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Strengthening the consumer protection and more efficient supervision from independent regulators

The III Energy Package was implemented on March 3rd. ACER opening ceremony took place in Ljubljana.

The III Energy Package consists of two directives and three regulations and its aim is to create a fully efficient and integrated European energy and gas market. The purpose of the implementation of the III Energy Package is to maintain the lowest possible prices and to improve the standards and the safety of supply.

Consequently to the implementation of the new EU regulations the transparency of the retail market will increase and the regulations for the protection of the consumers as well as the supervision from the independent regulators will be reinforced.

The package consists of two directives - on common rules for the internal market in natural gas (2009/73/EC) and the internal market in electricity (2009/72/EC) and the three regulations (on access to natural gas transmission networks (( EC) No 715/2009), on access to the network for cross-border exchanges in electricity ((EC) No 714/2009) and the establishment of Agency for the Cooperation of Energy Regulators ACER ((EC) No 713/2009).

All these acts were adopted in July 2009, and Member States had 18 months - until 3 March 2011 - to transpose the two Directives into national law. Regulations - not required to be implemented into national law - come into force on 3 March 2011 in all Member States.

More power to the consumers

The 3rd Energy Package further empowers the consumer when it comes to changing electricity and gas providers. The new regulations provide consumers with access to clear and transparent information on e.g. prices, energy and gas consumption, or information about consumer rights.

Information on consumer rights is to be included both on the websites of the energy providers and on utility bills, and the Member States are obliged to prepare the so-called contact points, at which consumers can obtain all necessary information about their rights and applicable laws.

The Directives put in place a mechanism that provides consumers with a possibility to seek their rights in an out-of-court procedure when dealing with complaints and disputes, a mechanism to enable a fair and quick resolution of conflicts.

3rd Energy Package also provides provisions to protect so-called ‘vulnerable customers’; a state aid system for customers who otherwise cannot afford to pay their utility bills.

New duties of Energy Regulatory Office

The regulator will also enjoy new responsibilities and competences. It will broaden and extend its scope of monitoring of the energy market, examining such areas as: investment plans of enterprises or quality of provided services.

Once the Third Energy Package enters into force, the ERO will enjoy, among others, several new competences e.g. to conduct investigations into the functioning of the electricity and gas markets, to make decisions and impose any necessary and proportionate measures in order to promote effective competition and ensure the proper functioning of the market.

The regulator will also be able to impose sanctions on energy and gas providers that fail to comply with the requirements imposed on them by market directives, or on those who will not comply with legally binding decisions of the Regulator or the European Agency ACER.

EU strengthens the independence of the regulators

The 3rd Package is also strengthening the position of the regulator. As indicated by the Article. 35 Paragraph. 4 of Directive 72/2009 Member States have an obligation to ensure the independence of the regulator and ensure that it can exercise its powers impartially and transparently.

For this purpose, the regulator should be legally distinct and functionally independent from any other entity - public or private. Such EU guidelines shall preclude any hierarchical dependency between the regulator and other bodies.

- Independence of the regulator, which in turn guarantees impartial and transparent exercise of powers is fundamental. The regulator must be independent not only in relation to the energy sector, but also in relation to any public entity. Directives in effect preclude any hierarchical relationship between the regulator and other institutions and introduce the principle of the fixed term of office of the top management of the regulatory authority-points Marek Woszczyk, head of the ERO.

To protect the independence of the regulator, the Member States shall ensure in particular - in line with the Directives - budgetary autonomy, and adequate human and financial resources to accomplish statutory tasks. The management of market regulator should be appointed for a fixed non-renewable period of at least five years and may be relieved from office during their term of office only if they no longer fulfill the conditions laid down in the Directive, or proven guilty of serious misconduct.

In the current legal frame independence of the Polish regulator under the provisions of Directive 72/2009 is not guaranteed. It is therefore indispensable to make such changes to the Energy Law, which enable the effective independence of the regulator, including budgetary autonomy and guaranteed term in office principle.

What is unbundling?

The third Energy Package introduces unbundling - separation of production, supply and sale of energy. The rules stipulating the allocation of these three types of activities should effectively contribute to elimination of any conflict of interest between these activities and, in particular, prevent e.g. favouritism by network operators of their own production facilities or hindering access to the network to competitors.

The EU package provides for three basic models of the separation of network activities from generation and transmission: ownership unbundling, independent system operator or independent transmission operator. Depending on what variant of the separation of these activities Polish will take, the companies will have to take an appropriate action to reorganize their structures.

If the chosen model were ownership unbundling the company would have to sell their networks and create a separate entity responsible for managing the network. If the independent system operator (ISO) were chosen - the company would retain the ownership supervision over transmission grids, but would transfer the network management in the hands of an independent system operator.

Option providing for the establishment of an independent transmission operator (ITO) provides for the integrity of trading and transmission of energy, however within a well-defined set of rules. These two parts of the enterprise, in practice, would operate independently, under control of a supervisory body.

The provisions on unbundling are scheduled to enter into force by March 3, 2012.

ACER - EU Regulator as watchdog of the common market

Today marks the official birthday to a new EU institution - the Agency for Cooperation of Energy Regulators (ACER). The Agency was established by the Regulation of the European Parliament and the Council of 13 July 2009 in order to ensure effective cooperation between national regulators and to make decisions on trans-border issues.

The Agency was launched at a high-profile ceremony in Ljubljana (Slovenia), headquarters of the new institution. The inaugural ceremony was also attended by Marek Woszczyk, head of ERO and representative of Poland at the Board of Regulators of ACER.

The task of the agency is to ensure that the work of national energy regulators is in line within EU regulations. The Agency's objective is to monitor regional cooperation between transmission system operators, tasks related to the implementation of guidelines for trans-European energy networks in respect to the conditions of access to cross-border infrastructure and its conditions for safe operation, as well as monitoring and reporting on the electricity and natural gas markets.

As a consequence of the launch of ACER, the existing advisory group - the European Regulators' Group for Electricity and Gas (ERGEG) will be resolved in the coming months, and its activity will be fully taken over by ACER.

03.03.2011

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