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Regional Independent Operator RIO way forward Issues for further dialogue

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No geographical overlaps between RIOs, but responsibility for well-defined regional markets ... cooperation of regulators responsible for different RIOs. Etc. ... – PowerPoint PPT presentation

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Title: Regional Independent Operator RIO way forward Issues for further dialogue


1
Towards Regional Independent Operators a main
driver for successful market integration
2
Setting the scene
  • 3rd liberalisation package 2 options proposed
    by the Commission
  • Ownership Unbundling
  • National ISO model as second best solution
  • Rationale guarantee fair access to networks and
    remove discriminatory behaviour of vertically
    integrated companies
  • BUT
  • Ownership unbundling NOT conducive to market
    integration 2nd step needed to bring TSO
    activities together
  • National ISO model not sufficient for market
    integration

3
Rationale for proposing a RIO
  • Need to speed up market integration
  • To alleviate concerns of market concentration
    thereby increasing the number of market
    participants
  • To enhance price convergence
  • To reinforce trust in price formation and
    markets abilities to deliver
  • Etc.
  • Close TSO cooperation needed for development
    towards an internal electricity market
  • ? RIO-model will drive market integration solve
    the issue of fair access to networks

4
Tasks of a RIO I
  • Clear separation of the responsibilities of the
    RIO and the TSOs needed
  • Access to the networks
  • Day-ahead scheduling activities
  • Calculation of grid capacity
  • Procurement of balancing services
  • Capacity allocation
  • Secondary capacity markets
  • Nomination of capacities
  • Cross-border intra-day
  • Invoicing for network usage

5
Tasks of a RIO II
  • Real-time operations
  • Real-time system management
  • Counter trading and redispatching
  • Balancing of the grid
  • System planning
  • System adequacy report
  • Investment plan
  • Execution of investments
  • RIO to make a binding decision on the needs for
    additional capacity set a timeframe for
    fulfilment by TSOs
  • TSOs obliged to fulfil capacity needs
  • Competent regulatory authority to approve decision

6
Remaining tasks for the asset owners (TSOs)
  • Asset management as owner of the transmission
    assets
  • Provide maximum availability of grid capacity
    (capacity adequacy)
  • Execution of investments Fulfilling the request
    for additional capacity (based on RIOs binding
    decision on capacity needs)
  • For TSO to decide concrete technical investment
    project, i.e. how to practically fulfil the
    capacity needs, in close cooperation with the RIO
  • Execution of maintenance work
  • Provision of information to the RIO
  • Tariff administration

7
Tasks and structure of the RIO
8
Governance and independence of the RIO I
  • Set-up of the RIO through legislation
  • Independent Management of the RIO
  • Sole responsibility for day-to-day
    decision-making
  • Rules for management unbundling will apply
  • Independent Supervisory Board
  • No conflict of interest with interests of RIO
  • Trustee organisation correct balance to be found
    when appointing the trustees no majority for any
    stakeholder group on regional level
  • Transparent decision-making process
  • Advisory Committee(s)
  • To provide necessary technical input to the
    management of the RIO
  • Transparent decision-making process
  • Supervision by the competent regulatory
    authorities on regional level

9
Governance and independence of the RIO II
  • Regulated organisation
  • Management incentives to achieve efficiency
  • Separate accounting for different activities
  • Remuneration of the expenses of the RIO via grid
    fees
  • Liability need for further discussion

10
Fair access to networks I
NOW
With RIO
Generator 1
Generator 2
Generator 1
Generator 2
owns
Competent regulatory authority
owns
Regulator 1
Regulator 2
Controls fair access
Controls fair access
Controls fair access
RIO
TSO 1
TSO 2
TSO 1
TSO 2
Access request by market participants
Access request by market participants
11
Fair access to networks II
  • Fair access is guaranteed through strict
    governance rules for RIO (via independent
    management and independent supervisory board)
  • Fair access also to be guaranteed through strict
    application of Directive 2003/54
  • Effective and consistent implementation in Member
    States to be ensured
  • Rules for management unbundling to apply to
    Management of RIO
  • Supervision by competent regulatory authority
  • Clear transparent complaint mechanisms based on
    Directive 2003/54
  • Supervision by the competent regulatory authority

12
Regional market integration
  • RIO to drive regional market integration ?
  • No geographical overlaps between RIOs, but
    responsibility for well-defined regional markets
  • RIO should cover neighbouring TSOs
  • Markets should not be split up but remain part of
    the same RIO
  • Responsibility for inter-regional coordination
  • Definition of regions use EC Strategy Paper as a
    basis

13
Investments Decision-making process
  • RIO, with input of amongst others asset owners,
    carries out multi-annual regional adequacy
    analysis basis for investment decisions
  • Optimisation of the regional grid
  • RIO defines capacity needs which have to be
    fulfilled by the TSOs within a clear timeframe
    set by the RIO ?
  • Approval by competent regulatory authority on
    regional level
  • Leads to a concrete (technical) investment
    project decided by the asset owner (in close
    cooperation with RIO)
  • Obligation of the TSO to carry out investments
    which meet the capacity needs identified by the
    RIO (i.e. for TSO to decide how to practically
    meet the capacity needs)
  • Approval by competent regulatory authority on
    regional level

14
Investments Decision-making principles
  • Criteria in the decision-making process of the
    RIO
  • Network situation in neighbouring areas
  • Grid integrity
  • Security of supply
  • Value of enhanced system security and better
    system operation
  • Socio-economic value of reduced generation costs
    for the region, taking account
  • Value of a better functioning market, e.g. price
    convergence and price correlation
  • Optimization of network losses
  • Value of accommodating sustainable energy system
    changes
  • Value of a more flexible network that can cope
    with changes in the market

15
Investments Who pays for investments?
  • Financing in general via network tariffs
  • 2 ways to distribute the costs for investments
  • New investment paid for by the customers
    benefiting from the investment
  • OR
  • Socialisation of new investments to all customers
    of the region covered by the RIO
  • Further discussion needed

16
Regulatory oversight
  • Regional and ultimately European regulatory
    function to supervise RIO
  • European mindset and mandate of (national)
    regulators needed as precondition
  • Regional/European regulatory function to carry
    out the following tasks
  • Approve the statutes of the RIO
  • Supervise network access to guarantee
    non-discriminatory access
  • Approve decisions on capacity needs and for the
    concrete investments
  • Approve the operational costs of the RIO
  • Ensure inter-regional cooperation of regulators
    responsible for different RIOs
  • Etc.
  • A way to do it create regional sub-committees
    within an ERGEG with active role of the
    Commission and clear fall-back powers
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