Gas & Electricity Workshop CER Consultation CER/13/122 Access Tariffs & Financing the Gas Transportation System 03 July 2013

A Sustainable Future Powered by Electricity Outline About EAI Overview of the Consultation Paper – The issues – The proposals Principles of Better Regulation Scorecard Conclusions

A Sustainable Future Powered by Electricity About EAI Trade Association representing the electricity industry on the island of Ireland (SEM geographic area) Eurelectric national member for Ireland Membership GenerationSupplyNetworks ESB Networks NIE Airtricity BGE Energia Electric Ireland AES BGE Bord na Móna Indaver Ireland ESB Tynagh Energia SSE Power NI A Sustainable Future Powered by Electricity Vayu

A Sustainable Future Powered by Electricity Overview of CER/13/122 The Issues – Primary Capacity Bookings A drop off in capacity bookings and erosion of this core revenue base Too much flexibility offered to system users – Equity issue Ensure that the required system is remunerated in a fair and equitable way across customer categories, with costs imposed in proportion to the service provided A Sustainable Future Powered by Electricity

Overview of CER/13/122 The Issues Primary Capacity Bookings Too much flexibility offered to system users The Real Issues Reduced Demand – Recession & Weather Changes in Power Gen – Relative Fuel Prices & Carbon – Wind – EWIC BGN Forecasts Regulatory Decisions – PC3 – Short Term Tariffs A Sustainable Future Powered by Electricity

Overview of CER/13/122 The Issue Equity Issue The Real Issues Is this a genuine issue? – Connection Policy Power Gen NDM – Capacity/Commodity split Is Power Gen subsidising NDM? – Yes (CER/10/089) – Does CER/10/089 create this “issue”? The proposals and the “equity” issue A Sustainable Future Powered by Electricity

Overview of CER/13/122 The Proposals (to be applied at exit only) 1.Removal of secondary capacity transfers 2.Removal of the ability to buy/transfer capacity “within day” Other Proposals – Mandatory Bookings – Removal of Mandatory Bookings for NDM – Long Term Booking Incentives

Overview of CER/13/122 The Proposals Removal of Secondary Capacity Transfers The Real Issues & Impacts Transfers improve efficiency – Agree: CER/10/089 (p.18) – Disagree: CER/13/122 (p.9) All within category (LDM) secondary capacity transfers require a primary booking – Redundant capacity – Cost & Revenue implications Flexibility is increasingly important to Power Gen – Demand for flexible products recognised by CER A Sustainable Future Powered by Electricity

Overview of CER/13/122 The Proposals Removal of ability to buy/transfer capacity “within day” The Real Issues & Impacts Power Gen & Flexibility – Central dispatch – Double payment? – Demand destruction? EU Compliance – Regulation (EC) 715/2009 Art. 13, 14, 16, 22 “Equity” issue – Increased cost for reduced service? A Sustainable Future Powered by Electricity

Better Regulation Better Regulation White Paper (2004) Dept of An Taoiseach Consultation (2013) The Principles – Necessity – Effectiveness – Proportionality – Transparency – Accountability – Consistency

A Sustainable Future Powered by Electricity Better Regulation Scorecard Necessity F – The specific proposals are not necessary – Some change may be required – All options should be considered after the issues are properly defined Effectiveness – The proposals are not properly targeted as the issues are poorly or inappropriately defined – The proposals will have consequences contrary to their intended impact F F

A Sustainable Future Powered by Electricity Better Regulation Scorecard Proportionality – A comprehensive assessment of the drivers of change has not been undertaken – No assessment of alternatives has been undertaken – The expected costs to outweigh the benefits as the proposals have a disproportionate impact on flexibility Transparency – The consultation paper has no analysis, just statements – The paper has no supporting legal opinion, just statements – The timeline for consultation is inappropriately short NG F

A Sustainable Future Powered by Electricity Better Regulation Scorecard Accountability – CER are responsible for regulating shippers and networks – Many of the arguments forwarded in support of CER’s approach are taken from BGN correspondence – There is no effective appeals process Consistency – The consultation does not adhere to best practice – Proposals are inconsistent with; Wider gas and energy market objectives The intended outcomes stated by the CER F NG

A Sustainable Future Powered by Electricity Conclusions A poor paper on top of a poor process (PC3) Proposals are based on conjecture and prioritise stability of network revenue – The appropriate time to address tariffs was PC3 If this is a systemic long term issue, it requires a comprehensive review over an appropriate period Flexibility must be accommodated, not ignored The concept of economic efficiency is misunderstood The “equity” issue is misconceived and is an anomaly in the context of CER/10/089 Next Steps…