EURELECTRIC vision on market development – what can the industry provide

to accelerate market development?

EURELECTRIC vision on market development – what can the industry provide

to accelerate market development?

Peter ŠTULCChairman of EURELECTRIC TF flow-based methods

CEZ, Head of Strategy

EMCEF conference « Energy policy and restructuring »,Prague, 23 March 2007

Electricity markets at the crossroads

• Keep momentum! • Need for more market, not less!• Risks for markets of getting “stuck” half-way

-> High time to adopt measures that will secure fastest way to market integration

-> EURELECTRIC regards the forthcoming EU legislative package as an opportunity to attain this objective

Energy Package

Commission’s proposal of 10 January (markets)

UNBUNDLING

- ownership unbundling preferred option,

- national ISO model as a second best approach

TSO’s COOPERATION

- Enhance level of TSO co-ordination via an ETSO+

- Introduce regional system operators with the

establishment of cross-border system operators as an intermediary step

Energy Package

Commission’s proposal of 10 January (markets)

REGULATION

- At national level: increase and harmonise regulators’ powers

- At European level: improve process via ERGEG + or a

Community body

WHOLESALE MARKETS

- Introduce legislative measures on market transparency (either through revision of CB regulation or new instrument)

Energy Package

EURELECTRIC VIEWS

• Commission’s approach is sensible but more is needed to drive market integration forward (i.e. cooperation of TSOs and of regulators)

• Agrees with Commission’s analysis on current status of markets

• Ownership unbundling is not conducive to market integration

• Lack of incentives and political will are main reasons for slow development of interconnectors

Energy Package EURELECTRIC VIEWS ON TSO COOPERATION

EURELECTRIC favours an approach that drives

regional market development and is investigating

the benefits of a regional ISO model - TSOs linking up their activities in regional markets (e.g. calculation of grid capacity, capacity allocation, secondary market, cross-border intraday, etc);

- This would be an essential driver in bringing markets together;

- This would also remove possibly remaining suspicion towards vertically integrated companies;

Energy Package EURELECTRIC VIEWS ON REGULATION

EURELECTRIC acknowledges that regulators’

cooperation brought some improvement but a more efficient regulatory process is needed

- Market integration requires a more European approach to regulation

- This requires greater involvement of the Commission (i.e. ability to take appropriate actions and oversee process)

- Such a process needs to deliver timely decision-making with effective consultation of stakeholders

Energy Package EURELECTRIC VIEWS ON WHOLESALE MARKETS

• EURELECTRIC is committed to creating a level-playing field on market transparency

• EURELECTRIC actively engaged in a voluntary process of disclosing generation data

• This is meant to pave the way for the

Commission’s next legislative measures

Generally in line with EURELECTRIC general principles

Development towards compliance with EURELECTRIC general principles

DE: Since 10 April 2006 publication of data on EEXCWE: Implementation

close to EEX standard

CEE: industry proposal for voluntary disclosure

scheme

Implementation is ongoing …

AT Companies join the German initiative

INTEGRATION OF WHOLESALE MARKETS

WAY FORWARD

• More is needed to move to regionally integrated wholesale markets:

- Integrate intra-day markets

- Harmonise gate closures

- Introduce market coupling

- Develop secondary markets

- Harmonise trading products and trading principles

- Integrate balancing markets

OTHER ISSUES AT STAKE

WAY FORWARD

• Markets also need:

- removal of regulated prices in retail markets

- appropriate integration of RES in the market, i.e. though the development of harmonised market-based schemes for RES support

- bridging the gap between gas and electricity market development to ensure progress towards competitive gas markets

INTEGRATION OF WHOLESALE MARKETS

WAY FORWARD

• Acceleration of market development should be

based on a cumulative processes:

- new legislative measures capable of driving genuine market integration

- consistent development of the regional market initiatives

- EURELECTRIC road map towards a pan-European market should be used as guidance for further market integration

Thank you for your attention.

Representing the European Electricity Industry