customer-centric_retail_markets-web-2011-321-0002-01-e

Customer-Centric Retail Markets:
AFuture-Proof
Market Design
EURELECTRIC Policy Paper, September 2011

The Union of the Electricity Industry–EURELECTRIC is the sector association representing
the common interests of the electricity industry at pan-European level, plus its affiliates and
associates on several other continents.
In line with its mission, EURELECTRIC seeks to contribute to the competitiveness of the electricity
industry, to provide effective representation for the industry in public affairs, and to promote
the role of electricity both in the advancement of society and in helping provide solutions to
the challenges of sustainable development.
EURELECTRIC’s formal opinions, policy positions and reports are formulated inWorking Groups,
composed of experts from the electricity industry, supervised by five Committees.This “structure
of expertise” ensures that EURELECTRIC’s published documents are based on high-quality
input with up-to-date information.
For further information on EURELECTRIC activities, visit our website, which provides general
information on the association and on policy issues relevant to the electricity industry; latest
news of our activities; EURELECTRIC positions and statements; a publications catalogue listing
EURELECTRIC reports; and information on our events and conferences.
Dépôt légal: D/2011/12.105/46
EURELECTRIC pursues in all its activities the application
of the following sustainable development values:
Economic Development
 Growth, added-value, efficiency
Environmental Leadership
 Commitment, innovation, pro-activeness
Social Responsibility
 Transparency, ethics, accountability

Customer-Centric Retail Markets:
A Future-Proof Market Design
TF Retail Target Model
Roel KALJEE (NL) Chair
Maria Elena FERIGO (IT), Juan-José FERNANDEZ MARTIN (ES), Riina HEINIMÄKI (FI), Alexandra HERRMANN
(AT), Vladimir HOLECEK (CZ), Henrik HORNUM (DK), Peter KORNMANN (SE), Akke KUUSELA (FI),
Javier LATORRE (ES), Pauline LAWSON (GB), Stefano MATANI (IT), Lars OHLSSON (SE), Frode OTNES (NO),
Andreas POULLIKKAS (CY), Davis SKULTE (LV), Jörg-Martin STÖCKLE (DE), Alesander VALDES AGUILAR (ES),
Luc VAN NUFFEL (BE), Elliott WAGSCHAL (NL), Elsa WIDDING (SE)
Anne-Malorie GERON (EURELECTRIC Secretariat), Bernardo RANGONI (EURELECTRIC Secretariat)
Contact:
Anne-Malorie GERON – amgeron@eurelectric.org
Bernardo RANGONI – brangoni@eurelectric.org

Customer-Centric Retail Markets: A Future-Proof Market Design | 3
Executive Summary and Recommendations 4
1. Introduction 6
1.1 Objective of the report 6
1.2 A customer-centric retail market model 7
1.3 Retail markets towards 2020 8
2. A Future-Proof Retail Market Design 10
2.1 Preconditions for well-functioning retail markets 10
2.2 Core retail market processes 12
Supplier as main point of contact 13
Supply and network contracts 14
Single bills tailored to customers’ needs 15
Efficient and robust supplier switching 16
Moving of end-users 17
Balance and settlement 18
Metering 18
Third party access to data 19
Information exchange between market operators and with customers 19
Customer data privacy and security 20
3. Ensuring a Market-Consistent Customer Focus 22
Credit management (debt and disconnection) 22
Supplier of last resort 23
Default supplier/default tariff 23
Vulnerable customers and energy poverty 24
4. Towards Converging Retail Markets 25
4.1 The need for interoperability 25
4.2 Harmonised retail market design: desirable and realistic? 26
ANNEXES 27
ANNEX I: A Customer-Centric Demand Response Market Model 28
ANNEX II: Retail Market Design Models in the EU 33
Table of Contents

4 | Customer-Centric Retail Markets: A Future-Proof Market Design
Well-functioning electricity retail markets are indispensible to Europe’s energy future. As well
as giving customers the chance to become much more active and involved, they will help to
deliver low-carbon, reliable electricity at competitive prices. This report sets out a customer-
centric retail market model as part of a wider, future-proof market design. Our model consists
of 10 key features:
1. Well-functioning wholesale markets: wholesale markets have a significant impact on
retail markets. Efficient price signals for retail market customers require a well-functioning
wholesale market with transparent price mechanisms. Similarly, large wholesale price
differences within or between regions – and large differences in wholesale market design
– will have detrimental effects on retail markets and may distort competition between
electricity suppliers.
2. Clear roles and responsibilities: well-functioning retail markets need clear roles and
responsibilities of all market actors while drawing a clear distinction between competitive
and regulated players. In demand response markets suppliers will ‘package’ innovative
products based on customers’ preferences and consumption profiles, while distributors
(DSOs) will act as ‘neutral market facilitators’ by providing suppliers with the necessary
information. New contractual agreements will have to be drawn up to satisfy the interests
of both market players and system operators, for instance regarding the management of
the supply portfolio and grid stability.
3. Removing regulated prices for end-users: customers should be able to benefit from market-
driven prices. However, price regulation at household level – still present in 19 out of 27 EU
member states – is hindering the development of well-functioning retail markets. Moreover,
regulated prices obstruct the development of demand response markets, as they prevent
customers from realising the value of (shifting) their consumption. We therefore suggest
the adoption of market-reflective commodity prices and cost-reflective grid tariffs.
4. Efficient information exchange: system operators, market players and customers need to
share information efficiently to ensure high-quality retail market processes such as switching.
Interoperability will benefit customers and should therefore be widely implemented, by
agreeing on a minimum set of data to be exchanged and through compatible formats and
functional open standards. Moreover, information exchange between suppliers and DSOs is
evolving towards ‘data hub’models, where information is sent to, received from and possibly
stored in a central data hub, making it easier to verify data and exchange information.
Although data hubs are not a prerequisite for efficient retail market processes, the rationale
for data hubs will be strengthened by the increased amount of information exchanged in
‘smart energy systems’; the advantages of different ownership/control regimes should
therefore be further investigated in terms of quality, cost-efficiency and governance.
Executive Summary and Recommendations

5. Customer interface: customers are at the heart of any retail market model. A simple
customer interface can improve customer awareness and active participation in electricity
retail markets. We therefore suggest a model in which suppliers act as the main point of
contact for customers.
6. Single bills tailored to customers’ needs: customers should be able to receive a single
bill covering both commodity prices and grid fee components. Moreover, smart meters will
allow customers to receive accurate bills frequently enough to manage their consumption.
Once smart meters are fully rolled out, customers should be able to receive monthly bills
based on actual consumption. Alternatively, suppliers should be allowed to offer customers
the possibility to opt for an equally spread payment scheme with an annual reconciliation
bill, in which case they would receive frequent information on actual consumption through
other means such as mobile phones, in-house displays, or the Internet.
7. A market-consistent customer focus: the focus on customers, for instance in terms of
customer protection, should be consistent with competitive, well-functioning retail markets.
This means inter alia that measures related to suppliers of last resort or default suppliers/
tariffs are well-targeted, do not limit customers’ ability and interest in choosing between
market-based competing offers, and are in line with market dynamics such as price levels
or tendering processes.
8. Reliable sources of information: customers can only reap the benefits of competitive
and well-functioning retail markets if they are well-informed about their rights, the offers
available on the market and the distinction between competitive and regulated actors.
They therefore need reliable sources of information, for instance through the ‘single point
of contact’ prescribed by Directive 2009/72/EC.
9. Privacy and data confidentiality: customers’ confidence is crucial to ensure the well-
functioning of both present retail electricity markets and future demand response markets
with smart meters. This requires adequate safeguarding of customers’ privacy and data
confidentiality.
10. Converging retail market design: the harmonisation of market design and major processes
should be regarded as a useful policy option rather than as an objective in itself. The
potential costs and benefits of EU-wide retail market harmonisation should therefore be
investigated further. A stepwise approach should be adopted, in which the necessity of
further steps is evaluated based on the experience gained after each step.

Introduction1
1.1 Objective of the report
The liberalisation of the energy sector was undertaken to create an internal energy market with
competitive prices, better services and improved security of supply. Properly functioning retail
markets are essential to complete the internal energy market, allow citizens to fully reap the
advantages of competitive markets and move towards the decarbonisation of the electricity sector.
Electricity is a key solution to the challenge of climate change. With its potential for carbon-
neutrality, electricity is an ideal vector to contribute to the decarbonisation of the European
economy. Electricity and highly efficient end-use electric technologies such as electric vehicles
(EVs) and heat pumps will play an increasing role in modern societies, thus combating climate
change, achieving greater energy efficiency and creating economic growth and jobs.
The integration of intermittent renewable energy sources (RES) into the
power system will require an evolution towards ‘smart energy systems’.
This implies adequate regulatory incentives to ensure that the necessary
investments are delivered, as well as the development of new market models
which should have customers at their very heart. Building on clear roles and
responsibilities for suppliers (as major points of contact for customers) and distribution system
operators (DSOs) (as neutral market facilitators), new contractual agreements will be established
to ensure proper market functioning, smooth processes, and security and reliability of supply.
Indesigningwell-functioning,competitiveretailmarketstothebenefitofcustomers,theprinciples
should be the same as for any other market; in particular, to the customer, buying electricity and
electricity services should ‘look’ like any other purchase1
. Customers are genuinely empowered
wherever they can make an informed choice based on a variety of offers, with the confidence that
1 The only exceptions relate to the specific features of electricity, such as the fact that it is intangible, the need to protect those for whom
a short-term loss of electricity supply would be potentially life-threatening (e.g. reliance on kidney dialysis machine), and the need to
ensure universal supply for residential (household) customers. Electricity is, however, not the only essential good, and provisions to
ensure citizens can afford essential goods are part of wider economic and social welfare policy.
The development of new
market models should have
customers at its very heart.

any potential problems will be properly resolved and/or compensated. Customers will have a
choice of products, services and suppliers wherever retail supply companies can freely enter the
market, innovate to meet customers’differing expectations and compete on a level playing field.
Thispaperconsidersthemarketdesignnecessarytoenableelectricityretailmarkets
tofunctionoptimallyfromamacro-economicperspective–takingintoaccountthe
specificities of power markets – and to ensure that suppliers and energy service
companies(ESCOs)candeveloptheirproductsinlinewithtechnologicalandmarket
developments. This will in turn allow the full potential of smart meters and smart
gridstoberealisedaswellasthedeliveryofappropriateofferswithregardtolocal
powerandheatgeneration,smartheatingandcoolingsolutions,electricvehicles,
domestic appliances, and efficiency and load optimisation services.
1.2 A customer-centric retail market model
This report aims to elaborate a customer-centric retail market model, derived from customer
needs. These are:
Choice of different supply products and companies
• Customers can freely choose from a range of different products and supply companies, while
supply companies can innovate in terms of price structure and contract types, products and
services.
• Customers can base their choices not only on price and supplier brand, but also on features
such as billing type and frequency, detailedness of information, level of service, or type of
generation fuel mix (green, grey, etc.).
• A variety of offers is available to meet customer preferences.
Market-based prices
• Customers benefit from competitive market-driven prices and from their ability to choose
and pay for only the product/service level they want, without having to subsidise services
they do not use.
Confidence in market functioning and operators
• Customers benefit from ‘carefree choice’ and smooth execution of the supply agreement.
• The supplier switching process is straightforward and does not represent a barrier to
switching.
• The terms of contracts are clear and transparent, allowing customers to base their choices
on them, rather than on price alone.
Reliable and easily accessible information
• Customers can easily access all the information necessary to compare relevant offers and
make a choice, i.e. information on product, type of contract and price.
• Customers can access general information on the market.The information required is member
state specific because national markets are at different development stages regarding for
instance customer rights and obligations, minimum supply standards, customer protection,
and supplier switching procedures.
This report aims to
elaborate a customer-
centric retail market
model, derived from
customer needs.

• Customers receive clear, transparent and accurate bills frequently enough (based on their
preferences) to manage their consumption, as well as information on payment terms and
recovery procedures if the bill is not paid in time.
• Contract terms contain all the relevant information including, where applicable, the end
date of the contract and what terms apply thereafter (e.g. automatic renewal or return to
standard product).
Adequate customer protection rules
• General customer protection legislation should also apply to electricity supply, and sector-
specific social legislation should in principle not be necessary. Should specific policy measures
exist or be introduced, they should be proportionate and not hinder market functioning or
distort retail market competition.
• Protection from unfair commercial practices is important, as it is for other retail markets.
• Legislation should ensure protection from interrupted supply if a supply company goes
bankrupt.
• Customers should be able to easily access their supply companies’ complaint/customer
service and third party complaint resolution bodies.
1.3 Retail markets towards 2020
The increasing share of decentralised generation from intermittent RES,
the possibility for customers to become ‘prosumers’that both consume
and generate electricity, and the diffusion of EVs and electric heating and
cooling will all require the evolution towards ‘smart energy systems’.
To ensure the successful development of demand-side participation customers have to be at
the very core of demand response markets with smart meters. This will only be possible under
the following conditions2
:
• Suppliers should remain customers’main point of contact for all (major) processes.This will
simplify and clarify market processes for customers and therefore ease their engagement
and active participation in markets – even with the increased complexity of the future ‘smart
energy system’.
• A clear distinction between competitive and regulated market segments should be
maintained:
— On the one hand, suppliers should have non-discriminatory access to relevant information
and their own customers’ data to offer innovative products based on customer
preferences. Moreover, suppliers will further develop their role as energy services
providers. They will increasingly offer energy efficiency services, will use load flexibility
for load management and balancing purposes and will offer this flexibility to system
operators for grid congestion management.
— On the other hand, DSOs should have an adequate overview of the grid and of existing
innovative contracts, in order to neutrally facilitate well-functioning retail markets by
providing the necessary information to market players in a timely, efficient and non-
A clear distinction between
competitive and regulated market
segments should be maintained.
2 See Annex I for a more detailed vision of the future customer-centric demand response market.

discriminatory manner, while at the same time maintaining
grid stability and allowing the integration of intermittent RES
into the power system.
• Demandresponsemarketsneedtobesupportedbyanappropriate
regulatory framework. Suppliers will design creative and dynamic
feedback programmes to provide customers with information that
allows them to actively manage their consumption. Yet this will not be sufficient to change
electricity consumption: active demand response will only become possible once regulated
prices for end consumers – currently present in 19 out of 27 EU member states – have been
removed (or have been made market-reflective) and customers become more aware of the
value of shifting their electricity consumption. Similarly, business as usual will not deliver:
DSOs must be given a chance to invest in smart grids and manage their networks more
intelligently (where necessary). In most member states, the regulatory framework rewards
DSOs for following business-as-usual approaches – investing in ‘copper, aluminium and
iron’– and provides little to no economic incentives to invest in innovative solutions such as
smart meters, supervision and monitoring devices, and network automation. Policymakers
should address this issue to ensure that incentives for smart grids exist and that demand-
side participation solutions can take off.
• Customers will need to have confidence in demand response markets, which includes
adequate data protection. It should always be clear to customers who has access to their
data and what is done with it. At the same time, a market framework needs to be developed
which allows innovation and makes full use of technological potential to offer products that
are attractive to customers.
• Finally, new market models also mean that new contractual agreements will have to be
established between suppliers and DSOs to ensure that the mutual interests of both
market players and system operators are satisfied (concerning, for instance, grid security,
congestion management, and management of the supply portfolio).
Demand response markets
need to be supported by
an appropriate regulatory
framework.

A Future-Proof Retail
Market Design
2
3 Examples include use of regulated tariffs in pre-competitive markets to ensure head room for new entrants, specific and well targeted
where they are used as a substitute for social welfare; and supplier of last resort tariff to ensure a fair opportunity for other suppliers
to win the business of such customers following the transfer from a bankrupt supplier. See opinion of advocate general Colomer, case
C-265/08, 20 October 2009: “if public service can be defined, as noted by the French Conseil d’Etat as ‘the extension of the market by
other means, where the market has failed, and not the other way around’, then in a situation of diminished competition, the state would
have to intervene in order to mitigate the effects of this difficult situation. Yet state involvement in the market must be limited so as not
to postpone true liberalisation indefinitely, and should focus on the protection of the rights of the consumer.”
4 For instance imposing price caps in uncompetitive markets for a defined and limited period in order to protect customers against market
abuse. The price caps should be sufficiently high so as not to discourage new entry and expansion of existing competitors.
5 By definition, “an end-user regulated price is a price subject to regulation (or control) by a public authority, as opposed to an end-user
price set exclusively by supply and demand. The regulation can take different forms, such as setting or approval of prices, price caps or
various elements of these” (ERGEG, 2010).
2.1 Preconditions for well-functioning retail markets
Based on the customer needs in section 1.2, we can derive the following preconditions for
well-functioning retail markets:
Fully liberalised wholesale and retail markets
• A well-functioning wholesale market with transparent price mechanisms is essential to drive
efficient price signals for retail market customers. Large price differences within or between
regions – as well as large differences in wholesale markets design – will have detrimental
effects on retail markets and may distort competition between electricity suppliers.
• To facilitate the creation of the European electricity market and the promotion of liquid
markets that are easily accessible by suppliers for procurement and balancing, cross-border
congestions should be progressively reduced.
• Competition conditions should be met as defined in EU competition law. In particular,
regulated tariffs3
should exist only where necessary to facilitate opening of a market,4
and
barriers for new suppliers to enter the retail market should be low, for instance through
interoperable data and similar supply licences across the EU. Unfortunately, according to the
European Regulators Group for Electricity and Gas (ERGEG), regulated household prices for
end-users still exist in 19 out of 27 European member states, as shown in Figure 1 below5
.
A well-functioning
wholesale market
with transparent
price mechanisms
is essential to
drive efficient
price signals for
retail market
customers.

Figure 1: Overview of end-user price regulation at household level in the EU
Market
opening
Price regulation on 1 January 2010
Country
Final market
opening date
Households
Small
businesses
Medium-
sized to large
business
Energy-
intensive
industry
Austria 2001
Belgium Jan-07
Bulgaria
Croatia
Cyprus
Czech Republic 2006
Denmark 2003
Estonia 2009 2013-01 2013-01 2010-04 2010-04
Finland 1997
France Jul-07
Germany 1998
Greece Jul-07
Hungary Jul-07
Iceland
Ireland 2005 2010-10 2010-10
Italy Jul-07
Latvia Jul-07
Lithuania Jul-07 2015-01 2013-01
Luxembourg Jul-07
Malta
Netherlands 2004
Norway 1995
Poland Jul-07
Portugal 2006 2011-01 2010-01 2010-01
Romania Jul-07
Slovak Republic Jul-07 2012-12 2011-12
Slovenia Jul-07
Spain 2003 2009-07 2009-07 2008-07
Sweden 1996
United Kingdom 1990
Price regulation
YES
End-user price regulation in open
market segment removed between
July 2008 and January 2010
NO
Closed market Segment closed in July 2008
N.A.
XXXX-XX Scheduled date of price regulation removal
Source: ERGEG (2010)

• Thebasicinformationrequirementsandbusinessprocessesshouldbeefficientandcompatible
so as to allow flawless implementation and data exchange between market participants.
• The customer focus should be consistent with well-functioning markets. When addressing
energy poverty and the protection of vulnerable customers – which are member state
specific – by imposing energy supply prices (social tariffs), this support should target a
well-defined group and result in minimum distortions to the retail market.
Established and robust retail market processes
• Retail market processes (e.g. switching) should be simple and reliable,
and encompass well-defined data requirements and formats so that
market players can share critical information efficiently and swiftly.
• Procedures should be in place to ensure a continuous energy supply,
e.g. supplier of last resort provisions should be applied in cases of failed
supplier switching or bankrupt supplier.
Reliable sources of information
• Customers should have access to clear facts on how to choose a supplier and on the switching
process; on how to make a complaint and when and how to seek dispute resolution and
redress; and on customer protection legislation and its application to energy supply.
• Clear information should be provided on the roles and contact details of suppliers and
DSOs. For instance, consumers should be confident that switching suppliers will not affect
quality of supply.
• According to Article 3 (12) of Directive 2009/72/EC, member states shall provide “single
points of contact”. These can represent a possible – but not exclusive – reliable source of
information for consumers.
Adequate complaints, dispute settlement and redress procedures
• Customer complaints should, in the first instance, be handled consistently within a reasonable
timeframe by the suppliers themselves.
• Where a complaint is not resolved satisfactorily by the supplier, an independent service
(e.g. ombudsman) should be available to settle the dispute and to make recommendations
on redress, including a proposal for compensation payments. This should provide a fair
and cost-efficient mediation process in cases where the cost of referral to a court might be
disproportionate to the harm and appropriate level of compensation. Both the consumer
and the supplier should in any case have the right to go to court6
.
2.2 Core retail market processes
Based on the identified preconditions for well-functioning retail markets and following the 2007
EURELECTRIC ‘Reference Retail Market Model’7
this chapter briefly analyses the market design
models implemented in the EU as to the main retail market processes, and provides some
recommendations.Amoreextensiveoverviewwithdataon15memberstatesisprovidedinAnnexII.
6 EURELECTRIC, “Response paper to EC Consultation on the use of Alternative Dispute Resolution (ADR) as a means to resolve disputes
related to commercial transactions and practices in the EU”, March 2001, Brussels.
7 EURELECTRIC, “Reference ‘Retail Target Model’: Bringing the Benefits of Competitive Electricity Markets to the Customer”, April 2007,
Brussels.
Retail market processes
should be simple and
reliable, and encompass
well-defined data
requirements and formats.

Supplier as main point of contact
An essential part of market design concerns the organisation of the customer interface. The
customer interface defines how the market actors and different processes appear from the
customer’s point of view. It has a significant influence on processes and on the roles and
responsibilities of different market actors. EURELECTRIC believes that suppliers should constitute
the major point of contact for customers.
Customers can better relate to the electricity market if it ‘looks’ like other
purchases. For instance, a customer buying goods via the Internet can choose
the delivery service they are willing to pay for but have no interaction with the
transportation company; delivery is both arranged and billed by the retailer.
Customers choose the service based on the delivery date (next day, one week)
but not on how it is achieved, i.e. by plane, overland, by courier or by postal
service. A customer purchasing goods in a store can request delivery (e.g. for
furniture) and again make arrangements and payments in the store where the
goods are bought rather than with a separate delivery agent.
Similarly, the customer interface model advocated here, ‘a customer-centric
model with the supplier as the major point of contact’, implies that most
customer issues are handled by the supplier. Examples of such issues – based
on today’s retail markets – include billing, moving in/out, supplier switching
and questions about consumption, fuel mix and so forth.
The customer-centric model means that the customer has just one counterpart for all (major)
matters: the supplier.This ensures clarity and simplicity for customers and therefore facilitates
their active involvement in the market. The need for such a market model is likely to be
strengthened within demand response markets with smart meters, because of the increased
complexity and amount of information exchange in tomorrow’s “smart energy systems”.
However, this model does not imply that all customer issues should be handled by suppliers.
Strictly network-related issues will remain the responsibility of DSOs, defined by Directive
2009/72/EC as the “natural or legal persons responsible for operating, ensuring the maintenance
of and, if necessary, developing the distribution system in a given area” (Article 2.6). Such
issues include interruptions, technical aspects of metering and metering devices, quality of
supply, new connections, and compensation for failing to meet specified standards of supply.
Moreover, a clear distinction between the competitive and the regulated segments of the market
is required to make sure that customers fully reap the benefits of competitive electricity retail
markets in terms of prices, quality and variety. Within the regulated segment of the market,
DSOs “shall be responsible for ensuring the long-term ability of the system to meet reasonable
demands for the distribution of electricity and for operating, maintaining and developing under
economic conditions a secure, reliable and efficient electricity distribution system” (Art. 25.1).
By providing access to the necessary information on a non-discriminatory basis, they will
neutrally facilitate the market. Within the competitive segment of the market, customers will
then be able to choose between different offers and suppliers.
Suppliers should
constitute the major
point of contact for
customers. [...] This
ensures clarity and
simplicity for customers
and therefore facilitates
their active involvement
in the market.

Supply and network contracts
All customers have an electricity supply contract with their supplier and – in general terms – a
network contract with the DSO8
, as illustrated in the figure below.
Figure 2: Customer contracts: a generic representation
Source: EURELECTRIC elaboration
It is worth noting that the results of a recent study on supply contracts, conducted for the
European Commission, show that the number of supply tariffs offered to household customers
is generally very high: 96 on average9
.
These tariffs differ, for instance, in terms of:
• fixed or variable prices;
• duration (1 year, 2 years or unspecified);
• unique or peak/off-peak prices, as with the “Time-of-Use” (ToU) offers already present in
several member states and characterised by higher ‘on-peak’ prices during daytime hours
and lower ‘off-peak’ prices during night and weekends; and
• whether the electricity is produced from green or grey sources.
The roll-out of smart meters will certainly increase the available number of offers for customers.
Demand response means that customers will be encouraged to be more flexible in how much
electricity they use and when, for instance through “dynamic pricing” offers. Given the ability
to easily manage their electricity use, information about its value and packaging of attractive
products, customers can be willing to change that use. For this to happen, end-user price
regulation will however need to be removed.
Since flexibility is a valuable resource for both market and system operators, we can envisage that
suppliers will sign contractual arrangements with DSOs in order to provide them with the load
flexibility they might need for grid management purposes. As highlighted by the Customer-led
Network Revolution project recently granted by Ofgem, “if distributors were to control demand
response without engaging suppliers, it would threaten suppliers’ ability to balance their
portfolios. As a result, the need for the network operator to contract for reserve would increase,
8 See Annex II for more detailed information on the models identified across EU member states.
9 ECME Consortium, “The functioning of retail electricity markets for consumers in the European Union”, November 2010.
10 CE Electric UK, “Customer-led Network Revolution”. Project granted by Ofgem, 20 December 2010, Appendix 4: Methodology, p.14.
Supply contract
with supplier:
prices, fuel mix, terms
and conditions for
termination of contract,
moving in/out, etc.
Network contract with
DSO:
interruptions, quality of
supply, compensation
for failing to meet
quality standards, new
connections, etc.
Customer
Competitive
segment
Regulated
segment

and this would in turn lead to increased costs for consumers”10
. Moreover, situations might arise
in which the interests of suppliers to use load flexibility for supply portfolio management will
be in direct conflict with the need of DSOs to maintain local grid stability. Such situations will
have to be resolved through a new set of contractual agreements, to ensure that the different
interests of all market players are safeguarded.
Finally, as regards contract termination, it is worth noting that the switching requirements
set out in the electricity and gas directives (switching within 3 weeks) refer to the switching
process rather than the contractual conditions. In a fixed-term contract the contract itself should
clearly set out what happens at the end of the contract and what happens in the case of early
termination, which may constitute a breach of contract. Early termination fees can apply in line
with general contract law, as for other markets such as telecoms and internet services. The
fees usually reflect the loss to the company and make clear to both parties what happens if
the contract is broken, removing the need for court referral in straightforward cases. In some
member states, suppliers can prevent a customer switch and thus protect the customer from
these fees if they have simply failed to take account of their existing contract in making their
decision to switch.
Single bills tailored to customers’ needs
Energy bills are an essential instrument for consumers to choose the supplier that best meets
their needs. According to the 2009 European Commission’s Good Practice Guidance (GGP)
for Billing, “the bill is the primary means by which consumers obtain information on their
consumption and on the price they pay. It is, indeed, an important tool which helps consumers
to manage their consumption and, if possible, consume less11
.”
As shown in the figure below, most EU member states have adopted a market model in which
suppliersgenerallysendcustomersasinglebillcombiningboththecommodityandthegridfees,
while also comprising related costs such as taxes12
.The fundamental advantage of this customer
invoicingmodelisthatcustomershavejustonecounterpart(i.e.thesupplier)forallmajormatters.
Figure 3: Number of bills that customers generally receive in EU member states
Source : ERGEG Status review on the Implementation of EC Good Practice Guidance on Billing (2010)
11 European Commission (DG SANCO) Working Group on Billing, “Good Practice Guidance for Billing”, 2009, Brussels.
12 Figure 3 shows the number of bills that customers receive ‘in general’, though country-specific situations can be more complex and
include exceptions. For instance, in Austria suppliers can choose to use either combined or separate bills.
30
20
10
0
One bill Two bills
Numbers of bills

Inacustomer-centricmodelwiththesupplierasthemajorpointof
contactcustomersreceiveasinglecombinedbillforbothcommodity
prices and grid fee components. The clarity of this model is likely
to facilitate customers’ participation in the market. EURELECTRIC
therefore welcomes the ongoing assessment in the Nordic region
(Denmark, Finland, Iceland, Norway and Sweden) of combined
billing regimes, which includes an evaluation of the implications
of a mandatory vs. a voluntary adoption of combined billing.
In an alternative model, currently implemented in some (Nordic) countries (Denmark, Sweden,
Finland13
), customers receive two separate bills: one from the supplier for the commodity price
and another one from the network operator covering the grid fee.
Smart meters will enable customers to receive accurate bills more frequently, and to receive
information frequently enough (according to their preference) to manage their consumption.
Billing frequency will therefore be an important means for suppliers to differentiate their
commercial offers and to compete against each other. For this reason, once smart meters are
rolled out customers should be able to either receive monthly bills based on actual consumption
or, when offered by suppliers, choose an equally spread payment scheme with an annual
reconciliation bill. In the latter case, which is used widely and is preferred by many customers,
information on actual consumption would be provided on a frequent basis through other means
(e.g. monthly bill, Internet, mobile solution or in-house display), selected according to cost-
efficiency criteria and local market features.
Efficient and robust supplier switching
In a well-functioning retail electricity market, customers actively choose their supplier. This
means that customers have confidence in the market and are not afraid of switching: they know
they will not be cut off when changing supplier and will receive the right bill. In addition, clear
and transparent contract terms allow customers to make an informed choice.
Behind the scenes, efficient and effective data exchange between market actors should be
in place to ensure high-quality processes. The meter operator should provide the necessary
information to market players in a timely, efficient and non-discriminatory manner, while at the
same time safeguarding customers’ privacy and data confidentiality.
Figure 4: Information exchange behind supplier switching
13 In Finland, customers receive two bills when they switch to an alternative supplier, while they continue to receive a single bill if they do
not switch.
In a customer-centric model with
the supplier as the major point of
contact customers receive a single
combined bill for both commodity
prices and grid fee components.
Metering
Access to consumption information
Change of supplier
CUSTOMER CHOICE
Market facilitation

We can identify two different market models for supplier switching, which can be found equally
across the EU. In the first model, the DSO simply registers the new supplier contacted by the
customer, and then notifies the old supplier of the switch (NL, NO, SE, IT, ES, FR, DK, GR).
In the second model, the DSO has to check with the old supplier that the switching is correct,
e.g. does not imply a breach of contract. The DSO then sends either a positive or a negative
supplier switching message to the new supplier (FI, DE, CZ, HU, AT, UK).
As a result, supplier switching in the first model is a rather straightforward process, where the
customer is responsible for contract breach fees and bad debt is a suppliers’risk. In the second
model, by contrast, the switching process is subject to evaluation and can be blocked, under
certain conditions, by the old supplier.
In some markets objections to switching are normal practice where the contract allows it, if
the customer requests it, or for outstanding debt. However, in some markets objections are
not permitted under any circumstances. In these cases, fees are charged for switching within a
minimum contract period and it is considered the customer’s responsibility to know when the
fee applies. If there is a switching error or a fraudulent switch then the customer should be able
to contact their original supplier and ask for the switch to be cancelled. Therefore objections
to switching should be possible within the process.
Notwithstandingthefactthatneithermodelismoreefficientthantheother,thecurrentdifferences
in national rules and practices regarding switching, as well as in the data to be exchanged,
may constitute an entry barrier for suppliers. Harmonisation could offer substantial benefits
to suppliers who want to enter other electricity markets across the EU and, through market
competition, ultimately benefit customers with lower prices, more choice and better quality.
However, harmonisation would also lead to stranded investments for all market parties and
would necessitate substantial efforts to adapt ICTsystems.These costs might indeed be higher
than the direct benefits. EURELECTRIC is therefore closely following the implementation of a
harmonised supplier switching model in the Nordic region.
Moving of end-users
Moving can be split into two separate business processes: moving out of a consumption place
and moving into a consumption place.
Two different market models exist in the EU. In the first model the supply contract is considered
‘personal’: it moves with the customer, though it takes into account the local market features
that, for instance, are likely to influence grid tariffs. When customers move, they can choose
to maintain their contracts with their old suppliers (NL, IT, NO, FI, CZ, DE14
).
In the second market model, the supply contract is fixed to the connection and automatically
ends when the customer moves. In this case, after having contacted the old supplier – which
will in turn inform the DSO(s) – customers will have to arrange a new supply contract for their
new address. This new contract could be with the old supplier or a different supplier (SE, ES,
DK15
, FR, HU, GR).
14 In Germany it is possible though not mandatory to maintain the supply contract when moving.
15 In Denmark it is possible to maintain the supply contract when moving, but customers need to actively request it; otherwise, moving
will automatically imply switching to a new supply contract.

16 In France, distribution meters – as well as networks – are owned by the authorities in charge of organising distribution (i.e. local authorities).
It is worth noting that in the Nordic region harmonisation of the most important messages
and the timetable to send them is considered essential in order to ensure swift and reliable
moving processes, as is the case for the process of supplier switching. However, whether the
supply contracts will be terminated when the customer moves out of a consumption place is a
contractual issue whose harmonisation is not critical.
Balance and settlement
Balance and settlement are essential processes to settle any imbalances between the supply
and the consumption of electricity.
Balance and settlement represent two fundamental processes, for which a market model common
to all member countries can be identified. In this common model, each access responsible
party is responsible for balancing its own portfolio, while the TSO is responsible for residual
imbalance and relies on grid operators for meter reading.
Regarding settlement, on the other hand, grid operators – usually TSOs rather than DSOs – are
responsible for the allocation process, which is yearly in most cases. The reconciliation is often
done by an ad hoc settlement company appointed by grid operators and suppliers.
Metering
Metering is a crucial behind-the-scenes process for establishing consumption data for billing
purposes. The meter reader has to provide consumption information to the relevant market
players in a timely, efficient and non-discriminatory manner, whilst safeguarding consumers’
privacy and data confidentiality.
In most EU member states, the DSO both owns the metering assets and is responsible for
meter reading, for estimation (based on synthetic load profiles) and for validation of metering
data. The established consumption data is communicated to the supplier, who is then able to
correctly bill the customer (BE, NL, AT, IT, NO, FI, CZ, DE, DK, FR16
, HU, SE, GR).
Although this model is the most common across the EU, the frequency of meter reading varies
among countries. Often it is yearly for low voltage (LV) customers, but in other cases it depends
on thresholds related to consumption per year, ampere or other criteria.
In addition, alternative models exist. For instance, UK suppliers are responsible for the provision
of a meter as well as for meter reading and estimation. As competition has been introduced in
the metering activity, suppliers contract with third parties (either DSOs or independent meter
asset providers) to fulfil their obligation. Similarly in Germany, while it is usually the DSO who
is responsible for meter reading, it can also be the supplier (e.g. by offering services which
comprise meter reading) or a third party: customers are free to decide.
Smart meters will allow more frequent and accurate consumption data. In Italy, where smart
meters are already rolled out, monthly meter readings are available for LV customers. Finnish
legislation prescribes that 80% of all consumption places will have to be metered hourly and
read daily by 2014. EURELECTRIC believes that meter readings at 15-minute intervals should
be technically possible in view of a consistent approach and complete synchronisation with
wholesale markets (notably for balancing and settlement purposes), but its actual use should
be left to market dynamics.

Third party access to data
Access to data is essential to ensure the smooth functioning of the retail market. For instance,
commercial data is needed for a smooth switch of suppliers, for billing and provision of energy
services, and for suppliers to make reliable product offers to customers. At the same time, access
to technical data is essential for operational control of the grid and to realise the benefits of
smart metering and smart grids.
This implies that suppliers should have access to relevant information and their
own customers’data on a non-discriminatory basis in order to be able to “package”
innovative products and services based on customer preferences. At the same time,
DSOs should have an adequate view of the grid and of the innovative contracts
between suppliers and customers, in order to (i) neutrally facilitate well-functioning
retail markets by providing the necessary information to market players in a timely,
efficient and non-discriminatory manner; (ii) while at the same time maintaining
grid stability and allowing the integration of intermittent renewable energy sources
into the power system.
Itisthusessentialthatsuppliershaveaccesstocommercialdata(e.g.consumption),
whileDSOshaveaccesstothetechnicaldata(e.g.meteringpointidentificationnumber)
necessary to manage the grid effectively and, where relevant, in a smarter way.
Information exchange between market operators and with customers
Data exchange is one of the most critical processes for a well-functioning electricity retail
market.To guarantee a flawless information exchange between DSOs, suppliers and customers,
both consumption information and ‘relevant consumption point’data should be shared among
relevant market players in a timely and efficient manner.
Within the EU we can identify three different models through which information is exchanged
between the metering operator (usually the DSO) and the supplier.
1. In the first and currently most common market model, information exchange is direct and
bilateral: all market parties directly send one another standardised messages (e.g. IT, NO,
FI, ES, SE, DE, DN, FR, HU, GR).
2. As an alternative, messages can be sent to a data hub, intended as a kind of ‘post box’
where messages are subject to a quality check and are then forwarded to the final addressee
(e.g. CZ, NL).
3. Data hubs can also be organised as a central database where the exchanged data is not
only checked, but also stored. This provides added value in the form of record keeping and
data storing (e.g. UK).
The fundamental advantage of models 2 and 3 is that messages are sent to,
checked by, received from and possibly also stored in just one address. These
models are likely to become increasingly relevant to the future smart energy
systems, which will have smart meters as an interface between technical operation
and the market system and which will be characterised by greater complexity. In
fact, a trend towards information exchange through data hubs can already be
observed within the EU: some countries have already implemented it (NL, CZ) or
decided to fully adopt it (BE, DK); others have decided to adopt it just for some
processes such as switching (AT, ES, IT); and some countries are implementing
this model as a voluntary alternative (SE).
Suppliers should have
access to relevant
information and their
own customers’ data on
a non-discriminatory
basis in order to be able
to “package” innovative
products and services
based on customer
preferences.
A trend towards
information exchange
through data hubs can
already be observed
within the EU.

It is important to note that the advantages of models 2 and 3 are independent from the ownership/
control of the data hub, which can be either public, private (controlled by a third party – energy
industry or otherwise) or mixed.
What is needed is an efficient, transparent and non-discriminatory data
dispatching platform with clear access rules to guarantee customers’ data
confidentiality. It will be necessary to further investigate the advantages and
disadvantages of different data hubs ownership/control regimes in the near
future, by focusing on the following key criteria: quality, cost-efficiency and
governance.
Given the confidentiality obligation of DSOs (Art. 27 2009/72/EC) and their task
to “provide system users with the information they need for efficient access to,
including use of, the system” (Art. 25-3), DSOs might be particularly effective
in fulfilling this role. At the same time, cases such as the Swedish, Dutch and
Danish (under development) data hubs show that ownership/control by national
industry associations can be equally efficient.
Regardless of the ownership/control model, DSOs must in any case have access to technical
and power quality data to ensure that they can efficiently perform their tasks as set out in
Article 25, 2009/72/EC. Similarly, the necessary information should be made available to
market players in a timely, efficient and non-discriminatory manner so that customers are able
to seek products or services that suit their needs, while suppliers can invoice their customers
and develop new products and services.
Customer data privacy and security
Customer confidence is a prime precondition for the well-functioning of both
present retail markets and future demand response. Data security and privacy
are therefore crucial. Customers should always know who has access to their
data and for what purpose. At the same time, a privacy framework that protects
customers, yet enables new services and technology, is essential.
Energy usage data, in particular the anticipated wealth of data from new
technology (smart metering, ICT, in-home units), can be used to tailor products
and offer a better price and service to customers, including the introduction of
dynamic demand response services.Tailored energy services, energy efficiency
and cost-effective grid management offer significant potential advantages
for customers. This can be facilitated if suppliers have access to all the data
required to develop products and tailor energy services. Data protection risks
need to be balanced against the benefits.
Data from smart metering may prove valuable in managing grid constraints and may therefore
contribute to security of supply and reduced costs by reducing grid investments. Using the data
from smart metering can potentially encourage more efficient use of energy. Some argue that the
societal benefit of open access to usage data for the purpose of encouraging energy efficiency
outweighs any privacy and security considerations.This is being tested in the U.S.: for example
Madison (Wisconsin) and Gainesville (Florida) already disclose their residents’ energy use on
the Internet. Disclosure of the annual energy use of public buildings, commercial premises and
when renting or selling residential property is already required in some EU member states as
part of measures under the Energy End-Use Efficiency and Energy Services Directive.
It will be necessary
to further investigate
the advantages and
disadvantages of
different data hubs by
focusing on quality,
cost-efficiency and
governance.
Customer confidence
is a prime precondition
for the well-functioning
of both present retail
markets and future
demand response. Data
security and privacy are
therefore crucial.

Clearly the attitude to privacy differs across countries, as existing laws demonstrate. For
example more people choose to pixelate their property on Google Maps in Germany than in
Sweden. Credit reference is common in the UK but unheard of in Hungary. The public interest
should be balanced with an individual’s ability to give and withdraw consent to the use of their
personal data.
In an example from the energy sector, Spanish legislation to support the liberalisation of the
national energy market obliges each distribution company to share (and update) the data
related to their points of supply through a free online system. To address the relevant privacy
issues, national legislation defines which data can be shared: location of the point of supply
(full address), type of access tariff, voltage, maximum power, type of metering, availability of
power control interruptor, type of consumption profile, contracted powers for each period,
date of last change of access tariff, date of last change of supplier, consumption of the two
previous natural years, day, month and year of the last reading, information related to defaults
on payment, physical or legal person, type of usage, regular home or not, and information on
arrears and on whether the customer has had payment problems in the past.
In conclusion, attitudes to privacy may vary across member states, but all customers will only
be comfortable with access to and use of their data if they are confident that their data is secure
and that their privacy is safeguarded. Designing data storage and exchange technology and
processes that guarantee security of data will play a key role in ensuring that customers are
confident and willing to take up new energy services, in particular demand response services.
Looking to demand response markets, national regulators could draw lessons from sectors
such as banking and telecoms to ensure that the benefits of smart grids are fully delivered,
while adequately safeguarding customers’ privacy and data security.

17 European Directive 2003/54/EC establishes that all household customers should enjoy universal service, which is the right to be supplied
with electricity at reasonable, transparent, easily and clearly comparable prices.
Ensuring a Market-
Consistent Customer Focus
3
The essential nature of electricity means that it is covered by a requirement for universal
service provisions17
. In particular, it is necessary to ensure that customers do not lose supply if
a supplier fails and that vulnerable customers are able to participate in the market. Measures
should nevertheless be compatible with the functioning of competitive retail markets, and
such contracts should not represent an attractive long-term (or permanent) alternative for the
customer to competitive markets.
For example, if tariffs provided by a supplier of last resort/default supplier are
below market prices, customers have no incentive to re-enter the competitive
market. Measures to meet climate and social policy goals should also be assessed
not only in terms of their efficiency and effectiveness in meeting these goals
but also in terms of their impact on competitive retail markets. When a member
state introduces measures which amount to subsidies, these should be clear to
the customer.
Credit management (debt and disconnection)
In competitive markets, those offering services are entitled to be paid for those services as agreed
contractually (at its simplest this is the amount of money paid in exchange for a product/good/
service). In all markets, suppliers have processes and policies for credit management such as
prepay options, mechanisms to access bad payer lists before contracting with customers, or
the possibility to cease supply to bad debtors.This principle should apply to electricity markets
as well, with the exception of household customers who are unable to pay and those defined
as vulnerable. Suppliers provide electricity to public service customers who do not pay their
bills (without disconnecting them) only under very strict conditions set by law. In those cases
specific debt collection measures are also provided.
Measures should
be compatible with
the functioning of
competitive retail
markets.

The costs of credit management and bad debt will be reduced by smart metering, which
allows remotely switching meters from prepay to credit mode and remotely connecting and
disconnecting. This will benefit all customers (notably the majority of ‘good’ payers) as the
cost of debt is necessarily spread across the entire customer base. In addition, it will increase
choice for customers (prepayment18
as a service), reduce disruption and inconvenience (i.e.
no need to visit a property and physically disconnect and reconnect or change a meter from
credit to prepay or vice versa), and facilitate a better service for rented properties, particularly
for short-term letting. It will also prompt customers to choose a supplier rather than continue
with a default supplier when moving house.
Supplier of last resort
Under the public service obligations Directive19
, member states may appoint a supplier of last
resort (SoLR) to ensure the provision of universal service for household customers (and small
enterprises, where deemed appropriate by the member state20
). This provision is intended to
ensure continuity of supply should a supplier fail. The method of implementation, while left
to each member state, must be transparent and non-discriminatory, and restrict competition
as little as possible.
Appointment of a SoLR should preferably result from a competitive process as stated in the
Directive’s interpretative note.
In some member states SoLR is used not only in the case of the failure of a supplier but also
when customers fail to pay the bill or choose a supplier.
Default supplier/default tariff
A default supplier/default tariff is important for electricity, given electricity’s physical
characteristics and potentially essential nature. The default situation is that electricity flows
through the meter on demand, and that a person moving into a house should reasonably expect
to be able to use electricity immediately. A default supplier/default tariff enables supplying and
billing customers even when a supply contract has not yet been explicitly agreed.
This provision is often used when opening up markets, in which case all consumers are on
default prices until they choose to switch.
Default prices should incentivise customers to seek a more suitable contract for their needs.
Otherwise, energy prices could be artificially low, in which case consumers do not see the
true cost of electricity reflected in the prices and are thus neither motivated to engage in the
competitive market nor to take up energy efficiency measures.
Where a default supplier is used as the SoLR the process is not competitive. If a default price
is below the market price a customer has no incentive to re-enter the electricity market and
18 Prepayment provides a straightforward means of budget (and energy use) control which many customers prefer. In the UK 80% of
customers on electricity prepay meters would prefer to continue with that method of payment. Source: Waddams Price 2002, Pre-
Payment Meters: The Consumer Perspective.
19 Directive 2009/72/EC, Article 3.
20 Enterprises with fewer than 50 employees and an annual turnover or balance sheet of less than EUR 10 million.

a regulated sub-market is created. The impact on the competitive market is exacerbated if
this default position is used not only in the case of a failure of a supply business but in every
situation where a customer does not actively choose a product, e.g. at the end of a fixed-period
contract, or as the outcome of a debt management process.
Vulnerable customers and energy poverty
The third legislative package requires member states to ensure adequate safeguards to protect
vulnerable customers. In this context each member state should define the concept of vulnerable
customers, which may in turn refer to energy poverty. To ensure that measures taken do not
interfere with the competitive market, this definition should comprise a small specific set of
household customers; it is for social policy to ensure that essential services are met (e.g.
services such as hospitals where electricity can be critical) and household customers should
not be subsidising businesses.
In order to make sure that customers are aware of energy prices, any social subsidies processed
via the electricity bill should be clearly distinguished from the electricity price they would pay
without this social aid.

Towards Converging
Retail Markets
4
4.1 The need for interoperability
EURELECTRIC believes that interoperability, defined as “the ability of two or more systems or
components to exchange information and to use the information that has been exchanged
effectively”, will bring benefits to consumers by:
• facilitating communication between market players;
• reducing market entry barriers;
• increasing the cost-efficiency of processes;
• facilitating innovation and offering of new services;
• avoiding dependency on a single equipment or service provider.
Interoperability will contribute to keeping the system as simple and cost-effective as possible
and allow electricity retail markets to function like every other market. Several ‘layers’ of
interoperability can be identified: a minimum set of data to be exchanged, compatible formats,
and functional open standards.
1. To define the minimum set of data to be exchanged, two types of information should be taken
into account: the minimum set of information that has to be exchanged (i) during supply
and (ii) when starting energy supply. During supply (i) there should be a regular exchange
of consumption data between the metering operator (usually the DSO) and the supplier, to
enable invoicing, balance and settlement processes.When starting energy supply (ii), on the
other hand, the metering operator should provide suppliers with the ‘relevant consumption
point data’ to allow them to correctly identify the customer, start supplying energy and
notify the other market actors. Regardless of the tool used (e.g. direct bilateral exchange
or data hub), the minimum information required in this phase is the consumption point ID.
EURELECTRIC therefore believes that (i) consumption data and (ii) ‘relevant consumption
point data’ (i.e. consumption point ID) should be compatible.
Interoperability
will bring benefits
to consumers.

2. The use of compatible formats refers to the possibility that all operators, when exchanging
data and regardless of the tool implemented in the different markets (e.g. direct bilateral
exchange or data hub), use predefined formats (for example EDI) that are applied in most
European countries.
3. The introduction of functional open standards represents the highest layer of interoperability.
It refers to the use of a standard format or protocol made available to the general public for
widespread adoption, and permits the development of a variety of competing interoperable
services that use different technologies and platforms.
4.2 Harmonised retail market design: desirable and realistic?
Harmonisation should be seen as a potentially useful instrument rather than an
objective in itself. The Nordic experience proves that cost-benefit analysis (CBA)
is extremely difficult, especially in trying to quantify the potential benefits of
harmonisation. Nonetheless, it is worth briefly mentioning potential costs and
benefits of harmonisation in the EU as we see them.
On the one hand, harmonisation could offer substantial benefits to suppliers in terms of
economies of scale and lower barriers to entry. This would promote more competition across
larger markets and by this means ultimately benefit consumers in terms of lower prices, more
choice and better quality. Even a reduction of a few euro cents per kWh would, if multiplied
for a large amount of total household consumption, deliver substantial economic benefits.
In addition, harmonisation of retail market design could be an opportunity to improve retail
market design, by learning from other countries’ experiences and implementing the models
that are considered most successful.
On the other hand, however, retail markets currently have a national dimension, with (strongly
diverging) national legislation and rules, for instance for communication among market parties.
Moreover, harmonisation would lead to stranded investments for all market parties and would
imply significant costs to adapt ICT systems, which could in the end be higher than the direct
benefits. The adaptation costs of harmonisation at EU level would be even more significant for
countries which are already involved in harmonisation processes at regional scale, so aligned
timescales will be crucial.
Harmonisation should be
seen as a potentially useful
instrument rather than an
objective in itself.

Current initiatives towards the harmonisation of retail markets design in the EU include the
Nordic region and the All-Ireland market between Ireland and Northern Ireland, both of which
EURELECTRIC is closely following.
The advantages of harmonisation will be higher if:
• regulated prices have been removed;
• lessons from the harmonisation exercises in the above-mentioned regional projects are
taken on board;
• relevant parties have enough time to jointly develop and enact moves towards harmonisation.
To make an EU-wide harmonisation of retail market design and of the main
retail processes feasible, a stepwise approach is necessary. After each step,
the necessity of undertaking further steps should be evaluated based on the
experience gained.
A. Basic Step: Functioning national retail markets
a) Removal of regulated tariffs (2012 -2014)
B. Harmonisation of processes
a) Among the first steps would be (at the earliest 2014-2017):
• (minimum level of) harmonisation of roles and responsibilities;
• (minimum) requirements regarding the availability of data to be exchanged.
b) The next steps could be (at the earliest 2017-2020):
• (minimum level of) standardisation of retail-market related processes;
• (minimum level of) standardisation of retail-market related rules and legislation.
c) The ultimate steps could be (at the earliest 2020-2025):
• harmonisation of retail-market related processes;
• harmonisation of data to be exchanged.
To make an EU-wide
harmonisation of retail market
design and of the main retail
processes feasible, a stepwise
approach is necessary.

21 EURELECTRIC Power Choices Study - Pathways to Carbon-Neutral Electricity in Europe by 2050, November 2009.
22 This paper focuses on demand response. For a deeper analysis of both demand-side management and demand response please refer
to ‘EURELECTRIC Views on Demand-Side Participation: Involving Customers, Improving Markets, Enhancing Network Operation’ (2011)
Brussels.
A Customer-Centric Demand Response
Market Model
ANNEXI
Introduction
Europe’s future electricity system will be different from the present system as its physical
infrastructure and market design will have to keep pace with the decarbonisation of the sector
and with customers’changing needs.To address climate change and its effects, the power sector
is striving to achieve a carbon-neutral power supply by 2050, in which the share of electricity
from renewable energy sources (RES) will amount to more than 50%21
. In addition, customers
will increasingly manage and adjust their consumption (energy savings, energy shifting, peak
shaving) throughout the day, responding to real-time information and dynamic price signals.
Inordertosmoothlyintegratedistributedenergyresources(DERs)intodistributiongridsandenable
amoreactiveandflexibledemand,afundamentalchangeinthepowersystemisneeded.Aspartof
awidermovementawayfroma‘supplyfollowsloadparadigm’toa‘loadfollowssupplyparadigm’,
smartgridswillsignificantlyincreasetheresilienceofdistributionnetworkstointermittentintake
and will serve as a market platform for flexible loads and (enhanced) demand-side participation.
The development of demand-side participation solutions – encompassing both demand-side
management and demand response22
– will improve overall system efficiency and provide
benefits to every stakeholder, to the ultimate benefit of consumers (see EURELECTRIC’s Views
on Demand-Side Participation report).
First of all, customers will potentially see lower electricity bills than in a scenario without
demand response; they will increase their awareness and participation in the market; and they
will benefit from flexible load contracts. Secondly, suppliers will be able to offer new products
and services based on individual consumption profiles and preferences, and will have better
balancing and hedging opportunities.Thirdly, provided DSOs are given the possibility to rely on
DSM tools to operate and plan the grid in a smarter way, smart grids will mitigate the increase
in new network assets to relieve grid constraints. Finally, generators and traders will be able
to optimise investments in peaking generation plants and back-up capacity. They will also gain
potential benefits in terms of portfolio diversification.
• Increased awareness and savings
• Increased participation and economic
benefits of personalised and flexible
load contracts
Customers
• Opportunity to optimise the use of
and investment in new network assets
to relieve constraints
• Increased network performance
Network Operators
• Ability to offer new products and
services for customers
• Enhanced balancing and hedging
opportunities
Suppliers
• Investment optimisation in peaking
generation plants and back-up capacity
• Possible benefits in terms of portfolio
diversification
Generators

23 M.H. Albadi and E.F. El-Saadany (2007) “Demand Response in Electricity Markets: An Overview”, IEEE.
The Vision
The paradigm shift that is occurring in balancing electricity supply and demand means that in
a demand response market customers will be encouraged to be (more) flexible regarding how
much electricity they consume and when. In future, customers will steer their consumption
much more actively than today, contributing to the flexibility that the new system requires.
Given the opportunity to easily manage their electricity use and receive information about its
value, customers might be willing to change their consumption patterns. As a result, they will
become active in managing their consumption in order to achieve system efficiency gains and
by this means also individual monetary/economic benefits.
Demand response can be defined as “the changes in electric usage by end-use customers from
their normal consumption patterns in response to changes in the price of electricity over time.
Further, demand response can also be defined as the incentive payments designed to induce
lower electricity use at times of high wholesale market prices or when system reliability is
jeopardised. Demand response includes all intentional modifications to consumption patterns
of electricity of end-use customers that are intended to alter the timing, level of instantaneous
demand, or the total electricity consumption”23
. Demand response therefore aims to reduce
electricity consumption in times of high energy costs or network constraints by allowing customers
to respond to price or quantity signals.
With the development of demand-response markets, customers will be encouraged to be more
responsive to price signals and hence more flexible in their electricity consumption. Such higher
flexibility will help to offset the intermittency of RES. To ensure a smooth transition from the
current ‘supply follows demand’ paradigm to a larger degree of ‘demand follows supply’, an
architecture which allows easy, simple and automated services should be offered. This would
ensure customers’engagement and consequently the take-off of demand response markets. In
sum, demand-response products (new paradigm) have the potential to complement conventional
peak power plants (traditional paradigm) to provide the system with the needed flexibility.
The Concept
In a functioning retail market, customers should be able to choose from a range of products which
suit their preferences. The innovative products packaged by suppliers will deliver – provided
that end-user price regulation is removed – powerful messages to consumers about the value
of shifting their electricity consumption. Examples of such offers comprise:
• Time-of-Use (ToU): higher ‘on-peak’prices during daytime hours and lower ‘off-peak’prices
during night and weekends (already offered in some member states);
• Dynamic pricing (including real-time): prices fluctuate to reflect changes in the wholesale
prices;
• Critical peak prices: same rate structure as for ToU but with especially higher prices when
electricity prices are high or system reliability is compromised.

24 For instance there are fewer options for use of discretionary load in the UK than in other parts of Europe due to factors such as lack of
air conditioning load (moderate climate) and high take-up of gas rather than electricity for heating (which is expected to change in the
future as gas supplies become more expensive).
Figure 2: A customer-centric demand response market
The control on customers’ load can either be:
• manual: customers see prices, for example on a display, and decide to shift their consumption,
e.g. remotely through a mobile phone;
• automated: customers’consumption is shifted automatically through automated appliances,
which can be pre-programmed and can be activated by either technical or price signals (as
agreed for instance in the supply contract).
Suppliers will need to translate the complexity and sophistication of a well-functioning demand-
response market into the simplicity that customers demand, by ‘packaging’attractive products.
Successful suppliers will offer products that are easy for the customer to understand and
effectively manage any complexity in costs (e.g. variable grid tariffs). Moreover, the potential
for demand response and related earnings (e.g. possible savings in energy bills) at household
level is currently limited in most countries. Such customers can therefore only be engaged – at
least in the short term – through services which are not exclusively related to energy savings. It
will be the suppliers’ role to create attractive products that, for instance, offer customers more
security, an appealing (green) brand and convenience.This will in turn require a cultural shift for
suppliers, who will progressively become service providers rather than mere energy suppliers.
Many large and energy-intensive industrial consumers already use demand-response services,
and further services will develop over time. Household electricity consumption and customer
preferences differ significantly across Europe, hence the potential for demand response at
the household level will also differ. In countries such as Sweden and Finland for instance, the
average yearly household consumption is three times higher than in Southern Europe (around
15,000 kWh compared to less than 5,000 kWh24
. Furthermore, average consumption is neither
the only nor the most important factor determining the potential for demand response. The
most important influence will most likely be the share of usage which can be shifted.We expect
the market to develop gradually, according to the figure below.
Total
Limited
Price
Customer
Handover control
to third party with criteria
e.g. car ready to go at
6am, food safety, home
temperature maintained,
microgeneration used
locally or fed to grid
anytime
Customer
in-home remote
control via iphone
– sets own price
signal alerts

Figure 3: The European demand response/DSM market will develop step-by-step
The technological changes expected within the energy industry present attractive opportunities
for suppliers to further develop their products and services. However, technological developments
and the application of emerging technologies cannot be known in advance. Customers’flexibility,
consumption profiles (shiftable load for households vs. SME) and local conditions (e.g. wholesale
markets, network constraints) that will affect future offers by suppliers differ widely; while the
future potential for demand response is still largely unknown (e.g. electric vehicles). This is
why demand-response offers should be ultimately left to market dynamics.
Behind the scenes
To efficiently deliver new products on a competitive basis, suppliers will need timely, transparent
and non-discriminatory information from metering operators (DSOs in the majority of EU member
states). In a ‘smart energy system’ characterised by smart grids and load flexibility, DSOs will
facilitate the playing field on which suppliers offer innovative products, and will therefore play
the role of neutral market facilitators.
It is thus essential that suppliers have access to commercial data, while DSOs have access to
the technical data necessary to manage their grid effectively and, where relevant, in a smarter
way. In particular, the frequency/granularity and quality of information required from and by
DSOs will depend on the purpose and the products offered by commercial players, with even
real-time information conceivable. Commercial products in turn will depend on the availability
of information as well as customer preferences.
Taking into account that customers’ flexibility is a valuable resource for every stakeholder,
suppliers will contract with customers their flexibility for energy balancing purposes. Distributors
will then contract with suppliers and with distributed generators for an additional level of
flexibility for local network balancing. If distributors were to control demand response without
involving suppliers, it would threaten suppliers’ ability to balance their portfolios. As a result,
the need for the network operator to contract for reserve would increase, and this would in
HOUSEHOLD
CONSUMERS 5,000 kWh/y
PUBLIC ADMINISTRATIONS
COMMERCIAL CONSUMERS
SMALL AND MEDIUM-SIZE INDUSTRIAL CONSUMERS
LARGE INDUSTRIAL CONSUMERS
Business case of demand response
by category of users
HOUSEHOLD
CONSUMERS 5,000 kWh a year
Today 2010 and beyond

turn lead to increased costs for consumers25
. Where applicable, network tariffs should support
the development of demand-response products. It is anticipated that in the future and with the
advent of smart grids, the grid-tariff structure will become more load-dominated26
.
A new set of agreements will also have to be established between suppliers and DSOs to ensure
that customers benefit from proper market functioning, smooth processes, and a secure and
reliable electricity supply. Such innovative agreements can be set out in grid codes and ancillary
services, allowing suppliers to market new products and optimise their supply and balancing
portfolio, while DSOs can guarantee local grid stability and security of supply through system
services. Indeed, the large-scale connection of distributed energy resources to a smarter
distribution grid opens up new opportunities for system obligations and grid services (reactive
power, voltage support, congestion management) and will hence foster the development of a
market for ancillary services.
The table below provides some generic, non-exhaustive examples of possible arrangements
between DSOs and suppliers. These agreements, which need to be analysed in further detail
in the future and will have to be reflected in grid codes and ancillary services, should ensure
that the core competencies of both market players and system operators are put to best use.
Table 1: Examples of possible future agreements between suppliers and DSOs
Object of agreement Purpose Responsible actor Service/product provider
Provide customers with
information on energy
consumption related cost
Enhance customer
awareness and their active
role in electricity markets
Supplier Supplier
Balance of demand/supply
in the transmission grid
Optimise demand and
supply to balance the grid
TSO Balance responsible party
Balance of demand/
supply portfolio at balance
responsible level
Optimise demand and
supply to ensure global
system flexibility
Balance responsible party Supplier/large customer
Security congestion
management (short-term)
Operate the grid within the
security standards
DSO Supplier/large customer
Firm capacity management
(long-term)
DSO planning purpose;
optimise demand and
supply with a viewing to
using assets most efficiently
DSO Supplier/large customer
Voltage control High quality of service DSO Supplier/large customer
Finally, smart grids will also lead to increased interactions between market players and system
operators along the upstream electricity value chain and will usher in a stronger link between
wholesale and retail markets. Consistency in price signals should be achieved, and TSO-DSO
interfaces should be more structured. Looking ahead, the increasing penetration of intermittent
and distributed generation may imply that DSOs will gradually move towards more local system
operation and coordination functions. In the near future they might thus be put in a position to
perform local balancing or islanding: further research will be needed on these aspects.
25 CE Electric UK, “Customer-led Network Revolution”. Project granted by Ofgem, 20 December 2010, Appendix 4: Methodology, p.14.
26 More specifically, ‘an assessment of the actual grid tariff systems reflecting grid load by demand charge on a metered basis and by
offering special discounts for interruptible loads could help to find the essential framework to be designed’ (EC Expert Group 3).
Adequate tariffs structures could be elaborated taking into account energy (kWh), load (kW) and time of use, so as to ensure fairness
towards all grid users and adherence to the principle of causality (i.e. cost-reflective tariffs).

Retail Market Design Models (15 Member States)
• Consumer information exchange: Consumer information is always exchanged between the
metering operator (usually the DSO) and the supplier, often through the use of standardised
messages for the most common processes (e.g. switching). Currently 3 different models of
information exchange exist:
1) Direct bilateral exchange: everyone directly sends messages to everyone else. This is
currently the most common market model.
Examples: IT, NO, FI, ES, SE, DE, DK, FR, HU, SK, GR.
2) Information exchange through a ‘data hub’, a kind of post box where messages receive
a quality check before being sent to the addressee. The fundamental advantage of this
model is that just one address is needed to send and receive messages.
Examples: NL, CZ have already implemented it; BE and DK (April 2012) have decided
to adopt it; SE as a voluntary alternative; ES, AT and IT have decided to adopt it just for
switching.
3) The data hub also acts as a central database where the data is stored and managed.
The extra advantage of this model: it can represent an instrument for recordkeeping
and data storing.
Examples: UK uses one hub for information exchange and another portal to store static
data, e.g. point ID, current supplier.
• Balance and settlement: There is one market model common to most countries, in which:
• Balancing: each access responsible party is responsible for balancing its own portfolio,
while theTSO is responsible for residual imbalance and relies on grid operators for meter
reading.
• Settlement: grid operators are responsible for the allocation process, with an annual ex
post reconciliation by a party appointed by grid operators and suppliers  TSO often via
an ad hoc (balancing and) settlement company.
Examples: BE, NL, ES, IT, UK, AT, DK, SE, DE, NO, CZ, FR
In an alternative settlement model, DSOs are responsible for yearly reconciliation and
there is no central party for reconciliation.
Examples: FI, HU
• Customer contact; customer information: Two models exist:
1) In the model adopted by the majority of Member States the supplier is the major point of
contact for the customer. The DSO can be contacted in cases of emergency loss of supply
or technical issues related to the network, e.g. power quality or connecting large loads.
Examples: BE, UK, NL, AT, IT, NO, ES, DE, CZ, FR, SK
2) A minority of Member States has adopted a “dual contact model”, where customers are
in contact with both the supplier and the DSO
Examples: FI and DK (however the supplier is in fact the main point of contact, because
customers can handle supplier switching and moving with the supplier alone if they so
want); SE.
ANNEXII

• Contracting with the consumer: Besides the supply contract (which is always between
supplier and customer), we can identify three main contractual models:
1) The connection contract is concluded between the DSO and the customer, while the
network service contract is concluded between the DSO and the supplier.
Examples: BE, NO, DK, CZ, DE27
, SK, GR
2) Both the connection contract and the network service contract are concluded between
the customer and the DSO.
Examples: FI, HU, SE28
, AT
3) Both the connection and the transport contracts are concluded between the DSO and
the supplier, who acts on the customer’s behalf.
Examples: IT, FR29
, UK, ES30
• Establishing consumption data for billing purposes: Three market models exist:
1) In the model adopted by the majority of Member States the DSO is the owner of the
metering assets and is responsible for meter reading, for estimation (based on SLPs)
and for validation of metering data.
Examples: BE, NL, AT, IT, NO, FI, CZ, DE31
, DK, FR32
, HU, SK, SE, GR
However, the frequency of meter reading varies across Member States, e.g.:
• yearly for LV and monthly for MV and HV customers (BE, NL, AT) – daily for MV and
HV customers equipped with AMR meters (BE)
• monthly for LV, MV and HV customers and yearly only for residual customers still
not provided with smart meters (IT)
• frequency depends on usage: yearly for small customers ( 8000 kWh/year) and
every second month for large customers (8000 kWh/year) (NO); yearly for customers
with consumption of  100000 kWh/year (DE, DK)
• frequency depends on Ampere: monthly for customers with 63 Ampere or less and
hourly for customers with more than 63 Ampere
• 80% of all consumption places should be metered hourly and read daily, by beginning
of 2014 (FI)
• a 4-month metering period for LV customers with small capacity and a monthly
metering for HV, MV and LV customers with capacity greater than 35kVA (GR)
27 Although this is the most common model in Germany, customers can also choose model 2.
28 Some aspects in the network service contract are also regulated in the Electricity Act and Regulator provisions.
29 Customers can decide to have a contract with a DSO or to let suppliers act on their behalf. Most household customers favour simplicity
and therefore prefer to have just a single contract with a supplier.
30 Although this is the most common model in Spain, customers can also choose model 1.
31 In Germany the DSO usually reads the meter, but the customer can also decide to delegate this to the supplier (e.g. it can offer services
with meter reading included) or a third party.
32 In France the distribution meters – as well as networks – are owned by the authorities in charge of organising distribution (i.e. local
authorities).

2) The meter company (usually the DSO) owns the assets, but suppliers are responsible
for meter reading and estimation; reading frequency varies from 4 to 1 time per year
and suppliers accept customer readings – any dispute is referred to Ofgem.
Examples: UK
3) Either the DSO or the customer owns the metering assets, and the DSO is responsible for
meterreading(everytwomonthsforLVcustomersandmonthlyforMVandHVcustomers).
Examples: ES
• Billing consumers: Two market models exist:
1) In the model adopted by the majority of Member States the supplier issues a unique bill
comprising both commodity prices and grid fee components (plus related costs such
as taxes). In this model the supplier is usually liable for unpaid bills (including for the
related grid fee component).
Examples: BE, NL, UK, ES, IT, AT33
, FI34
, DE, CZ, FR35
, HU36
, SK, NO37
, GR
2) A minority of Member States have decided to adopt two separate bills, issued by the
supplier and the DSO respectively.
Examples: SE, DK
Billing frequency varies widely across Member States, e.g.:
• monthly billing of a fixed sum with a yearly reconciliation bill based on measured
consumption for LV customers – monthly billing of measured consumption for MV and
HV customers (BE, NL, AT, CZ).
• billing frequency decided by suppliers and therefore varies (UK, ES, IT, FI)
• Switching of customer: Two market models can be identified:
1) Consumer -  new supplier -  DSO (registration only) -  (notification only) - 
old supplier. In this model the switching process is straightforward; the customer is
responsible for contract breach fees and bad debt is a suppliers’ risk.
Examples: NL, NO, IT, ES, SE, FR, DK, GR
2) Consumer-newsupplier- DSO- (check)- oldsupplier- (restraintforswitchor
not) -  DSO -  (switch OK or not) -  new supplier. In this model the switching process is
subjecttoacheckbytheDSOandmaybeblockedbythe‘oldsupplier’(undercertainconditions)
Examples: FI, DE, CZ, HU, AT, UK
33 Austria: mostly one unique supplier bill but suppliers can choose to bill only the supply side if they so wish.
34 Finland: customers who have not switched receive one unique supplier bill, while customers that have switched receive two separate
bills. In these cases suppliers can also offer one unique bill if the DSO agrees.
35 This is by far the most common model in France for LV and MV customers. Nevertheless, since the number of bills depends on the
number of contracts the customer has, in principle it is possible for customers to have two separate bills. In addition, it is interesting
to note that in France due to a recent ruling the supplier is not liable for the grid fee component of an unpaid bill.
36 In Hungary household customers typically receive a single bill, though commodity and grid fees have to be stated separately.
37 The majority of households in Norway receive a single combined bill, though the rate is decreasing. In addition, when customers switch
from the local or incumbent supplier (from which they received a combined bill) they receive two separate bills.

• Moving of end-user: Two market models exist:
1) The supply contract is ‘personal’ and moves with the customer. The customer contacts
the supplier (date, meter data old connection and ID new connection, meter data new
connection) and the supplier informs DSO/DSOs (old and new when moving out/into
different DSO area).
Examples: NL, IT, NO, FI, CZ, DE (maintaining contrast possible but not necessary)
2) The supply contract is linked to the connection and automatically ends when the customer
moves; the customer contacts the supplier (and DSO?) and has to arrange a contract
for the new address with a new supplier.
Examples: SE, ES, FR, HU, GR; DK (possible to maintain contract but automatic switch
to new one if customers do not actively request it)
• Dispute settlement: Customers generally contact first and foremost the supplier to settle
disputes (ES, NL, IT, UK, FR, GR, DK: also DSO when appropriate). In case they are not
satisfied, there are several options. They can:
1) turn to an in-house company ombudsman (FR);
2) turn to an independent dispute settlement organisation (NL);
3) turn to a regulator with dispute settlement functions (IT, GR);
4) turn to (free of charge) consumer advice services (FI).
• Commodity prices: Besides the supplier of last resort (SoLR)/ default supplier/tariffs
(discussed below), prices can be:
1) determined by demand and supply.
Examples: AT, BE, UK, FI, LU, SI, NO, CZ, DE, SE
2) regulated. By definition, “an end-user regulated price is a price subject to regulation
(or control) by a public authority, as opposed to an end-user price set exclusively by
supply and demand.The regulation can take different forms, such as setting or approval
of prices, price caps or various elements of these”38
. For instance, in Spain prices are
determined by suppliers without need for approval by the regulator but there is an ex
post price monitoring by regulators; while in the Netherlands prices are determined by
suppliers but the regulator has to determine if they are reasonable. If this is not the
case, suppliers have to adjust prices.
Examples: FR39
, HU, SK, ES, BE, NL, IT, DK40
, BG, CY, EE, GR, IE, LV, LT, MT, PL, PT, RO
38 ERGEG, “Status review of End-User Price Regulation as of 1 January 2010”, 8 September 2010, Brussels.
39 Prices are regulated by the Ministry of energy if supplied by incumbent (this is the case for most customers), while are determined by
suppliers if energy supplied by suppliers other than the incumbent.
40 “Passive customers” who are not actively switching supplier are supplied at regulated prices.

41 Only large business customers (i.e. all HV and MV customers and LV customers with revenues higher than 10 mn ∑ and more than 50
employees).
42 Only large business customers (i.e. all HV and MV customers and LV customers with revenues higher than 10 mn ∑ and more than 50
employees).
43 Exceptions are Belgium (regional licence for retailers) and Finland (no licence needed for suppliers).
• Supplier of last resort, default supplier and default tariff:
• Social supply tariff: Some Member States have no social supply tariff. Where such a tariff
exists, these have different features:
1) There is no social supply tariff.
Examples: NL, AT, FI, UK, CZ, DE, DK, CZ
2) There is a social supply tariff.
Examples: BE, IT, ES, FR, HU, GR
a) for about 5% of the population (e.g. disabled people with low income); cost (=
delta between commercial price and imposed tariff) is socialised and recovered by
suppliers (BE);
b) all suppliers are required to offer social tariffs to people with low income or severe
physical disease (about 5 mn); social tariff is a cash discount on the bill which
depends on the number of family members but not on their consumption (IT);
SOLR / Default Supplier / Default Price - Tariff
Scheme used: REGULATED NON-DISCRIMINATORY / NEUTRAL PRO-MARKET
Applies in cases
of:
Social supplier
(DSO), regulated
tariff
Social supplier,
regulated tariff /
regulated price
Social
supplier, non-
discriminatory
price
Standard
published
price with
ex-incumbent
supplier
Customers split
proportionally
between
all other
suppliers, non-
discriminatory
(standard)
prices
SOLR allocated
by tender
process, market
prices
Bankruptcy of
supplier
ES (Supplier which is
part of same vertically
integrated company
as the DSO);
CZ (‘Common’
supplier in the local
area);
FR; SK
NL UK, IT
Customer does
not choose a
supplier (house
move, at end of
contract)
ES (Supplier which is
part of same vertically
integrated company
as the DSO)
DK (Supplier obtains
licence to offer supply
obligation contracts)
IT41
Customers
unable to pay
bills
BE AT
Customer
never switched
(supplier or
product)
DK (Supplier obtains
licence to offer supply
obligation contracts)
UK IT42

c) social supply regulated tariffs are offered by incumbents as part of their public service
obligation, for which they are compensated. In addition, all suppliers contribute to
the “housing solidarity funds” managed by the government and which assist low-
income customers (FR);
d) asocialsupplytariffisappliedtocustomersunder3kWorretiredpeople,largefamilies
and those where all members unemployed (in total about 2.5-3 mn customers); the
social tariff is regulated and the cost is paid by generators (ES);
e) the beneficiaries are socially disadvantaged groups who satisfy specific criteria, like
families with low income, families with three children, long-term unemployed and
people with disabilities whose income is lower than the current tax-free bracket of
the category they belong to (GR).
• Market structure:
• In most countries suppliers and DSOs need a licence at national level43
.
• All retail customers are now eligible to buy on the competitive market (as prescribed by
EU legislation), but they were made eligible at a different pace:
- UK (1990)
- NO (1995)
- SE (1996)
- FI (1997)
- DE (1998)
- UK (1999)
- AT (2001)
- ES, DK (2003)
- NL (2004)
- IE (2005)
- CZ, PT (2006)
- BE, IT, FR, SK, GR, HU, LV, LT, LU, PL, RO, SI (2007)
- HU (2008)
- EE (2009)
• The number of DSOs and suppliers (registered and active) varies, but in some Member
States we can see concentration, e.g. 3 suppliers with 80% of the market (NL), 4 suppliers
with 80% of the market (ES) and 1 DSO with 95% of the market (FR).

Notes
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................

Union of the Electricity Industry - EURELECTRIC aisbl
Boulevard de l’Impératrice, 66 - bte 2
B - 1000 Brussels • Belgium
Tel: + 32 2 515 10 00 • Fax: + 32 2 515 10 10
VAT: BE 0462 679 112 • www.eurelectric.org
MazyGraphicDesign

customer-centric_retail_markets-web-2011-321-0002-01-e

More Related Content

What's hot

Viewers also liked

Similar to customer-centric_retail_markets-web-2011-321-0002-01-e

customer-centric_retail_markets-web-2011-321-0002-01-e