1. The document summarizes key topics from a webinar on electricity market regulation, including the objectives of regulation to protect consumers and ensure fair industry participation. 2. It discusses areas of regulation like generation, transmission, distribution and retail supply. Methods of regulation include price controls, quality standards and incentive schemes. 3. Institutional questions are also covered, like the roles of different regulatory bodies and the importance of regulator independence.

1. Training on Regulation A Webinar for the European Copper Institute Webinar 1: Regulation – General Principles Dr. Konstantin Petrov / Dr. Daniel Grote 23.10.2009 http://www.leonardo-energy.org/training-module-electricity-market-regulation-session-1

2. Agenda 3. Scope of Regulation 2. Areas of Regulation 4. Methods of Regulation 5. Institutional Questions 6. Consultation and Communication 1. Objectives of Regulation 7. Regulatory Performance

5. 1. Objectives of Regulation Choice of Regulatory Regime Areas of Regulation Scope of Regulation Type of Regulation Regulatory Institutions Where should be regulated? What should be regulated? How should be regulated? Who regulates? Choice of Regulatory Regime

6. 1. Objectives of Regulation Balancing Interests Regulation must balance obligations to both customers and regulated companies and also the costs and benefits of the regulatory system itself. Costs and Benefit of Regulatory System Distortions to industry structure Costs of operating regulation Prevention of monopoly abuse Efficiency savings and lower costs Customer and Company Interests Price reductions Protection against monopoly abuse Fair return Profit opportunities

7. 2. Areas of Regulation Regulated and Competitive Elements Ancillary Services Wholesale Supply Power Generation System Dispatch Power Transmission Power Distribution Retail Supply Metering and Billing Services subject to regulatory control Competitive services Potentially competitive services

8. 3. Scope of Regulation Regulatory Controls Price Control Regulatory Controls Quality of Supply Market Functioning Setting Revenue Requirements Price / Revenue Adjustments Efficiency Assessment Commercial Quality Continuity of Supply Market Rules / Contract Rules System / Network Rules (Grid Code) Market Monitoring Technical Quality Tariff Design Security of Supply Other Unbundling Cross-border Issues

13. 4. Methods of Regulation Regulatory Control Price Control Quality of Supply Power Market Rate of Return Price and Revenue Cap Incentive Schemes Indirect Quality Controls Ex-ante Endorsement of Rules Monitoring of Market Performance and Corrective Actions Minimum Performance Standards Yardstick Competition Overview

17. 5. Regulatory Institutions Sector specific regulators Courts Competition Authorities Legislators DG Competition National Comp. Authorities National/Regional Regulators Agency for the Cooperation of Energy Regulators (ACER) from 2011 European Court of Justice National courts Energy Law Secondary Legislation National Parliaments National Governments Industry National industry associations EU Council ENTSO-E EU Commission EU Parliament Who regulates?

25. 7. Regulatory Performance Factors Affecting Sector Performance and Regulatory Performance Based on: Sanford V. Berg (2009), Characterizing the Efficiency and Effectiveness of Regulatory Institutions, PURC Working Paper Industry Risk Perception Objectives, Priorities General Economic Conditions Input Markets Regulatory Rules/Policies Structural Policy Behavioural Policy Legitimacy, Credibility Industry Conditions Structure Behaviour Performance Corporate Governance Historical Experience Institutional Conditions Regulatory Governance Design Processes