Belgrade , 25 . April 201 3 .

1. Regional electricity market I panel: How to integrated electricity market in South East Europe- Regulatory aspects- Belgrade, 25. April 2013. Ljiljana Hadzibabic Council member Energy Agency of the Republic of Serbia

2. Content The objectives of SEE Regional market integration EU Target Model for Electricity Market Integration The 8th Region - SEE Regional and national programs Allocation of roles and responsibilities of relevant institutions Regulatory role Current state and development possibilities for Serbian market Marketmodel and market participants in Serbia The dynamics of the Market Openning The legal framework for the functioning of National Market Comparative Electricity Prices for the industry in some EU countries

3. The objectives of SEE Regional market integration The main goals are: Creatinga competitive integratedRegional energymarket – more efficient than national markets Efficient management of interconnection capacities: Capacity Allocation and Congestion Management (CACM) Attracting investments inenergy Providing a secure and sustainable supply of customers at reasonable prices

4. EU Target Model for Electricity Market Integration • Common vision for completion of Internal ElectricityMarket (IEM) by 2014 • Electricity markets across Europe must share a set of common features and be linked by efficient management of interconnection capacities • In order to achieve this: CACM and Balancing have been identified as priority areas → 3rd Legislative Package

5. The 8th Region - SEE • 9 Energy Community Treaty Contracting Parties • the neighboring countries Bulgaria, Greece, Hungary, Romania and Slovenia • Italy with regard to the interconnections between Italy and the CPs to the EnC Treaty (DC undersea cables) • + Moldova and Ukraine are not technically in parallel synchronous operation within ENTSO-E, and thus cannot perform operationally CACM mechanisms in the 8th region The ultimate goal is to achieve a single platform for yearly, monthly and daily implicit auctions for theSEE region.

6. Legal Basis Directive 2009/72/EC 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC Regulation (EC) No 713/2009 of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators Regulation (EC) No 714/2009 of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No 1228/2003 EU Legislation implementation within SEE Region Contracting Parties (CP)shall bring into force the laws, regulations and administrative provisions necessary to comply with Directive 2009/72/EC, Directive 2009/73/EC, Regulation (EC) No 714/2009 and Regulation (EC) No 715/2009, as adapted by the PHLG Decision (Jun/Oct 2011), by 1 January 2015

7. New Institutions NewEU institutions based on the 3rd Package: ENTSO-E (TSOs) ACER (Regulators) Joint preparation of: Framework Guidelines Network Codes Targetmodels for capacity allocation and congestion management ..............

8. Parallel Regional and national programs /1 National development Regional cooperation Parallel development of regional and local electricity market? SEE local markets are underdeveloped in average - mainly bilateral markets Markets are largely illiquid Dominantexisting production company Legislative changes are still ongoing Obstacles to market development in each jurisdiction in SEE (exceptHungary, Italy, Moldova and Ukraine)

9. Regional and national programs /2 The committed institutions: TSOsto develop concepts and make proposals Consultantsto moderate and make recommendations Regulatorsto decide or approve Supports and encourages the adopted policies and market development in line with the EU Target Model Approves of TSOs proposals related to organizational, commercial and legal aspects Verifies of compliance with national legal framework and development schedules and with EU legal framework Energy Community jointprojects: WholesaleMarket Opening (WMO) Balancing Energy Market Marketmonitoring Supplier switching

10. By the Energy Law 2011 National Market

11. The Legal Frameworkforthe Market Functioning

12. Market Participants Balancing responsibilities of all market participants; Relations of Market participants are regulated by agreements.

13. Current state of Serbian electricity market - model

14. The Dynamics of the Market Opening Potentialy, 43% of market was oppend in 2008 (all non-household) The markets will be 100% beopenfrom 1 Jan 2015, but the households and small consumers may choose from the market or the public supply

15. Current state of Serbian electricity market - data 2012:

16. Traders activities in the 2011 and 2012

17. The physical flow of the interconnectors in2012

18. Comparasionof the Electricity Prices for the Industry(31) - The second half of 2012 -

19. Cost of CO2 ? Renewable Energy Cost New power plants and ecology Profit Costs rationalization Price now Price after 2020. The trend of electricity prices in the future

20. The trend of electricity prices in Serbia Regulated / Free Market Regulatedprices approved by the Regulator since October 2012

21. Thank you for your attention! Ljiljana Hadzibabic Council member Energy Agency of the Republic of Serbia www.aers.rs