On April 24-25, 2001, members of the Tariff/Pricing  Committee representing 15 energy regulatory bodies in Central/Eastern Europe and Eurasia met in Sofia, Bulgaria. This was the committee's seventh meeting and the first event organized within the framework of the newly formed ERRA - Energy Regulators Regional Association. The Bulgarian State Energy Regulatory Commission (SERC), was the co-host of the meeting. 

Chairman Vardan Movsesyan (ERC, Armenia) who headed the Committee since its start was elected to continue serving as committee chair for a two-year term.

As in the past, the meeting agenda focused on Issue Papers prepared by individual Committee members who collected data through surveys. The topics for 2001 are: 

• Differentiated Tariffs in Wholesale and Retail Electricity Markets

• Cost Allocation between Heat and Electric Power in Combined Energy Production at Cogeneration Plants

• Structure of the Power Sector and Rates Charged for Monopoly Services

Differentiated Tariffs
The first of the papers presented by Mr. Florin Gugu (Director of the Tariff Department, ANRE, Romania) found that tariffs differentiated by voltage, demand levels and load curve factors are a good method of sending price signals to the consumers in the unbundled markets. Yet, the paper concluded, the use of differentiated tariffs is severely restricted in the region due to the lack of metering equipment and data tele-transmission.

Cogeneration Plants
In the second paper, Mr. Viacheslav Ovchenkov (First Deputy Chairman, FEC, Russia) examined a special type of cogeneration plants distinctive for the former socialist countries. Most of these plants were built several decades ago to provide heat and electricity both to industrial and residential users. Yet in the past decade, due to decreased industrial production, decreased incomes of residential consumers and competition from other heat producers, cogenerations plants have dropped their production by 30 to 40 percent and thus became a concern for the regulators. The paper looked at the ways to increase their competitiveness by analyzing various methods for allocating variable and fixed costs of producing heat and electricity.

Structure of Power Sector
Chairman Movsesyan, who prepared the third paper, gave an overview of reform objectives in the energy sector and analyzed how market structure affects the reform process. The paper studied in detail the two most popular market structure models - single buyer and bilateral contracts. The single buyer model found in Armenia, Bulgaria, Hungary, Latvia and Ukraine is characterized by the concentration of transmission and dispatch services in the hands of one company  "the single buyer" that purchases electricity from generators and sell it to distributors. The bilateral contracts model is prevalent in Estonia, Moldova, Romania, and Russia and is notable by allowing generators to sell electricity directly to distributors and large consumers.

European Union Electricity and Gas Directives
New to the Tariff/Pricing Committee meeting was a presentation by a representative of the European Union. Commissioner Juan Unda (Comision National de Energia, Spain, and Vice-Chair of NARUC Committee on International Relations) provided a unique opportunity for the participants to learn about the latest regulatory developments both in Europe and in the US. He discussed the revised Electricity & Gas Directives of the EU and cross border exchanges in electricity. In March 2001, the EU has adopted proposals of the Council of European Energy Regulators (CEER). According to these new laws, all EU non-domestic consumers will be free to choose their electricity supplier by January 2003 and all others by January 2005. Other measures include: (1) unbundling the transmission system operator from generation and sales activities; (2) insuring third Party Access to the grid; (3) creation of independent national regulators; (4) exclusion of the "Single buyer" option for TPA (5) improvements in public service regulation; (6) reinforcements of existing safeguards through monitoring the domestic market by each Member State; (7) internalisation of external costs (CO2 tax, state aids, demand side measures, cogeneration & renewables) and others.

California Electricity Crisis
Tariff/Pricing Committee members could not refrain from discussing issues related to California electricity crisis. At the their request, Mr. Jim Gallagher (Chief/Retail Competition Section/ New York Public Service Commission  (PSC) and Co-Chair of NARUC Staff Subcommittee on Energy Resources and Environment) gave an overview of the California electricity crisis and made a comparison with New York. In his view, the fundamental immediate problem in California is the supply-demand imbalance that could be fixed only through pricing and adding generation. Other lessons that should be learned from California experience are that legislated rate setting lacks necessary flexibility and that political and financial constraints dominate public policy. In New York, like in California, load growth has been much greater than expected, and new generation has not kept pace. Mr. Gallagher presented the ways in which the New York PSC is trying to combat these problems. Among others, they include identification of: (1) sources of supply and opportunities for demand reductions; (2) ways to streamline the siting process for new generating facilities; and (3) factors causing high prices in wholesale markets.

Tatyana Kramskaya, Program Officer

Albania
Electricity Regulatory Authority
Mrs. Rajmonda Islamaj, Member of the Board
Tel: (355 42) 22 963 / 32 245; Fax: (355 42) 22 963

Armenia
Energy Regulatory Commission of Armenia
Chairman Vardan Movsesyan, Tariff/Pricing Committee Chair
Tel: (374 2) 52 25 22; Fax: (374 2) 50 73 61

Bulgaria
State Energy Regulatory Commission
Mrs. Svetla Todorova, Director
Tel: (3592) 5490 356; Fax: (3592) 9888 782

Estonia
Energy Market Inspectorate
Ms. Reet Aru, Head of Analysis and Tariffs Division
Tel: (372) 6 201 901; Fax: (372) 6 201 932

Georgia
Georgian National Energy Regulatory Commission (GNERC)
Commissioner Demur Chomakhidze
 Tel: (995 32) 253 392; Fax: (995 32) 253 397

Hungary
Hungarian Energy Office
Mr. Ede Treso, Senior Advisor Pricing Department,
(Official Member - Mr. Gyorgy Bekes, Head, Pricing Department,
Tel: (361) 210 0352; Fax: (361: 210 0352

Kazakhstan
Agency of the Republic of Kazakhstan for Regulation of Natural Monopolies, Protection of Competition and Small Business Support
Ms. Danna Tokubayeva, Head, Department of Energy Regulation
 Tel: (7 3172) 32 36 47; Fax: (7 3172) 32 77 22)

Kyrgyz Republic
State Energy Agency under the Government of the Kyrgyz Republic
Ms. Svetlana Molochinskaya, Head of Finance Department
Tel: (996 312) 42 46 07; Fax: (996 312) 62 08 06

Latvia
Energy Regulation Council
Mrs. Galina Sirone, Head, License Office, Tariff Division,
Tel: (371) 7013 241; Fax: (371) 7312 763

Lithuania
National Control Commission for Prices and Energy in Lithuania (NCC)
Vice-Chairman Vygintas Sidzikauskas
Tel: (370 2) 236 332; Fax: (370 2) 235 270

Moldova
National Energy Regulatory Agency (ANRE)
Mrs. Lidia Zestrea, Head, Tariff and Economic Analysis Department
Tel: (373 2) 21 23 85; Fax: (373 2) 54 05 34

Poland
Electricity Regulatory Authority
Mr. Tomasz Kowalak, Acting Director, Tariff Department
+48 22 66-16-210, or 211; fax 66-16-219

Romania
National Electricity and Head Regulatory Authority (ANRE)
Mr. Florin Gugu, Director, Tariff Department
Tel: (401) 311 2244; Fax: (401) 312 4365

Russian Federation
Federal Energy Commission (FEC)
First Deputy Chairman Viacheslav Ovchenkov
Tel: (7 095) 220 4975; Fax: (7 095) 206 8108

Ukraine
National Electricity Regulatory Commission (NERC)
Mrs. Olga Ossadcha, Head, Tariff Department
Tel: (38044) 241 9011; Fax: (38044) 241 9011

United States
National Association of Regulatory Utility Commissioners (NARUC)
Commissioner Juan Unda, National Energy Commission, Spain
Tel: (34 91) 432 9616; Fax: (34 91) 578-2336
Internet: http://www.cne.es
Mr. James Gallagher, Chief, Retail Competition Section, Office of Electricity and Environment, New York Public Service Commission
Tel: 1 (518) 474-1932; Fax: 1 (518) 474-5026
Internet: http://www.dps.state.ny.us/
Ms. Tatyana Kramskaya, Program Officer, NARUC
 Tel: (1 202) 898-9394; Fax: (1 202) 898-9390

U.S. Agency for International Development
Internet: http://www.usaid.gov/
Mr. Jamshid Heidarian, Senior Energy Advisor, Energy and Infrastructure
Division, Bureau for Europe and Eurasia

Observers
Mr. Ognyan Nechev, Head of Economic Analyses Dept., Tariffs and Contracts
Division; State Energy Regulatory Commission of Bulgaria
Mr. Ivaylo Aleksandrov, Chief Expert, Economic Analyses Dept., Tariffs and
Contracts Division; State Energy Regulatory Commission of Bulgaria

Issue Papers

Other Presentations

• California's Electricity Crisis: What Happened and Why? With comparisons to New York
  Mr. James Gallagher, Chief, Retail Competition Section, Office of Electricity and Environment, New York Public Service Commission

• Electricity & Gas Directives of the EU and Cross Border Exchanges in Electricity
  Commissioner Juan Unda, National Energy Commission, Spain