Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
GUIDELINES FOR TSO RESTRUCTURING Fourth Athens Forum Athens June 2 to 4 th , 2004
Chapter I Contextual Framework
Strategy for Regional Integration MISSING LINK TSO RESTRUCTURING REFERENCE FRAMEWORK Clear Vision of Regional Trading Pote...
STRATEGIC JOINT OPERATION AGREEMENTS WILL HAVE A CRITICAL IMPACT ON SMALL COUNTRIES TSO RESTRUCTURING
Relative Peak Load in 2001 Consolidated Peak 6600 MW
INTELLECTUAL TECHNICAL COHERENCE Athens Memorandum of Understanding #1 & #2 National Market Design  National Transitory Co...
LEAD RESPONSIBILITY URGENTLY REQUIRED LEADERSHIP FRAMEWORK INTELLECTUAL LEADERSHIP EUROPEAN  COMMISSION  MACRO REGIONAL  P...
THE TSO BENCHMARKING FRAMEWORK GUIDELINES FOR THE REFORM OF THE TRANSMISSION FUNCTIONS NATIONAL BLUEPRINTS FOR THE REFORM ...
EXECUTION AND PRESENTATION OF BENCHMARK Might be done by Czech International Assistance <ul><li>Electronic data collection...
INITIAL DATA COLLECTION TEMPLATE (I) Straightforward working template developed to collect and organize information within...
INITIAL DATA COLLECTION TEMPLATE (II) <ul><li>Area being benchmarked can be expanded within “tree” structure to cover  mor...
INITIAL DATA COLLECTION TEMPLATE (III) Links   are activated to display background documents including text, spreadsheets,...
IMPLEMENTATION TIMEFRAME AND DANGERS BUILD UP OF VISION & PERSPECTIVE 2002 2003 DESIGN & PLANNING MOBILIZATION OF MEANS 20...
The Market Design Framework Balancing Market 0 to 5%  Real Time by System Operator National and Regional Bilateral Contrac...
FUTURE CHANGES ARE ALREADY PREDICTABLE <ul><li>MARKET PARTICIPANTS: 2005 Industrial Eligible Customers </li></ul><ul><ul><...
INTROVERT ORGANIZATIONS 1900 - 1980 COMMAND AND CONTROL ORGANIZATIONS CLIENT-ORIENTED ORGANIZATIONS MARKET ORIENTED ORGANI...
Chapter II Guidelines for High Level Unbundling of Power Sector
IMPLEMENTATION FRAMEWORK STARTING POINT  – Vertically Integrated Utility
STARTING POINT – VERTICALLY INTEGRATED UTILITY Telecommunication CORPORATE SERVICES Assets Management, Maintenance, Constr...
IMPLEMENTATION FRAMEWORK PHASE I  – Functional Unbundling Within the Vertically Integrated Utility CORPORATE SERVICES TELE...
PHASE I - FUNCTIONAL UNBUNDLING <ul><li>ADVANTAGES </li></ul><ul><li>Soft preparation for corporatization while political ...
IMPLEMENTATION FRAMEWORK <ul><li>Three Leadership Paths can be Considered: </li></ul><ul><ul><li>Government Lead Path </li...
HIGH LEVEL UNBUNDLING STARTING FROM HERE THE REFORM NEEDS TO BE ORCHESTRATED FROM A LONG-TERM PERSPECTIVE Three concurrent...
TIME EFFORT & MONEY HARVESTING OF BENEFITS GLOBAL PERSPECTIVE IMPLEMENTATION IMPLEMENTATION DEC 2004 JUL 2006 DEC 2006 JUL...
GOVERNMENT LEAD IMPLEMENTATION PATH GOVERNMENT FURTHER REFORMS DOWNSTREAM MORE DIFFICULT TO IMPLEMENT WITHOUTDIRECT GOVERN...
GOVERNMENT SHARES OWNED BY THE STATE UTILITY LEAD IMPLEMENTATION PATH CORPORATE SERVICES TELECOMMUNICATION SERVICES SUPPOR...
CORPORATE SERVICES TELECOMMUNICATION SERVICES THERMAL HYDRO NUCLEAR & OTHERS GOVERNMENT TELECOMS TRANSMISSION GENERATION T...
GOVERNMENT GOVERNMENT INITIATED IMPLEMENTATION PATH NON COOPERATIVE MANAGEMENT GOVERNMENT ESTABLISH AND STAFF A SHELL STAT...
GOVERNMENT CORPORATE SERVICES TELECOMMUNICATION SERVICES NON-CORE SERVICES GENERATION TRANSMISSION DISTRIBUTION GOVERNMENT...
GOVERNMENT CORPORATE SERVICES TELECOMMUNICATION SERVICES NON-CORE SERVICES GENERATION TRANSMISSION DISTRIBUTION GOVERNMENT...
SECTOR ORGANIZATION AT THE END OF  PHASE II – HIGH LEVEL UNBUBDLING AND STILL FAR FROM A MARKET ENVIRONMENT NO INTERNAL CO...
The Market Design Framework Balancing Market 0 to 5%  Real Time by System Operator National and Regional Bilateral Contrac...
Chapter III Guidelines for Establishing a Competitive Environment Prior to Market Opening
IMPLEMENTATION FRAMEWORK PROGRESSIVE ESTABLISHMENT OF A COMPETITIVE ENVIRONMENT PHASE III  – Corporatization of Business U...
INDEPENDENT OPERATING CORPORATIONS EXPOSED TO COMPETITION PHASE III – CORPORATIZATION AND PRODUCTIVITY IMPROVEMENT OF BUSI...
IMPLEMENTATION FRAMEWORK APPROPRIATE TIMING FOR MARKET OPENING PHASE III  – Corporatization of Business Units GOVERNMENT G...
PHASING OUT OF NON-CORE CO STATE OWNED DISTRIBUTORS STATE OWNED POWER PLANTS GOVERNMENT LEFT OVER PHASE IV – STATE DIVESTI...
Chapter IV Organizational Design of the Power Transmission Functions
TRANSMISSION INSTITUTIONAL FRAMEWORK OPTIONS STATE HOLDING COMPANY GENERAL MANAGER SUB-SECTOR OTHER SUB-SECTOR GENERATION ...
Sorting of Critical Transmission Functions GO SO TO BMO TRANSMISSION GRID RELATED SYSTEMS OPERATION RELATED TRANSMISSION G...
WILL LIKELY BE THE FINAL OPTION RETAINED BY COUNTRIES SHARING BALANCING AND DAY-AHEAD MARKETS SOLE OPTION CURRENTLY CONSID...
Traditional European TSO  Before Market Opening ACCEPTABLE TO ETSO Management  Department GO GO Grid Ownership Management ...
OPTION # 1 – No Unbundling Integrated Transmission Functions after Market Opening ACCEPTABLE TO ETSO Management  Departmen...
OPTION # 2  Separation of Grid Operation from System Operations OPPOSED BY ETSO INDEPENDENT AND NOT FOR PROFIT FOR PROFIT ...
SPARE SLIDES NOT USED
<ul><li>The Serbian Case </li></ul>
ELEKTROISTOK EPS CORPORATE OFFICE Transmission Support Services Telecommunication Department Other Departments Power Syste...
Step 1 of the Reform Minimization of the Cultural Shock at Time of the Merging of the SO Functions EPS Holding Company Gen...
EPS CORPORATE OFFICE Transmission Support Services Telecommunication Department Other Departments Power System Control Dep...
EPS CORPORATE OFFICE Transmission Support Services Other Departments Power System Control Department Step 3 of the Reform ...
Step 4 of the Reform (Development and Establishment of a Market Operation Department within Elektroistok) EPS CORPORATE OF...
Step 5 of the Reform (Transformation of Elektroistok into a Fully Independent Transmission, System and Market Operator) EP...
END OF PHASE V OF RESTRUCTURING GO ? GO ? ITSMO - Elektroistok Company EPS Holding Company Portfolio of Generation Compani...
POTENTIAL FURTHER RESTRUCTURING STEPS ITSMO - Elektroistok Company Market Operation Department  (on Vojvode Stepe) Grid Ow...
GR  SK RO TR BG AL A I HR H Ser Mon SLO BiH BG UA MD MK Proposed UCTE Control Blocks RO HR SLO BiH AL Ser Mon MK BG RO GR ...
Upcoming SlideShare
Loading in …5
×

Guidelines Tso Restructuring

1,151 views

Published on

Guidelines Tso Restructuring

Published in: Business
  • Be the first to comment

  • Be the first to like this

Guidelines Tso Restructuring

  1. 1. GUIDELINES FOR TSO RESTRUCTURING Fourth Athens Forum Athens June 2 to 4 th , 2004
  2. 2. Chapter I Contextual Framework
  3. 3. Strategy for Regional Integration MISSING LINK TSO RESTRUCTURING REFERENCE FRAMEWORK Clear Vision of Regional Trading Potentialities and Constraints Some Harmonization might be required National Energy Law EC DIRECTIVES
  4. 4. STRATEGIC JOINT OPERATION AGREEMENTS WILL HAVE A CRITICAL IMPACT ON SMALL COUNTRIES TSO RESTRUCTURING
  5. 5. Relative Peak Load in 2001 Consolidated Peak 6600 MW
  6. 6. INTELLECTUAL TECHNICAL COHERENCE Athens Memorandum of Understanding #1 & #2 National Market Design National Transitory Constraints RESTRUCTURING REFERENCE FRAMEWORK BLUEPRINT FOR THE RESTRUCTURING OF NATIONAL TRANSMISSION FUNCTIONS Standard Regional Market Design CEER/EFET TSOs Restructuring Guiding Principles ETSO/UCTE Validation Validation IMPLEMENTATION SEE - BENCHMARKING Strategy for Regional Integration National Energy Law EC DIRECTIVES
  7. 7. LEAD RESPONSIBILITY URGENTLY REQUIRED LEADERSHIP FRAMEWORK INTELLECTUAL LEADERSHIP EUROPEAN COMMISSION MACRO REGIONAL PLANNING (Key Milestones ) MACRO REGIONAL PLANNING (Key Milestones ) MACRO REGIONAL PLANNING (Key Milestones ) MACRO REGIONAL PLANNING (Key Milestones ) HARMONIZATION UCTE OPERATION STANDARDS UCTE SYSTEM OPERATION & SECURITY EFET EFET TRAD ING MECHANISMS GUIDELINES FOR EFFICIENT TRADING ETSO ETSO MARKET DEVELOPMENT FACILITATION GUIDELINES FOR TSO RESTRUCTURING CEER FAIR LEVEL PLAYING FIELD & MONITORING CEER SEE REGION STANDARD MARKET DESIGN CHANGE MANAGEMENT ADVISORY COMMITTEE
  8. 8. THE TSO BENCHMARKING FRAMEWORK GUIDELINES FOR THE REFORM OF THE TRANSMISSION FUNCTIONS NATIONAL BLUEPRINTS FOR THE REFORM NATIONAL BLUEPRINTS FOR THE REFORM NATIONAL BLUEPRINTS FOR THE REFORM NATIONAL BLUEPRINTS FOR THE REFORM NATIONAL BLUEPRINTS FOR THE REFORM NATIONAL BLUEPRINTS FOR THE REFORM NATIONAL BLUEPRINTS FOR THE REFORM NATIONAL BLUEPRINTS FOR TSO REFORMS NATIONAL BLUEPRINTS FOR THE REFORM NATIONAL BLUEPRINTS FOR THE REFORM NATIONAL BLUEPRINTS FOR THE REFORM NATIONAL BLUEPRINTS FOR THE REFORM NATIONAL BLUEPRINTS FOR THE REFORM NATIONAL BLUEPRINTS FOR THE REFORM NATIONAL BLUEPRINTS FOR THE REFORM NATIONAL RESTRUCTURING IMPLEMENTATION PLANS BENCHMARKING ISSUES COUNTRIES ATHENS FORUM REPORTING ETSO CEER UCTE EFET REVIEW & ANALYSIS
  9. 9. EXECUTION AND PRESENTATION OF BENCHMARK Might be done by Czech International Assistance <ul><li>Electronic data collection to facilitate information entry and compilation </li></ul><ul><li>Presentation and consultation via a central database linked to background documents </li></ul><ul><li>Wide availability of results by publication and update maintenance via global internet website </li></ul>
  10. 10. INITIAL DATA COLLECTION TEMPLATE (I) Straightforward working template developed to collect and organize information within an Excel spreadsheet <ul><li>Simple “tree” structure to address all main areas being benchmarked </li></ul><ul><li>Expandable “Tree” structure Provides more detailed information as required </li></ul>Information to be collected for each country
  11. 11. INITIAL DATA COLLECTION TEMPLATE (II) <ul><li>Area being benchmarked can be expanded within “tree” structure to cover more detailed criteria </li></ul><ul><li>Collected information presented in a color coded way or as links… (when appropriate) </li></ul>
  12. 12. INITIAL DATA COLLECTION TEMPLATE (III) Links are activated to display background documents including text, spreadsheets, organization charts, presentations, maps, etc.
  13. 13. IMPLEMENTATION TIMEFRAME AND DANGERS BUILD UP OF VISION & PERSPECTIVE 2002 2003 DESIGN & PLANNING MOBILIZATION OF MEANS 2004 SET UP OF VIABLE INSTITUTIONAL FOUNDATIONS 2005 DEVELOPMENT OF MARKET PARTICIPANTS 2006 PROGRESSIVE MARKET OPENING 2007 HARVESTING OF BENEFITS 2008 Strategic Vision of Potential Alliances is Still Missing (Currently underway) Countries Still Have a Too Short-Term and National Perspective (Danger of replicating status quo) Long-Term Stability and Continuity in Implementing the reforms is Important (Long & difficult process) Establishment of Healthy Competitive Environment (Increasing Number and Diversity of Market Participants) Development of Competitiveness and Progressive State Divestiture (Performance Improvement) Final Objective
  14. 14. The Market Design Framework Balancing Market 0 to 5% Real Time by System Operator National and Regional Bilateral Contracts 70 to 80% of Demand Annual – Seasonnal - Monthly Day Ahead Market 15 to 20% Week to Day Ahead GENERATOR CUSTOMER TRADER SUPPLIER BROOKER Offers Bids Price 1 Price 2 Price 3 Financial Products Risk Mitigation
  15. 15. FUTURE CHANGES ARE ALREADY PREDICTABLE <ul><li>MARKET PARTICIPANTS: 2005 Industrial Eligible Customers </li></ul><ul><ul><ul><ul><li>2005 Emergence of Trading Intermediaries </li></ul></ul></ul></ul><ul><ul><ul><ul><li>2006 Mix of Public/Private Participants </li></ul></ul></ul></ul><ul><ul><ul><ul><li>2006 Cross Border Alliances & Partnership </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>2006 Commercial Eligible Customers </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>2007 All Customers </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>2008 More Sophisticated Financial Products </li></ul></ul></ul></ul></ul><ul><li>MARKET: Consensus is already established </li></ul><ul><li>Increased Number of: </li></ul><ul><li>Participants, </li></ul><ul><li>Intermediaries, </li></ul><ul><li>Commercial interests, </li></ul><ul><li>Competitors </li></ul><ul><li>Independent Behaviors </li></ul><ul><li>Products on the Market </li></ul><ul><li>Regulation </li></ul>Flexibility in the Structures will be a Key Success Factor
  16. 16. INTROVERT ORGANIZATIONS 1900 - 1980 COMMAND AND CONTROL ORGANIZATIONS CLIENT-ORIENTED ORGANIZATIONS MARKET ORIENTED ORGANIZATIONS More client oriented organizations are required EXPERTISE CONCENTRATED AT THE CORPORATE LEVEL <ul><li>Ever expanding </li></ul><ul><li>Self centered </li></ul><ul><li>Poor performers Can Hide within the Organization </li></ul><ul><li>Protect Status Quo </li></ul><ul><li>Internal controls difficult </li></ul><ul><li>Client service oriented </li></ul><ul><li>Profit center easily controllable </li></ul><ul><li>Highly flexible and adaptable </li></ul><ul><li>Competitive </li></ul>DISTRIBUTED EXPERTISE, TOOLS, SYSTEMS, MEANS, DECISION POWER AND INOVATION
  17. 17. Chapter II Guidelines for High Level Unbundling of Power Sector
  18. 18. IMPLEMENTATION FRAMEWORK STARTING POINT – Vertically Integrated Utility
  19. 19. STARTING POINT – VERTICALLY INTEGRATED UTILITY Telecommunication CORPORATE SERVICES Assets Management, Maintenance, Construction and Engineering GENERATION TRANSMISSION DISTRIBUTION SHARES OWNED BY THE GOVERNMENT
  20. 20. IMPLEMENTATION FRAMEWORK PHASE I – Functional Unbundling Within the Vertically Integrated Utility CORPORATE SERVICES TELECOMMUNICATION SERVICES SUPPORT NON-CORE SERVICES GENERATION TRANSMISSION DISTRIBUTION THERMAL HYDRO NUCLEAR & OTHERS GO TO SO MO POWER SECTOR SUPPORT COMMERCIAL STARTING POINT – Vertically Integrated Utility
  21. 21. PHASE I - FUNCTIONAL UNBUNDLING <ul><li>ADVANTAGES </li></ul><ul><li>Soft preparation for corporatization while political process unfold; </li></ul><ul><li>Opportunity for internal rationalization before corporatization; </li></ul><ul><li>Identification of stranded resources before transfer to new operating corporations; </li></ul><ul><li>DISADVANTAGES </li></ul><ul><li>Performed by current rather than future line managers (lack of critical screening) </li></ul><ul><li>Based on current organizational structure and processes rather than redesigned structure and processes </li></ul><ul><li>Based on the use of same management systems, software and constraints; </li></ul><ul><li>Often reproduce the same functional status quo (no reengineering of operations) </li></ul>CORPORATE SERVICES TELECOMMUNICATION SERVICES SUPPORT NON-CORE SERVICES GENERATION TRANSMISSION DISTRIBUTION SHARES STILL OWNED BY THE GOVERNMENT THERMAL HYDRO NUCLEAR & OTHERS GO TO SO MO POWER SECTOR SUPPORT COMMERCIAL
  22. 22. IMPLEMENTATION FRAMEWORK <ul><li>Three Leadership Paths can be Considered: </li></ul><ul><ul><li>Government Lead Path </li></ul></ul><ul><ul><li>Utility Lead Path </li></ul></ul><ul><ul><li>Government Initiated Path </li></ul></ul>PHASE II – High Level Unbundling GO TO SO MO THERMAL HYDRO NUCLEAR & OTHERS STATE HOLDING COMPANY GENERAL MANAGER SUB-SECTOR MANAGER SUB SECTOR MANAGER SUB-SECTOR MANAGER SUB-SECTOR MANAGER PHASE I – Functional Unbundling Within the Vertically Integrated Utility CORPORATE SERVICES TELECOMMUNICATION SERVICES SUPPORT NON-CORE SERVICES GENERATION TRANSMISSION DISTRIBUTION THERMAL HYDRO NUCLEAR & OTHERS GO TO SO MO POWER SECTOR SUPPORT COMMERCIAL STARTING POINT – Vertically Integrated Utility
  23. 23. HIGH LEVEL UNBUNDLING STARTING FROM HERE THE REFORM NEEDS TO BE ORCHESTRATED FROM A LONG-TERM PERSPECTIVE Three concurrent processes need to be simultaneously managed
  24. 24. TIME EFFORT & MONEY HARVESTING OF BENEFITS GLOBAL PERSPECTIVE IMPLEMENTATION IMPLEMENTATION DEC 2004 JUL 2006 DEC 2006 JUL 2007 DESIGN DESIGN & PLANNING JUNE 2004 OPERATIONS CURRENT LEVEL OF OPERATION CLEAN UP - RATIONALIZATION RESTRUCTURING DESIGN HORIZON PHASE I FUNCTIONAL UNBUNDLING & DESIGN PHASE II HIGH LEVEL CORPORATIZATION PHASE III CORPORATIZATION OF BUSINESS UNITS PHASE IV DIVESTITURE AND PRIVATIZATION PROPER CONDITIONS FOR MARKET OPENING DANGER
  25. 25. GOVERNMENT LEAD IMPLEMENTATION PATH GOVERNMENT FURTHER REFORMS DOWNSTREAM MORE DIFFICULT TO IMPLEMENT WITHOUTDIRECT GOVERNMENT INTERVENTION IN OPERATIONAL MATTERS MINISTRY OF FINANCE OR ECONOMY CORPORATE SERVICES TELECOMMUNICATION SERVICES SUPPORT NON-CORE SERVICES GENERATION TRANSMISSION THERMAL HYDRO NUCLEAR & OTHERS GO TO SO MO POWER SECTOR SUPPORT COMMERCIAL DISTRIBUTION GENERATION THERMAL HYDRO NUCLEAR & OTHERS GO TO SO MO TRANSMISSION DISTRIBUTION TELECOMS SUPPORT Co POWER SECTOR SUPPORT NON CORE GOVERNMENT DISPOSE OF LEFT OVER
  26. 26. GOVERNMENT SHARES OWNED BY THE STATE UTILITY LEAD IMPLEMENTATION PATH CORPORATE SERVICES TELECOMMUNICATION SERVICES SUPPORT NON-CORE SERVICES GENERATION TRANSMISSION THERMAL HYDRO NUCLEAR & OTHERS GO TO SO MO POWER SECTOR SUPPORT COMMERCIAL DISTRIBUTION TRANSMISSION SHELL GENERATION SHELL DISTRIBUTION SHELL SUPPORT & NON-CORE SHELL SHELL COMPANIES READY TO RECEIVE TRANSFER OF ASSETS, RESOURCES AND LIABILITIES FROM VERTICALLY INTEGRATED UTILITY The Vertically Integrated Utility is Incorporating an Appropriate Number of Subsidiary Companies
  27. 27. CORPORATE SERVICES TELECOMMUNICATION SERVICES THERMAL HYDRO NUCLEAR & OTHERS GOVERNMENT TELECOMS TRANSMISSION GENERATION THERMAL HYDRO NUCLEAR & OTHERS DISTRIBUTION POWER SECTOR SUPPORT NON CORE SUPPORT Co GENERATION HOLDING OWNS THE SHARES OF THE OPERATING COMPANIES UTILITY LEAD IMPLEMENTATION PATH GO TO SO BMO STATE HOLDING COMPANY GENERAL MANAGER SUB-SECTOR MANAGER SUB SECTOR MANAGER SUB-SECTOR MANAGER SUB-SECTOR MANAGER GOVERNMENT STATE OWNS THE SHARES OF THE HOLDING COMPANY POWER SECTOR SUPPORT NON CORE LEFT OVER FORMER VERTICALLY INTEGRATED UTILITY TELECOMMUNICATION SERVICES
  28. 28. GOVERNMENT GOVERNMENT INITIATED IMPLEMENTATION PATH NON COOPERATIVE MANAGEMENT GOVERNMENT ESTABLISH AND STAFF A SHELL STATE HOLDING COMPANY The Government Own the Shares of the Holding (No Significant Assets Yet) STATE HOLDING COMPANY GENERAL MANAGER SUB-SECTOR MANAGER SUB SECTOR MANAGER SUB-SECTOR MANAGER SUB-SECTOR MANAGER Telecommunication CORPORATE SERVICES Assets Management, Maintenance, Construction and Engineering GENERATION TRANSMISSION DISTRIBUTION SHARES OWNED BY THE GOVERNMENT
  29. 29. GOVERNMENT CORPORATE SERVICES TELECOMMUNICATION SERVICES NON-CORE SERVICES GENERATION TRANSMISSION DISTRIBUTION GOVERNMENT INITIATED IMPLEMENTATION PATH VERTICALLY INTEGRATED UTILITY NO ASSETS YET BUT ORGANIZATIONAL DESIGN INITIATED STATE HOLDING COMPANY GENERAL MANAGER SUB-SECTOR MANAGER SUB SECTOR MANAGER SUB-SECTOR MANAGER SUB-SECTOR MANAGER TRANSMISSION SHELL GENERATION SHELL DISTRIBUTION SHELL SUPPORT & NON-CORE SHELL The Holding Establish Shell Companies (Own the Shares) And Lead the Realization of the Preparatory Functional Unbundling and Screening Process CORPORATE SERVICES TELECOMMUNICATION SERVICES SUPPORT NON-CORE SERVICES GENERATION TRANSMISSION THERMAL HYDRO NUCLEAR & OTHERS GO TO SO MO POWER SECTOR SUPPORT COMMERCIAL DISTRIBUTION
  30. 30. GOVERNMENT CORPORATE SERVICES TELECOMMUNICATION SERVICES NON-CORE SERVICES GENERATION TRANSMISSION DISTRIBUTION GOVERNMENT INITIATED IMPLEMENTATION PATH TRANSMISSION DISTRIBUTION SUPPORT Co STATE HOLDING COMPANY GENERAL MANAGER SUB-SECTOR MANAGER SUB SECTOR MANAGER SUB-SECTOR MANAGER SUB-SECTOR MANAGER CORPORATE SERVICES TELECOMMUNICATION SERVICES SUPPORT NON-CORE SERVICES GENERATION TRANSMISSION THERMAL HYDRO NUCLEAR & OTHERS GO TO SO MO POWER SECTOR SUPPORT COMMERCIAL DISTRIBUTION TELECOMMUNICATION SERVICES GENERATION TRANSMISSION THERMAL HYDRO NUCLEAR & OTHERS GO TO SO MO POWER SECTOR SUPPORT COMMERCIAL DISTRIBUTION Generation Transmission Telecommunications SUPPORT AND NON-CORE SERVICES FORMER VERTICALLY INTEGRATED UTILITY TELECOMS TRANSMISSION SHELL GENERATION SHELL DISTRIBUTION SHELL SUPPORT & NON-CORE SHELL GO TO SO MO THERMAL HYDRO NUCLEAR & OTHERS POWER SECTOR SUPPORT NON CORE FORMER VERTICALLY INTEGRATED UTILITY TELECOMMUNICATION SERVICES DISTRIBUTION Generation Transmission Telecommunications Non-Core and Support Services POWER SECTOR SUPPORT NON CORE LEFT OVER FORMER VERTICALLY INTEGRATED UTILITY TELECOMMUNICATION SERVICES
  31. 31. SECTOR ORGANIZATION AT THE END OF PHASE II – HIGH LEVEL UNBUBDLING AND STILL FAR FROM A MARKET ENVIRONMENT NO INTERNAL COMPETITION STILL A VERTICALLY INTEGRATED UNDERTAKING GOVERNMENT TELECOMS GO TO SO BMO TRANSMISSION GENERATION THERMAL HYDRO NUCLEAR & OTHERS DISTRIBUTION SUPPORT Co STATE HOLDING COMPANY GENERAL MANAGER SUB-SECTOR MANAGER SUB SECTOR MANAGER SUB-SECTOR MANAGER SUB-SECTOR MANAGER LEFT OVER POWER SECTOR SUPPORT NON CORE LEFT OVER NATIONAL ENERGY POLICY DEVELOPMENT IMPLEMENTATION OF NATIONAL ENERGY POLICY AND MANAGEMENT OF THE RESTRUCTURING PROCESS UNTIL FULL DIVESTITURE INDEPENDENT MANAGEMENT OF OPERATIONS
  32. 32. The Market Design Framework Balancing Market 0 to 5% Real Time by System Operator National and Regional Bilateral Contracts 70 to 80% of Demand Annual – Seasonnal - Monthly Day Ahead Market 15 to 20% Week to Day Ahead GENERATOR CUSTOMER TRADER SUPPLIER BROOKER Offers Bids Price 1 Price 2 Price 3 Financial Products Risk Mitigation
  33. 33. Chapter III Guidelines for Establishing a Competitive Environment Prior to Market Opening
  34. 34. IMPLEMENTATION FRAMEWORK PROGRESSIVE ESTABLISHMENT OF A COMPETITIVE ENVIRONMENT PHASE III – Corporatization of Business Units GOVERNMENT GENERAL MANAGER PORTFOLIO MANAGER OTHER PORTFOLIO MANAGER GENERATION PORTFOLIO MANAGER DISTRIBUTION STATE OWNED DISTRIBUTORS Distributor 3 Distributor 2 Distributor 1 STATE OWNED POWER PLANTS GO TO MO SO Telecom Metering PHASING OUT Public Wholesale Supplier Left Over LEFT OVER TSO PHASE II – High Level Unbundling of Sub-Sectors GO TO SO MO THERMAL HYDRO NUCLEAR & OTHERS STATE HOLDING COMPANY GENERAL MANAGER SUB-SECTOR MANAGER SUB SECTOR MANAGER SUB-SECTOR MANAGER SUB-SECTOR MANAGER PHASE I – Functional Unbundling Within the Vertically Integrated Utility CORPORATE SERVICES TELECOMMUNICATION SERVICES SUPPORT NON-CORE SERVICES GENERATION TRANSMISSION DISTRIBUTION THERMAL HYDRO NUCLEAR & OTHERS GO TO SO MO POWER SECTOR SUPPORT COMMERCIAL STARTING POINT – Vertically Integrated Utility
  35. 35. INDEPENDENT OPERATING CORPORATIONS EXPOSED TO COMPETITION PHASE III – CORPORATIZATION AND PRODUCTIVITY IMPROVEMENT OF BUSINESS UNITS ARMS LENGH MANAGEMENT OF PORTFOLIOS OF INDEPENDENT BUSINESS UNITS MISSION IMPROVEMENT OF THE INDIVIDUAL PERFORMANCE AND OF THE COMPETITIVENESS OF EACH BUSINESS UNIT, WITH THE OBJECTIVE OF SECURING ITS LONG-TERM VIABILITY IN THE NATIONAL AND REGIONAL ELECTRICITY MARKET AND PREPARE FOR STATE DIVESTITURE (IF AND WHEN APPROPRIATE) POLICY ORIENTATIONS GOVERNMENT STATE HOLDING COMPANY GENERAL MANAGER PORTFOLIO MANAGER OTHER PORTFOLIO MANAGER GENERATION PORTFOLIO MANAGER DISTRIBUTION PORTFOLIO MANAGER TRANSMISSION PORTFOLIO MANAGER TRANSMISSION TSMO GO TO SO BMO Generator 1 Generator 2 Generator 3 Generator 4 Generator 5 Generator 6 Generator 7 Generator 8 Generator 9 Generator 10 Distributor 4 Distributor 3 Distributor 2 Distributor 1 Distributor 8 Distributor 7 Distributor 6 Distributor 5 Wholesale Construction Engineering Telecom Non Core Non Core Non Core Non Core
  36. 36. IMPLEMENTATION FRAMEWORK APPROPRIATE TIMING FOR MARKET OPENING PHASE III – Corporatization of Business Units GOVERNMENT GENERAL MANAGER PORTFOLIO MANAGER OTHER PORTFOLIO MANAGER GENERATION PORTFOLIO MANAGER DISTRIBUTION STATE OWNED DISTRIBUTORS Distributor 3 Distributor 2 Distributor 1 STATE OWNED POWER PLANTS GO TO MO SO Telecom Metering PHASING OUT Public Wholesale Supplier Left Over LEFT OVER TSO PHASE II – High Level Unbundling of Sub-Sectors GO TO SO MO THERMAL HYDRO NUCLEAR & OTHERS STATE HOLDING COMPANY GENERAL MANAGER SUB-SECTOR MANAGER SUB SECTOR MANAGER SUB-SECTOR MANAGER SUB-SECTOR MANAGER PHASE I – Functional Unbundling Within the Vertically Integrated Utility CORPORATE SERVICES TELECOMMUNICATION SERVICES SUPPORT NON-CORE SERVICES GENERATION TRANSMISSION DISTRIBUTION THERMAL HYDRO NUCLEAR & OTHERS GO TO SO MO POWER SECTOR SUPPORT COMMERCIAL STARTING POINT – Vertically Integrated Utility PHASE IV – State Divestiture or Privatization Distributor 4 Distributor 8 Distributor 7 Distributor 6 Distributor 5 Construction Engineering Non Core Non Core Ind Supplier Ind Supplier
  37. 37. PHASING OUT OF NON-CORE CO STATE OWNED DISTRIBUTORS STATE OWNED POWER PLANTS GOVERNMENT LEFT OVER PHASE IV – STATE DIVESTITURE STATE HOLDING COMPANY GENERAL MANAGER PORTFOLIO MANAGER OTHER PORTFOLIO MANAGER GENERATION PORTFOLIO MANAGER DISTRIBUTION LIQUIDATION MANAGER TSMO GO TO MO SO Independent State Owned TSMO Telecom Metering Generator 1 Generator 2 Generator 3 Generator 4 Generator 5 Generator 6 Generator 7 Generator 8 Generator 9 Generator 10 Distributor 4 Distributor 3 Distributor 2 Distributor 1 Distributor 8 Distributor 7 Distributor 6 Distributor 5 Wholesale Construction Engineering Telecom Non Core Non Core Non Core Non Core Generator 7 Generator 6 Generator 5 Generator 4 Generator 9 Generator 8 Independent Privately Owned Power plants Distributor 4 Distributor 8 Distributor 7 Distributor 6 Distributor 5 Privately Owned Distribution Companies Construction Engineering Non Core Non Core Ind Supplier Ind Supplier Private Businesses PROCEEDS OF DIVESTITURE PREDEFINED MAXIMUM % OF VALUE OF STRANDED ASSETS USED TO LIQUIDATE LEFT OVERS BALANCE OF PROCEEDS PAID TO THE CONSOLIDATED STATE ACCOUNT AS DIVIDENDS FROM THE HOLDING PREDEFINED MAXIMUM % OF PROCEEDS ALLOCATED TO FURTHER PRODUCTIVITY IMPROVEMENT OF REMAINING STATE OWNED BUSINESS UNITS
  38. 38. Chapter IV Organizational Design of the Power Transmission Functions
  39. 39. TRANSMISSION INSTITUTIONAL FRAMEWORK OPTIONS STATE HOLDING COMPANY GENERAL MANAGER SUB-SECTOR OTHER SUB-SECTOR GENERATION SUB-SECTOR DISTRIBUTION SUB-SECTOR TRANSMISSION TSMO GO TO BMO SO REGULATORS Regional Day Ahead Market GENERATION DISTRIBUTION NON CORE
  40. 40. Sorting of Critical Transmission Functions GO SO TO BMO TRANSMISSION GRID RELATED SYSTEMS OPERATION RELATED TRANSMISSION GRID OWNERSHIP RELATED TRANSMISSION GRID OPERATION RELATED POWER SYSTEM OPERATION RELATED MARKET OPERATION RELATED
  41. 41. WILL LIKELY BE THE FINAL OPTION RETAINED BY COUNTRIES SHARING BALANCING AND DAY-AHEAD MARKETS SOLE OPTION CURRENTLY CONSIDERED BY ETSO MEMBERS OPTION FAVORED IN NORTH AMERICA RETAINED IN CROATIA AND BiH Transmission Institutional Organizational Options UNLIKELY OPTION (AT LEAST FOR MANY YEARS) FOR PROFIT NOT FOR PROFIT <ul><li>INCREASED LEVEL OF: </li></ul><ul><li>INDEPENDENCE </li></ul><ul><li>NUMBER OF PLAYERS </li></ul><ul><li>INSTITUTIONAL COMPLEXITY </li></ul><ul><li>MANAGEMENT COMPLEXITY </li></ul><ul><li>EFFORT REQUIRED TO FORM BUSINESS UNITS </li></ul><ul><li>MORE COMPLEXITY TO MANAGE INTERFACES (AGREEMENTS) </li></ul><ul><li>MORE REGULATION </li></ul><ul><li>OPERATIONS COSTS </li></ul><ul><li>HIGHER DEGREE OF CONFIDENCE OF PRIVATE INVESTORS </li></ul>GO TO ISO IMO OPTION 4 IMO TSO (GO+TO+SO) OPTION 3 GridCo (GO+TO) ISMO (SO + MO) OPTION 2 TSMO (GO + TO + SO + BMO) OPTION 1
  42. 42. Traditional European TSO Before Market Opening ACCEPTABLE TO ETSO Management Department GO GO Grid Ownership Management Department Grid Operation Department TO TO Grid Operation Department TSO Transmission Company Before Market Opening Legal Corporations Departments Within Corporations System Operation Department SO SO System Operation Department
  43. 43. OPTION # 1 – No Unbundling Integrated Transmission Functions after Market Opening ACCEPTABLE TO ETSO Management Department GO GO Grid Ownership Management Department Grid Operation Department TO TO Grid Operation Department Market Operation Department MO BMO Market Operation Department System Operation Department SO SO System Operation Department Legal Corporations Departments Within the Corporation TSMO
  44. 44. OPTION # 2 Separation of Grid Operation from System Operations OPPOSED BY ETSO INDEPENDENT AND NOT FOR PROFIT FOR PROFIT Management Department GO GO Grid Ownership Management Department Grid Operation Department TO TO Grid Operation Department Market Operation Department MO MO Market Operation Department System Operation Department SO SO System Operation Department GridCo GridCo Grid Management ISMO ISMO System Management Legal Corporations Departments Within Corporations
  45. 45. SPARE SLIDES NOT USED
  46. 46. <ul><li>The Serbian Case </li></ul>
  47. 47. ELEKTROISTOK EPS CORPORATE OFFICE Transmission Support Services Telecommunication Department Other Departments Power System Control Department Subsidiary Step 1 of the Reform (Transformation of the EPS Elektroistok Subsidiary into a Transmission and System Operation Company (TSO) Transmission Grid Owner & Transmission Grid Operator (GO + TO = TSO) SO TSO System Operation Control (Dispatch Centre) Operations Planning and Analysis Metering Accounting & Tariffs Electricity Trading Telecommunications Group Energy Planning Group Transmission Network Group Information Technology Group
  48. 48. Step 1 of the Reform Minimization of the Cultural Shock at Time of the Merging of the SO Functions EPS Holding Company Generation Companies Distribution Companies System Operation Functions (on Vojvode Stepe) Elektroistok System Operations Building Isolated from other EPS functions located on Vojvode Stepe TSO Elektroistok Transmission Grid and System Operation Subsidiary Physical, Functional and Accounting Unbundling Grid Operation Functions (on Kneza Milosa) Elektroistok Grid Operations Remains in the Same Building on Kneza Milosa
  49. 49. EPS CORPORATE OFFICE Transmission Support Services Telecommunication Department Other Departments Power System Control Department Step 2 of the Reform (Unbundling and Transfer of the EPS Corporate Transmission Technical Support Services to the Elektroistok Subsidiary) ELEKTROISTOK Subsidiary Transmission Grid Owner & Transmission Grid Operator (GO + TO = TSO) SO TSO STRENTHENING OF THE MANAGEMENT CAPACITY AND INDEPENDENCE OF ELEKTROISTOK
  50. 50. EPS CORPORATE OFFICE Transmission Support Services Other Departments Power System Control Department Step 3 of the Reform (Unbundling and Corporatization of the EPS Telecommunication Department as a Subsidiary of Elektroistok) ELEKTROISTOK Subsidiary of EPS SO TSO Commercial Operations Telecommunication Department Subsidiary of the Elektroistok TSO Telecommunication Power Sector Operations
  51. 51. Step 4 of the Reform (Development and Establishment of a Market Operation Department within Elektroistok) EPS CORPORATE OFFICE Transmission Support Services Telecommunication Department Other Departments Power System Control Department ELEKTROISTOK Subsidiary of EPS Subsidiary of the Elektroistok TSO SO TSMO Telecommunication MO ESTABLISHMENT OF THE NATIONAL MARKET OPERATION DEPARTMENT
  52. 52. Step 5 of the Reform (Transformation of Elektroistok into a Fully Independent Transmission, System and Market Operator) EPS CORPORATE OFFICE Transmission Support Services Telecommunication Department Other Departments Power System Control Department ELEKTROISTOK Subsidiary of EPS Subsidiary of the Elektroistok TSO SO ITSMO Telecommunication MO X FULL UNBUNDLING & TRANSFORMATION OF ELEKTROISTOK INTO AN ITSMO
  53. 53. END OF PHASE V OF RESTRUCTURING GO ? GO ? ITSMO - Elektroistok Company EPS Holding Company Portfolio of Generation Companies Portfolio of Distribution Companies Market Operation Department (on Vojvode Stepe) Grid Operation Department (on Kneza Milosa) System Operation Department (on Vojvode Stepe)
  54. 54. POTENTIAL FURTHER RESTRUCTURING STEPS ITSMO - Elektroistok Company Market Operation Department (on Vojvode Stepe) Grid Ownership & Operation Department (on Kneza Milosa) System Operation Department (on Vojvode Stepe) Independent ISMO (on Vojvode Stepe) Independent IMO (on Vojvode Stepe) Independent ISO (on Vojvode Stepe) OR Independent GridCo (on Kneza Milosa)
  55. 55. GR SK RO TR BG AL A I HR H Ser Mon SLO BiH BG UA MD MK Proposed UCTE Control Blocks RO HR SLO BiH AL Ser Mon MK BG RO GR A SK H BORZEN OPCOM

×