1. David Halldearn, ERGEG Conference on Implementing the 3 rd Package Brussels, 11 th December 2008 Co-ordination of Decisions at Regional and European level

2. 2Conference on Implementing the 3rd Package, Brussels, 11th December 2008 Ultimately to create single European electricity and gas markets via interim step of regional markets, and building on and fostering integration of currently largely separate national markets Specifically: Establish (better) functioning regional markets Identify and publish priority areas for eliminating barriers to trade Establish and publish action timetable Identify who should take action Monitor and foster progress Bottom-up process to mesh with top-down EU inititives Common principles, not standard market design or common rules ERGEG Regional Initiatitive - Objectives

3. 3Conference on Implementing the 3rd Package, Brussels, 11th December 2008 Regional markets – what progress? Mixed picture: Transparency is improving Technical issues being addressed Structures for engaging stakeholders and other parties established and working But: Progress is slower that many hoped for Legal and other obstacles inhibit progress: ‘regulatory gap’ National interests sometimes dominate Commission review proposed for 2009

4. 4Conference on Implementing the 3rd Package, Brussels, 11th December 2008 3 rd package has regional aspects “Regulatory gap” at the borders between national regulatory systems is largely addressed –Essential for cross-border investments; system operation; market interactions –Codes (probably binding) will set cross-border rules National regulators should be given the necessary tools to do the job Duties of NRAs broadened to include European interests Agency created to co-ordinate NRA actions –Possibility of binding Guidelines TSOs will have EU level co-ordination bodies Member states required to co-operate

5. 5Conference on Implementing the 3rd Package, Brussels, 11th December 2008 What role will the Agency have in Regional markets ? Regional Initiatives will probably move from ERGEG to the Agency Regional Initiative will remain central to achievement of single market Legal responsibility to co-ordinate activities of NRAs Commission could propose binding Guidelines for co-operation between NRAs Requirement to monitor regional co-operation of TSOs Requirement to promote cooperation between the national regulatory authorities and between regulatory authorities at regional level. Co-ordination of regional and European regulatory policy Could be made binding through Code modifications National regulators will have an objective to develop competitive and properly functioning regional markets

6. 6Conference on Implementing the 3rd Package, Brussels, 11th December 2008 Transition to a Single European Market NowFuture National and regional differences Convergence Single market

7. 7Conference on Implementing the 3rd Package, Brussels, 11th December 2008 Co-ordinating Change to Single Market Framework guidelines and first set of Codes will not achieve Single Energy Market Task is simply too large, complex and costly Modifications to Codes will enable progress to Single Energy Market over time Many interested parties can propose Code changes with risk of divergent approaches The Agency will need to provide clear criteria for assessing Code modifications against the target of SEM Regional activities will need to take account of these criteria to achieve convergence

8. 8Conference on Implementing the 3rd Package, Brussels, 11th December 2008 Managing the Transition to a Single Market First set of Codes First steps towards SEM Modifications to Codes Convergence towards SEM Further code modifications Achievement of SEM Co-ordinated changeCo-ordinated change

9. 9Conference on Implementing the 3rd Package, Brussels, 11th December 2008 Progress will be both bottom up and top down Single Market Region European level Regional level Effective co-ordination at all levels will be essential

10. 10Conference on Implementing the 3rd Package, Brussels, 11th December 2008 Co-ordinating decisions Vertical and horizontal aspects of European and regional decision making

11. 11Conference on Implementing the 3rd Package, Brussels, 11th December 2008 Practical Arrangements Build on Regional initiative arrangements – Stakeholder Groups; Regulatory Co-ordination Committees Co-ordination of work plans of Agency; ENTSOs and Regional initiatives Active within-year monitoring of regional developments Disputes referred to the Agency EU-wide consultation on European issues Codes – and their modification - will be critical for regional development towards single market. Separate consultation planned for this.

12. 12Conference on Implementing the 3rd Package, Brussels, 11th December 2008 Timetable The Agency not operational before mid-2010 at the earliest First Codes unlikely before 2012 Regional market development remains important in the interim

13. 13Conference on Implementing the 3rd Package, Brussels, 11th December 2008 Questions on regions A Are the proposed practical arrangements to ensure regional level involvement of stakeholders adequate? If not, how could they be improved? B How do you envisage the Regional Initiatives operating after the entry into force of the 3rd package legislation? Will their role become less important, given the development of network codes at EU level?

14. 14Conference on Implementing the 3rd Package, Brussels, 11th December 2008 Thank you for your attention! More information on the consultation paper and the 3 appendices are available at: www.energy-regulators.eu www.energy-regulators.eu David Halldearn