1. 1 Vattenfall Sveanät AB Deregulation for domestic customers in Sweden “Organizational consequences for network companies in Sweden and the consequences for their IT systems after opening the electricity market for domestic customers” Sven Lindgren

2. 2 Vattenfall Sveanät AB Deregulation for domestic customers in Sweden Scope Milestone of the deregulation process in Sweden Opening of the electricity market for domestic customers – organizational consequences New revenue regulation model from 1 January 2004 Merging process of network companies in a cost effective manner – Example from Vattenfall Sveanät IT systems for customer switching administration Monthly meter reading of all customers 2009 IT systems for remote meter reading and billing – Example from Vattenfall

3. 3 Vattenfall Sveanät AB Deregulation for domestic customers in Sweden Milestones of the deregulation process in Sweden DateMilestone/New Laws 1 January 1996Deregulation of the electricity market In reality for commercial and public business 1 July 1997Maximum rate for customer switching 2 500 SEK (270€) - hourly metering still required 1 November 1999Hourly metering no longer required up tp ~ 80 A Market in reality opened for domestic customers 1 July 2001New regulation of merging concession areas Same network prices in merged areas 2007 1 January 2004New regulation of prices with the ”Network Performance Assessment Model (NPAM)” 1 January 2009Monthly meter reading of all customers and billing of consumed energy – i.e. not preliminary

4. 4 Vattenfall Sveanät AB Deregulation for domestic customers in Sweden Organizational consequences of opening the market for domestic customers 1 November 1999 Example from Vattenfall Sveanät A new organizational group was established for customer switching administration A special organizational function was built for new IT- system support Independence function to price network tariffs - Considering regulators demands Resources to meet the increased interest from publicists concerning the deregulated market

5. 5 Vattenfall Sveanät AB New revenue regulation model from 1 January 2004 ” The Network Performance Assessment Model (NPAM)” Model for objective measurements of distribution companies performance as seen by the their costumers Model designed to assessing the tariffs for - differing conditions - quality of supply provided by each company Performance defined by a fictitious network with - coordinates (x,y) for all customers - energy consumption for all customers - quality of supply parameters Must be reported to Swedish Energy Agency 31 March every year (starting 2004). Deregulation for domestic customers in Sweden

6. 6 Vattenfall Sveanät AB Deregulation for domestic customers in Sweden Fictitious network created of the Network Performance Assessment Model A quarter of the city of Sundbyberg Low Voltage network

7. 7 Vattenfall Sveanät AB Deregulation for domestic customers in Sweden Vattenfall Sveanät AB Number of customers 440,000 Transmission volume 32,000 GWh Turnover 300 MEUR Number of employees 220 Area structure Urban, rural, archipelago (700 electrified islands) Merging process

8. 8 Vattenfall Sveanät AB VATTENFALL SVEANÄT Norberg Mälarnät Solna Sundbyberg Huvudsta Tyresö Värmdö Huddinge Drefviken Södertörn Botkyrka Salem Botkyrka- Salem Botkyrka- Salem VRAB KBAB Östra Roslag Östra Roslag Ingarö Roslagen Knivsta Sydmälaren Mälarbygden Bergslagen Norduppland Uppsala Elnät Sigtuna Elnät Roden Elnät Avesta Mergers 1995-2001

9. 9 Vattenfall Sveanät AB Deregulation for domestic customers in Sweden To be successful in a Merging process Important issues to consider Rapid merging of companies - In organisation and appointment of managers Information to employees Honesty To be aware of crisis Manage personnel reduction well Competence development Staff welfare Year 1999 2003 Costumer 240,000 440,000 Employees 199 220 Contractors and call centre with billing (bought services) are not included

10. 10 Vattenfall Sveanät AB Deregulation for domestic customers in Sweden Customer switching administration Example from Vattenfall Sveanät Accumulated number, including costumer switching back to previous electricity supplier 1 November 1999 Accumulated 18 % Number of customer 440,000

11. 11 Vattenfall Sveanät AB Costumer switching system SABEL Billing system Curry Supplier Z03 contract of New supplier Z09 Supplier has changed Balance provider Supplier Z04 confirms the contract to the New supplier, Z05 drops out the contract with the current supplier m m To update Curry Daily changes Measuring stands Measuring changes New Customer Balance Provider Preliminary account Finally account Deregulation for domestic customers in Sweden Prodat EDIEL- Converter Data flow of message and data changes

12. 12 Vattenfall Sveanät AB Deregulation for domestic customers in Sweden Monthly meter reading of all customers 2009 Resolution from the Swedish Parliament expected this year Hourly reading of all meters > 63 A fuse – 1 July 2006 (Today for meter fuse > 200 A) Monthly meter reading of all customers – 1 July 2009 The switching to a new electricity supplier shall be easer for the costumer In reality this means that remote metering system have to be implemented for all costumers. This is also the lawmakers intention.

13. 13 Vattenfall Sveanät AB Collecting system 1 Balance account system MVS SVK System authority Collecting system 2 Deregulation for domestic customers in Sweden GS2 Balance providers Supplier Billing system Curry Bills Ed iel Hour based value Ediel converter i nhouse Collecting system 3 Dataflow of hour based energy values

14. 14 Vattenfall Sveanät AB Deregulation for domestic customers in Sweden Monthly meter reading of all customers 2009 Project: “Number 1 for the Customer” - A fresh approach to the customer

15. 15 Vattenfall Sveanät AB Deregulation for domestic customers in Sweden It is unacceptable for customers to feel that they come second Complicated bills ”It is unacceptable that customers cannot understand their own electricity bills” Pay for actual consumption ”It is unacceptable that customers cannot pay for their actual consumption” Customers feel that information is inadequate and vague ”It is unacceptable that customers do not fully understand what they are paying for” Switching electricity suppliers is complicated ”It is unacceptable that it should be so difficult to switch electricity suppliers” Monthly meter reading of all customers 2009

16. 16 Vattenfall Sveanät AB Powerful initiatives from Vattenfall... Investment of more than EUR 70 million (SEK 600 million) Installation of approx. 300,000 remote-read meters in 2003-2005 Eliminate preliminary charges Deregulation for domestic customers in Sweden

17. 17 Vattenfall Sveanät AB Deregulation for domestic customers in Sweden “The opening of the electricity market for domestic customers in Sweden has in many aspects greatly changed the conditions for the network companies business”