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Regulatory Exchange Newsletters / Summer 2004
ERRA’s 3rd Energy Regulation & Investment Conference:
The Premier Conference of Energy Regulators and Stakeholders
On May 17-18, 2004 in Budapest, Hungary the Energy Regulators Regional Association (ERRA) organized the 3rd Energy Regulation & Investment Conference, the premier international symposium of energy regulators and stakeholders which has gained significant international awareness and has become a widely recognized and acknowledged energy industry event.
There were 230 participants including representatives of regulatory bodies of the region, governmental and non-profit organizations, utilities, research institutes and consultancy agencies. An excellent line-up of 38 speakers from both government and utility participated in plenary sessions and panel discussions providing expert views on the most pressing issues facing the energy sector today.
The Conference included Keynote Addresses by President Jean Lemierre, European Bank for Reconstruction and Development; Deputy Chairman Vyacheslav Sinyugin, RAO UES Russia, and the Honorable Gyorgy Hatvani, Deputy State Secretary of the Ministry of Energy and Transportation, Hungary. The 3rd Energy Regulation & Investment Conference was an exclusive opportunity for investors, utility officials, and other power sector representatives to exchange views with the Chairmen, Commissioners, and senior staff of the energy regulatory bodies of Albania, Armenia, Bosnia & Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Kyrgyz Republic, Latvia, Lithuania, Macedonia, Moldova, Mongolia, Montenegro, Poland, Romania, Russia, Slovakia, Turkey, and Ukraine. Commissioners from the U.S. National Association of Regulatory Utility Commissioners and the Council of European Energy Regulators (regulators of the member states of the European Union), including Commissioner Nora Mead Brownell from the Federal Energy Regulatory Commission (USA), also provided their perspectives on the major themes. The format of the Conference allowed for interactive and dynamic discussions on the following themes: Regulatory Progress to Encourage Investment, Role of the Regulator in Promoting Investments, Security of Supply, Regional Energy Trade, and Emerging Issues in Energy Regulation.
A distinctive networking opportunity was provided by the Monday afternoon Networking Session. It enabled participants to have personal meetings with energy regulators from a country of their special interest.
Social events provided also great opportunity for the participants to get to know energy regulators and future business partners, all in the unique atmosphere of Budapest. The Conference was supported by the U.S. Agency for International Development
4th ANNUAL ERRA MEETING & NEW MEMBERS
During 2003-04, four organizations applied for ERRA membership: the State Energy Regulatory Council of Bosnia & Herzegovina, the Energy Regulatory Commission of Macedonia, the Energy Regulatory Authority of Mongolia and National Regulatory Authority for Municipal Services of Romania. Mongolia has been an Associate member of ERRA since 2002, but applied for Full Membership. The National Regulatory for Municipal Services of Romania applied for Associate Membership. The applications were presented to the Presidium on May 16, 2004 and all the applications were recommended to the General Assembly for approval.
The General Assembly convened during the 4th Annual ERRA Meeting on May 19, 2004. Chairman Slave Ivanovski, Energy Regulatory Commission of the Republic of Macedonia, Commissioner Mirsaid Salkic of the State Energy Regulatory Commission of Bosnia & Herzegovina, and Commissioner Tumentsogt Tsevegmid, Energy Regulatory Authority of Mongolia, reaffirmed their intention to join the Energy Regulators Regional Association and introduced their Authorities to the General Assembly. The General Assembly unanimously approved all the applications, thus ERRA to date lists 22 Full Members and four Associate Members.
The General Assembly also approved six Honorary Memberships for former Chairmen and Commissioners who made significant contributions to the creation and sustainability of ERRA.
Peter Kaderjak (former President, HEO, Hungary and former Chairman ERRA)
Dusan Holoubek (former Commissioner RONI, Slovakia and former Chairman ERRA)
Vardan Movsesyan (former Chairman, PSRC, Armenia and former Presidium Member, former ERRA Tariff/Pricing Committee Chairman)
Ularbek Mateev (former Director, SEA, Kyrgyz Republic and former Presidium Member)
Engjell Cuci (former Chairman ERE, Albania)
Elizbar Eristavi (former Chairman, GNERC, Georgia)
The General Assembly concluded the business portion of the Annual Meeting by approving the annual workplan, budget, and program activities for ERRA for 2004-05. In addition, ERRA members reviewed the previous year’s accomplishments, especially the Issue Papers and Reports prepared by the Tariff/Pricing and Licensing/Competition Committees and European Union Accession Working Group.
By Anna Fischer, Program Officer
ERRA Joint Tariff/Pricing and Licensing/Competition Committees Meeting
The Energy Regulators Regional Association (ERRA) held a joint meeting for its Tariff/Pricing and Licensing/Competition Committees, during its Annual Meeting, on 19 May 2004. It was co-hosted by the Energy Regulators Regional Association (ERRA) and the U.S. National Association of Regulatory Utility Commissioners (NARUC), with funding provided by the U.S. Agency for International Development (USAID). Representatives of ERRA’s 22 Full Members participated on the joint Committee Meeting, including Commissioners and senior staff from Albania, Armenia, Bosnia & Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Macedonia, Georgia, Hungary, Kazakhstan, Kyrgyz Republic, Latvia, Lithuania, Moldova, Mongolia, Poland, Romania (ANRE), Russian Federation, Slovakia, Turkey and Ukraine. Apart from the full members, Associate Member organizations were also represented from the National Natural Gas Regulatory Authority, Romania. NARUC also represented itself with Commissioner Frederick Butler, New Jersey Board of Public Utilities.
The main issues of the meeting were “Stranded Cost Compensation Methods”, “Power Purchase Agreement Renegotiations” and “Power Purchase Agreement Contra Effective Competition”. The meeting started with welcoming comments, delivered by Dr. Gabor Szorenyi, Chairman of the Licensing and Competition Committee and Commissioner Florin Gugu, Chairman of the Tariff/Pricing Committee.
The first-thought provoking presentation, delivered by Mr. Istvan Dobozi, Lead Energy Economist of the World Bank, on “Introduction to Stranded Cost Issues, PPA Renegotiations, Capacity Release” gave a good start of the meeting. Another side of the same issue was presented to the participants by Commissioner Frederick Butler, New Jersey BPU, when presenting “US Experiences with Capacity Release and Stranded Costs, Price Caps”. A Hungarian case study was delivered on “Stranded Costs PPA Renegotiations and Capacity Release” by Mr. Laszlo Varro, Director, Hungarian Energy Office.
The second part of the meeting was devoted to the discussion of the results of the Questionnaire prepared by the Tariff/Pricing Committee on stranded costs. The answers received from the regulatory bodies of the member states were compiled and presented by Mrs. Aistija Zubaviciute, Senior Specialist of National Control Commission for Prices and Energy in Lithuania. Mr. Karol Dvorak, Member of the Regulatory Council, Regulatory Office for Network Industries of Slovakia highlighted the issue of stranded costs and pricing in his presentation. The meeting concluded with questions and answers to all presentations, and some practical issues of both Committees.
Written by Anna Fischer, Program Officer, ERRA
ERRA Performance Standards/Monitoring of the Licensed Activities
Working Group Meeting
After the joint meeting of the Tariff/Pricing and Licensing/Competition Committees of the Energy Regulators Regional Association (ERRA), the “Performance Standards/Monitoring” Working Group held a workshop on May 20, 2004 in Budapest, Hungary. It was co-hosted by the Energy Regulators Regional Association (ERRA) and the U.S. National Association of Regulatory Utility Commissioners (NARUC), with funding provided by the U.S. Agency for International Development (USAID). Representatives from 8 of ERRA’s 22 Full Members stayed for this working group meeting, including Commissioners and senior staff from Bulgaria, Hungary, Kyrgyz Republic, Lithuania, Moldova, Mongolia, Romania (ANRE), and Ukraine.
The Working Group meeting was opened by Mr. Endre Slenker, Senior Specialist of the Department of Electricity Licensing and Monitoring, HEO. In the first part of the morning session Commissioner Angel Semerdjiev, State Energy Regulatory Commission, Bulgaria, and Mr. Tumentsogt Tsevegmin, Energy Regulatory Authority, Mongolia, provided data to the 2001 Issue Paper titled “Mechanism of Monitoring and Enforcement of the Conditions of the Licensed Activities” on Bulgaria and Mongolia. Mr. Marin Profir, National Energy Regulatory Agency, Moldova, evaluated the answers received on the updated version of the 2001 Issue paper and presented the country updates to the participants of the meeting. The morning session concluded with the presentation of a draft questionnaire on “Performance Standards for Electricity Distribution Service”, compiled by Mrs. Mihaela Popescu, National Electricity and Heat Regulatory Authority, Romania.
The second part of the meeting started with the discussion of the questionnaire and amendments were made to it by the participants. After this discussion Mrs. Mihaela Popescu delivered a presentation on “Aspects Regarding Enforcement of Compliance with Standards of Performance Provisions”. It was followed by Mrs. Cristina Teodorescu’s from the National Electricity and Heat Regulatory Authority, Romania (ANRE) presentation in which she introduced the “Management Information System developed by ANRE”. After Mrs. Teodorescu’s presentation problems of developing a valuable database came up for discussion. After the lively discussion Mr. Kestutis Zilenas, National Control Commission for Prices and Energy, Lithuania, introduced the „Procedure for Evaluating the Technological, Financial and Managerial Capacity of the Enterprise” through a case study.
The Working Group meeting concluded with distribution of tasks to be fulfilled for the next Working Group meeting in October.
By Anna Fischer, Program Officer, ERRA
Southeast Europe Energy Regulatory & Partnerships Meeting
On May 20, the National Association of Regulatory Utility Commissioners (NARUC) organized a Southeast Europe Energy Regulatory & Partnerships Meeting following the 4th Annual ERRA Meeting. It was co-hosted by the Energy Regulators Regional Association (ERRA) and sponsored by U.S. Agency for International Development (USAID). The meeting participants included the Chairmen of the regulatory agencies from Albania, Bosnia & Herzegovina, Bulgaria, Croatia, Macedonia, Moldova, Romania and Turkey as well as representatives from NARUC and USAID.
Dr. Michael Thomadakis from the Energy Regulatory Authority of Greece gave a presentation on the activities of CEER’s Regulatory Working Group. In addition, Mr. John Gulliver from Pierce Atwood Attorneys discussed Benchmarking and Priorities for Institutional Development. In the next part of the meeting, the various ERRA members and US regulators gave had the opportunity to provide remarks on the status of their participation in the NARUC Energy Regulatory Partnership Program (about the partner commission, the beginning of the program, number of the exchanges, dates and topics of the next activities, etc.), key issues covered during partnership activities, lessons learned, and potential areas for improvement in the partnership program. NARUC currently implements several partnerships in the Southeast Europe region, including Albania – Indiana, Bulgaria – New Jersey, Croatia – New York, Macedonia – Vermont, and Moldova – Iowa. (The partnership for Romania – Maine is implemented by another organization.) Please see www.narucpartnerships.org for more information on the NARUC Energy Regulatory Partnership program.
By Katalin Szarvas, Program Assistant, ERRA Secretariat
Black Sea Energy Regulatory Forum: Role of the Regulator in Energy Trade
Following the Southeast Europe meeting, the National Association of Regulatory Utility Commissioners (NARUC) organized a meeting for countries from the Black Sea Region. The meeting was co-hosted by the Energy Regulators Regional Association (ERRA) and the National Association of Regulatory Utility Commissioners (NARUC) and sponsored by U.S. Agency for International Development (USAID). The Chairmen from Bulgaria, Georgia, Moldova, Romania, Russia, Turkey, and Ukraine participated in this meeting, along with representatives from NARUC and USAID.
Following introductory remarks by Dr. Robert Ichord from USAID, Dr. Michael Thomadakis from the Energy Regulatory Authority of Greece discussed the Regulatory Process and Trading in the European Union. President Ion Lungu (ANRE/Romania) then focused on the Regulatory Process and Trading in Southeast Europe. Next each country delivered a presentation on the Role of the Regulator in Energy Trade with such issues like: The Methodology and Status of Transmission Tariff Design and Implementation, The Role and Authority of the Regulator and Others with Respect to Imports, Exports, and Transit Contracts/Arrangements.
The meeting concluded with lively discussion about plans for future meetings.
By Katalin Szarvas, Program Assistant, ERRA Secretariat
2nd ERRA-CEU Summer School
ERRA organized the 2nd Summer School on Energy Regulatory Practices on 26-30 July 2004 in Budapest together with the Central European University. Funding was provided by USAID and CEU. Beyond the 30 representatives of ERRA member organizations, 6 CEU students – selected from the 13 applicants – participated in the course. Mr. Peter Kaderjak, the former Chairman of the ERRA, Director, Regional Centre for Energy Policy Research, served as a Course Director. The following senior ERRA regulators served as course instructors: Mr. Vidmantas Jankauskas (Chairman, ERRA; Chairman, National Control Commission for Prices and Energy, Lithuania), Ms. Carmen Oprea (ANRE, Romania), Mr. Gábor Szörényi (Director, HEO Hungary), Mr. Ion Lungu (President, ANRE, Romania), Ms. Michaela Popescu (ANRE, Romania), Mr. László Varró (Director, HEO Hungary), Commissioner Florin Gugu (ANRE, Romania), Mrs. Ligia Medrea (General Director, National Natural Gas Regulatory Authority, Romania). In addition, there were presentations by Mr. Jacques de Jong (Clingendale Institute, former Dutch regulator), Mr. Marko Sencar (Energy Regulatory Agency of Slovenia), and Ms. Catherine Connors from Pierce Atwood Attorneys.
The course curricula included the following regulatory topics: Regulating energy markets and the ERRA, Theory and principles of regulation, Energy Sector liberalization and Market reform – Global trends and developments in the EU countries, Role and functions of the regulator, Basics on the legal aspects of regulatory work, Parallel and opposing regulatory trends in the EU and the ERRA countries, Public involvement and dispute resolution techniques at regulatory authorities , Restructuring of the gas industry: basic elements and models, Restructuring of the electricity industry: basic elements and models, Regulation of unbundled networks in electricity: access rules, investment and access pricing, System operation, Service quality regulation in the network industry, , Energy wholesale and balancing markets Long term contracts, Cross-border trading and regional market initiatives – South East European market, Benchmarking of regulatory commissions, Licensing: regulating entry, supervision and enforcement, Economics of open markets / Basics of price and cost, Rate-of-return and incentive based price regulations and the role for benchmarking, Basic elements of tariff design, Network tariffs: transmission and distribution, End-user tariffs, Tariff solutions for low income consumers, Gas network and product pricing, Pricing electricity from renewable sources and co-generation.
This School was planned to serve as an introductory course on energy regulation for practitioners, with special emphasis on the problems and experiences of transition economies in this field. The Curricula had been developed by the aim to provide an introduction into the basic principles, the most important problems and the major techniques of energy sector regulation (electricity and gas). The ERRA summer school program was launched in 2003, and this year the curricula was further developed and fine-tuned based on the lessons learnt from the previous year. The themes covered by the lecturers were expanded (e.g. covering gas regulatory, legal issues) and some new lecturers were invited.
Thirty-five lectures were delivered during the five-day course by 12 lecturers. Students were provided by PowerPoint presentations and a selected readings list including 24 pieces. All the teaching materials were distributed through the ERRA website and put on a CD that each participant received on the first day of the course.
One round-table discussion was organized in the evening of day 1 with the participation of six present or past commissioners. The topic for discussion was on major trends in energy sector reform in different country groups (EU, CIS, others). The audience actively participated in the discussion. Beyond classroom work, an additional field visit to the Hungarian market operating company (MAVIR) was arranged for the students.
Country Updates
These countries provided new information.
 Albania
Armenia
Bosnia & Herzegovina
Bulgaria
Croatia
Czech Republic
Hungary
Latvia
Moldova
Mongolia
Poland
Romania
Romania National Natural Gas Regulatory Authority - ANRGN
Slovakia
Turkey
Ukraine |
