1. LEW - Dr. Peter Birkner 01.05.2003 1 CIRED Guaranty of Supply Availability in a Competitive Environment – Strategy and Experience of a German Distribution Company CIRED Conference 2003, Barcelona Contribution to Session 6, Block 2 Dr.-Ing. Peter Birkner, Business Unit System Operation, Lechwerke AG, Augsburg, Germany

2. LEW - Dr. Peter Birkner 01.05.2003 2 CIRED Consequences of Deregulation on the Distribution Business Efficiency of Grid Design Efficiency of Operation Imputed Return on Equity Imputed Depreci- ation Allowances Comparison Market Scheme Individual Cost Items Individual Cost Items Grid Volume Imputed Cost Items Imputed Cost Items Use-of-System Charges Use-of-System Charges Revenues of Asset Owner Budget for Reinvestment Supply Quality + +

3. LEW - Dr. Peter Birkner 01.05.2003 3 CIRED Consequences of Deregulation on the Distribution Business Asset Owner Vertically Integrated, Stand Alone Distribution Company *) *) electricity or also other scopes Asset Manager Asset Service Industrial Partner Horizontal Cooperation of Distribution Companies *) Asset Owner Asset Manager Industrial Partner Asset Owner Asset Manager Asset Service Industrial Partner

4. LEW - Dr. Peter Birkner 01.05.2003 4 CIRED Consequences of Deregulation on the Distribution Business Demand Side Management (DSM) and System Operator: Reduction of maximum power demand via DSM limits necessary capacity Reduction of maximum power demand via DSM limits use-of-system charges payable to the system operator of the higher voltage level Demand Side Management (DSM) and Electricity Supplier: Predictability of power demand in order to reduce settlement cost CustomerSystem Operator Electricity Supplier DSM