1. 3 rd Athens Process Forum 2003-10-23/24, Sofia CEER WG SEEER – Regulatory Benchmarking Standards for SEE

2. 2 SEE Regulatory Standards  Scope Following the invitation of the 2 nd Athens Process Forum in Rome, the CEER WG SEEER has developed the basic principles that should be followed by the countries of the SEE to establish an independent energy regulatory authority, and the specific standards that can be used to measure whether this goal has been met.  These principles and standards were developed based on the experience already gained within the European Union (CEER) and internationally  Gradual implementation and attention to country specific conditions The CEER WG SEEER would like to acknowledge the valuable support of USAID and also the leader of the Institutional Compliance subgroup EMRA for their contribution to this effort

3. 3 SEE Regulatory Standards  Fundamental Principles  EU Directives 96/92 and 2003/54, Regulation 1228/2003 and the Athens MoU provide only the minimum requirements  Additional requirements are important to enable regulatory authorities to perform their role adequately:  Independence  Competences: Market design, operation and monitoring Access to information Role in security of supply Role in environmental issues (e.g. emission trading)  Enforcement powers  International activities  Procedural transparency and accountability of the regulator  All competences should be established and guaranteed by national legislation

4. 4 Independence Regulatory Authorities should have:  Independence from the interests of the regulated industry  Legal personality, separate from the ministries  Clear and sufficient competences  Financial independence from the state (revenues preferably from sector’s participants fees)  Board members:  meritocratic and impartial appointment process  fixed mandate, removal for cause only  no direct or indirect financial interests in the energy sector, no conflicts of interest  Sufficient, highly qualified personnel and own management policy  Sufficient equipment (budget, buildings, IT technology, etc.)

5. 5 Competences 1.Market design, operation and monitoring  Tariffs At least set the methods; preferably set the tariffs Treatment of social, transitional, external costs  Quality of Supply  Licenses Issuance, or at least set essential conditions Monitoring compliance; imposing fines  Rules of the market Capacity allocation and management (including interconnections) Market design and operation Grid codes Market monitoring (including unbundling)  Dispute settlement (including regional issues)

6. 6 Competences (cont.) 2.Access to information Regulatory authorities should have full access to all information necessary to fulfil their mission, including access to accounts Confidentiality is comprehended 3.Role in security of supply Regulators should participate in the process of monitoring and safeguarding the medium and long-term security of supply of the energy market 4.Role in environmental issues e.g. emission trading

7. 7 International Activities CEER experience has shown that national Regulatory Authorities must collaborate at an international level National legislation should provide for this National Regulatory Authorities should be able to become members of international institutions and participate in decision-making processes at a level which exceeds the borders of a single country

8. 8 Conclusions CEER Working Group “SEEER”: invites the Forum to endorse these fundamental principles commits itself to further elaborate these principles with the view to provide a more detailed paper for the Next Forum invites the governments of the SEE region to take all necessary actions for a rapid implementation of these standards and their incorporation into national legislation invites the EC and the USAID to further proceed with their benchmarking exercises for the SEE region, taking into account the above regulatory standards commits itself to collaborate with all relevant stakeholders and particularly with EC, USAID and the countries of the SEE region in this joint effort