EnergyEnergy

Making the Internal Energy Market work

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Tudor ConstantinescuDG Energy Bucharest 22 November 2012

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EU Energy Mix

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Energy Mix Romania

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The internal energy market can deliver

Economic growth

Jobs

Securesupply

Sustainable use of limited

resourcesAffordable

energy

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Where are we today?

Benefits

and

Challenges- Enforcement

- Consumer satisfaction

- Investment

- Choice

- Competitive prices

- Secure supplies

- Impact in the world

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Belg

ium

Sw

eden

Neth

erl

ands

Finla

nd

Spain

Germ

any

Italy

Denm

ark

Cze

ch R

epublic

Port

ugal

France

Slo

venia

Aust

ria

Lith

uania

Slo

vak R

epublic

Luxem

bourg

Rom

ania

Pola

nd

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0electricity

gas

Switching rates in some Member States in electricity and gas retail markets in 2010

Source: CEER database and national regulators

More choice and flexibility for consumers

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Infringement procedures for non-transpositionof the 3rd package directives

• No pending infringements

 

• Pending infringement(s)

•

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Independent national energy regulators are central to ensure truly competitive markets

ENERGY REGULATORS ARE INDEPENDENT

CONCERNS ABOUT INDEPENDENCE

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Bridging the gap between Member States

• No Flows

• Flows only in one direction

• Flows in two directions

GAS FLOWS

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High concentration in retail electricity markets

• VERY HIGH (ABOVE 5000 HHI)

• HIGH (1800 – 5500 HHI)

• MODERATE (750 – 1800 HHI)

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KEY INDICATORS FOR THE ENERGY MARKETS IN ROMANIA IN 2010

ELECTRICITY GAS

Number of companies representing at least 95% of net power generation 10 Number of entities bringing natural gas into country 19

Number of main power-generation companies (1) 6 Number of main gas entities (4) 2

Market share of the largest power-generation company 35.6% Market share of the largest entity bringing natural gas 48.4%

Number of electricity retailers 56 Number of retailers selling natural gas to final customers63

Number of main electricity retailers (2) 8 Number of main natural gas retailers (5) 5

Switching rates (whole electricity retail market) 0.1% Switching rates for gas (whole retail market) N/A

Regulated prices for households - electricity YES Regulated prices for households - gas YES

Regulated prices for non households - electricity YES Regulated prices for non households - gas YES

HHI in power-generation market(3) 1947 HHI in gas supply market (3) N/A

HHI in electricity retail market (3) 1333 HHI in gas retail market (3) 1679

Electricity market value (bn €) (6) 3.799 Gas market value (bn €) (6) 4.056

ENERGY MARKETS IN ROMANIA

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Consumer challenge: Low level of trust

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Price regulation fails to activate consumers and suppliers

• REGULATED PRICES FOR HOUSEHOLD

CONSUMERS AND INDUSTRIAL CONSUMERS,

IN GAS AND/OR OF ELECTRICITY

• REGULATED PRICES FOR HOUSEHOLD CONSUMERS

• NO REGULATED PRICES

Member States currently phasing out price regulations:By 2013: Greece, Portugal & LithuaniaBy 2017: Romania EnergyEnergy

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Distribution of cost factors in retail prices

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Support for renewables differs significantly across EU-countries

Remuneration ranges (average to maximum remuneration) for onshore wind in the EU-27MS in 2011 (average tariffs are indicative) compared to the long-term marginal generation costs(minimum to average costs).

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Removing retail price regulation

Allows other companies to enter; Competition brings choice and better services

Gives incentive to invest in infrastructure, enhances security of supply

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• Retail prices regulated below costs

Deficit at taxpayer's expense

Example: 24 billion € accumulated energy debts in Spain

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Lower prices in competitive and open markets

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Empowerment for all consumers

Switching supplier

Access to information

Comparing prices and offers

Complaint handling and Dispute resolution

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Protecting vulnerable consumers in particular

Energy efficiency measuresHeating in winter timesProhibition of disconnecting

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Investment challenge

Letting the market work to encourage appropriate investments:

- - Market Coupling has already integrated national markets- - State intervention needs to be optimised

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The advance of market coupling

National measures are insufficient in a

European market

2012 2014

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THANK YOU FOR YOUR ATTENTION!

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ADDITIONAL SLIDES

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The share of oil-indexed contracts is decreasing…

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National measures are insufficient in a European market

Market couplingNo market coupling

No market coupling at this border

"Volume coupling" at thisborder

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• The Commission is launching a consultation on generation adequacy