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ERGEG Customer Focus Group Workshop October 11, 2005, Helsinki

ERGEG Customer Focus Group Workshop October 11, 2005, Helsinki. CED E C Gert De Block Secretary General. OVERVIEW. Influence of market structure Conditions for switching General problems related to switching Particularities for local Distribution System Operators (DSOs)

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ERGEG Customer Focus Group Workshop October 11, 2005, Helsinki

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  1. ERGEGCustomer Focus Group Workshop October 11, 2005, Helsinki CEDEC Gert De Block Secretary General

  2. OVERVIEW • Influence of market structure • Conditions for switching • General problems related to switching • Particularities for local Distribution System Operators (DSOs) • Customer switching - Case of Belgium • Customer protection • Conclusions ERGEG CFG 11/10/2005 - CEDEC

  3. 1. Influence of market structure • Final date for complete market opening fixed and approaching, but still wide variety in eligibility • Nationally chosen market model determines processes to be supported • Essential role for distribution system operators controlling customer and metering data • Dominance of historic market player(s) and degree of unbundling determines urgency of need for performant switching mechanism • Role and impact of regulators varies ERGEG CFG 11/10/2005 - CEDEC

  4. 2. Conditions for switching • Energy market is functioning : • Only a market - with benefits for all customers in terms of price & service quality - if there is real competition  between suppliers : considerable number of players on national markets - but historical player(s) still dominant  between producers : still limited number of players – virtual monopoly behaviour on regional / national markets (2) Only a market – with non-discriminatory access to grids – if grid companies and their personnel and IT-systems behave neutrally ERGEG CFG 11/10/2005 - CEDEC

  5. 2. Conditions for switching • Customers are eligible • Change of supplier process supported by effective and efficient data exchange mechanisms between DSO and all market parties  Need for : - clear rules of the game agreed between parties - use of a same language - use of a safe medium - involvement of all market parties - exchange within reasonable timeframe - efficient information technology ERGEG CFG 11/10/2005 - CEDEC

  6. 3. General problems related to switching • Diverse legislation  different market models  diverse technical rules  even if EDIEL (common structures & codes) : diverse processes • Risk of market data pollution  Need for DSO to clean customer data before start-up of data clearing between market parties • Location of customer data clearing : in each DSO or DSO-group or single national platform ? • “Switch management” still to be developped after official market opening … ERGEG CFG 11/10/2005 - CEDEC

  7. 4. Particularities for local DSOs • Unbundling leads to relative growth of fixed costs • New regulatory environment leads to higher complexity  Problem of scale for smaller DSO • New needs in field of IT (switching)  High cost in terms of investments and human resources (development of internal know how + external consultants)  Problem of scale for smaller DSO with limited human resources capacities and financial constraints • Risk of concentration between national / european players  dominating lobbying power ? role of the regulators ? ERGEG CFG 11/10/2005 - CEDEC

  8. 5. Customer switching - Case of Belgium • Regions responsable for legislation on distribution  (minor) differences between regions in market structure and technical rules • Municipal distribution companies have completely unbundled  seperate companies for DSO and supply  complete separation of personnel and IT-systems (for some distribution companies) • Pro-active development of a common EDI platform (“Publiclear”) for 5 DSOs (20% of regional market) in Flanders  fully operational on date of full market opening (1/7/2003) • Other EDI-platforms of DSOs : “Indexis” (for mixed distribution companies in 80% of market); “Walclear” for 5 DSOs in Wallonia (20% of regional market) – Performance to be upgraded ERGEG CFG 11/10/2005 - CEDEC

  9. 5. Case of Belgium – Current status • EDI platforms with inspiration from Scandinavian market  Exchange of data in EDIEL (for electricity and gas) • Message structure (UMIG = Utility Market Implementation Guide) inspired on international handbook for EDIEL • Legislation + regulatory framework + technical codes  processes  translation into messages  UMIG • Several UMIG-versions already implemented : UMIG 1.0 (1/1/2003)  …  UMIG 3.5 (1/7/2006) ERGEG CFG 11/10/2005 - CEDEC

  10. 5. Case of Belgium – Current status • UMIX structure : formal cooperation between all parties involved • EDI platforms should perform following tasks : - management of access register (EAN-codes + data on supplier & network user + technical characteristics) -SLP for non-AMR customers - allocation + reconciliation • Medium to communicate : - VAN (high cost !) and FTP : between larger market parties - e-mail : for smaller players - web portal of DSO : for smaller parties (only limited number of processes – only if no EDIEL infrastructure available) ERGEG CFG 11/10/2005 - CEDEC

  11. 5. Case of Belgium – Problems to be solved • 3 regions  3 non-identical technical codes  processes not 100% compatible • 3 regions  different market opening date  implementation of UMIG not synchronized yet • Some players refuse use of EDIEL (TSOs) • Initial UMIG-versions : too much room for interpretation / not all scenarios defined / no rectification of processes  manual interventions : expensive and laborintensive • Risk of “Pollution” of access register : due to suppliers data & DSO systems • SLP : sufficient number (4 E / 3G) ? lacking accuracy ? ERGEG CFG 11/10/2005 - CEDEC

  12. 6. Customer protection • Code of good conduct for suppliers • Harmonisation of supply contract conditions and billing presentation (mainly for residential customers) • Harmonisation of DSO contracts & regulations regarding connection to the grid • Solutions for “dropped customers” ? Prepayment meters  High investments and operational costs • PSOs imposed on DSO : supplier of last resort / social tariffs ERGEG CFG 11/10/2005 - CEDEC

  13. Conclusions • Real competition between producers / suppliers is prerequisite, EDI platform can only contribute to smooth market functioning • Development and operation of EDI platform is expensive (investments / internal or external expertise / operational costs)  cost of software (development)? cooperation between DSOs? • Timely preparation within DSO and between all parties is crucial • Different market models  diverse technical rules  “tailormade” processes  problem for regionalisation of markets ERGEG CFG 11/10/2005 - CEDEC

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