National Agency for Energy Regulation Legislation in Energy Sector Institutional Capacity of Energy Sector Wholesale and Retail Market Development Third Party Access to Network Viability and Security of Supply Chisinau, 21 Iunie 2010
Energy Legislation Primary Legislation - Law on Energy - Law on Electricity, which transposes the provisions of EU Directive 54/2003 on Common Rules for Electricity Market - Law on Natural Gas, which h transposes the provisions i of EU Directive 55/2003 on Common Rules for Natural Gas Market - Law on Renewable Energy - Law on Oil Product Market - Law on Regulating Entrepreneurial Activity through Licensing - Law on Public Utility Services Slide 2
1. Law on Energy provides for: - general framework for operation of energy sector, so as to ensure viable supply of energy resources to consumers, - duties and competence of central and local public administration authorities, - National Agency for Energy Regulation - duties and administration of the Regulator, its financing, 2. Law on Electricity: - sets the legal framework for efficient operation, regulation and phased opening of the electricity market, for specific activities of electricity sector and for the production of heat by CHPs, under conditions of accessibility, availability, reliability, continuity, competitiveness, transparency, compliance with quality norms, safety and environmental protection Slide 3
- the Law sets forth the responsibilities of the Government, the central specialized public administration body and the powers of the National Agency for Energy Regulation with regards to electricity sector and market operation. - The law establishes the requirements for licensing the activities on the electricity market, - duties, rights and obligations of transmission and system network operators, of electricity suppliers and distribution operators, including the duties of last resort suppliers, - end users rights and obligations, - access of users to electric networks and electric networks extension, - procedure of building electric power plants etc. - the law also provides for phased liberalization of electricity market for non-household consumers before January 1, 2013, for household consumers before January 1, 2015 and the right of eligible consumers to sign contracts at their choice with electricity suppliers. Slide 4
3. Law on Natural Gas: - sets the legal framework for efficient operation and regulation of natural gas system and market, for specific activities of the natural gas sector under conditions of accessibility, availability, reliability, continuity, competitiveness, transparency, compliance with quality norms, safety and environmental protection. - the Law sets forth the responsibilities of the Government, the central specialized public administration body and the powers of the National Agency for Energy Regulation with regards to the operation of the natural gas system and market. - The law establishes the requirements for licensing the activities on the natural gas market, - duties, rights and obligations of the transmission/distribution network operators, gas suppliers, including the duties of last resort suppliers, storage warehouse operators - end users rights and obligations, Slide 5
- access to storage warehouse and combined operator s work etc. The Law also provides for the possibility that the distribution network operator, providing services up to 100000 consumers, also hold a license for natural gas supply at regulated tariffs after 2013. - The Law states that the end user shall be entitled to sign a gas supply contract with any supplier, including from abroad. 4. The Law on Renewable Energy sets the legal framework for the operation of renewable energy sector, social and economic relations established in the process of utilization of renewable energy sources, ways of organizing the production and marketing of renewable energy and fuel. - The Law provides for the principles and objectives of state policy in the utilization of renewable energy sources, lays down the ways of integration of renewable energy sources into the national energy system, including through the obligatory procurement by distribution network operators of electricity ect c ty amounts produced by electric power plants, working on renewable energy sources, including Slide 6
Ensuring, before 2010, 6% of traditional energy volume be produced from renewable sources, before 2020-20%. - In 2020 the volume of bio-ethanol/gasoline mixture will make 6% of the volume of gasoline sold, whereas the volume of bio-diesel/diesel l mixture will make 5% of the diesel sold. - In 2020 the volume of bio-ethanol/gasoline li mixture and the volume of bio-diesel/diesel mixture will each make 20% of the volume of gasoline and diesel sold; Slide 7
4. Law on Oil Market is targeted at forming the organizational, legal and economic framework for the country's economic security and regulation of import, transmission, storage and marketing of petroleum products domestically, as strategic products, under a special activity regime, creating favorable conditions for relations on the domestic oil product market, reliable supply of high quality oil products to consumers, developing fair competition and protection of consumers rights and interests. The Law prescribes that activities of import and retailing gasoline, diesel oil and liquid gas shall be licensed by the Agency. The Law also prescribes that the Agency shall develop and approve the methodology of price calculation for gasoline, diesel oil and liquid gas, including by applying reasonable profitability. For the import and marketing of other oil products no license is required and prices shall be established depending on market demand. Slide 8
5. Law on Regulating Entrepreneurial Activity through Licensing determines the legal, regulatory and economic organization of entrepreneurial activity by licensing, determines the activities regulated by licensing and is targeted at ensuring compliance with the conditions set by the law for activity subject to regulation by licensing. - The Law provides for the procedure of issuance, updating, suspension, renewal and withdrawal of licenses for licensed activities on electricity, natural gas and oil products market. 6. The Law on Public Utility Services establishes an integrated legal framework for the establishment and organization of public utility services in administrativeterritorial units, including monitoring and control of their operation and regulation of tariffs for public utility services provided on centralized basis. Slide 9
Pursuant to the Law, the Agency shall: a) develop and approve, in coordination with the Government, the methodology of tariff calculation for public heat supply services, water supply, sewerage and waste water treatment; b) approve, in coordination with the local public administration, the tariffs for public services of technological water supply, provided on centralized basis at municipality (city) and district level, calculated in conformity with the tariff calculation l methodology; c) monitor operators compliance with the methodology of tariff calculation, take part, within its powers, in exercising control over the activity of utility service market players; d) ensure transparency of the tariffs for public utility services; e) approve tariffs for public heat supply services via centralized systems, calculated in compliance with the methodology of tariff calculation, meant to ensure the recovery of all minimum costs, strictly necessary for heat production, transmission, distribution and supply. Slide 10
2. Secondary Legislation - Regulations on construction/reconstruction of electric power plants with capacity factor exceeding 20 MW and Regulations on Auctions (Government); - Regulations on Electricity Network Protection (Government); - Rules of Electricity Market, Rules of Natural Gas Market (Agency); - Regulations on Electricity Supply and Use, Regulations on Natural Gas Supply and Use (Agency); - Regulations on Measuring Electricity for Commercial Purposes, Regulations on Measuring Natural Gas for Commercial Purposes (Agency); - Regulations on Electricity Distribution Network Extension, Regulations on Natural Gas Distribution Network Extension (Agency); Slide 11
- Technical Norms for Electricity Transmission Networks; Technical Norms for Electricity Distribution Networks, Technical Norms for Natural Gas Distribution Networks, Technical Norms for Natural Gas Transmission Networks (Agency); - Methodologies of Calculation and Application of Regulated Tariffs for electricity and heat, produced by CHPs, electricity produced by electric power plants from renewable sources, for electricity transmission and distribution services; tariffs for electricity supply at regulated tariffs; final tariffs for electricity supplied to end users; - Methodology of Calculation and Application of regulated tariffs for natural gas; (Agency); - Methodology on Pricing and Price Application for oil products and liquid gas; - Regulations on Eligible Consumers Accreditation of (Agency); - Methodology and Instruction on Calculating Electricity and Natural Gas Losses in Networks (Agency); - Standards; - Norms in Constructions. Slide 12
Institutional Capacity of Energy Sector Electricity Sector 1 Transmission network and system operator 6 license holders for electricity production (5 electric power plants) 3 distribution network operators 3 electricity suppliers at regulated tariffs (also last resort suppliers) 7 electricity suppliers at unregulated tariffs Natural Gas Sector 1 Transmission network operator 26 distribution network operators 27 natural gas suppliers at regulated tariffs (also last resort suppliers) 1 natural gas supplier at unregulated tariffs Slide 13
Oil Products Market 9 license holders for liquid gas import and wholesaling 53 license holders for liquid gas retailing 24 license holders for gasoline and diesel oil import and wholesaling 78 license holders for gasoline and diesel retailing at gasoline stations Systems of Centralized Heat Supply Currently there are 16 centralized heat supply systems, in municipalities and cities, for which the Agency shall set tariffs for the heat they supply. Slide 14
Development of Retail and Wholesale Market Electricity Market 1. Electricity suppliers shall have the right to conclude electricity purchase-sale contracts with any supplier, including from abroad and also shall procure the quantity of electricity produced under cogeneration regime by the CHPs and by electric power plants from renewable sources. The only condition is that the electricity price must be the lowest on the market. 2. According to the Law on Electricity, the opening of the electricity market shall be phased, as established by the Agency, in coordination i with the Government, in the following timeframes: a) for non-household consumers before January 1, 2013; b) for household consumers before January 1, 2015; 3. Currently, 10% electricity market is open for eligible consumers, whose installations are connected to electricity networks of 35-110 kv. Slide 15
66 MW Generation and Import Moldova Power Market Ownership & Boundaries Electricity Distribution and Supply CHP-1 North DISCO No of customers: 291,000 240 MW CHP-2 24 MW CHP-3 Power System Operation Transmission & Dispatch North West DISCO No of customers: 180,000 20 MW IPP HYDRO 35 kv 110 kv 330 kv 400 kv Union Fenosa DISCO No of customers: 785,000 16 MW Transmission losses: 3% 2520 MW MGRAS Transmission System Distribution losses: 13% Eligible customers Imported Supply Ukraine: 900 MW HVT Independent Suppliers Slide 16
Natural Gas Market 1. Natural gas consumers have the right to conclude a natural gas supply contract with any natural gas supplier, including from abroad. Currently this right cannot be de facto exercised, as the natural gas is imported from one country (Russia, Gasprom) and there is one single license holders JSC Modovagaz, which is a joint venture. The transmission network operator, LLC Moldovatransgaz, is an enterprise, created by JSC Moldovagaz. JSC Moldovagaz is the owner of 12 distribution network operators and, accordingly, of 12 natural gas suppliers at regulated tariffs. Besides, on the natural gas market there are other 14 distribution operators, also holders of licenses for natural gas supply at regulated tariffs, not owned by S.A. Moldovagaz. Any enterprise holding natural gas distribution networks may apply for a license authorizing natural gas distribution and, accordingly, for a license authorizing natural gas supply at regulated tariffs. Licenses are issued for 25 years. Slide 17
Access of third parties to the network Pursuant to the Law on Electricity Access to network the right of natural and legal persons to be provided with services of electricity transmission and/or distribution under the Law herein, including the connection of their production or usage installations to the electricity networks; The transmission and system network operators and the distribution operators shall be liable to: a) respond to any application for a service, including the application for issuance of a Connection Notice, within 15 days after the application was registered; b) connect, disconnect, re-connect to electricity transmission and distribution networks under the terms and within the time slots prescribed in the Regulations on Electricity Supply and Use and in the Technical Norms for Electricity Transmission and Distribution Networks; c) to admit of no discrimination between system users or between categories of system users, in particular in favor of a affiliate; Slide 18
1. The access of third parties to the electricity transmission and distribution networks shall be based on tariffs made publicly available, applied to all system users on objective and non-discriminatory principles. 2. The transmission/system/distribution network operator shall ensure the access of all system users and third parties to the electricity network, under no discrimination. The transmission/system/distribution network operator may refuse access to their electricity networks, in case of lack of capacity. The refusal shall be substantiated and justified as appropriate. The transmission/system/distribution network operator shall offer relevant information about the measures needed for extending the electricity network and about the specified time limits for those works. 3. The access of third parties to electricity networks shall be offered under the terms and conditions prescribed in the Rules of Electricity Market, Regulations on Electricity Supply and Use, Technical Norms for Electricity Transmission Networks and Technical Norms for Electricity Distribution Networks. 4. The transmission network/system operator shall inform the Agency about any case, where a market player or applicant is denied access to electricity transmission networks. 5. The transmission network/system/distribution network operator shall convey, in written form and within 15 days from the date the consumer s s application was received, the technical and economic conditions for connection to the network and assist the applicant in making an informed choice and implementing the most advantageous connection solution. Slide 19
Viability and security of supply Pursuant to the Law on Electricity, it security of electricity it supply is defined d as the capacity of an electric power system to supply consumers with electricity in compliance with the provisions of the law; 1. The Government shall ensure the energy security of the state; 2. The Government, through the specialized central public administration body in the energy sector, shall ensure the monitoring of electricity supply security. The monitoring will comprise, in particular, the coverage of the balance between demand and supply on the electricity market, the level of future electricity demand and available sources to meet the demand, additionally planned capacities or capacities under construction, quality of electricity network maintenance, as well as due measures to cover the peak load and the electricity supply deficit in case of unavailability of one or more suppliers. Annually, before April 30, specialized central public administration body in energy sector shall develop, publish in the Official Gazette of the Republic of Moldova and on its web site a Report for the preceding year, which shall present the results of monitoring the given issues, as well as other measures taken or planned for solving them. Slide 20
The transmission network/system operator is liable to develop and present, before March 31, to the specialized central public administration body in the energy sector and to the Agency an annual Report containing the information on the balance between demand and supply on the electricity market, expected demand and planned production capacities or capacities under construction, quality and level of transmission network maintenance, measures to cover the peak load, actions to be taken in case of reduced d electricity it volumes supplied by one or more suppliers. The Report shall be published on the Web page of the transmission/system network operator. For the purpose of ensuring continuity in electricity supply and monitoring the electricity market, The Agency summons monthly working sessions, attended by all electricity market players and natural gas suppliers in order to examine the situation on the energy market. According to the Rules of Electricity Market, the transmission network /system operator shall inform the specialized central public administration body in the energy sector and the Agency where an electricity deficit balance may appear for the following month, in order to make it possible to adequately act to redress the situation. Similar provisions also apply for security and viability of natural gas supply. Slide 21
Thank you Regulation and Licensing Department Slide 22