Title: Regional Independent Operator RIO way forward Issues for further dialogue
1Towards Regional Independent Operators a main
driver for successful market integration
2Setting 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
3Rationale 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
4Tasks 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
5Tasks 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
6Remaining 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
7Tasks and structure of the RIO
8Governance 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
9Governance 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
10Fair 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
11Fair 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
12Regional 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
13Investments 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
14Investments 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
15Investments 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
16Regulatory 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