THE EUROPEAN ENERGY MARKET: POLICY CHOICES, REGULATORY DEVELOPMENTS AND INNOVATION NEEDS Jorge Vasconcelos HYDROGEN IN EUROPE COLLEGE OF EUROPE BRUGGE, JUNE 24, 2004
THE EUROPEAN ENERGY MARKET 1. THE INTERNAL ENERGY MARKET 2. MAIN POLICY CHOICES 3. ENERGY REGULATION IN THE EU 4. INNOVATION NEEDED
1. THE INTERNAL ENERGY MARKET
LIBERALIZATION REGULATION NETWORKS VERTICALLY INTEGRATED NATIONAL MONOPOLY EUROPEAN INTEGRATION EUROPEANIZATION MARKETS EUROPEAN MARKET
LEGISLATION REGULATION 1988 89 90 91 92 93 94 95 96 97 98 99 00 01 02 2003 WHITE PAPER TRANSIT 1st GAS DIRECTIVE 2nd EL. DIR. PRICE TRANSPARENCY 1st ELECTRICITY DIRECTIVE 2nd GAS DIR. REGULATION CROSS-BORDER
TOWARDS THE EUROPEAN ELECTRICITY MARKET 1996 DIRECTIVE 2003 DIRECTIVE GENERATION MONOPOLY AUTHORISATION AUTHORISATION TENDERING (TENDERING) TRANSMISSION REGULATED TPA MONOPOLY NEGOTIATED TPA REGULATED TPA DISTRIBUTION SINGLE BUYER SUPPLY MONOPOLY FREE FREE CUSTOMERS NO CHOICE CHOICE FOR ALL NON-HOUSEHOLD (2004) ELIGIBLE ALL (2007) ( 1/3) UNBUNDLING NONE ACCOUNTS LEGAL T / D CROSS-BORDER TRADE MONOPOLY NEGOTIATED REGULATED
5 MISSING STEPS
THE MISSING STEPS: 1. LACK OF TRANSMISSION CAPACITY IN PARTICULAR, CROSS-BORDER INTERCONNECTION CAPACITY
THE MISSING STEPS: 2. LACK OF TRANSPARENCY IN NETWORK ACCESS CONDITIONS INCLUDING NETWORK ACCESS TARIFFS AND CONGESTION MANAGEMENT
THE MISSING STEPS: 3. LACK OF TRANSPARENCY IN THE TECHNICAL OPERATION OF INTERCONNECTED SYSTEMS
THE MISSING STEPS: 4. LACK OF ROBUST, DEEP AND LIQUID ORGANISED ENERGY MARKETS IN MOST GEOGRAPHICAL AREAS
THE FINANCIAL DIMENSION FIRST EUROPEAN CLEARING HOUSE ( SCONTRO ) : PIACENZA, 1579
THE FINANCIAL DIMENSION «En 1577, le facteur des Fugger en Espagne accuse déjà les Génois d avoir plus de papier que d argent comptant, mehr Papier als Baargeld» F. Braudel Le Modèle Italien, 1989
THE MISSING STEPS: 5. LACK OF TRANSPARENCY AND PREDICTABILITY CONCERNING RULES APPLIED TO THE APPROVAL OR REFUSAL OF MERGERS AND ACQUISITIONS IN THE ENERGY FIELD
Ireland N.Ireland Norway Sweden Finland R Great Britain Poland Estonia u Belgium Netherlands W. Denmark E. Denmark Latvia s Luxembourg Germany Lithuania s Czech Republic Slovakia i France Switzerland Austria Hungary Belorussia a Italy Slovenia Ukraine Spain Croatia FRY Romania Moldova Portugal Bosnia Fyrom Bulgaria Morroco Albania Greece Turkey
51 Bcm 24 Bcm 116 Bcm LNG 17 Bcm PRODUCTION: 235 Bcm 31 Bcm DEMAND: 455 Bcm
2. MAIN POLICY CHOICES
MAIN POLICY CHOICES A. SIMULTANEOUS OPENING UP AND SUPRA-NATIONAL INTEGRATION OF NATIONAL ELECTRICITY AND NATURAL GAS MARKETS B. SIMULTANEOUS INTRODUCTION OF WHOLESALE AND RETAIL COMPETITION
MAIN POLICY CHOICES C. FULL RETAIL COMPETITION ( 1 JULY 2004 ALL NO-HOUSEHOLD 1 JULY 2007 ALL EL. & NAT. GAS CONSUMERS) D. LEGAL UNBUNDLING, REGULATED NETWORK ACCESS E. COMPATIBLE WITH PUBLIC SERVICE OBLIGATIONS
MAIN POLICY CHOICES FROM JULY 1, 2004 THE EU HAS THE MOST CONSISTENT AND COMPREHENSIVE LEGISLATIVE FRAMEWORK FOR THE DEVELOPMENT OF A LARGE, INTERCONNECTED, SUPRA-NATIONAL ENERGY MARKET.
3. ENERGY REGULATION IN THE EU
REGULATION IN THE EU AT NATIONAL LEVEL AT EU LEVEL
REGULATORY COMPLEXITY EU REGIONAL SINGLE COUNTRY SINGLE VARIABLE TWO VARIABLES MULTI- VARIABLE
LOW-LEVEL COMPLEXITY REGULATOR INPUTS. REGULATED UNDERTAKING OUTPUT
PRICE REGULATION INPUTS POWER SYSTEM PRICE QUALITY QUALITY REGULATION
HIGH-LEVEL COMPLEXITY REGULATOR LOCAL INPUTS REMOTE INPUT. REGULATED UNDERTAKING OUTPUT 1 OUTPUT 2
OLD vs. NEW REGULATION: NEW CHALLENGES COMBINATION MONOPOLIES / COMPETITION ORGANIZATION EFFICIENT WHOLESALE MARKETS ORGANIZATION EFFICIENT RETAIL MARKETS ENSURE SYSTEM RELIABILITY ENSURE SECURITY OF SUPPLY ENSURE QUALITY OF SERVICE FULFILL PUBLIC SERVICE OBLIGATIONS (E.G. UNIVERSAL SERVICE) PROMOTE PUBLIC SERVICE INTEREST (E.G. RENEWABLES, CO-GENERATION, ENERGY EFFICIENCY) INCENTIVES FOR OPTIMAL USE OF EXISTING INFRA-STRUCTURE INCENTIVES FOR OPTIMAL SYSTEM EXPANSION GOVERNANCE OF REGIONAL MARKETS
EUROPEAN REGULATORY DIVERSITY DE, LU DK, FI, NL AT, BE, ES, UK, PT, IT, FR, SE, GR, IE ENERGY ANTI-TRUST ENERGY TELECOM ENERGY
THE EUROPEAN MODEL: REGULATION BY CO-OPERATION CONSUMERS EUROPEAN COMMISSION CEER NATIONAL REGULATORY AUTHORITIES hhh INDUSTRY SYSTEM OPERATORS TRADERS
COUNCIL OF EUROPEAN ENERGY REGULATORS CEER CO-OPERATION AMONG NATIONAL REGULATORY AUTHORITIES WITH EU COMMISSION AIMED AT EXCHANGE OF EXPERIENCES, INFORMATION ( BEST PRACTICES ) FACILITATING THE DEVELOPMENT OF EFFICIENT EU ENERGY MARKETS (ELECTRICITY AND NATURAL GAS)
CEER 2000 MARCH MEMORANDUM OF UNDERSTANDING 2003 JUNE NOT-FOR-PROFIT ASSOCIATION
CEER 2003 NOVEMBER EC DECISION ESTABLISHING ADVISORY COMMITTEE 2004 MAY
NATIONAL / EU INTERACTION EU LEVEL EC EUROPEAN REGULATORS GROUP EUROPEAN COMMISSION CESR ERG CEER / ERGEG CO-OPERATION CO-ORDINATION NATIONAL LEVEL 1...... 15 NATIONAL REGULATORY AUTHORITIES HARMONIZATION
WWW.CEER-EU.ORG WWW.ERGEG.ORG
INCENTIVE BASED REGULATION COMMAND AND CONTROL NETWORKS RATE OF RETURN REGULATION VERTICALLY INTEGRATED MONOPOLIES VERTICALLY INTEGRATED MONOPOLIES WHOLESALE / RETAIL MARKETS MARKET REGULATION
4. INNOVATION NEEDED