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Unbundling: Status and Consequences

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Bernhard Painz (E-Control) presents at the Vienna Forum on European Energy Law, 2014

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Unbundling: Status and Consequences

  1. 1. Unbundling: Status and Consequences Bernhard Painz, Head of Gas Department, E-Control
  2. 2. 2 Agenda • Liberalization of Energy Markets / Unbundling • Distribution System Operator (DSO) • New Corporate Identity • Transmission System Operator (TSO) • Cases • Consequences • Penalties / Offences 20140314, Vienna Vienna Forum on Energy Law
  3. 3. Liberalization of Energy Markets Unbundling 3
  4. 4. (Un-)Bundling? 4 4
  5. 5. Unbundling! Before Liberalization: • All from one source • One undertaking • Vertically Integrated Undertaking (VIU) After Liberalization in 2001: • Supplier = selectable • TSO/DSO – Monopolist – Independent Prod./Supply 5 Grid (transmission and distribution system operator TSO/DSO) Production Supply VIU 20140314, Vienna Vienna Forum on Energy Law
  6. 6. Unbundling for DSO 6
  7. 7. 7 Unbundling: DSO (Art 26) • Legal Unbundling  Independent legal body • Functional Unbundling – Effective decision making rights – Independent – Necessary human, technical, physical, financial resources (3rd Package!) – Separate corporate identity (3rd Package!) – Fully independent compliance officer • Unbundling of Accounts – Separate accounts – No cross-subsidies 20140314, Vienna Vienna Forum on Energy Law
  8. 8. New Corporate Identity (DSO and ITO) 8
  9. 9. New Corporate Identity • Art 17, 26 Directive 2009/72/EC, 2009/73/EC „shall not […] create confusion“ • Criteria: Trade Mark Law - Company name - Company Logo - Color of the brand - Etc. No possibility of confusion !!!! Average customer !!!! 920140314, Vienna Vienna Forum on Energy Law
  10. 10. Cases • ITO / TSO: • DSO: 1020140314, Vienna Vienna Forum on Energy Law
  11. 11. Unbundling for TSO
  12. 12. 12 Unbundling: TSO (Art 9) • From 3. 3. 2012 • 4 Options: – Ownership Unbundling – ISO: Independent System Operator – ITO: Independent Transmission Operator – ITO+: more effective independence of the TSO than ITO 3. 9. 2009 Standard Model
  13. 13. 13 Ownership Unbundling – TSO is owner of the transmission system – VIU is not owner under company law of the TSO (only minority shares – but without any „rights“) – Independence of the TSO – No decisive influence – No rights (e.g. power to exercise voting rights) – Exemptions – Member State / Public Body • „Truly separated“ • No commercially sensitive information – New Infrastructure • Tariff Regulation • Third Party Access • Ownership Unbundling • Temporary / limited VIU TSO System Owner & System Operator Vienna Forum on Energy Law
  14. 14. 14 Independent System Operator (ISO) – System Owner is not the System Operator • System Owner shall not be responsible for granting TPA, investment planning • System Owner shall cooperate with ISO • Legal Unbundling of System Owner – Designation of an ISO • necessary human, technical, physical, financial resources responsible for granting TPA, collecting access charges, operating, maintaining • Outsourcing possible • but not to VIU or System Owner VIU TSO System Owner ISO System Operator 20140314, Vienna Vienna Forum on Energy Law
  15. 15. 15 Independent Transmission Operator (ITO) • ITO is the System Owner – necessary resources and personnel – own „corporate identity“ – No rendering of services (and leasing of personnel) from VIU – Core business (Operation, Maintenance, Development, etc.) • No sharing of IT-systems, premises Compliance Officer & Programme • Independence of the Management – Cooling-on, -off, no business relationship, no shares • Independence of the Supervisory Body • No influence to day to day activities and 10- years-investmentplan • 50 % -1 member shall be „independent“ VIU ITO System Owner+ System Operator NRA 20140314, Vienna Vienna Forum on Energy Law
  16. 16. Cases
  17. 17. Cases in Austria • Ownership Unbundling: – Vorarlberger Übertragungsnetz GmbH (V ZER 02/11) – Nabucco Gas Pipeline International GmbH (V ZER G 04/12) • ITO: – Austrian Power Grid GmbH (V ZER 02/11) – Gas Connect Austria GmbH (V ZER G 01/12) – Baumgarten-Oberkappel GasleitungsgesmbH (V ZER G 02/12) • New Procedure: V ZER G 01/14 •  ITO; Completion Q2 / 2014 • ISO: – Trans Austria Gasleitung GmbH (V ZER G 03/12) • New Procedure: V ZER G 04/13 •  ITO; Completion Q2 / 2014 1720140314, Vienna Vienna Forum on Energy Law
  18. 18. Principles • Assets owned by TSO (e.g. APG, GCA, VÜN, BOG) – But: „pipe-in-pipe“ (e.g. GRTGaz/MEGAL) “ownership of the transmission system assets is shared between two TSOs, where these TSOs have joint control over the transmission assets and where they have rights of use and disposal over a part of the transmission system that are equivalent to those of an owner (Eigentümergleiche Verfügungsbefugnis), and which allow them to operate their part and develop it independently and without being hindered, the certification of such TSOs should in principle not be withheld as regards compliance with Article 9(1)(a) of the Directive“ • Core activities within TSO (e.g. APG, GCA, BOG) – But: outsourcing possible at OU, ISO (e.g. Vorarlberger Übertragungsnetz GmbH as OU) 1820140314, Vienna Vienna Forum on Energy Law
  19. 19. Principles • Prohibition of services provided to the ITO by other parts of the VIU – But: telecommunication services (e.g. APG) “derogation could only be envisaged in exceptional circumstances. Such derogation should be construed narrowly and should not go beyond what is strictly necessary to protect overriding interests, such as the security and the reliability of the transmission system. Only in exceptional cases, where the services concerned are strictly necessary to protect overriding interests as referred to above, and where no other service provider except for the VIU could provide these services to the ITO, could a derogation possibly be considered justified. Such derogation should also in principle be of a transitional nature, limited in time.” • ITO remains part of the VIU (e.g. GCA, APG) – But: in respect of outsourcing of tasks (e.g. BOG) “certified ITO should not be considered as ordinary "other part" of the VIU” “it diminishes the possibilities for a conflict of interest“ “Still, assessment will be needed” 19
  20. 20. Consequences
  21. 21. Consequences • simultaneous participation in a TSO and in generation, production and/or supply activities – THE COMMISSION'S PRACTICE IN ASSESSING THE PRESENCE OF A CONFLICT OF INTEREST INCLUDING IN CASE OF FINANCIAL INVESTORS http://ec.europa.eu/energy/gas_electricity/interpretative_notes/doc/implementation_notes/swd_2013_0177_en.pdf In-depth analysis Case-by-case • Cases: – Swedegas (Sweden): Waste disposal company generating electricity in neighbor country – National Grid (UK): under control of National Grid USA 2120140314, Vienna Vienna Forum on Energy Law
  22. 22. Consequences – 50 Hertz Transmission (Germany): IFM Global Infrastructure Fund several participations in generation/supply – Società Gasdotti (Italy): Eiser Global Infrastructure Fund participation in generation – TAG (Austria): Cassa Depositi e Prestiti participation in ENI („Separate Account Regime“ – power of guidance of Ministry) 2220140314, Vienna Vienna Forum on Energy Law
  23. 23. Penalties / Offences
  24. 24. Penalties Art 37 (4) (d) Directive 2009/73/EC; Art 41 (4) (d) Directive 2009/73/EC • Effective • Proportionate • Dissuasive – Administrative Penalties • No Application for Certification – EUR 150.000,-- • Repellent decision – EUR 150.000,-- • Fail to comply with Unbundling Rules – EUR 50.000,-- to EUR 75.000,-- – Discrimination and finable Offences • 10 % of the annual turnover 2420140314, Vienna Vienna Forum on Energy Law
  25. 25. 25 Bernhard Painz  + 43 1 24 7 24 801  bernhard.painz@e-control.at  www.e-control.at Contact 20140314, Vienna Vienna Forum on Energy Law
  26. 26. 2620140314, Vienna Vienna Forum on Energy Law

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