1. Status Report of the Electricity Regional Initiative Ms Asta Sihvonen-Punkka ERGEG Electricity Focus Group (EFG) Chair The Regional Initiatives: Progress and Prospects Conference Brussels, 28 March 2007

2. 2 Status Report of the Electricity Regional Initiative  Background – what do we want to achieve?  Process established – regions, structure of RIs  Progress achieved – priorities, concrete results  Prospects anticipated  The single market – convergence and coherence  How can I participate in the Regional Initiatives? Structure of presentation

3. 3 The Regional Initiatives: Progress and Prospects Conference Brussels, 28 March 2007 Status Report of the Electricity Regional Initiative Background – What do we want to achieve? PRACTICAL OUTPUT: - IDENTIFICATION of existing barriers to entry/obstacles to regional market integration (Set Priorities) - PROPOSITION of concrete and practical improvements, with time schedule, to remove those obstacles (Action plan, MoU) - IMPLEMENTATION of those practical improvements at a regional level (Effective Implementation) ENSURE COORDINATION AND COHERENCE BETWEEN REGIONS  TOWARDS A SINGLE MARKET

4. 4 The Regional Initiatives: Progress and Prospects Conference Brussels, 28 March 2007 Status Report of the Electricity Regional Initiative Process established  7 electricity Regional Energy Markets (REMs) now established  Priorities identified in all 7 REMs  European Commission involvement and support  Stakeholders actively involved, TSOs supporting the Regional Initiatives  ERGEG commitment to transparency -> e.g. ERGEG website (www.ergeg.org)www.ergeg.org

5. 5 The Regional Initiatives: Progress and Prospects Conference Brussels, 28 March 2007 Status Report of the Electricity Regional Initiative Electricity Regional Energy Markets (REMs)

6. 6 The Regional Initiatives: Progress and Prospects Conference Brussels, 28 March 2007 Status Report of the Electricity Regional Initiative ERGEG established Regional Co- ordination Committees (RCCs). Each RCC comprises regulators from the region, has autonomy, & adopts its own decision making process and chairs SG IMPLEMENTATION GROUP Includes TSOs and other Market Operators This is the ‘do-er’ for each Regional Initiative Chaired by RCC STAKEHOLDER GROUP Wide participation including market players Each SG chaired by RCC and used for consultation FLORENCE & MADRID FORA Overall forum for discussing progress in progressing regional initiatives and pan- European consistency MEMBER STATES Input into identifying and solving market integration issues – e.g. legislative proposals, Member State to Member State interface EU COMMISSION

7. 7 The Regional Initiatives: Progress and Prospects Conference Brussels, 28 March 2007 Status Report of the Electricity Regional Initiative Progress achieved - priority topics identified  A number of regions have now established concrete Action Plans that identify key deliverables and responsibilities for delivery  Broadly common priorities across the regions include  Congestion Management  Interconnectors  Transparency  Balancing  Regulatory issues

8. 8 The Regional Initiatives: Progress and Prospects Conference Brussels, 28 March 2007 Status Report of the Electricity Regional Initiative First priority issues adopted in regions Congestion management  Optimizing use of interconnectors  Explicit auction rules  Day-ahead market coupling  Cross-border intraday and balancing trade  Maximization of the capacities offered to the market  Common calculation method for cross-border capacities  Flow-based allocations  Availability of transmission capacity  Development of new interconnector infrastructures Transparency

9. 9 The Regional Initiatives: Progress and Prospects Conference Brussels, 28 March 2007 Status Report of the Electricity Regional Initiative Progress achieved – concrete results (1/2)  Central-East REM  Auction office established for 4 countries of Central East REM  A single auction office and a coordinated flow based system for the whole region forseen for Central East REM by end 2007  Central-South REM  Coordinated explicit auctions at 3 of the 4 Italian borders

10. 10 The Regional Initiatives: Progress and Prospects Conference Brussels, 28 March 2007 Status Report of the Electricity Regional Initiative Progress achieved – concrete results (2/2)  France-UK-Ireland REM  Auction reserve prices effectively removed France – England interconnector Central-West REM  Trilateral market coupling established in November 2006  Comprehensive Action Plan published in February 2007 with needed improvements with associated time schedule  Northern REM  Day ahead market coupling between Nordic region and Germany to begin October 2007

11. 11 The Regional Initiatives: Progress and Prospects Conference Brussels, 28 March 2007 Status Report of the Electricity Regional Initiative Progress – some impediments noted  Differences in competences of regulators, possibilities for cross-border cooperation and action – ‘regulatory gap’  Resources – regulators, TSOs, stakeholders often involved in several regions, topics  Consistency with other initiatives – e.g. MIBEL on the Iberian market  Other ?

12. 12 The Regional Initiatives: Progress and Prospects Conference Brussels, 28 March 2007 Status Report of the Electricity Regional Initiative Prospects anticipated  More practical results in the regions in the coming months with the implementation of Action Plans  Within the Electricity REMs  Improved transparency  Bottlenecks on a number of electricity borders will be better managed  The Regional Initiatives should bridge the gap between high level policy objectives at EU level and action on the ground

13. 13 The Regional Initiatives: Progress and Prospects Conference Brussels, 28 March 2007 Status Report of the Electricity Regional Initiative  ERI a step to a single European electricity market  The challenge of integrating regions  ERGEG undertaking work :  Ongoing monitoring of progress and,  ERGEG report on convergence and coherence to the next Florence forum  Support and involvement of ALL stakeholders will be crucial in helping to ensure this coherence The single market – convergence and coherence

14. 14 The Regional Initiatives: Progress and Prospects Conference Brussels, 28 March 2007 Status Report of the Electricity Regional Initiative How can I participate in the Regional Initiatives?  STAY INFORMED:  Visit the ERGEG website (www.ergeg.org)www.ergeg.org  Become an “online subscriber” and automatically receive news from the regions  BE HEARD – comment on public consultations  TAKE ACTION – join the Stakeholder Group for your region

15. 15 The Regional Initiatives: Progress and Prospects Conference Brussels, 28 March 2007 Status Report of the Electricity Regional Initiative More information on the Electricity Regional Initiative (ERI) is available at www.ergeg.org Become an “Online Subscriber” to automatically receive news from the regions Thank You