EURELECTRIC VIEWS

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EURELECTRIC VIEWS on the third energy package
Anne Malorie Géron Head of Markets
Unit EURELECTRIC ECOSOC Hearing  Third
legislative package on eletricity and gas
markets  Brussels, 11 February 2008
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Third liberalisation package General comments

• EURELECTRIC sees the package as an opportunity
  not to be missed to
• Address current market shortcomings and speed up
  market development
• Establish a process conducive to market
  integration
• Achieve a pan-European energy market with
  regional markets as an intermediary step

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EURELECTRIC Roadmap towards a pan-European
electricity market
Integration at European level
Pan-European market
2007-12
Coordination between regions
2005-10
Development within regions
2005-09
Continued liberalisation of national markets
2005-07
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The benefits of expanding wholesale markets

• Enhance price convergence
• Stimulate liquidity and transparency
• Increase the number of market players
• Reinforce trust in price formation and markets
  abilities to deliver
• Alleviate concerns of market concentration

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Positive elements of the third energy
liberalisation package

• Independence and harmonisation of powers for
  national regulators
• Cooperation of regulators through an EU Agency
• A similar approach for electricity and gas
• A suggestion to establish a retail forum
• The use of congestion revenues as a matter of
  priority for network expansion

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but the European approach of the package is
too weak

• The package is dominated by grid issues but it
  lacks clear means and processes to foster market
  integration
• Experience shows that TSO cooperation
• does not deliver fast enough
• lacks a market drive
• Mandating regional ISOs would allow to kill two
  birds with one stone

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• But more market integration is needed!
• Goal achieve a pan-European energy market
• via consistent regional markets
• Development of regional system operation
• Regional planning based on socio-economic
  benefits for
• the whole region
• Reinforcement of regional regulatory Committees
  (cf ERGEG regional initiatives)
• Stronger role of ACER driven by a clear European
  mind-set
• Close involvement of market parties

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Priorities for market integration

• Maximised and coordinated allocation of
  interconnection capacity
• Expansion of market coupling to all
  interconnectors
• Integrated day-ahead and intra-day markets with
  harmonised gate closures
• Unified definition of firmness of capacity and
  force majeure
• Development of secondary markets for cross-border
  capacity
• Harmonised balancing rules and coordinated
  reserve capacity
• Harmonised trading and capacity products and
  principles
• Level-playing field on market transparency

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Guiding Principle Good Governance is about
Checks Balances
ACER
Centre of gravity need to be here for
Optimal Market Development
Final Customer
USER (Industry)
ENTSO
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A more balanced and democratic process is
necessary

• A stronger role for ACER
• An Agency driven by a frank European-mindset
• A process run by ACER
• A regulatory process subject to better
  regulation principles
• A close involvement of market parties in the
  development of the guidelines/codes via the
  creation of a standing market panel
• A lead responsibility of ENTSO on the drafting of
  technical codes only

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Governance Why a Standing Market Panel is
essential?

• To ensure that market parties are genuinely
  involved in the development of market rules
• To be a driver for market integration
• To ensure that market developments and
  accompanying measures meet market needs
• To mirror existing types of structure and
  collaboration at national/European level

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Thank you for your attention.
Representing the European Electricity Industry