Market Liberalisation

1

• Market Liberalisation
• and
• Quality of Supply
• in Ireland
• Una Brady
• Commission For Energy Regulation (CER)

2
Quality of Supply Regulation

• Quality of Supply
• Customer Service (Commercial Quality)
• Voltage Quality
• Continuity of Supply
• Key Regulatory Instruments
• Licences, Codes etc.
• Performance Criteria
• Economic incentive in DSO allowed revenue formula

3
Commercial Quality

• Key Regulatory Instruments
• Performance Standards
• Mix of Licences, Codes, Agreements that contain
  commercial quality elements
• Performance Standards
• Guaranteed Standards (GS) Service levels that
  must be met in individual cases. Otherwise -
  penalty payment.
• Overall Standards (OS) where customers in
  general have a right to expect pre-determined
  levels of service. No penalty.

4
Performance Standards

• Separate charters for PES and the DSO
• Expanded Networks Customer Charter 12 GS (some
  tightened, some new, increases in penalties)
• Expanded PES Customer Charter - 7 GS with
  automatic penalty payment
• Overall Standards for PES and DSO (e.g. 75 of
  phonecalls to be answered in contact centres
  within 20 secs)

5
Regulatory Instruments to improve Commercial
Quality

• Guaranteed and Overall Standards number of
  standards, level of service and penalty payments
  are high compared to other EU countries.
• Licence conditions to report annually on
  performance criteria.
• Other - Independent Complaints Arbitrator, 24
  hour contact centres, Disconnection Code of
  Practice

6
Voltage Quality

• While Irl. has adopted CENELEC standards, its
  voltage quality standard is not met for a
  significant proportion of rural customers.
• High number of voltage complaints
• Approx. 60 (year 2000 estimate) of rural
  customers have short circuit level lt 100 kVA

7
Voltage Complaints-Key Instruments

• CER approved capex specifically for voltage
  complaints but required the no. of complaints to
  be halved by 2005
• Guaranteed Standards (GS)
• Voltage complaint GS contact complainant within
  10 working days, further 10 for investigation -
  35 penalty
• Voltage Problem Resolution GS- within 12 weeks
  (except significant reinforcement required) - 50
  penalty
• DSO Performance Report report no. of complaints
  (2736 in year 2001)

8
Continuity Indicators
CMLs 2000 2001
Fault 255 197
Planned 172 188
Total 427 385

• Big differences across urban and rural
• High proportion of CMLs are due to planned outages

Int./yr/ Cust. 2000 2001
Fault 1.54 1.38
Planned 0.44 0.51
Total 1.98 1.86
9
Network Characteristics

• High lenght of network per customer
• Low proportion of underground cable - 10
• Need for significant additional network capacity
• Network age and condition is a concern
• Notemajor Network Renewal Project currently
• underway

10
Continuity Key Instruments

• (1) Economic Incentive in DSO Revenue Formula
• (2) Guaranteed Standards (GS)
• Planned Outage GS -min. 2 days notice, penalty -
  35 domestic
• Main Fuse GS call out within 3 hours, penalty -
  35
• (3) Overall Standard 95 of all faults are to be
  restored within 4 hours (and DSO to report on
  same)
• (4) Licence Condition to report annually on
  Continuity performance (including actual versus
  target, worst-performing feeders)

11
Continuity and DSO Price Control

• DSO - Incentive based regulation for improving
  efficiency and continuity performance
• Current 5 year Price Control Period (2001-2005)
• CPI X framework with CML targets set by CER
  which are linked to incentive/penalty
• Forecast Expenditure for Continuity was allowed
  but CER set more stringent continuity targets for
  2005
• Urban CML (50), Rural CML (350), Overall (275)

12
Continuity Incentive/Penalty Regime

• Revenue Formula includes incentive/penalty per
  CML (above/below forecast CMLt) of 215,855 (in
  year 2000 prices) based on value of lost kWh of
  7.2 and 1.6m customers using 17.7TWh in year
  2000.
• Cap incentive (penalty) at /- 2 of allowed
  revenue in a given year
• for net combined incentives (penalties) for
  Losses and CMLs
• Storms are excluded (days for which CML is gt two
  standard deviations from the mean)
• Incentive/Penalty regime to be based on Annual
  reporting of Continuity - must be robust and
  auditable

13
Continuity Target v Actual CMLs

• Incentive/penalty in regulatory price control
  formula of
• 215,855 (in year 2000 prices) per CML
  above/below
• forecast CMLt for beating/missing the target

Forecast Total CML Actual Total CML
2001 400 385
2002 370 463 (current estimate)
2003 340
2004 310
2005 275
14
Issues currently under Review

• Given significant refurbishment programme,
• should penalty/incentive apply to Total
• CMLs (planned and faults) or should some
• allowance be made for the number of CMLs
• due to planned outages under the Network
• Renewal Project ?

15
For Further Information

• View CER website www.cer.ie
• In particular see
• Determination of Distribution Allowed Revenues
• (CER/01/128)
• Distribution Performance Report 2001 (CER/02/219)
• For Networks Customer Charter and PES Customer
• Charter see www.esb.ie website.
• Contact info_at_cer.ie