Additional Support Mechanisms:  Development of necessary Tools, i.e. software and real time tools  Technical Assistance: training, plans promotion and dissemination to the national stakeholders Monitoring:  Benchmarking and monitoring Compliance between national and regional markets

8. 88 Implementation The issues identified above are closely interrelated They must be implemented in a harmonized manner throughout the SEE countries Currently, the implementation is performed in a non-coordinated way, mainly in a national context, without a consistent regional approach. The aim is not to slow down national reforms underway, but to streamline efforts at a national level into a regional implementation strategy. This requires the development of an Action Plan along three lines: 1.Detailed description of the issues above 2.Assignment of each task to a particular stakeholder 3.Definition of a coordination procedure and a consistent timetable

9. 99 The way forward  A draft Action Plan is being elaborated by CEER WG SEEER, in collaboration with SETSO and UCTE  This proposal of an AP will then be communicated to EC (mid December 2003) for further dissemination among stakeholders for revision and comments (early January 2004)  A meeting for the finalization of the AP (under the auspices of the EC) to be held by the end of January  The final AP will be presented by the EC to the PHLG (during the next PHLG meeting ?)  Implementation of the AP starts  First results to be presented at the next Forum