1. 3 rd Electricity Market Directive Comments to Matti Supponen SEEF 17 February, 2009 Gunnar Lundberg

2. The Internal Energy Market?

3. Recognition Now Wholesale Markets in focus Functioning Wholesale Market an issue of design Eventually Retail Competition –Not obvious; different schools –Personally I think it vitalise the market A. B. First and second directive customer choice = Retail competition

4. The European market is vulnerable Extensive price regulation in the name of customer protection Nationalistic behaviour to lock in cheap power Poor coordination between the market directive and the green package Creation of national champions

5. What can make the 3 rd package a success? Regional integration –Most national markets too concentrated –To have competition regional markets must be developed A. Can the Commission use comitology procedures in a smart way to foster regional integration?

6. What can make the 3 rd package a success? ENTSO –Can and will the TSOs live up to the expectations? –What make us believe that TSOs, except the Nordic ones, that so far not have as a task to stimulate the market will do so? –Will “new ownership unbundled private TSOs” serve the market or serve their shareholders? –Conflicts between national and regional/European regulation of TSOs? B. If ENTSO does not deliver what is next step? RIOs?

7. What can make the 3 rd package a success? ACER –Clearly an example of old Europe –In US no market development without FERC –What makes us believe in a European success without a European Regulator? A superior Market Design? –How can ACER balance ENTSO from being a selfplaying piano? –How will the Commission ensure that the national regulators within ACER are really independent from their governments and that they have a European mindset? C. My bet is that ACER will not play an important role. After the failure 5 years from now governments will have to accept a European Regulator or give up the idea of a European Market.

8. Conclusion If the European Market shall develop –The Commission need to act against countries making sabotage, do not hesitate to start infringement procedures –The Commission need to use comitology procedures in a smart way to foster market integration –The Commission need to monitor closely how ENTSO is acting to stimulate the market. And be prepared to act early if ENTSO do not work in the interest of the market Or be prepared to launch the 4 th package!