David HalldearnEnergy Market Insights Limited

14 November 2008

Will the 3rd package help?

“Regulatory gap” at the borders between national regulatory systems is largely addressed Essential for cross-border investments; system

operation; market interactions Codes (probably binding) will set cross border rules

National regulators should get the necessary tools to do the job

Duties of NRAs broadened to include EuropeanACER created to co-ordinate NRA actions

Possibility of binding GuidelinesTSOs will have EU level co-ordination bodies

What role will ACER have in Regional markets?Regional Initiatives will probably move from ERGEG to

ACER Regional Initiative will remain central to achievement of single

market

Legal responsibility to co-ordinate activities of NRAs Commission could propose binding Guidelines for co-operation

between NRAs Dispute resolution Exemption decisions where NRAs can’t agree

Co-ordination of regional and European regulatory policy Could be made binding through Code modifications

Co-ordinating Change to Single Market

Framework guidelines and first set of codes will not achieve SEMTask is simply too large, complex and costly

Modifications to codes will enable progress to SEM over time

Many interested parties can propose code changes with risk of divergent approaches

ACER will need to provide clear criteria for assessing code modifications against target of SEM

Regional activities will need to take account of these criteria to achieve convergence

Now Future

Wide regional

and national

differences

Convergence Single market

First set of codes First steps towards SEM

Modifications to codes

Convergence towards SEM

Further code modifications

Achievement of SEM

Progress will be both bottom up and top down

Single Market

Region

Region

RegionRegion

Region

European level

Regional level

Effective co-ordination at all levels will be essential

Bottom up Push for EU Policy

In reality progress across EU will be multi speedThere is no ‘blueprint’ for a single market – it has

to evolveTherefore, interactive nature of transition to

single market gives influence to advanced regionsGRI NW has great influence:

60% EU gas marketTechnically most advancedConstituency of big player countries

Political involvement inevitable – but not yet fully integrated into GRI NW

Timetable

ACER not operational before mid-2010 at the earliest

First Codes unlikely before 2012Regional market development remains

important in the interimSensible companies will not wait for 3rd

package implementationFurther industry restructuring is likely and

may impact on GRI NW

14 November 2008