EU Integration Working Group Meeting
“Cross Border Capacity Allocation Methods”
Monday, September 13, 2004
Budapest, Hungary
Conference Room of the
Hungarian Energy Office
Energy Regulators Regional Association (ERRA) Sponsored by Conference Room Bulletin
ERRA EU Integration Working Group Meeting September 13, 2004 According to the decision of the ERRA Presidium the former ERRA EU Accession Working Group continued its work under the name of EU Integration Working Group with Mr. Ion Lungu (Vice President of the Romanian Electricity and Heat Regulatory Authority) as chairman of the working group and with extended scope of participants. The EU Integration Working Group held a meeting on September 13, 2004 in Budapest, Hungary. It was co-hosted by the Hungarian Energy Office (HEO), the Energy Regulators Regional Association (ERRA) and the U.S. National Association of Regulatory Commissioners (NARUC), with funding provided by the U.S. Agency for International development (USAID). Representatives from 11 ERRA member countries participated in the meeting, including senior staff from Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Moldova, Romania and Turkey. The Austrian and French regulators represented the Council of European Energy Regulators (CEER).Commissioner Jacques-Andre Troesch from the Commission de Regulation de l'Energie, France in his welcoming comments introduced the main topic of this meeting and stressed that cross-border allocation methods are short-term priorities in the EU. He drew the audience’s attention to the new challenges for interconnections, emphasized the importance of the new infrastructures and underlined that the allocation methods must be suitable for the market. Commissioner Maria Manicuta (ANRE, Romania) introduced an issue paper prepared earlier by the ERRA Licensing/Competition Committee on “Cross-Border Allocation Methods in ERRA member countries”. Commissioner Manicuta started her presentation with giving a common definition of the main terms used in this field, defining Transmission Congestion, Net Transfer Capacity. Then she introduced the process of setting up the Cross-border Capacity Allocation Methods, starting with the identification of Transmission Asset Owners, setting up the basic methods of allocating NTC and continuing with the description of the advanced methods of NTC allocation. The necessary steps to increase competition by reducing the importance of national borders as constraints were deeply analyzed, and Commissioner Manicuta underlined how important it is to promote and encourage investments to fix critical bottlenecks. Since legal authorities of the regulators are different in the region, they have to face different challenges but it is common that they have to implement national legislation and the EU Electricity Directive, based on the assumption that a Court would not prohibit regulatory activities that are clearly required to implement the EU Directive. Commissioner Manicuta finished her presentation by listing all the challenges that the regulators face in the region. Chairman of the EU Integration Working Group, Mr. Ion Lungu (ANRE, Romania) analyzed the Congestion Management practice at cross-border trade in the ERRA region in his presentation. After outlining the background in the region, Mr. Lungu gave a thorough analysis of the Congestion Management Methods keeping in view the Provisions of EU Regulation 1228/2003, and described the actual status of Congestion Management (CM) in the South East European region with special respect to CM in Romania. Dr. Tahir Kapetanovic, Chairman of CEER TF System Operation, (E-Control, Austria) delivered a presentation on Congestion Management and the EC Regulation 1228/2003. After giving the historical background of EC Regulation 1228/2003, Dr. Kapetanovic introduced Article 5 and 6 of the Regulation, emphasizing provisions of information, general principles, such as „Economic Efficiency”, „Promoting Competition”, „Transparency”, „Maximizing Capacity and its Use” and „Application of Congestion Revenues”. This thought provoking presentation was finished with the conclusion that „Efficient and market conformant congestion management, together with an adequate long-term ITC system are the mandatory predictions for a truly Internal Electricity Market”. Mr. Laszlo Varro, Director of Tariff Department of the Hungarian Energy Office, examined the question of „Regional Market Integration” in his presentation. He tried to give an answer from the economic point of view for the reason of creating regional markets and showed the methods of this procedure. Question of the „Allocation of Cross-Border Capacities at Borders”, and „Cooperation between TSOs” were discussed by Mr. Peter Simig, Deputy Director for Market Operation of the Hungarian Power System Operator Company (MAVIR) and Mr. Bogdan Popescu Vifor, Director of Strategy, Planning and Market Division, CN Transelectrica SA Romania. Mr. Simig started his presentation with the ETSO approach of handling Cross Border trading and the description of Congestion management methods in Europe for transmission capacity allocation. After showing examples for explicit and implicit auctions, Mr. Simig highlighted the advantages of coordinated auctioning through an example of the market-based cross border congestion management method. He finished his presentation with describing the current methods on Hungarian borders for capacity allocation and introducing the further plans for it. Mr. Popescu Vifor introduced Transelectrica’s mission and the Romanian Transmission Grid, the Net Transfer Capacity values on Romanian borders at the beginning of his presentation. After capacity allocation on Romanian borders were described, Mr. Popescu Vifor The meeting concluded with a roundtable discussion in which new ERRA EU member countries shared their experience in implementing the EU directives, cooperation with regulators in CEER and ERGEG. By Anna Fischer, Program Officer, ERRA
Monday, September 13 09:00 Welcoming Comments
09:15 Cross-Border Capacity Allocation Methods, ERRA Issue Paper, 2003 - Introduction
10:15 Coffee break 10:30 Congestion Management practice at cross-border trade in ERRA region ( the open questions / issues for harmonization)
11:15 Congestion Management and the EU Regulation 1228/2003
12:00 Regional Market Initiatives
12:45 Lunch 14:15 Allocation of Cross-Border Capacities at Borders (present practice and target of the TSOs ); Cooperation between TSOs (how often, on which issues the TSOs communicate to each other?)
15:15 Coffee break 15:30 New EU Members’ Experience in the Implementation Process (implementing the Directives, cooperation with regulators in CEER, in ERGEG)
16:15 ERRA Members’ Experience in the Accession/Integration Process
17:00 Meeting Concludes
ERRA FULL MEMBERS Albania Bosnia & Hercegovina Bulgaria Croatia Czech Republic Estonia Hungary Latvia Lithuania Macedonia Moldova Romania Commissioner Maria Manicuta, Director, Licensing and Network Access Department Turkey
ERRA ASSOCIATE MEMBERS Romania
OTHER PARTICIPANTS & OBSERVERS Austria France Hungary Macedonia Romania Mr. Vasile Stefanescu, Head of the Operational Planning Department Mr. Gheorghe Radoveanu, Head of Department for Operations on the Energy Regulators Regional Association (ERRA)
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