OHR/OECD Conference on Regulatory Governance and Network Industries Sarajevo, April 19 2002 SESSION II: Economic Regulation and Network Industries Policy and Regulation: Key Aspects of Energy Markets Reforms in Transition Economies

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OHR/OECD Conference on Regulatory Governance and
Network IndustriesSarajevo, April 19
2002SESSION II Economic Regulation and Network
IndustriesPolicy and Regulation Key Aspects
of Energy Markets Reforms in Transition Economies

• Emmanuel Bergasse International Energy
  Agency/OECD

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Presentation Map

• I. Energy Market Reforms in Central Europe a
  decade of experience
• II. Southeast Europe perspectives
• III. Conclusions

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I. Energy Market Reforms in Central Europe a
decade of experience

• Goal decentralised and market based energy
  system bringing overall economic benefits
• Integrated approach
• Separate State role on policy (Ministry),
  regulation (regulator) and operation/ownership of
  energy companies
• Sequencing of reforms transition
• Means Policy/strategy, institutional and
  regulatory framework to support market based
  operation

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Energy Policy Foundation

• Goal Policy definition and institutional set-up
• Why? infrastructure need medium/long term
  guidelines and overall co-ordination
• How? Policy paper with objectives/priorities and
  missions of state bodies
• Who? Energy Department of Economy/Industry,
  Parliament
• Eg Czech Energy Policy (2000)

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Regulation Market Basis

• Goal a regulated energy market
• How? Energy Law sets market regulation
  (licensing, pricing, control of services)
  enforced by an independent regulator
• Who? Government and Parliament (energy Law),
  Ministry (secondary regulation) and regulator
• Eg. Polish Energy Law (1997)

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Operation of Energy Services

• Goal decentralised and efficient market
  operators
• How? Restructuring good governance,
  corporisation, customer orientated strategy
  Privatisation to strategic investors when
  conditions for competition met
• Who? Ministry of Econ./industry for reforms Min.
  of Finance for privatisation
• Eg. Polish power sector

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Energy Demand Environment

• Goals integrated policy on energy its impacts
  reduce demand and pollution ? cost reduction
• How? Demand side and environment strategy
  management
• Who? Energy and environment agency
• Eg. Energy Centre Hungary

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? Performance of Reforms in CE

• Energy policies consistent with EU IEA
  standards
• Regulation aligned with EU Directives
• Energy companies at international level and in
  part privatised
• Energy intensity and pollution reduced
• Hungary and Czech Rep. IEA members, 1st wave of
  EU accession countries

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Energy Intensity in the Czech Rep.
Hungary (Impacts of Policy Mix price adjustment,
investment, tax incentives, closure of obsolete
units)
1973-2010 (Toe per thousand US at 1990 prices
and purchasing power parities)
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II. Southeast Europe Perspectives

• Similarities/differences SEE CE of early 90s
• Economic system transition, low energy
  efficiency, prices below cost, power
  overcapacity, high environmental impact
• post-war reconstruction, industry collapse,
  political instabilities

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Reform Progress

• Energy policy limited advancement, Bulgaria-1998
  Croatia-1999
• Regulation some reforms (tariff adjustment) but
  no overall legal framework. Energy Law in
  Bulgaria-1999 Croatia2001
• Energy sector restructuring first steps
  (corporatisation)
• Demand management-environment low progress

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Regional Co-operation

• Clear need for regional approach-convergence of
  energy policies
• Supply complementarities
• Networks interconnection
• Transit projects
• ? Effective Regional Energy Market (REM) if
  viable markets and legal compatibility between
  electric systems

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III. Concluding remarks

• 10 years experience in CE proved importance of
• Policy foundation for objectives and
  institutional responsibilities
• Clear market rules enforced by an independent and
  competent regulator
• Restructuring of energy companies to market
  conditions international standards

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IEA Contribution on Policy

• Web site http//www.iea.org/about/nmccee.htm
• Contact
• Emmanuel Bergasse, Administrator for Central and
  Southeast Europe
• email emmanuel.bergasse_at_iea.org
• Fax [phone]