1. Lord Mogg Chair of ERGEG Florence Forum 04-05 June 2009 Implementation of the Third Energy Package

2. 2Florence Forum 04-05 June 2009 Introduction We issued a consultation document last Autumn (“Implementing the third energy package”) and a conclusions document earlier this year. We had a very positive response, even though the negotiations were not then complete (before second reading). As we promised, a further document will be issued to confirm our conclusions in the light of the final third package text. We will update you on our further thinking and plans. This presentation is an early summary.

3. 3Florence Forum 04-05 June 2009 Framework Guidelines/Network Codes Framework Guidelines not defined in the text. Each network code must be consistent with the relevant Framework Guideline. Together they are a major mechanism for achieving a single European energy market. We have identified areas which are priorities for Framework Guidelines. We are taking soundings with the ENTSOs and the Commission. Will establish within each area which of the problems preventing a single market should be tackled first.

4. 4Florence Forum 04-05 June 2009 Legal Framework Key stages of the process –after “interim period”- are the following: ProcessLead 1. Priorities to be set on areas to be covered by the network codes European Commission 2. Framework Guidelines to be prepared, setting clear and objective principles for the codes Agency (or Commission) 3. Network codes to be developedENTSOs (or the Agency) 4. Approval of the network codesCommission, following recommendation of Agency 5. Adoption via ComitologyCommission and Member States

5. 5Florence Forum 04-05 June 2009 Process is important In the view of the European Energy Regulators: Because of the legally binding nature of network codes, the process must be well-structured Ongoing and past work by the European Energy Regulators could serve as “preparatory work” Stakeholders must be properly consulted throughout the process Coordination with ENTSOs and the Commission needed to develop an “end to end” process

6. 6Florence Forum 04-05 June 2009 Process for developing the Framework Guidelines Two-step process: Step 1: “Initial Impact Assessment” (IIA) or preparatory work This can be launched during the interim period by the European Energy Regulators Step 2: preparation/drafting of Framework Guideline by the Agency This can only be done by the Agency after the end of the interim period

7. 7Florence Forum 04-05 June 2009 Step 1: Initial Impact Assessment (IIA) Initial Impact Assessment Selection of a policy option (if possible) Identification of criteria/objectives Identification of problems Identification of policy options pros and cons Step 1: Initial Impact Assessment (IIA) The following tools may be used: call for evidence (new areas only), workshops, ad hoc expert groups, public consultation

8. 8Florence Forum 04-05 June 2009 10-year network development plan Provides a shared vision of the future to all stakeholders an essential tool for long-term security of supply Indicative, non-binding Agency to provide an opinion to the Commission

9. 9Florence Forum 04-05 June 2009 Engaging with stakeholders Written public consultation: By the European Energy Regulators during the interim, on preparatory work (IIA) By the Agency on a draft Framework Guideline Calls for evidence (only for new areas), workshops, public hearings can be used as a complement to the written public consultation

10. 10Florence Forum 04-05 June 2009 Ad hoc expert groups To be set up during the interim period in order to provide technical assistance Members appointed by ERGEG/Agency for their experience and expertise Not representatives of organisations or companies Agenda of meetings, minutes, conclusions to be made public Not binding on the Agency

11. 11Florence Forum 04-05 June 2009 ‘Pilots’ of Guideline and Code in electricity and gas We want to make sure the process we have developed works efficiently and has confidence of ENTSOs and stakeholders Commission need to be satisfied with the end to end process Length/depth of Framework Guideline will depend on issues to be addressed

12. 12Florence Forum 04-05 June 2009 Regional Initiatives Regional Initiatives have a continuing major role under the third package No blueprint for a single market, we have to find our way Challenge is to harness the RIs as a means to make progress in a converging path consistent with work on Framework Guidelines and network codes New Regional Initiatives Working Group –chaired by Jose Sierra - will help us manage that process

13. 13Florence Forum 04-05 June 2009 Modifications to Network Codes Process for modifying established network codes is very important – limited legal basis in third package Essential for evolution to a single European electricity and gas market But modification process is vital, but not urgent until first codes are in place (mid-2012).

14. 14Florence Forum 04-05 June 2009 Conclusion European energy regulators are working hard to use the interim period to maintain progress We have completed a period in which substantial planning was undertaken to get the processes right We are now moving into the substantive issues. We are committed to engage fully with stakeholders, ENTSOs and the Commission We will shortly issue a document summarising the current position and our proposed next steps

15. 15Florence Forum 04-05 June 2009 Thank you for your attention! www.energy-regulators.eu Mark your diary for the World Forum on Energy Regulation IV October 18-21, 2009 Athens, Greece www.worldforumiv.info