North / North West RegionRegional Gas Initiative

Regulatory Co-ordination Workshop

8th February 2007

Introduction

Keelin O’Brien

CER Ireland

Workstream Deliverables

1. Martix of Regulatory Powers • Drawing on Work of CEER / ERGEG

2. Operator Issues• Expanded to include Shippers /Storage Operators

3. Conclusions Paper – Categorise Issues; Dealt with by:• Legislation• Other Workstreams / CEER / ERGEG• Improvements can be made by improved Regulatory Co-

ordination

4. Guidelines for Regulatory Co-ordination

Agenda for Workshop

• Matrix of Regulatory Powers – Keelin O’Brien

• Transporter Issues – Britta Van Boven

• Responses to Issue paper– Keelin O’Brien

• Discussion and Development of Conclusions Paper

Matrix of Regulatory Powers

Keelin O’Brien

CER Ireland

Methodology

• Draw on Work of CEER– CEER Regulatory Benchmark report Dec 05

• Summarise Powers for Each Country in the Region– Includes Norway; Northern Ireland Added; No

information for Poland

• Summary of ERGEG paper for Background– Compatibility of National Legal Conditions Concerning

Regulatory Competences Dec 06

Regulatory PowersEU Level

National regulatory competences need to be compatible and complementary in order to develop the EU energy market

ERGEG Consider:

The regulatory and legislative framework is not consistent with the development of a more integrated and ultimately single energy market.

The existing regulatory framework … is designed primarily to create the conditions for a liberalised within National boundaries. This will not be sufficient to achieve a single competitive EU energy market.

Requirement for Legislation

Regulatory Powers underpinned by – Article 25 of Gas Directive (2003/55/EC)– Regulation 1775/2005– Commission Decision setting up ERGEG

ERGEG recommend Additional Powers :– ability for regulators to act jointly to oversee

investments in and operation of networks– ability for regulators to gather and exchange

information and pursue ..activities in one territory that affect markets in another

A necessary starting point for developing guidelines is an assessment of the concrete powers and areas of discretion of the regulators of the member states within the existing national frameworks to identify the possibilities for creating a common set of binding guideline and processes for issues of co-operation without changing the existing regulatory and legal

frameworks.

- RWE (response to Issues paper)

Regulator Cross Border Competencies

• Mandate to recognise customers’ interests in adjoining markets– E.g. cost transfers on transmission infrastructure

• Possibility to co-operate and act jointly with other regulators– Exchange Information– Request and Pursue market Investigations#– Effective Decision making processes to decide on

Joint Actions

• Possibility to co-operate jointly with competitive authorities

National Market Level

• Regulatory authority should be independent and have own resources

• Role in advising Government

• Sufficient powers to enforce decisions and introduce sanctions and penalties

Network and Market Operations

• Approve and monitor compliance with rules for access to and use of system

• Approve and set methodologies or levels for tariffs for UOS and connection

• Resolve disputes on access and charges• Approve rules for wholesale market including

balancing, settlement and credit• Monitor and enforce compliance with market

rules• Require timely information to be made available

on retail and wholesale markets

Legal Framework Matrix

Regulator Legal Status Enforcement Powers

Appeals

Belgium CREG (plus three other based

regionally)

Independent Regulator but Minister can suspend or modify decisions

Issue Fines; Skim off proceeds

Brussels Civil Court;Competition Authority

France CRE Independent Regulator Issue Fines Paris Appeal Court;State Council; Cassation Court

Great Britain OFGEM Independent Regulator Regional office

Scotland

Issue Fines;Revoke Licence;

Competition Appeal Tribunal;

Competition CommissionJudicial Court

Ireland CER Independent Regulator Revise Tariffs;Reduce ROR;Revoke Licences

Ministry Appeal Panel;Judicial Review- High Court

Northern Ireland OFREG Independent Regulator Issue Fines;Revise Tariffs;Reduce ROR;Revoke Licences

Legal Framework Matrix(2)

Regulator Legal Status Enforcement Powers

Appeals

Denmark DERA Independent Regulator Revise Tariffs;Reduce ROR;

Energy Board of Appeal; County Court; High Court;Supreme Court

Germany BNetzA Independent federal authorityWithin Ministry

Issue Fines; Skim off proceeds

District Civil Court;Federal Court of Justice

Netherlands Dte Independent – part of Netherlands Competition Authority

Revise Tariffs;Reduce ROR;Issue Fines;Skim off proceeds;Revoke Licences

Netherlands Competition Authority;Court of Rotterdam;Trade and Industry Appeals Tribunal

Norway NVE Agency of Ministry Issue Fines;Revoke Licence;Skim off proceeds;

Ministry of Petroleum and Energy

Sweden STEM Independent Government Agency

Issue Fines;Revise Tariffs;Reduce ROR;

County Administrative Court;Supreme administrative Court

Matrix - Operational Issues

• Access to Information

• Dispute Resolution– All but Northern Ireland and Belgium

• Tariffs – All Methodology except GB, Den and Ger– All level except Norway & Denmark– All but Norway approve; Fra can be overruled

Operational Issues (2)

• Licences – Issue, Modify, Monitor– GB, Ire, NI, Neth, Nor, Swe

• Licences – Sanction – Bel, GB, Ire, NI, Neth, Swe

• Rule Making Authority– Network Access (except Bel, Den)– Market Rules (except Swe, Den, Ger)– Balancing (except Bel, Den)

Operational Issues (3)

• Congestion Management– Approve Rules (except GB, Den, Swe)– Allocate Capacity (except GB, NI, Swe, Den, Neth)

• Investment– Planning: Ire & NI, advisory role BG, Fra, Bel– Approving: Ire, NI, Fra, Nor– Recovery: Ire, NI, Den, Neth, Nor

• Cross Border Exchanges– Standards: Fra, BG, Ire, NI, Neth, Nor– Exemptions: Fra, BG, Ire, NI, Ger