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Edin ZAMETICAState Electricity Regulatory Commission
Bosnia and Herzegovina
Fourth Poverty Reduction Strategies Forum June 26-27, 2007, Athens, Greece
Regional Energy Market in South East EuropeIMPLICATIONS FOR CONSUMERS
Implications for Consumers 2
Agenda
Introduction - Regional market (Energy Community) Market opening Power to choose Demand and price trends Right to cover the costs Vulnerable customers support systems in the region Ongoing activities on customer protection
Implications for Consumers 4
Regional Market (Energy Community)
General Objectives of the Treaty Establishing the Energy Community enhance the security of supply that is essential for economic
development and social stability diversification improve the environmental situation improve energy efficiency, foster the use of renewable
energy
South East European countries are to introduce energy markets based on competition in generation and supply
Implications for Consumers 5
Energy Community Characteristics / Electricity
ENERGY COMMUNITY FINAL REPORT ON COMPLIANCE WITH ELECTRICITY BENCHMARKS April 2007
Implications for Consumers 6
Energy Community Characteristics / Gas
ENERGY COMMUNITY REPORT ON COMPLIANCE WITH THE GAS BENCHMARKS December 2006
Implications for Consumers 7
Consumer Interests
Competition improves efficiency and reduce prices increase
Increased transparency, market discipline, reduced corruption
Regional framework for necessary investments results in reduction of the total investments
More efficient utilization of existing and new infrastructure Affordability - Article 33 of the Treaty: The Energy
Community may also make Recommendations to support effective reform … and to foster the affordability …
Implications for Consumers 8
Market Opening
Each Contracting Party must ensure that the eligible customers within the meaning of the European Community Directives 2003/54/EC and 2003/55/EC are: from 1 January 2008, all non-household customers; and from 1 January 2015, all customers.
Network related activities (transmission and distribution – natural monopoly)
Supply activities (+generation) – market activities – to be deregulated
Implications for Consumers 9
Market Opening in the RegionElectricity (threshold, market opening %) Gas (threshold, market opening %)
Albania 100 GWh/year
Austria 100% 100%
Bosnia and Herzegovina
33% (>10 GWh/a Jan 2007, all non hh Jan 2008, all households Jan 2015)
Bulgaria >20 GWh/a [till June 2006] /9 GWh/a (till Dec 2006) (all non till June 2007; all households july 2007 85% (de iure)
Croatia >9 GWh/a (all non households July 2007, all households July 2008) 45% (>100 bcm/a)
FYROM >20 GWh/a >10 bcm
Greece 70% (all non hh July 2007) >25 GWh/a (CHP and electricity producers)
Hungary all non households [67%] (all hh July 2007) 67%
Italy 80% [non households] (all households July 2007) 100%
UNMIK Kosovo customer at 110 kV (four)
Montenegro gradual opening without dynamics specified
Romania all non households (all July 2007) 75% (all non hh Jan 2007, all households July 2007)
Serbia >3 GWh (21%, January 2007) >50 bcm (47-50%, January 2007)
Slovenia partially open (all households July 2007) partially open % (all households July 2007)
Turkey 6 GWh/a (all households 2011) 80% (de facto)Source: Data from National Regulators, Energy Community Secretariat
Implications for Consumers 12
Power to ChooseThis is changing
Customers choose the supplier that provides the energy.
This stays the same
Electricity is delivered over the same poles and wires.
Reliability will stay the same.
Implications for Consumers 13
Power to Choose
Energy Community promotes freedom of energy supplies At the latest from July 2007, and January 2015, all consumers
in EU and SEE respectively, will be free to shop around for gas and electricity supplies. The current (default) supplier will no longer be the only choice.
Switching Supplier – process to be “user-friendly” with easy, cost efficient and standardised procedures for leaving one supplier and signing up with another.
This process will be monitored by regulators, so that customers can be confident that the market is working in their interests.
Implications for Consumers 14
Demand and Price Trends 1/2
Rising demand for electricity Improving living standards Economy in Europe is expected to grow Weather conditions
Implications for Consumers 15
Demand and Price Trends 2/2
Eurostat 11/2006 : EU-25 electricity prices expressed in euro per kWh increased by 5% for households* and by 16% for industrial consumers* between January 2005 and January 2006.
Eurostat 18/2006: EU-25 electricity prices expressed in euro per kWh increased by 7% for households* and by 15% for industrial consumers* between July 2005 and July 2006.
Implications for Consumers 16
Electricity Prices for Households 1/2
Composition of electricity price for household Dc in € per 100 kWh, on January 1, 2006 Source: Eurostat11/2006 household category Dc, with annual consumption of 3500 kWh, of which 1300 kWh during night hours
0
5
10
15
20
25D
enm
ark
Ital
y
Net
herl
ands
Ger
man
y
Lux
embo
urg
Nor
way
Irel
and
Slov
akia
Bel
gium
Swed
en
Cyp
rus
Eur
opea
n U
nion
25
Port
ugal
Aus
tria
Fran
ce
Pola
nd
Spai
n
Finl
and
Hun
gary
Slov
enia
Rom
ania
Uni
ted
Kin
gdom
Cze
ch R
epub
lic
Mal
ta
Cro
atia
Lat
via
Bos
nia
and
Her
zego
vina
Est
onia
Lith
uani
a
Gre
ece
Bul
gari
a
Serb
ia
Mac
edon
ia
Without T ax Other T axes VAT
d
Implications for Consumers 17
Electricity Prices for Households 2/2
Composition of electricity price for household Dc in € per 100 kWh, on July 1, 2006 Source: Eurostat18/2006household category Dc, with annual consumption of 3500 kWh, of which 1300 kWh during night hours
0
5
10
15
20
25
30D
enm
ark
Net
herl
ands
Ital
y
Ger
man
y
Nor
way
Lux
embo
urg
Swed
en
Irel
and
Bel
gium
Eur
opea
n U
nion
25
Aus
tria
Cyp
rus
Slov
akia
Port
ugal
Fran
ce
Uni
ted
Kin
gdom
Spai
n
Pola
nd
Finl
and
Slov
enia
Mal
ta
Cze
ch R
epub
lic
Hun
gary
Rom
ania
Cro
atia
Est
onia
Lith
uani
a
Gre
ece
Lat
via
Bul
gari
a
Bos
nia
and
Her
zego
vina
Serb
ia
Mac
edon
ia
Without T ax Other T axes VAT
Implications for Consumers 18
Right to Cover the Costs
The concept of energy being a public good resulted in price bellow the market value
Market-model implies that both for generation/supply and for network companies costs will be covered in addition a reasonable return on capital must be allowed
for. The transition to market model will imply rise in end-user
energy prices, which might be not affordable to certain consumer groups
Implications for Consumers 19
Vulnerable Customers Support Systems in the Region
Tariff based solutions – regulated tariffs for certain well defined consumer groups
Non tariff based solutions – typically introducing a social security system
Non tariff based solutions should be preferred as they do not obstruct market forces.
Two countries have a social electricity tariff scheme (EU members) Countries with significant number of vulnerable customers do not have any
support system (Bosnia and Herzegovina, Montenegro, Macedonia) UNMIK provides only some of the absolute poorest families to exclude them
from paying their electricity bills; however, pensioners with a monthly income of about 40EUR are not beneficiaries of the system.
Serbia provides for discounts only for special categories of customers, which are not necessarily the poorest ones and which are defined by the welfare centre.
Implications for Consumers 20
Vulnerable Customers Support Systems in the Region
T-social tariff, A-social allowance, O-Other
Electricity Gas Heating
Albania A
Austria A (targeted)
Bosnia and Herzegovina A (Sarajevo only) A (Sarajevo only)
Bulgaria A (used for heating) A
Croatia A A
FYROM
Greece A A
Hungary T (permanent) A
Italy
UNMIK Kosovo A
Montenegro
Romania T (targeted) A (not targeted) A (targeted)
Serbia O O
Slovenia
Turkey A (transitional)
Source: ERGEG (TF on South East Europe Customers): Protection of Vulnerable Household Customers in SEE – Report
Implications for Consumers 21
Sector Associations
Industry – well organized (ETSO, UCTE, EURELECTRIC, EFET...)
Regulators (ERGEG, CEER, ECRB, ERRA, IERN, MEDREG…)
Governments Most important stakeholder – H.E. CUSTOMER Empty place for “EURO-Customer” or “EURO-Consumer”
Implications for Consumers 22
Ongoing Activities on Customer Protection
General guidelines on the protection of vulnerable household customers in SEE
Memorandum of Understanding on the Social Dimension of the Energy Community
Conference dedicated to household customers including vulnerable customers and energy efficiency
Implications for Consumers 23
Guidelines
The European Energy Regulators Group for Electricity and Gas (ERGEG) Task Force on South East Europe Customers: GENERAL GUIDELINES ON THE PROTECTION OF VULNERABLE HOUSEHOLD CUSTOMERS IN SEE approved at the ERGEG CFG level Council of European Energy Regulators (CEER) GA
decided to provide them without CEER or ERGEG General Assembly approval to the European Commission as advice
The documents now is handed over to the ECRB to be further developed according to the needs of the region / country specificities
Implications for Consumers 24
Memorandum of Understanding
Memorandum of Understanding on the Social Dimension of the Energy Community (on the Agenda of the Ministerial Council Meeting 29 June 2007)
MoU covers two social aspects: consumers protection compatible with a sustainable and competitive
market industry workers rights
It is envisaged that the implementation of Article 3 of Directive 2003/54 EC will primarily be focused on the interests of the most vulnerable customers.
The European Commission is invited to develop strategies to deal with the issues of affordability, energy poverty, district heating reform, rural distribution, isolated systems and social impacts of reforms.
Establishment of Social Forum to be assessed
Implications for Consumers 25
Conference
European Commission and Energy Community Secretariat: high level conference dedicated to household customers including vulnerable customers and energy efficiency
Scope: electricity, gas and heating Participants: ministers (energy and social affairs),
municipalities, regulators, market players, donors Invitees: Energy Community plus Observers Date: 2nd half of October, 2007 Place - to be determined Rough agenda mid July
Implications for Consumers 26
THANK YOU FOR YOUR ATTENTION!
Edin Zametica, M.Sc. E.E.
Chief of Staff
State Electricity Regulatory Commission
Bosnia and Herzegovina
Tel: +387 35 302060
Fax: +387 35 302077