1. ERGEG Public Hearing 30. June 2005 Congestion Management Guidelines

2. 2 Agenda  Regulation (EC) 1228/2003 and Congestion Management  Mini Fora on Congestion Management  CM Guidelines framework  ERGEG public consultation - principles & steps  CM Guidelines - proposed draft

3. 3 Regulation (EC) 1228/2003 and CM  Regulation (EC) 1228/2003 of 26 June 2003 on Conditions for Access to the Networks for Cross- Border Exchanges in Electricity, applies from 01 July 2004  Congestion Management -> create simple, efficient and coordinated systems in order to encourage cross border trade  Provide sufficient information to the market participants (transparency !)  Create regional markets in a first step with a common system in IEM as final objective

4. 4 Regulation (EC) 1228/2003 and CM (cont‘d) Further key issues  Capacity calculation  Security of grid operation  Maximizing and netting of capacity  Information transparency and firmness of capacity rights  Capacity allocation  Non discriminatory, market and non-transaction based with efficient economic signals to market participants  Usage of congestion revenues according to the Article 6  Transparency  All relevant capacity & security information

5. 5 Mini Fora on Congestion Management 11 th Regulatory Forum 09/2004, Mini Fora on Congestion Management were established: “The mini-fora aim to provide a plan and detailed timetable for the introduction of at least day-ahead co-ordinated market based mechanisms, such as auctions”.  The Mini Fora have been completed in Q1/2005  Results of the Mini Fora are considered in the final version of the draft CM Guidelines

6. 6 Mini Fora: Congestion Management Method  Compatibility -> explicit & implicit auctions, zonal pricing  Explicit auctions = minimum requirement, some recent bilateral experiences and one coordinated approach  Implicit auctions -> liquid, short-term allocation with sufficient transparency and benefit to all  Nordpool  F-B-NL market coupling project  PT-ES and ES-F market splitting  NL-N market coupling (Nordned cable)

7. 7 Mini Fora: Coordination The Mini Fora confirm the importance of coordination:  Scope from the inter/intra-regional view  Coordination of the market operators  Coordination of the market participants, TSOs, regulators  Components & details  Coordinated capacity calculation  Nomination & assignment  Closing times & timeframes  Pricing / Products  Organisational issues and institutional arrangements

8. 8 Mini Fora: Roles & Responsibilities  TSOs -> responsible for operational security  Market operations to be designed in such a way that the TSOs can enable them in compliance with the operational security  Commercial capacity allocation can be performed by different actors  EC & regulators -> supervision, monitoring

9. 9 Mini Fora: Legal Issues Some level of regulatory control needed for each CM activity:  Capacity calculation  Bidding into explicit / implicit auctions  Capacity allocation  Obligation for generators to provide information  Transparency  Merchant lines

10. 10 Mini Fora: Transparency Key condition for market to work, needed among other things for:  Establishing a level playing field especially for new entrants  Market actors for their planning and decisions  Efficient pricing  Regulatory control  Development of the European market  Regulators‘ access to relevant regional information  Generators‘ data (fundamental -> iterative approach !)

11. 11 CM Guidelines Framework  Provide economic efficiency and promote competition  Maximize available capacity  Provide transparency  Allow secure network operation  Ensure broad revenue neutrality ------------------------------------------------------------------------------  ERGEG public consultation until 24 June 2005  ERGEG submission of final draft to EC -> EC decision on proceeding with comitology

12. 12 ERGEG Public Consultation (www.ergeg.org)www.ergeg.org  Basis for the ERGEG policy recommendations to the EC as required in Commission decision of 11. November 2003 (2003/796/EC)  Consult whom:  Consult full range of all interested parties at all levels  Make consultation proposals widely known (Internet)  Consult when:  ERGEG annual work programme, request for advice from EC  Discussions at an early stage, sufficient time to consult  Respond how:  Consideration & public responses to inputs received  Publish all formal proposals and advice to EC

13. 13 CM Guidelines Proposed Draft - Highlights (Key amendments to the draft of 09/2004)  General provisions  Regulatory powers & responsibilities  Cross-border exchange of information  Definition of „market based“: only explicit or implicit auction  Minimum requirement: at least coordinated explicit auction

14. 14 CM Guidelines Proposed Draft - Highlights (cont’d) (Key amendments to the draft of 09/2004)  Specification what is meant by „coordination“  Capacity calculation  Allocation  Dealing with loop-flows  Nomination  Timeframes & closing times  Products  Further focus on liquid, short-term, intra-day operations & trade with migration path in that direction and provisions for necessary monitoring by the regulators