1. Directorate General for Energy and Transport Unbundling DG TREN C-2 European Commission DG Energy and Transport Belgrade, Seminar on Gas Industry Restructuring 04-05 October 2005

2. Directorate General for Energy and Transport Introduction: the provisions of the Directive l Major goal of DIR 2003/55 is to achieve unbundling of integrated companies l Art 9, 10 TSO unbundling l Art 13, 14 DSO unbundling l Art 15 combined operator l Art 16, 17 unbundling of accounts

3. Directorate General for Energy and Transport Overview

4. Directorate General for Energy and Transport Overall objective of unbundling l Ensure fair network access through: l Separating the network business – natural monopoly – from those activities of the vertically integrated companies, which compete on the market (supply, production) l Should be the underlying guiding rule when interpreting individual provisions.

5. Directorate General for Energy and Transport Vertically integrated company Functional unbundling necessary if legally separate company remains under „control“ Reference to merger regulation Control=majority of shares or de facto control Exemptions to legal and functional unbundling Application of the merger regulation (“control”) in the context of the 100.000 customers exemption Unbundling – applicability

6. Directorate General for Energy and Transport Legal unbundling l In principle free choice of legal form l Modification to standard supervision regime might be necessary to comply with functional unbundling l Combined multi-sector network operator possible

7. Directorate General for Energy and Transport Management unbundling l Applies to top management and operational management l Salary independent from supply company l Restrictions on mobility and shareholding of staff l Common services: exceptionally acceptable under certain conditions l Application to not legally unbundled DSOs: concept of profit-centre

8. Directorate General for Energy and Transport Decision making rights – Compliance l Within the scope of the approved financial plan: independence of network company l No day-to-day oversight l In the absence of legal unbundling: far-reaching decision making rights of the network department, without prejudice to the overall responsibility of the board l Compliance programme: contents - enforcement - monitoring/reporting

9. Directorate General for Energy and Transport Implementation by Member States l Functional unbundling rules are “minimum criteria” - need further complementation under national law l Functional unbundling rules are very general – need further specification under national law l 100.000 customers exemption should be handled in the light of the particular national circumstances

10. Directorate General for Energy and Transport Accounting unbundling l No derogation possible l Establishes transparency of cost-allocation l Accurate cost allocation methodologies vital to avoid cross-subsidies l Regulators to play an active role

11. Directorate General for Energy and Transport Thank you for your attention! Reference documents: Dir EC 55/2003 and interpretative note on unbundling Contact: ana.arana-antelo@cec.eu.int; stephan.ressl@cec.eu.int;