Regional Market and Cross Border

1
Regional Market and Cross Border

• Luigi de Francisci
• TERNA - Rete Elettrica Nazionale S.p.A.

2
Terna at a Glance

• Main Owner of 98,3 of the Transmission Grid in
  Italy
• Sole Concessionaire Responsible for Transmission
  and Dispatching of Electricity
• Responsible for Grid Planning, Development and
  Maintenance
• Listed on the Stock Exchange Market Since Year
  2004

Business Unit

• Pending ANEEL approval
• Novatrans incorporation still subject to ANEEL
  and BNDES approval
• Consolidated with the Equity Method

3
Regional Electricity Markets and cross border
Introduction

• Background why regionalization to manage cross
  border issues
• Regulatory process established the ERGEG
  Regional Initiatives
• The way forward the 3 Electricity Package

4
Regional Electricity Markets and cross border

• The main goal shall be to improve cross border
  exchanges in order to really put in place IEM
• Via
• Definition and maximization of Network
  Interconnection Capacity under security
  constraints
• Investments on interconnection capacity

5
Regional Electricity Markets and cross border
State of the Art in Regionalization the
Electricity Regional Initiatives
Baltic Region Estonia, Latvia, Lithuania Lead
Regulator PUC (Latvia)
Central-East Region Austria, Czech R, Germany,
Hungary, Poland, Slovakia, Slovenia Lead
Regulator E-Control (Austria)
Central-South Region Austria, France, Germany,
Greece, Italy, Slovenia Lead Regulator AEEG
(Italy)
Central-West Region Belgium, France, Germany,
Luxemburg, Netherlands Lead Regulator CREG
(Belgium)
Northern Region Denmark, Finland, Germany,
Norway, Poland, Sweden Lead Regulator DERA
(Denmark)
South-West Region France, Portugal Spain. Lead
Regulator CNE (Spain)
UK Ireland Region UK, Ireland Lead Regulator
OFGEM (UK)
6
Regional Electricity Markets and cross border
Main Achievements on the Italian Borders
Congestion Management

• Non joint allocation
• 50/50 NTC Managed by Each Country
• Implicit Auction on 50 NTC managed by Italy
• Explicit Auction on 50 NTC managed by bordering
  EU countries

• Joint Allocation among Italy, France and Austria
  and Greece (100 NTC)
• Non joint allocation with Slovenia and
  Switzerland (50/50 NTC)
• Explicit Auction on all the borders

• Joint Allocation among Italy, France and Austria
  Slovenia and Switzerland and Greece(100 NTC)
• Explicit Auction on all the borders
• Harmonized allocation rules

2008
2006
2007
Not Coordinated Not Joint Allocation
Coordinated Not Joint allocation
Coordinated - Joint allocation

Interconnection Transmission Capacity based upon
NTC values not Flow Based Coordination among
TSOs to set the NTC Values based upon ETSO
methods Agreement on NTC value through a common
Pentalateral Procedure (Italy, France, Austria,
Slovenia, Switzerland)
7
Regional Electricity Markets and cross border
Work in progress and next steps on Congestion
Management on the Italian Border

• to set up a Single Auction Office (unbundled by
  TSOs)
• to further improve coordination among TSOs via
  Intraday Markets during year 2008

8
Regional Electricity Markets and cross border
Work in progress and next steps on Congestion
Management on the Italian Border

• to start up studies on Market Coupling solution
  for congestion management on day ahead where the
  different power exchanges operate in each area
• to set up a Secondary Market where market
  operators can trade interconnection capacity
  already allocated

9
Third Electricity Package
Terna Highlights on cross border issues

• Network Investments and Development of new
  Infrastructure are the prerequisite for the
  functioning of Regional Markets and the
  resolution of Cross border congestions
• The Italian Experience shows that full ownership
  unbundled TSO increases Investments on Network
  Infrastructure
• Clear mandate for TSOs fostered cooperation to
  develop technical codes and market codes in
  accordance with Regulatory predefined Terms and
  Conditions set by Regulators

10
Third Electricity Package
Terna Highlights on cross border issues

• Further harmonization with EU third Countries
  (ie. Switzerland) on cross border issues
• Lack of transparency on some borders due to the
  existence of long term contracts and reserved
  interconnection capacity in Europe (ie. Germany-
  Switzerland)
• Market asymmetries
• Inter TSO Compensation no double remuneration
• The use of Congestion Management Revenues coming
  to TSOs for the allocation of Interconnection
  Capacity and the use of Inter TSO Compensations
  due to Cross Border flows shall be taken into due
  account in order to avoid distortions of
  competitions among the different national markets

11
Regional Market and Cross Border

• Luigi de Francisci
• TERNA - Rete Elettrica Nazionale S.p.A.

END