Asta Sihvonen-Punkka Director General of EMA Vice-Chair of ERGEG Baltic Electricity Mini-Forum 24 th...

Asta Sihvonen-Punkka Director General of EMAVice-Chair of ERGEG

Baltic Electricity Mini-Forum24th of April, 2009 Riga

The 3rd Package – implied changes to NRAs and their European cooperation

2Baltic Electricity Mini-Forum 24 April 2009 Riga

Issues to be addressed

• The National Regulatory Authorities• Designation and independence• Objectives• Duties

• The Agency for the Cooperation of Energy Regulators• The role and duties of the Agency• NRAs participation in the Agency

• Concluding remarks


Independence and designation of NRAs

NRA legally distinct and functionally independent

Shall act independently from any market interest

Shall not seek or take direct instructions from any government or other public or private entity when carrying out regulatory tasks

MSs shall guarantee the independence of the NRA and ensure that it exercises its powers impartially

and transparently


What are the preconditions for NRA independence?

• Decision making: Autonomous decisions independently from any political body

• Budget: Separate annual budget allocations with autonomy in the implementation

• Resources: Adequate human and financial resources to carry out its duties

• Management: Board or top management for a fixed term of five up to seven years, renewable once


General objectives of NRA include cross-border issues

• Promoting IEM• Developing competitive and properly functioning

regional markets• Eliminating restrictions on trade in electricity

between MSs including developing CB capacities and enhancing market integration

• Ensuring that system operators and users are granted appropriate incentives to increase efficiencies and foster market integration


Duties of NRAs

• Fixing or approving ex ante• Network tariffs or methodologies

• Terms and conditions for network access and connection

• Balancing services

• Terms and conditions for access to cross-border infrastructure including capacity allocation and CM

• Monitoring duties (e.g. Network security and reliability rules, transparency, market opening, competition at wholesale and retail level, ISO)

• Setting or approving standards or requirements for quality of service and supply


Powers of NRAs

• To issue binding decisions on electricity undertakings

• To carry out investigations • To require information from the electricity

undertakings to fulfil the tasks• To impose effective, proportionate and

dissuasive penalties (for TSOs up to 10% of the turnover of the previous year)


Agency for the Cooperation of Energy Regulators

• A community body with legal personality• Purpose: “..to assist the regulatory

authorities..in exercising at Community level the regulatory tasks...and to coordinate their actions”

• Agency shall comprise• Administrative Board• Board of Regulators • Director• Board of Appeals


Agency’s tasks I

• Provide an opinion ondraft statutes, list of members, draft rules of

procedure of the ENTSOs to the Cion draft annual work programme of ENTSOs to the Ciondraft network codes to the ENTSOsdraft non-binding 10-year network development plan

to ENTSOs

• Submit a draft framework guideline to the Cion• Submit a network code to the Cion and

recommend that it be adopted


Basic timeline based on Regulation

EC defines

priorities for

network codes

6 Months

EC requests Agency to

submit framework guidelines

Agency prepares Framework Guidelines

ENTSO prepares network codes

12 Months

EC requests ENTSO to

submit network code

3 Months

Agency reviews network

codes

CO

MIT

OL

OG

Y

ENTSO submits

network code to Agency

Agency submits

network code to EC when satisfied,

recommending approval via Comitology


Agency’s tasks II

• Monitor and analyse • The implementation of the network codes and

Guidelines• Progress in implementation of projects to create new

interconnector capacity and 10-year network development plan

• Regional cooperation of TSOs


Agency’s tasks vis-á-vis the NRAs

• Provide an opinion at the request of any NRA or Cion on whether a decision taken by NRA complies Community legislation

• Follow compliance with the opinion, inform the Cion and MSs concerned

• At NRAs request, provide an opinion on the application of Community legislation (Cion to be consulted)

• Can propose to Cion to prepare binding rules on NRA cooperation


Tasks as regards cross-border infrastructure

• If NRAs cannot agree within 6 months or upon a joint request from the NRAs, the Agency shall decide on regulatory issues, which include terms and conditions for access and operational security of cross-border infrastructureProcedure for capacity allocationTime frames for allocationSharing of congestion revenuesCharges levied on users of the infrastructure

(merchant lines)

• Decisions on exemptions


Concluding remarks

• The independence, duties and powers of NRAs levelled up and harmonised

• The new European regulatory framework with legally binding European rules!

• The cooperation of energy regulators institutionalized in the Agency (similarly for electricity and gas TSOs in ENTSOs)

• The regulatory gaps significantly reduced• A huge step to enhance market integration


Thank you for your attention!

www.energy-regulators.eu

Mark your diary for the World Forum on Energy Regulation IV

October 18-21, 2009

Athens, Greece

www.worldforumiv.info

Asta Sihvonen-Punkka Director General of EMA Vice-Chair of ERGEG Baltic Electricity Mini-Forum 24 th...

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