1. 1 Regional electricity market Belgrade, 23. April 2014. Ljiljana Hadzibabic Council member Energy Agency of the Republic of Serbia

2. Content 1)The objectives and advantages of SEE Regional market integration 2)The 8th Region - SEE 3)Regional and national market development programs 4)EU Target Model for Electricity Market Integration 5)Regulatory role 6)Development possibilities for Serbian market Market model and market participants in Serbia The dynamics of the Market Openning The legal framework for the functioning of National Market Comparative Electricity Prices for the industry in some EU countries

3. The objectives and advantages of SEE Regional market integration The main goals are: Creating a competitive integrated Regional energy market – more efficient than national markets Efficient management of interconnection capacities: Capacity Allocation and Congestion Management (CACM) Attracting investments in energy Providing a secure and sustainable supply of customers at reasonable prices

4. 4  9 Energy Community Treaty Contracting Parties  the neighboring countries Bulgaria, Greece, Hungary, Romania and Slovenia  Italy with regard to the interconnections between Italy and the CPs to the EnC Treaty (DC undersea cables)  + Moldova and Ukraine are not technically in parallel synchronous operation within ENTSO-E, and thus cannot perform operationally CACM mechanisms in the 8th region SEE 9 contracting parties >20 borders Population: 137 million The 8th Region - SEE The ultimate goal is to achieve a single platform for yearly, monthly and daily implicit auctions for the SEE region.

5. EU Target Model for Electricity Market Integration

6. Legal Basis Directive 2009/72/EC 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC Regulation (EC) No 713/2009 of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators Regulation (EC) No 714/2009 of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No 1228/2003 EU Legislation implementation within SEE Region Contracting Parties (CP) shall bring into force the laws, regulations and administrative provisions necessary to comply with 3rd Energy

7. New Institutions New EU institutions based on the 3 rd Package: ENTSO-E (TSOs) ACER (Regulators) Joint preparation of: Framework Guidelines Network Codes Target models for capacity allocation and congestion management..............

8. Regional and national programs /1 Energy Community joint projects: Wholesale Market Opening (WMO) Balancing Energy Market Market monitoring Supplier switching ……

9. Regional and national programs /2 National development Regional cooperation Parallel development of regional and local electricity market? SEE local markets are underdeveloped in average - mainly bilateral markets Markets are largely illiquid Dominant existing production company Legislative changes are still ongoing Obstacles to market development in each jurisdiction in SEE Parallel

10. Serbian National Market Bilateral Balancing Market Power Exchange

11. Market Functioning - the Legal Framework Legal Framework EU directives - mandatory baseline The Energy Law 3 rd package by mid-year 2014 Transmission and Distribution Grid Codes Cross-border transmission capacities - Rules governing the allocation of rights Market Code Power Excange Code Supplier changing Rules Methodologies for the determination of the price for access to electricity transmission and distribution system

12. Market Participants Producers Suppliers (40 BOS / 75 Suppliers) Public Suppliers (1) The final buyers (3.6 million) Transmission System Operator Distribution System Operator (5) Market Operator - Power Exchange Balancing responsibilities of all market participants; Relations of Market participants are regulated by agreements.

13. Current state of Serbian electricity market - model

14. Serbian electricity market – data 2013 2013 2013/20 12% Generation GWh37,537108.6 Consumption GWh34,043108.6 Transmission losses %2.452.45 96.1 Maximum daily gross consumption GWh124.14 87.8 Maximum hourly load MW5,895 89.0 Total consumption GWh28,8 99.9 Transit GWh8,328 101.9

15. The Dynamics of the Market Opening 2013: + losses 5.6 TWh on market (26%)

16. Current supplier Customer New supplier System operator Application for supplier switching Invitation for removal of insufficiencies Application check Sales Contract Application copy Forwarding the customer’s statement on canceling/rescinding the Sales Contract Application data check Provision of metering data Objection to the operator Conditions for supplier switching are not met Supplier switching day Submission of application corrigendum D D+3 D+4 D+7 D+8 D+19 D+11 Conditions for supplier switching are not met Non-compliance with the invitation Invitation for removal of insufficiencies Notification on inaccurate data Conditions for supplier switching are not met Non-compliance with the application Submission of application corrigendum Certificate on settled liabilities, upon customer’s request No objections to the operator Day No cost, 21 days

17. Electricity quantities by trading activities during 2013

18. Serbian National Market

19. Serbian Power Exchange (SEEPEX) The initiator and the main support - EMS (TSO) Feasibility studies and an action plan - two years of analysis The project implementation is ongoing Support of the Ministry, Regulator, EPS as a market maker

20. Serbian Power Exchange (SEEPEX) Strategic partner for the financial function In 4th quarter 2013 - the establishment of the company In 2015 in operation - day ahead market Markets coupling with neighboring power exchanges (HU-SLO-CZ+RO)

21. Comparasion of the Electricity Prices for the Industry (31) - The second half of 2013 -

22. 22 Thank you for your attention! Ljiljana Hadzibabic Council member Energy Agency of the Republic of Serbia www.aers.rs