UCTE General Assembly 2007

16 May 2007

Amid of intense discussions among the European TSO community and their stakeholders about the evolution of the sector towards new mechanisms and structures in Europe, as addressed by the European Commission in its Strategic Energy Review released in January 2007, UCTE member companies held last week their General Assembly meeting in Munich.

Membership
Energinet.dk (TSO in Denmark), up to now associated member, was admitted as full UCTE member as responsible TSO for the western part of Denmark (Jutland and Funen). Following the launching of Swissgrid December 2006, the Swiss energy companies that were so far UCTE members transferred to Swissgrid their operational responsibility for the Swiss transmission grid including the responsibility for the single control area covering Switzerland. Swissgrid was also admitted as full UCTE member. Following the launch on 4 January 2007 of the Bulgarian Electricity System Operator (ESO-EAD), holder of the Power System Dispatch License and in the future also of the Market Administrator License, the UCTE membership for the TSO in Bulgaria is now held by ESO-EAD.

UCTE vision towards future mechanisms and structures for TSOs in Europe Recalling that UCTE member TSOs constitute the largest synchronously interconnected system in Europe, the UCTE member companies agreed unanimously on guiding principles for the evolution of the sector. In the future, UCTE members shall be able to agree first among themselves, based on their “collective” system responsibility, on best solutions for the issues they are facing in their synchronously interconnected system of continental Europe. They shall do this more efficiently, which means taking the full complexity of their system into account, when and where necessary.

UCTE member TSOs of course also firmly support the longer-term convergence objective of the European Commission for solutions “across European systems” and mandated their President to involve UCTE as key partner for designing efficient common interfaces towards stakeholders.

As a principle, all TSOs in Europe shall enjoy the same rights and obligations when determining first the best adapted solutions for their system. They shall also achieve a common understanding about which issues are system-specific, which are common; “common issues” are those to be applied and enforceable in all systems. Specific issues shall be dealt as much as possible within each synchronous system according to its specific characteristics, while common issues should be channeled towards stakeholders via dedicated “common interfaces” that should investigate the conditions for convergence. Such common interfaces will achieve best efficiency and effectiveness if they are tailored around clear objectives and fair governance.

UCTE members advocate to first and as quick as possible further improve workable and sustainable solutions to the specific issues in each synchronous system and to define via a constructive dialogue with stakeholders clear objectives for common interfaces of TSOs. This covers the establishment of a Formal Group of TSOs as counterpart to ERGEG in order to provide political support to TSO issues pointing at the effective barriers to integration resulting from not harmonized national legislation and regulation, to identify the common essential issues and principles across system borders, to specify the necessary conditions for convergence and to explain differences due to system characteristics.

More specifically, UCTE members underlined that in order to improve the reliability conditions in Europe the essential, but still missing element at supranational level is legitimacy resulting from a direct mandate by governments, laws or European directives, as legal framework and formal authority to:

- develop legally binding standards for the reliable operation and planning;

- achieve mandatory compliance to these reliability standards;

- monitor and enforce the compliance with these standards under efficient sanction mechanisms;

- establish funding models to ensure that adequate resources are available to develop and implement new mechanisms for reliability within upgraded structures.

UCTE members also underlined that developing market practice standards can conflict with the primary role of TSOs to serve the public interest. i.e. maintaining the reliability of each European interconnected system. UCTE is concerned with the development of competitive markets and integrating renewable energy and committed first to carrying out its reliability responsibilities in ways that enable and encourage technical and market solutions to the maximum extent possible, but ensuring that reliability is preserved also in those system areas (comprising EU and non-EU countries) where competitive markets do not yet exist.

UCTE members consider that simple principles about the relationship between reliability needs and market issues should be guiding the relation between ERGEG and the Formal Group of TSOs. This would allow achieving reliability objectives without causing undue restrictions or adverse impacts on competitive electricity markets. These principles are:

- planning and operation of synchronously interconnected systems shall recognize that reliability is an essential requirement of a robust European economy;

- any reliability standard/service shall not give any market participant an unfair competitive advantage, neither mandate nor prohibit any specific market structure, not preclude market solutions for achieving compliance with that standard/service and not require the public disclosure of commercially sensitive information;

- all market participants shall have equal opportunity to access commercially non-sensitive information required for compliance with reliability standards/services.

UCTE firmly supports the establishment of a Formal Group of TSOs as main common TSO interface to the European Commission, based on the five European synchronous systems as coordination platforms. In addition, this group might be supported by a „convergence body“ aiming at bridging solutions emerging from individual systems, in case such a convergence is recognized by all parties as of added-value.

UCTE remains open for discussions about objectives and governance of common interfaces without further delay. UCTE members decided to go ahead with their vision while continuing the dialogue with the other TSO associations to ensure that TSOs reach a common view prior to next contacts with EC.