COMMISSION STAFF WORKING DOCUMENT Country Reports Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Progress towards completing the Internal Energy Market
Date: 2014-10-13
Institutions: European Commission
Subjects: EU Member State, energy grid, energy supply, gas, market access, security of supply, single market, trans-European network













EUR-Lex - 52014SC0311 - EN











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52014SC0311

COMMISSION STAFF WORKING DOCUMENT Country Reports Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Progress towards completing the Internal Energy Market /* SWD/2014/0311 final */









Introduction
The
purpose of the Country Reports in this Staff Working Document is to take stock
of the state of play, both in quantitative and qualitative terms, of the
implementation and functioning of the energy market in the 28 Member States of
the European Union. 
These
country reports are based on the most recent information available to the
Commission during the first half of 2014. In order to allow for comparability a
similar structure and set-up of these reports has been chosen as the structure used
in the previous reports as published together with the Internal Energy Market
Communication of November 2012. There is one significant difference: for each
country a new Chapter on the electricity and gas security of supply situation
has been added for each country.
As
to the data used, the primary source of information is Eurostat. The data used
to produce the figures included in the country reports on gross inland energy
consumption, gross electricity generation and electricity and gas price changes
are sourced from Eurostat. Also a significant part of the information included
in the table with key indicators is sourced from Eurostat. This holds for
information on the number of companies, market shares, market values, and
(partly) installed generation capacity. Alternatively, installed generation
capacity is taken from ENTSO-E’s Yearly Statistics & Adequacy Retrospect
2012.
Information
included in the table with key indicators on switching rates, regulated prices
and HHIs is mostly provided by the NRAs. Typically this information is taken
from the NRAs’ national reports for 2012.  National Regulatory Authorities
(NRAs) have been given the opportunity to comment on draft versions of the
reports related to their country and all 28 NRAs have done so.  
In
these reports we have also strived to give a country-individual breakdown of
gas and electricity retail prices, showing the composition of these prices in
an energy, a network and a tax component (based on Directive 2008/92/EC, Annex
I) and demonstrating the development between 2009 and 2012. This work is a
follow-up of the data gathering exercise carried out in the context of the
Energy Prices and Costs Communication earlier in 2014. On the basis of the data
gathered we have not been able to provide meaningful graphs related to gas
prices for Austria, Finland, Greece and Ireland.
The
chapter in each country report on consumers contains information on consumer
satisfaction from the Commission's DG SANCO’s market monitoring surveys. The
number of smart meters is taken from varying national sources. The remaining
information on consumer affairs included in this chapter is typically provided
by NRAs.
The
chapters on the regulatory framework, wholesale markets, infrastructure and
security of supply contain information from a variety of (mostly national)
sources. Frequently used sources are publications by Ministries, NRAs, TSOs,
ACER, CEER and DG Energy. References to these sources are included in the
reports.
Austria
Key issues
In the
electricity sector, market coupling with Southern and Eastern neighbouring
countries would be beneficial. 
In gas, the
number of system operators could be reduced in view of the new gas-market
model. An extension of the gas network based on market demand is needed to
enable injections and withdrawals on a firm basis from the gas storage
capacities. The efficiency of the gas balancing regime should be improved in
order to create a level playing field on the retail market.

 General overview

Energy
consumption in 2012 (33.7 Mtoe) was based largely on crude oil and petroleum
products (35.54%), renewables (30.05%) and natural gas (22.8%)[1].
  Austria has committed to reach 34.2% of RES share in gross final energy
consumption by 2020. The country is showing good progress towards its European
target as the RES share in 2012 was 32.1%[2], well above its
2011/2012 indicative trajectory.
Figure 1:
Gross inland consumption mix 2008 – 2012 (source: Eurostat)
In 2011, approximately two thirds of the electricity
generated (67.5%) was provided by renewables and 21.8% by natural gas.
Figure 2:
Gross electricity generation mix 2008 – 2011 (source: EU Energy in Figures -
Pocketbook 2012 and 2013)
Cogeneration[3]
accounted for 15.7% of the total electricity generation in 2011, which is in
line with the last few years[4].
The relevant indicator for pump storage generation (base/peak spread) decreased
by 10.5% (EUR 11.5/MWh) and the generation from hydro power stations reduced
due to high tides and dry periods. Full load hours of gas fired power plants
reduced by 17.9% in 2012 (1859 hours, 2011: 2265 hours).

 Regulatory framework

General
The Directives
of the Third Energy Package were transposed into national law in 2010 for
electricity and in 2012 for gas. 
An important
development has been the introduction of an entry-exit system in gas in January
2013, replacing the previous system based on contractually agreed transport
paths. Austria has three market areas and entry-exit zone (East, Tirol and Voralberg). As the market areas of Tirol and Voralberg are neither connected with
East or each other but supplied via the market area Net Connect Germany, they have been partly integrated in to the German market area Net Connect Germany
(NCG) since October 2013. Approximately 95% of Austrian gas consumption takes
place in the Eastern market area. The new regime foresees that any gas
transported through the Austrian network is traded at a centralised virtual
trading point (Central European Gas Hub – CEGH) both bilateral and exchange
trades are possible. The new regime also foresees new balancing rules of which
the efficiency is however not proven. The new market model delegates
system-relevant tasks to a number of system-operators beyond the TSOs and DSOs
(Distribution Area Manager, Market Area Manager, Clearing and settlement agent,
Operator of the virtual trading point) which leads to administrative burden for
market participants.
National Energy Regulator
In 2012 the
Austrian Energy Regulator “Energie-Control Austria für die
Regulierung der Elektrizitäts- und Erdgaswirtschaft” (E-Control) had an
average of 113 employees and a budget of around EUR 20 million[5].
Unbundling
The electricity
TSO Austrian Power Grid (APG) was legally unbundled in March 2012 from its
shareholder Verbund AG, whose main shareholder is the Austrian Government
(51%). APG was certified as an Independent Transmission Operator (ITO). The
second electricity TSO in Austria, Vorarlberger Übertragungsnetz GmbH (VÜN),
whose main shareholder is the federal state Vorarlberg (51%), was certified as
an Ownership Unbundled TSO in June 2012. The gas TSO, Gas Connect Austria GmbH
(GCA) was for the first time certified as an ITO in July 2012 and received in
July 2014 an updated certification as ITO covering the operation of WAG
pipeline which was until September 2014 operated by Baumgarten-Oberkappel
Gasleitungsgesellschaft mbH (BOG). [6]  After the
rejection of the application to be certified as ISO in March 2013 Trans Austria
Gasleitung GmbH (TAG) was in July 2014 certified as ITO.

 Wholesale markets

Electricity
On the Austrian
energy exchange for electricity (EXAA, Energy Exchange Austria), electricity is traded on a day-ahead basis for delivery in Austria or Germany. In the absence of congestion, the wholesale market for electricity is fully
coupled with Germany and forms a single price zone. Therefore electricity can
also be traded at EPEX Spot situated in Paris on an Intraday and Day-Ahead
basis for the Austrian/German delivery zone. Similarly, derivatives at EEX
(European Energy Exchange) situated in Leipzig, such as Phelix Futures can be
traded for Austria/Germany. Hence, through Germany, Austria is indirectly
coupled with the North West European electricity market. It is not yet coupled
with its Eastern and Southern neighbours.
The average
wholesale electricity price was EUR 51.9/MWh in 2011 but decreased in 2012,
caused mainly by the low worldwide prices for coal and emission certificates,
increasing generation of subsidised RES in the joint German-Austrian price zone
and a bleak economic outlook. In summer 2013 Austria has introduced an
obligation for electricity suppliers supplying Austrian end consumers to
provide a certificate of origin of the energy supplied. It will need to be
assessed further whether this new obligation restricts imports of supplies from
other Member States.
Gas
The wholesale
gas market in Austria was still very concentrated (Herfindahl-Hirschmann Index
- HHI - of 3,371) in 2011. The wholesale gas market in particular was affected
by significant price changes, which brought about major developments. On the
one hand, new suppliers made use of the opportunity to enter the relatively
high-priced retail gas market (including household consumers), which led to a
larger spectrum of rates available. On the other hand, suppliers adapted their
contracts with importers to reflect better actual market conditions, i.e.
adjusting their prices to the short-term spot market.[7]
Being dependent
on gas imports, it is essential for Austria to have cross-border transport
capacity available to gas traders. In the past years, new entrants wanting to
trade in the Austrian gas market faced congestions in the transmission system
at the border with Germany and therefore only had limited access to transport
capacity. With the implementation of the European guideline on congestion
management procedures and the European network code on the
allocation of capacity in gas pipelines, this situation
has improved significantly.
In 2012, the
average price for natural gas was EUR 26/MWh, a small increase from 2011. In
2012, the price varied between EUR 25/MWh and EUR 27/MWh, except in January and
February 2012 when prices of up to EUR 39.5/MWh were recorded, which is the
highest price seen at CEGH. This significant increase was due to extraordinary
temperatures and lower imports from Russia. Usually spot prices at CEGH are
above the German NCG prices, however in the fourth quarter of 2012 this spread
was reversed. At CEGH a total volume of 48.9 bcm was traded OTC in 2012, which
is a significant increase compared to 38.9 bcm in 2011. The average churn rate
was 3.53 in 2012 and 3.38 in 2011. On the normal exchange 3.06 TWh was traded
in total.[8]
The total
Austrian gas demand was 4.391 Mtoe in 2011 of which approximately one third
came from national production[9].
In 2011, the largest share of the imported gas came from Russia (52%). Austria also exported natural gas to Germany and Italy.[10]

 Retail markets

Electricity
The retail
market can be divided into three different sections: households, small business
companies and large scale consumers with special contracts. The number of
active suppliers for households decreased from 143 to 139 in 2011 and for small
business companies from 142 to 137 as some smaller suppliers were taken over by
bigger ones. The market consists just of domestic suppliers for households and
SMEs, of which 15 are operating at a national level and the remainder-wide, the
others are regional suppliers. This implies that there are regionally operating
suppliers. For special contract consumers the number of suppliers has not
changed, giving industrial customers a chance to choose between 12 different
suppliers.[11]
, which are either domestic or foreign suppliers. Normally, foreign suppliers
only offer contracts if a certain amount (10-20 GWh) is supplied.[12]
Market
concentration has not changed considerably and remains at a high level given
the HHI of 1,769 for household customers (2011: 1,764) and 1,685 for commercial
customers (2011: 1,696). The overall market share of the three largest
retailers (for households and SMEs) remained at a level of about 56% across all
consumer groups. Alternative suppliers gained some market share relative to the
local suppliers who still have a strong market power.
Figure 3: Electricity price change by component 2008 – 2013
(source: Eurostat, energy statistics)
The household
energy price increased by 3% in 2012 (EUR 0.2224/kWh), which is higher than the
average electricity price in the EU (EUR 0.2061/kWh). In 2013, household prices
consisted of energy costs (41%), network costs (25%) and taxes and levies (34%).
Prices for industrial customers have decreased since 2010 and in 2012 the
reduction was about 4.5% for large industrial customers. 
Most of the
suppliers slightly reduced their prices at the beginning of 2012 mainly because
the reduction of transfer prices for the mandatory acquisition of renewable
energy. Following the renewal of the law in respect of renewable energy (ÖSG),
the costs for renewable energy became transparent and understandable as they
are determined by law. Additional price reduction due to the positive
developments on the wholesale market has not been passed through to the
household customers by the suppliers.
Regarding smart
meters, a cost-benefit analysis came out in favour of smart meters for both
electricity and gas. A Ministerial Decree mandated the roll-out of smart meters
for electricity customers by the end of 2019 at the latest with a specific
timetable for implementation. A modification, in 2013,
to the Elektrizitätswirtschafts-und-organisationsgesetzes of 2010 makes
provision for up to 5% of consumers to express the wish to their supplier not
to have a smart meter installed. 
Regarding
switching of energy supplier the switching rate dropped
from 1.5% to 1.1% in 2012. In
contrast, the switching rate of specially metered customers increased by almost
50% (to 6.8%) New rules, which came into force on 1
January 2013, have probably contributed to an increase in the number of
consumers who subsequently switched gas and electricity supplier. During 2013,
148,000 consumers and businesses switched supplier. This represents an increase
of 68% in comparison with 2012. 
Gas
The Austrian gas
market is divided into two segments. Prices for small consumers (households,
smaller consumers etc.) with a consumption of less than 400 MWh are published.
For large customers with consumption above 400 MWh, the prices and conditions
are negotiated individually. In 2012, 49% of household prices were for the
energy itself, network costs accounted for 22% and VAT and energy taxes made up
the remaining 29%. 
Market
concentration for the small consumer group is still very high (HHI: 3,726) even
though it reduced by 8% in 2012. The cumulated market share of the three
largest gas suppliers was 72% in 2012. The largest individual market player is
EnergieAllianz Austria GmbH with a market share of 60%. EnergieAllianz Austria
GmbH includes the retail companies: Wien Energie GmbH, EVN AG and Energie
Burgenland AG.   
In 2012, about
23,400 final customers changed their supplier (about 1.7% of all final
customers in Austria). Since January 2013 the process has been further
simplified, so that the switching process can be successfully completed within
three weeks.

 Consumers

Overall consumer assessment of the retail electricity
market is above the EU average (77.0 points compared to 72.0), corresponding to
8th place EU-wide. The market is also assessed just above the
average of 31 domestic services markets (15th place). The
electricity market has the second highest score in the EU on the 'overall
consumer satisfaction' indicator. However, consumer assessment of the retail
gas market is just below the EU average (74.0 points vs. 74.1[13],
ranked 17th) as well as below the average of the 31 domestic
services markets (ranked 21st). While the score on comparability has
been increasing (although slowly) every year since 2010, it remains 4th
lowest in the EU. Both electricity and gas markets have improved
their performance since 2012 (respectively by 2.8 and 2.2. points).[14]
E-Control has
launched a service hotline for all gas and electricity customers[15]
where customers can find a wide range of information on electricity and gas
markets. In 2012, the hotline recorded 6,373 calls, which is a reduction of
33.4% on 2011 when the price comparison tool was introduced. The main reasons
for calling the hotline were related to questions on switching and energy
bills. In addition, E-Control offers a wide range of online applications. About
500,000 customers used the so-called “Spritpreisrechner” calculator to identify
the cheapest petrol station.[16]
Furthermore, a significant number of customers checked their opportunities for
saving of energy in their households. 
In 2012, the
rights of vulnerable customers were strengthened. If consumers fail to pay
their bills, then the supplier may only switch off supply after repeatedly
sending reminders, including threatening disconnection. Moreover, suppliers are
obliged to deliver natural gas or electricity to vulnerable costumers who claim
their respective right, at their general terms and conditions in force and at
rates for universal service to vulnerable costumers that may not exceed the
rates at which most of their customers are supplied (universal service
obligation).
Whilst a protection mechanism for vulnerable customers does exist in Austria, the authorities have still to make a precise definition of the concept of
vulnerable customers.
New regulatory
guidance (ordinance) has been put in place defining the format of consumption
information by system operators towards consumers. These measures seem to have
had a positive impact on the overall consumers' assessment of both electricity
and gas markets between 2012 and 2013.

 Infrastructure

In
accordance with the TEN-E Regulation, Austria has designated one national competent authority responsible for facilitating and
coordinating the permit granting process for the Projects of Common Interest
(PCIs) in gas and electricity (“one-stop-shop”). 
Electricity
The
Austrian energy market faces substantial challenges due to the proposed
increase of electricity from renewables and the integration of European energy
markets. The high capacity high-tension 380-kV ring in Austria remains to be completed and cross-border capacities to Italy, Slovenia, Switzerland and Germany enhanced. To address these mentioned challenges extensive network
reinforcements and network expansion are required. Therefore Austria is
involved in 13 projects of common interest (PCI) under the guidelines for
trans-European energy infrastructure, including large scale projects like the
new construction of the 174 km long Salzburg line (380 kV) with a capacity of 2
x 2400 MVA. Remaining PCIs include five internal lines, three interconnectors
to Italy and three hydro-pump storages.  
Gas
In gas, the
network development needs to be closely coordinated with neighbouring countries
especially with regard to the development of new gas sources from the Caspian
Region. 
Gas Connect Austria (in its role as Market Area Manager) established the second Coordinated Network
Development Plan (KNEP) for the Austrian Market Area. Potential bottle-necks
have been identified at the entry-exit points Überackern SUDA and ABG, 7
Fields, and the exit point Mosonmagyaróvár. Even though extension was requested
on a non-binding basis for Penta West to offer guaranteed capacities for the
use of storage and incremental capacity at the entry-exit point Überackern[17],
no bookings were made in the course of the auction of the respective
incremental capacity via Prisma in March 2014. A total of six projects of
common interest in the gas sector are carried out by Austria.  

 Security
     of Supply

Electricity
Generation
capacities are expected to rise by 6.7 MW until 2020. The overall generation
capacity will then be 29.6 MW, what implies that there should be no issues of
generation adequacy. However, in periods when hydro generation capacities are
not able to generate due to high tides or dry periods and gas fired stations
are no longer running, maintaining security of supply may need complementary
measures.
Gas
Given the latest
survey regarding the security of gas supply Austrian suppliers fulfil the
requirements of Regulation 994/2010. One important element is the storage
capacities (67.8 GWh) which cover about 90% of annual gas demand (91.2 GWh).

 Key
     indicators 
 
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 145 || Number of entities bringing natural gas into country || 6 
 Number of main power-generation companies || 4 || Number of main gas entities || 3 
 Market share of the largest power-generation company 2012 || 56.6% || Market share of the largest entity bringing natural gas || N/A 
 Number of electricity retailers || 152 || Number of retailers selling natural gas to final customers || 41 
 Number of main electricity retailers || 6 || Number of main natural gas retailers || N/A 
 Switching rates (entire electricity retail market) || 1.1 || Switching rates for gas (entire retail market) || 1.7 
 Regulated prices for households – electricity || No || Regulated prices for households – gas || No 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || No 
 HHI in power-generation market || N/A || HHI in gas supply market || 3,371 
 HHI in electricity retail market || ̴1,800 || HHI in gas retail market || ̴2,200 
 Electricity market value[18] (bn€) || 7.265 || Gas market value19 (bn€) || 2.658 
 Installed generation capacity (MW, 2011) || 22,787 ||   ||   
 Peak demand (MW) || 11,617 ||   ||   
 Number of Smart meter installed || 590 ||   ||   
Belgium
Key issues
The level of
market concentration remains high, despite a high switching rate of consumers
that tend to reduce the market share of incumbent suppliers on the retail
markets. 
Due to changes
in the generation mix and retirement of generation capacity, risks for security
of supply will increase in the upcoming years. Increased cooperation with
neighbouring countries and demand side response are required to tackle such
risks. Efforts to further integrate the physical grid
and electricity markets with neighbouring countries should be pursued. Enhanced
interconnection could help to accommodate peaks in demand.
Belgium should take measures to further stimulate consumer empowerment
leading to enhanced retail competition. This is necessary to ensure that when
decrease in wholesale gas and electricity prices is observed, it is also passed
on to the final consumers. 
Belgium should also ensure that distribution charges reflect efficient
costs of distribution, network operations and development. Proper regulatory
oversight at federal as well as regional level is essential to ensure that all
network tariffs reflect efficient costs and are incentive based. 

 General overview

Gross energy
consumption in 2012 (56.3 Mtoe) was based largely on crude oil and petroleum
products (39.0%), natural gas (27.0%), and nuclear energy (18.5%). Solid fuels
and renewable energy sources (RES) were less important in the energy mix (with
shares of 5.3% and 5.9%, respectively)[19]. 
Figure 1:
Gross inland consumption mix 2008 – 2012 (source: Eurostat)
 
The power
generation mix in 2012 (82.9 TWh) was dominated by nuclear power (with a share
of 48.6%) and by gas-fired plants (30.9%). RES and solid fuels accounted for
14.2% and 0.12% respectively[20].
Electricity demand in Belgium decreased by 2.8% in 2012 compared to the 2011
level.[21]
Figure 2:
Gross electricity generation mix 2008 – 2011 (source:
EU Energy in Figures - Pocketbook 2012 and 2013)
Belgium’s renewable energy target is 13 % by 2020[22].
In 2012, the share of renewables in gross final energy consumption reached 6.8%[23]
and the country is on track to achieve its 2020 national RES target. Belgium also has plans to reduce its greenhouse gas emissions by 15%, but these have yet to
be aligned with regional initiatives. 

 Regulatory framework

General
The Third Energy
Package was transposed into national law by a law issued on 8 January 2012.
This resulted in an increase in the powers of the national regulator, while at
the same time strengthening consumer protection and increasing the competence
of regional authorities.[24]
The indexation of the energy component of electricity and gas prices
was capped provisionally from 1st April 2012 to 31st
December 2012. The aim of the Belgian authorities was to increase transparency
and price comparability in variable contracts, protecting the consumer against
price increases based on opaque indices and information asymmetries. These
measures and the subsequent public debate encouraged Belgian consumers to
become more price-conscious and ignited their interest in changing providers. 
To further increase competition and liquidity in the Belgium gas market a new entry-exit transmission model was implemented as of 1st
October 2012.
National Regulatory Authority
In January 2014,
the Belgian federal energy regulator, the CREG ("Commission de
Régulation de l’Électricité et du Gaz") employed 64 employees
(including 1 president and 3 directors) and had an annual budget of EUR
14,952,254.[25]
Its independence from the Ministry was increased by the provisions of the law
of January 2012 and the decision of the Constitutional Court of 7th
August 2013, which confirmed that the regulator had exclusive jurisdiction with
respect to application, determination and exemption of tariffs. Since 1st
July 2014, the competence for setting distribution tariffs has been transferred
to the regions. Regional regulators (CWaPE in Wallonia, VREG in Flanders,
BRUGEL in Brussels) are now responsible for the control of tariffs regarding
public distribution of gas and electricity (low-voltage (≤ 70kV) or
low-pressure networks). 
Unbundling
The CREG
certified S.A. Elia System Operator (Elia) as the Belgian TSO for electricity
as fully ownership unbundled on 6 January 2012, along with S.A. Fluxys Belgium as TSO for natural gas on 12 October 2012 and Interconnector (UK) on 11 July 2013. 
Elia has been
listed on the stock exchange since 2005. Its core shareholder is the municipal
holding company Publi-T (45.22%), founded in 2001 when Elia was established. 
Major
shareholders of S.A. Fluxys Belgium are Euronext Brussels (10,03%), Belgium State (1%) and Fluxys Holding (89,97%). Fluxys Holding, parent company of S.A.
Fluxys Belgium, is owned by a municipal holding Publigas (77.7%) and Caisse de
dépôt et placement du Québec (20%). 
The regional
governments of Flanders, Wallonia and Brussels-Capital have also transposed the
DSO unbundling provisions of the Third Energy Package in their respective
legislations for the 24 electricity and 18 gas DSOs.[26] Articles 28 of Directives 2009/72/EC and
2009/73/EC, relating to Closed Distribution Systems (CDS), have been transposed
into law in the Flemish and Walloon region. In the Walloon and Brussels-Capital
regions, the new concept of CDSs has not (yet) been introduced, but its
legislation provides for a concept of private distribution networks. 

 Wholesale markets

Electricity
The Belgian
electricity generation market is still highly concentrated (Herfindahl
Hirschmann Index – HHI- in: 2013 of 4,770 and 7,390 in 2008) but it
has been improving as the generation market share of Electrabel (2013: 67%)
dropped significantly in the last 5 years[27]. The three largest firms, Electrabel, EDF Luminus and E.ON had a
market share of 89% in 2013. The average price on day-ahead wholesale market in
2013 (EUR 47.45/MWh) at the Belgian exchange market Belpex was slightly higher
than in 2012 and about two euros lower than in 2011. At the same time the total
trading volume increased from 12.3 TWh (2011) to 17.0 TWh (2013). The sharp
increase in traded volume correlates with a reduced availability of two nuclear
power plants at the end of 2012. The number of market participants on the
Belpex Day-Ahead Market has increased significantly in recent years and totaled
42 at the end of 2013. 
Gas
Eighteen supply
companies operated in 2012 on the Belgian gas wholesale market. The largest
supplier was Eni Gas & Power with a market share of 36.9% in 2012 (2011:
45.7%). GDF Suez is the second largest supplier on the market with 31.9% market
share (+4.5 % in 2012). EDF Luminus also strengthened its third place (10.2% in
2012, up 1.6%). The remaining fifteen supply companies hold market shares of
less than 5% each and nine of these do not even reach 1%. The level of market
concentration, although still high, has improved (HHI 2013: 2,332)[28],
as pressure is exerted by emerging companies.
The total
natural gas consumption was constant at 185.6 TWh (+1.2%) even though
end-consumers connected to the distribution networks increased their
consumption (+11.5%). However, at the same time consumption for electricity
generation (possibly combined with the production of heat) dropped by 10.7% and
consumption by industrial customers dropped by 3.3%. Most gas supply is provided
via direct long term contracts (duration > 5 years) with natural gas
producers (61.9% in 2012). However, the share of short-term contracts (< 1
year) grew from 22.3% in 2011 to 33.9% in 2012.[29]
This effect was supported by the recently set up
virtual trading point ZTP(L) (Zeebrugge Trading Point) as part of the new
entry-exit regime. 

 Retail markets

Electricity
Despite
reduction of the largest three players’ market shares, concentration was still
high in 2012. The largest supplier was Electrabel Customer Service (ECS) with a
market share of 45% (2011). 
Figure 3: Electricity price change by component 2008 – 2013
(source: Eurostat, energy statistics)
The electricity
prices for household consumers declined from EUR 0.1590/kWh in 2012 to EUR
0.1583/kWh in 2013[30]
and for industrial consumers from EUR 0.0950/kWh to 0.0914/kWh.[31]
In 2013 the share of energy and supply costs was 38,75% of household prices,
while the share of network costs was 37,25%. Taxes and other levies made up for
the remaining 24%.[32]

On 1st April 2014, a VAT
reduction from 21% to 6% on electricity entered into force.
Gas
On the gas
market, concentration is still high. In 2012, especially in the Flanders region, the market share of the largest three retailing companies fell from 91.26%
to 76.01%. The HHI also fell in the Brussels region from 7,402 to 6,476. As in
the electricity market, ECS was the largest supplier. 
Figure 4: Natural gas price change by component 2008 – 2012
(source: EC, EPCR metadata)
Smart meters
Belgium formally decided, under current conditions, not to proceed until
2020 with the wide-scale roll-out of smart meters in the electricity and gas
markets as the outcome of the cost-benefit analysis conducted by the regional
regulators were negative.[33]

Each of the
three Belgian regions (Flanders, Wallonia and Brussels-Capital) has been in
charge of their region-specific cost-benefit analysis (CBA) for the smart
metering roll-out.[34] 

 Consumers

Consumers'
assessment of the retail gas and electricity markets is above EU average (75.7
points vs. 74.1[35] and
75.6 vs. 72.0, respectively), which in both cases corresponds to the 11th
position in the EU ranking. The gas market has improved by 6.7 points since
2012 and the electricity market by 7.4 (highest and 2nd highest in
the EU). Both markets have the highest proportion of consumers switching tariff
plan or service provider in the EU (about 3 times higher than the EU average),
and choice of providers and the ease of switching are within the 5 best ratings
in the EU (the latter component is assessed 3rd highest in the EU
for the gas market). While the incidence of problems in both markets is below
the EU average, the number of consumers complaining is higher than average (2nd
highest in the case of gas services). Especially the share of complaints to
third parties is 3rd highest in the EU.
[36]
The improvement
of market performance from 2012 could be linked to several measures taken by
the Belgian government: a modification of the energy law making it easier to
switch provider; a campaign organised together with local communes informing
and assisting consumers in using comparison tools for comparing energy prices;
and promotion of joint energy purchases. The information campaigns that took
place in 2012 were continued in 2013; at least one collective switching was
organised by a consumer organisation. New regulatory guidance specified that
contract termination can take place at any moment without cancelation fees (as
long as the one month notification period is respected).
Customers became
more price-conscious and suppliers kept their prices constant in 2013 after the
end of the provisional capping. Since 2013, suppliers’ prices are more
transparent and through the introduction of the safety net regulation these
prices are constantly monitored by the CREG. As a result, the average price of
the electricity and gas component is now moving closer to the average prices
seen in neighbouring countries. 
However, there
is still divergence among the various regions in Belgium. A positive outlook is
seen for Flanders, but not for Wallonia, as reported by regional regulators. 
The number of
customers benefiting from social tariffs remained stable compared to 2011
(400,000 for electricity and 230,000 for gas). The Federal Mediation Service
for Energy received 8,331 complaints during 2012 (compared to 8,736 complaints
in 2011). Of these complaints, 50% were considered admissible. 

 Infrastructure

The Belgian
authorities have establish a one-stop-shop for the permitting of Projects of
Common Interest (PCIs) pursuant the TEN-E Regulation and a cooperation
agreement between the Federal State and the Regions on the establishment of the
Coordination Committee has been signed.
Electricity
The Belgian
network forms an integral part of the European transmission network and has
connections with the Netherlands, France and Luxembourg. The infrastructure at
the interconnection point also includes phase shifters, which limit the impact
of loop flows which originate most frequently from Germany and help to
stabilize the grid in Belgium and in the region.
Several projects
have been identified as PCIs in accordance with the guidelines on
Trans-European energy network as they are cross border connections and improve
security of supply. The “NEMO” project will create the first interconnection to
the United Kingdom via the North Sea. The “ALEGro” project will also create the
first direct interconnection to Germany. Finally there is another
interconnection project with Luxembourg.
Gas
Belgium occupies a key position in the European gas grids and serves as an
important transit country. In particular, the development of the Zeebrugge hub
is attracting International trade as a collection of connection points of
several pipelines and as an important LNG terminal, which contributes significantly
to the security of supply in North-West Europe. In addition, Belgium is also well interconnected with its neighbours – Germany, France, The Netherlands, and Luxembourg.
Based on market
consultation Fluxys Belgium will build additional interconnection lines to the
LNG terminal in Dunkirk and Fluxys LNG will build a second landing stage for
loading and unloading at Zeebrugge terminal which also qualified as PCI. In
addition, there is another project to improve the interconnection of the Belgium gas market to Italy (reverse-flow on TENP).
In total, ten
projects involving Belgium have been identified as PCIs.

 Security
     of Supply

Electricity 
A combination of
factors has led to concerns about generation adequacy in Belgium: the nuclear phase-out, delays in several new plants for fossil-based generation
and in the construction of high-voltage lines. These factors have been
exacerbated by unforeseen outages in major nuclear units which have reduced the
generation capacity by 3 GW. 
Elia, as TSO,
and the Government have taken measures to address the situation which include
an increased strategic reserve and industrial load reduction. An updated plan
for controlled regional power cuts has been presented to avoid black-outs in a
worst-case scenario. 
In the medium
term, in order to encourage investments, the Belgian
government has launched a call for tender for the construction of new CCGT
plants. 
Gas 
Following the
transition to an entry-exit market model, the network was enforced with a new
compressor station on the rTr/VTN pipeline in Winksele, which increases entry
and exit capacities both in the East and the West. Moreover, Fluxys Belgium reactivated the former liquid nitrogen (LIN) storage tank in Dudzele with a new LIN blending
facility in order to stabilize the flows to the UK and to fulfil gas quality
conditions. Finally, the gas network towards Luxembourg will be enhanced in
order to be able to comply with the anticipated growing demand for natural gas
in Luxembourg.

 Key
     indicators
 
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 46 || Number of entities bringing natural gas into country || N/A 
 Number of main power-generation companies || 2 || Number of main gas entities || N/A 
 Market share of the largest power-generation company || 65.8% || Market share of the largest entity bringing natural gas || N/A 
 Number of electricity retailers || 33 || Number of retailers selling natural gas to final customers || 22 
 Number of main electricity retailers || 4 || Number of main natural gas retailers || 4 
 Switching rates (entire electricity retail market) || 10% || Switching rates for gas (entire retail market) || 11.2% 
 Regulated prices for households – electricity || No || Regulated prices for households – gas || No 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || No 
 HHI in power-generation market || 4,010 || HHI in gas supply market || 4,000 
 HHI in electricity retail market || 3,000 || HHI in gas retail market || 3,900 
 Electricity market value[37] (bn€) || 9.677 || Gas market value (bn€) || 4.505 
 Installed generation capacity (MW, 2012) || 20,8 ||   ||   
 Peak demand (MW) || 14,234 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Bulgaria
Key issues
With regards to
electricity, the domestic market is dominated by the Bulgarian Energy Holding
and its daughter, the national electricity supply company Natsionalna
Elektricheska Kompania EAD (NEK) and characterized by an overcapacity in
electricity generation. To attract independent producers and traders, efforts
on establishing a well-functioning balancing market including putting into
place an organised independent power exchange and day-ahead market should be
increased. The existing quota system for power plants in the regulated segment
of the market should be phased out gradually and the current single-buyer model
should also be removed. Bulgaria needs to gradually phase out regulated
electricity prices also for households and small and medium-sized businesses
connected at low voltage and take necessary steps towards a competitive retail
market. Furthermore, an effort should be made to accelerate the implementation
of electricity interconnection points and enhance the capacity to cope with
disruptions.
With regards to
the gas market, connection of the domestic gas transmission system and the
transit system via adequate capacity level remains an outstanding issue and the
delays observed in developing interconnections with neighbouring countries
should be resolved and promoted. The certification process of the independent
gas transmission operator should be completed.
The progressive
dismantling of the Bulgarian Energy Holding conglomerate and an ownership
unbundling of the transmission system operators would essentially help reducing
the dominance of the incumbent company and introduce more competition on the
Bulgarian electricity and gas markets.
Bulgaria should also strengthen the independence of the national regulatory
authority and its administrative capacity in the energy sector. 

 General
     overview

Gross national
energy consumption in 2012 reached 18.2 Mtoe, a decrease of 4.5% compared to
2011. The country’s energy mix was largely based on solid fuels (36.3%),
followed by nuclear (21.4%) and oil (20.1%). Compared to 2011, solid fuels
decreased significantly.
Figure 1: Gross inland consumption mix 2008 – 2012 (source: Eurostat)
Gross
electricity generation in 2011 reached 50.8 TWh, with the largest contributor
being solid fuels (54.2%), followed by nuclear power (32.1%). Renewables (9.3%)
and natural gas (4.1%) also had a visible presence in the electricity mix,
while the contribution by oil is negligible (0.3%). Gross electricity
generation in 2012 reached 47,3 TWh, with the largest contributor being solid
fuels, followed by nuclear power.
Figure 2: Gross electricity generation
2008 – 2011 (source: EU Energy in Figures – Pocketbook 2012 and 2013)
Cogeneration[38]
(with 6.7% in 2011) has been in decline since 2008, when it represented 10% of
gross electricity generation[39].
The country’s overall renewables target share for 2020 is 16%. In 2012, the
renewable share in gross final energy consumption was 16.3%[40]
and Bulgaria has thus already achieved its national 2020 RES target.

 Regulatory
     framework

General
The Energy Act
was amended in July 2012 to implement the Directives 2009/72/EC and 2009/73/EC[41]
and the Energy Efficiency Act was amended in February 2013 to implement
Directive 2010/31/EC[42].

The Renewable
Energy Act, adopted in July 2012 was amended in 2013 to abolish the “green
surcharge for transit“[43]
and introduce a fee (or tax) for solar PV and wind production.[44]
Also the limitation on the volume of electricity purchased at
the feed-in tariff price was amended. Production above the cap will be
purchased at the regulated retail price. 
National
Energy Regulator
The Bulgarian
Energy Regulator is the State Energy and Water Regulatory Commission (SEWRC),
established in 1999. SEWRC is an autonomous regulatory agency responsible for
electricity, heat, natural gas, water and sewerage. In 2012, SEWRC employed 128
staff, with an operating budget of approximately EUR 1.86 million. Although
SEWRC's budget increased by EUR 70,000 in 2013, this did not translate into a
significant increase of resources and number of employees. The current budget
does not allow SEWRC to build up the stable and high quality staff that is
demanded to carry out its legal tasks. The fact that SEWRC's Chairpersons
changed four times in the course of 2013, raises concerns about the
independence, professional stability and continuity of the management of the
Regulator. The selection of the Chairperson of SEWRC should take place in a
more transparent manner based on transparently defined professional criteria
and respecting general principles of conflict of interest. 
Unbundling
In February
2014, the public provider NEK completed the last phase of its split from the
Electricity System Operator (ESO). ESO is now able to start the process of its
certification as an independent transmission operator, although no draft
certification decision was submitted to the European Commission until September
2014.[45]
In April 2013, the gas TSO Bulgartransgaz EAD submitted an application to SEWRC
for certification as an independent gas transmission operator[46]. SEWRC's initial draft decision was withdrawn and is to be
resubmitted in the autumn of 2014[47].

The electricity
distribution network is privatized and owned by CEZ, EVN and Energo-Pro. The
distribution and supply companies are legally unbundled. None of the 30 gas
distribution companies are legally unbundled since they have less than 100,000
customers.[48]

 Wholesale
     Markets

Electricity
The state owned
Bulgarian Energy Holding EAD (BEH) and its subsidiary NEK, hold generation
assets representing 45% of the installed capacity. NEK acts as a single buyer
from the power generators on the high voltage grid and remains the sole
electricity supplier at regulated prices for end suppliers. Moreover, NEK has
the legal obligation to purchase electricity produced by CHP plants, renewables
and industrial producers at regulated prices.
Dispatching of
power plants takes place based on regulated quota and priority rules. As a
result, NEK purchases electricity at a wide range of prices, from EUR 21/MWh up
to more than EUR 350/MWh. Overall, the Bulgarian electricity market operates
mainly at regulated prices, covering roughly half of the electricity
transactions.  The Rules on Electricity Trade were amended in May 2014[49];
a company within the BEH group, Independent Bulgarian Energy Exchange (IBEX),
has been licensed for operating an organized power exchange and day-ahead
market in electricity[50].
About a third of
the electricity market was first opened in 2012, including consumers using
their right to choose a supplier and commercial exports. The open electricity
market in 2012 included mainly consumers connected to high voltage network and
some medium voltage consumers.
Traditionally Bulgaria is a net electricity exporter. In 2012, the share of net country exports was 20.4%
of the net electricity country output. [51] This was lower
than 2011 because of decreasing demand from the Greek market and other
neighbouring markets having sufficient hydro resources. In January and February
2012, the export of domestically produced electricity was curtailed twice from Bulgaria to the neighbouring markets. Following the removal of surcharges imposed on power
generators electricity exports increased in 2014 compared to previous years.
Gas
Bulgaria largely depends on gas imports from
Gazprom. Bulgargaz EAD, which is part of BEH, is the largest natural gas
importer. In 2013, a second
trader, affiliated with Gazprom,
entered the gas market, which imported gas from Russia and sold gas to its distribution companies as well as end
users. 
The tariff model
for transmission is “postage stamp” (flat fee). At present, transit flows
through Bulgaria to inter alia Turkey and Greece are excluded from the
regulatory oversight by SEWRC and based on historic long term transport
contracts with preferential access to cross-border capacities. Bulgartransgaz
EAD is expected to implement an entry-exit model, to meet the requirements of
the Third Energy Package, however this system is not envisaged to include the
transit.[52] 


 Retail
     Markets

Electricity
The retail electricity market remained highly concentrated.
In 2012, 8 out of total 24 power retailers took 92% of the market.
Figure 3: Electricity price change by component
2008 – 2013 (source: Eurostat, energy statistics)
From the beginning of 2013, the market was only regulated
at the low voltage level. The renewables
charge makes up for 15% of the total electricity price for household consumers
in Bulgaria.
Although electricity consumers are allowed to switch, no
actual switching is observed. Due to the regulated prices for household
consumers, there is no benefit in switching and there is no incentive for
traders to enter this segment.[53]
Gas 
Overall gas
demand in Bulgaria increased in 2013 by 7% compared to 2012[54].
The traded volumes were 2854.8 mcm for non-households and 70.2 mcm for
households.
Figure 4: Natural gas price change by component
2008 – 2012 (source: EC, EPCR metadata)
In 2012, Bulgaria registered an annual price decrease for
natural gas close to 4%, for both household and industrial customers. Taking
purchasing power into account, retail gas prices for the average consumer in Bulgaria are the highest in Europe. Natural gas prices (including taxes and levies) increased by
42.2% for residential consumers and by 49.2% for industrial users from 2008 to
2012. The main drivers behind these price rises were energy and supply costs,
although VAT rises and higher distribution costs (for industrial users) were also
significant factors[55].
Although
consumers have the right to select their natural gas supplier, no actual
switching is observed as DSOs operate exclusively in their licensed areas of
operation. 

 Consumers

The retail
electricity market in Bulgaria is by far the lowest scoring in the EU (48.9
points compared to 72.0) and has seen a highest decrease in score (6.9 points)
since 2012. The market is also at the very bottom of the domestic ranking of 31
services markets. In fact, it has the lowest score of all surveyed services
markets in the 28 EU Member States. The market scores the lowest or second
lowest on all components surveyed (comparability, trust in providers, overall
consumer satisfaction, choice of providers, problems, switching and ease of
switching), except for the proportion of complaints (which are just below the
EU average). The gas market in Bulgaria is scoring better, although also below
the EU average (72.0 points vs. 74.1[56],
corresponding to 18th position in the EU and has seen an increase of
2.1[57]
points since 2012. This market scores particularly low on trust (lowest place
among the EU countries). [58]
In July 2013,
SEWRC concluded that the implementation of smart metering was not economically
viable. The powers of the SEWRC include the review of complaints of consumers
against licensees. In 2013, 2,332 complaints against
electricity licensees were filed at SEWRC, and 45 complaints against gas
licensees. The majority of the gas related complaints were concerned with
delays in getting connected to the gas transmission network and gas
disruptions.[59] From July 2012, vulnerable customers
are defined in the Energy Act.

 Infrastructure

The Bulgarian authorities should ensure a proper and timely adoption
of the measures stemming from the TEN-E Regulation, including the establishment
of the one-stop-shop for Projects of Common Interest (PCIs) (due by 16 November
2013), and other measures foreseen for 2014 and 2015, including the publication
of the manual on the permit granting process for project promoters, and the
adoption of legislative and non-legislative measures streamlining the
environmental assessment procedures.
Electricity
Total installed
capacity in 2012 was 13.8 MW, with the peak load of 7.8 MW observed in February
2012.[60] 
There are several PCIs under the guidelines for trans-European energy
infrastructure to be developed within the interconnecting lines with Greece and Romania that increase the cross-border capacity and open North-South priority corridor.
Another important PCI is hydro-pumped storage in Yadenitsa.
Technical
measures and rehabilitation of the electricity transmission system were
approved by the Regulator in 2012. A number of reconstructions and an
enlargement of the transmission network was realised and new substations and
lines were constructed to satisfy the requirements from new renewable
capacities in certain regions of the country.[61] 
Gas 
In 2013,
approximately EUR 15.7 million has been invested in the improvement of the gas
distribution infrastructure, through the construction of 194 km of pipelines[62].
Currently there is no physical congestion in the system, either national or
cross-border. However, cross-border connection points suffer from heavy
contractual congestion and there is minor entry capacity from neighbouring
Member States into Bulgaria. Annual gas consumption is below half of the
projected transmission capacity.
Progress on the interconnections, PCIs, with Romania, Serbia, Greece, and Turkey is ongoing. The interconnection with Romania – originally
expected to be commissioned in June 2014 – is facing delays. Firm reverse flow
capacity from Greece has been installed at the level of 1 mcm/d. However, the
interconnection between Bulgaria and Turkey is delayed. The reverse flow
project with Romania, entailing the connection of the domestic Romanian system
to the trunk line, has been suspended.  

 Security
     of supply

Electricity
Bulgaria is
one of the largest electricity exporters in South Eastern Europe, and thus
faces no particular security of supply issues. The electricity transmission
network of the country has not faced any significant problems related to
security of supply and congestions in the electricity system, including the
cross-border capacities. Short-term congestions were rare in the
interconnectors with neighbouring countries. Scheduled and non-scheduled
interruptions were lower than forecasted.[63] To
increase the security of supply in the Burgas region, the construction of two
new 400kV substations and three 400kV lines in the North-Eastern part of
Bulgaria is envisaged, accommodating the high penetration of renewables in the
region and allowing the North-South connection[64].
Gas 
In 2014 Bulgaria remains fully dependent on a single source
of gas on a single route by a single supplier. It has only limited domestic
underground storage capacities that could help in balancing disruptions in high
demand periods. Interconnections with the neighbouring countries are very poor
and still under development. To ensure security of supply, there are
possibilities for reverse physical flow of natural gas from Greece and, after eventually reaching an agreement, from Turkey. The Kula-Sidirokastro
interconnector exhibits an existing capacity of 4.3 bcm annually, with the
planned reverse flow capacity of 0.36 bcm[65].
There is an underground gas storage facility, Chiren, with a capacity of 550
mcm, of which 250 mcm is reserved for emergency situations. Expansion of the
Chiren capacity is envisaged[66]. 

 Key
     Indicators
 
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 20 || Number of entities bringing natural gas into country || 2 
 Number of main power-generation companies || 5 || Number of main gas entities || 3 
 Market share of the largest power-generation company || N/A || Market share of the largest entity bringing natural gas || N/A for 2012, 99.8 for 2011 
 Number of electricity retailers || 24 || Number of retailers selling natural gas to final customers || 30 
 Number of main electricity retailers || 8 || Number of main natural gas retailers || 3 
 Switching rates (entire electricity retail market) || 0% || Switching rates for gas (entire retail market) || 0% 
 Regulated prices for households – electricity || Yes[67] || Regulated prices for households – gas || Yes 
 Regulated prices for non-households – electricity || Yes[68] || Regulated prices for non-households – gas || Yes 
 HHI in power-generation market || N/A || HHI in gas supply market || 7,753 
 HHI in electricity retail market || N/A || HHI in gas retail market || Approx. 1,000 
 Electricity market value[69] (bn€)   || 1.706 || Gas market value34 (bn€) || 0.434 
 Installed generation capacity (MW) || 10,236 ||   ||   
 Peak load (MW) || 7967 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Croatia 
Key Issues
Competition in Croatia’s energy market is still very limited. Market opening is needed to improve the
investment climate and create incentives for new entrants. 
Croatia should step up its efforts to deregulate wholesale prices and
prices for end-users and complete the unbundling process. Market liberalization
depends on the effective enforcement of EU law including competition and State
aid rules and the removal of barriers to the export and import of gas. 
Investment in
LNG terminal on the Croatian island of KrK is of strategic importance to
regional energy security.
1.     General Overview 
Croatian national gross energy consumption in 2012 amounted to 8.12 Mtoe[70]. Crude oil,
petroleum products and natural gas contributed the largest shares to the energy
mix.
Figure 1:
Gross inland consumption mix 2008 – 2012 (source: Eurostat)
 In 2012, total power generation reached
10.5 TWh (a significant decrease compared to 2010, when it was 14.1 TWh).
Almost half of power generation mix comes from hydro. 
Figure 2:
Gross electricity generation mix 2008 – 2012 (source: Eurostat)
Croatia has a long tradition of gas production by
which it covers over 70% of its annual domestic demand. In 2012, the domestic production of natural gas decreased. Imports
increased significantly and a large amount of imported gas has been stored in
underground facilities[71].
The share of renewable energy
sources in gross final energy consumption in 2012 amounted to 16.8%[72],
above Croatia's 2011/2012 interim trajectory, and is showing good progress
towards its national target of 20% by 2020.
2.     Regulatory framework
General
The Energy Law adopted in 2012 aims at incorporating the Third
Energy Package into Croatian national legislation[73].
Implementation has not yet taken place. In 2013, the Croatian Parliament
enacted the Strategic Investments Act[74].
It gives preferential treatment to energy projects of national interest,
regardless if they are private or public.
National Energy
Regulator
The Croatian Energy Regulatory Agency (HERA) was established in 2004. HERA’s annual budget of 4.5m EUR is not part
of the government budget. Funds for financing the work of HERA are secured from
income from its own activities (collection of one-off fees and compensations).
Unbundling
The unbundling process in Croatia is not yet completed.  The HEP
Group (Hrvatska Elektroprivreda) is a state owned electricity company,
engaged in electricity production, transmission and distribution, supply and
trade, as well as in many other supporting activities including other energy
sectors such as heat and natural gas.
In mid-2013 the Croatian TSO, HEP-OPS changed its name to Croatian
Transmission System Operator (HOPS). The equity capital of HOPS was increased
and founding acts amended to ensure functional unbundling from the rest of HEP
Group, including a different visual identity. However, unbundling certification
by HERA has not been yet notified to the Commission. The HEP Group has a
monopoly on the energy market but the TSO and DSOs have independent accounting,
legal and management systems. 
The gas grid operator Plinacro has been separated from the company
INA for more than a decade, but its certification is still pending. Gas is
distributed by 36 companies which operate at a local level, of which 13 have
unbundled their supply and distribution operations[75].
The remaining DSOs  serve less than 100,000 customers and are exempted from the
unbundling rules. 
3.     Wholesale markets 
Electricity
The power generation sector is also dominated by HEP. It was the
largest electricity generator, covering 82% of the market in 2012. It owns a 50% stake in the Krsko nuclear
power plant in Slovenia, near the Croatian border. HERA has so far issued 24
licenses for electricity generation, the most significant two being HEP and the
independent producer TE Plomin d.o.o., co-owned by HEP and RWE Power[76]
(50:50), operating a 210 MW power plant[77].  At the
wholesale level, the market is based on bilateral contracts. 
The Cross-border transmission and allocation of interconnection
capacity is progressing. In 2012, HEP TSO carried out its first multilateral
coordinated cross-border transmission capacity auctions with Slovenian and
Hungarian operators. HOPS is striving to improve further integration with
neighbouring electricity systems, including models for market coupling. 
Gas
There is currently no commodity exchange or gas hub.  Wholesale
gas trading is based on bilateral contracts.  The
conditions for a de facto opening of the gas market have been
met with the construction of the interconnecting gas pipeline between Croatia and Hungary which became operational on 3 August 2011. The Croatian
gas market began its transition to an entry/exit model on 1 January 2014.
Rather than seeking a new long-term deal (the supply contract with Italy's ENI ended last December), the Croatian oil and gas group INA-Industrija
Nafte is focusing on domestic gas resources and
spot markets. INA’s plan to purchase all its gas imports on the spot market has
sparked interest from Slovenia and Hungary, from which shippers can import. By
moving to the new model, traders will be able to book entry and exit capacity
separately and shipping gas to Croatia will be easier. However, some provisions
in the Gas Market Act represent a serious obstacle to cross border gas flows,
by obliging domestic gas producers to offer their gas primarily to suppliers of
customers in the territory of Croatia and obliging public service suppliers to
primarily purchase gas from domestic producers.
Until 31 March 2014, the company Prirodni
Plin (owned by INA) remained the "supplier of suppliers" under the public service
obligation of gas procurement at regulated prices.  From
April 2014 until 2017, this function was transferred to
HEP, which purchases the necessary gas from INA also at
a regulated price. This marked the beginning of a three
year transitional period before complete liberalisation
of the market, which contradicts Croatia's commitments under the accession
negotiations. During this period households prices
will  remain regulated. 
4.     Retail Markets
Electricity
In June 2013, two new power retailers entered the market offering
electricity to customers connected to the distribution network. The response of
small customers and households at first seemed high, although the actual
switching rate is unclear. This development is significant given that the price
for household customers remains fully regulated. Recently
the competition for customers gained momentum. Operators launched advertising
campaigns, promising savings on energy bills of 30%. Though the Croatian
regulator issued 15 electrical energy supply licences, the two companies
leading the campaign for swapping suppliers are Slovenia’s GEN-I and Germany’s RWE. In practice, supplier switching rules are yet to be
developed.
Figure 3: Electricity price change by component
2008 – 2013 (source: Eurostat, energy statistics)
Although below the EU average, Croatia's domestic electricity prices
rose by 16.9% between 2008 and 2012. Industrial price rises were lower (4%), in
part due to a decrease in the network costs paid by industry. In 2012, energy and supply costs accounted
for 60% of domestic prices, while network costs accounted for 40% (share in
price without taxes and levies). For industrial consumers, the shares were 58%
and 42% respectively. In 2013, the price for industrial
customers (without VAT) was EUR 91/MWh. For households, price reached a value
of EUR 106/MWh (without VAT and other taxes).
Gas
Between 2008 and 2012, Croatia's gas prices rose by 45% and 94% for
domestic and industrial consumers respectively.[78]
The growth was due to a VAT increase (25% for both electricity and gas), and a
major rise in the natural gas shipping rate. Although permitted, there were
almost no switches of supplier in 2012. The steep rise in gas prices has made
helping customers a priority for the government. In 2013, industrial consumers
paid 12.9 EUR/GJ on average, which is more than industry pays for gas in North
West Europe. High prices negatively impact competitiveness of the Croatian
economy.
Figure 4: Natural gas price change by component
2008 – 2012 (source: EC, EPCR metadata)
5.     Consumers
According to the law, all customers are eligible and free to choose
their supplier. Protection of
customers is strengthened, particularly in terms of ensuring quality of service
and protection of vulnerable customers.  HERA is in the process of preparing a rule which should simplify the
switching procedure and ensure it takes no more than 3 weeks. It has appointed
a council for customer protection, which makes recommendations and opinions to
assist the ongoing transformation of the sector.
6.     Infrastructure
The Croatian authorities should
ensure a proper and timely adoption of the measures stemming from the TEN-E
Regulation, including the establishment of the one-stop-shop for Projects of
Common Interest (PCIs) (due by 16 November 2013), and other measures foreseen
for 2014 and 2015, including the publication of the manual on the permit
granting process for project promoters, and the adoption of legislative and
non-legislative measures streamlining the environmental assessment procedures.
Electricity
There are several Projects of Common Interest under the guidelines
for trans-European energy infrastructure planned in Croatia, including two
electricity clusters, a high voltage transmission line
between Croatia and Bosnia and Herzegovina and a high voltage transmission line
between Croatia, Hungary and Slovenia. Considerable investment is expected. An 800 million
EUR investment in a 500 MW coal-fired power plant Plomin, is underway. The government is trying to find investors that would enable the
delivery of a 500 MW gas plant in Osijek, which would
help reduce imports of electricity, especially from Serbia. Investment scenarios are optimistic. 
Gas
The gas pipeline Donji-Miholjac – Dravaszerdahely between Croatia and Hungary has created conditions for gas market opening.  This is the second supply
route for imported natural gas with an annual pipeline capacity of 6.5
bcm.  The cross-border interconnector in Rogatec between Croatia and Slovenia is the supply route for Russian gas. Plinacro has
finalised the implementation of its previous Network Development Plan by
putting into operation the transmission pipeline Benkovac-Split[79].

The LNG terminal on Krk, on the list of PCIs, would open a cross
European North-South corridor. To deliver the project, the government should
encourage investors but for the time being contradictory signals are being
conveyed. In January 2013, Gazprom and Plinarco adopted
an action plan to implement the South Stream project in Croatia by 2016. A strategically important PCI (a least costly N‐1 solution for Croatia)
is the Ionian-Adriatic Pipeline to Albania which creates a new energy corridor
for the region.
7.     Security of Supply
Electricity
The Croatian power system is one of the
smallest in Europe. It has 4 GW of installed generation
capacity and 15.000 MVA[80]
of gross installed interconnection capacity. Due to its geographical position and location of generating plants,
electricity is transported for most of the year from the south to the north and
vice versa, and from the north towards the east[81].
Croatian security of power supply is strengthened by interconnecting
infrastructure with the systems of neighboring countries[82].
Gas
Croatian Regulation on Security of Natural Gas Supply is not fully
aligned with EU Regulation 994/2010. The Preventive Action and Emergency Plan
have not yet been adopted; there is no bi‐directional flow obligation; no
obligation to perform the Risk Assessment and no official obligation for a
N‐1 rule application.  Croatia is strategically located in terms of regional
security of gas supply. A recent survey revealed the
existence of promising deposits of gas and oil in the central and southern Adriatic. Delivery of a PCI in LNG terminal in Krk is quickest way
to improve the whole region’s natural gas supply security.
8.     Key Indicators   
 Electricity || Gas 
 Number of companies representing at least 95% of net power generation || 2 || Number of entities bringing natural gas into country || 5 
 Number of main power-generation companies || 2 || Number of main gas entities || 2 
 Market share of the largest power-generation company || 82% || Market share of the largest entity bringing natural gas || 60.8% 
 Total Number of electricity retailers || 9 || Number of retailers selling natural gas to final customers || 36 
 Number of main electricity retailers || 2 || Number of main natural gas retailers || 3 
 Switching rates (entire electricity retail market) || N/A || Switching rates for gas (entire retail market) || N/A 
 Regulated prices for households – electricity || Yes || Regulated prices for households – gas || Yes 
 Regulated prices for non-households – electricity || Yes || Regulated prices for non-households – gas || Yes 
 HHI in power-generation market   || 7,738 || HHI in gas supply market || 4,833   
 HHI in electricity retail market || 4,516 || HHI in gas retail market || 1,588 
 Electricity market value[83] (bn€) || 1.197 || Gas market value13 (bn€) || 0.505 
 Installed generation capacity (MW) || 4,000 ||   ||   
 Peak demand (MW) || 3,193 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Cyprus
Key issues
The full
liberalisation of the electricity market was formally achieved on 1st
January 2014, but it is not yet implemented in practice, as EAC, a semi-public
body, is currently the sole supplier. Consequently, there is no scope yet for
consumer switching. 
Liberalisation
should be planned in detail, taking into account the EU targets for renewables,
energy efficiency and GHG emissions. There is a need to create an investment-friendly framework in order to
attract alternative suppliers and ensure a smooth transition for consumers.
Renewable energy
could play a vital role in security of supply and should be promoted.

 General
     overview

The gross inland
energy consumption in 2012 was 2.51 Mtoe, a drop of 6.3% from 2011. The energy
mix pattern continues to be dominated by oil and petroleum products, which
represent 94.9% of the gross energy consumption in 2012. The contribution of
renewable energy to the gross inland energy consumption has steadily increased
over recent years and the renewables share has reached 6.8%[84]
in 2012. Cyprus remained above its 2011/2012 interim trajectory and is on track
to reach its national 2020 RES target of 16% by 2020[85].
Figure 1: Gross inland energy
consumption mix 2008-2012 (source: Eurostat)
The gross
electricity generation in 2012 was 4.72 TWh, a drop of 4.3% compared to 2011.
Electricity in Cyprus is generated mainly by crude oil and petroleum products.
Only 3.6% of electricity is generated by renewables, despite Cyprus' remarkable potential in solar and wind. However, renewables are increasing their
contribution in electricity generation. In 2012, electricity generation from
renewables more than tripled compared to 2010 levels, mainly due to the
increase of wind power generation. The National Renewable Energy Action Plan
projected that by 2018 the electricity generation capacity from renewable
energy sources would reach 400 MW. In 2012, the installed renewables have
reached 172 MW. The gross electricity generation is presented graphically the
period 2008-2011[86].
Figure 2: Gross electricity generation
mix 2008 – 2011 (source: EU Energy in Figures – Pocketbook 2012 and 2013)

 Regulatory
     framework

General
An important
regulatory development for 2012 was the implementing legislation of the Third
Energy Package, which came into force in late 2012[87].
National
Energy Regulator
The Cyprus
Energy Regulatory Authority (CERA) was established in 2003. The objective of
CERA is to regulate and monitor the Electricity and Natural Gas Markets. CERA
employs 11 people. Further recruitment has been postponed as a result of
government decisions for the wider public sector; CERA's lack of resources is a
source of concern. The revenue of CERA for the year 2012 was EUR 1.96 million,
an increase of approximately 14% from 2011. CERA closed the year with a net
surplus of EUR 0.97 million[88].
Unbundling
The incumbent
Electricity Authority of Cyprus (EAC) owns both the transmission and the
distribution system. The TSO is legally but not functionally unbundled from
EAC, since all its staff is seconded from EAC. The obligation of ownership
unbundling of the TSO does not apply, since Cyprus has obtained a derogation
from Article 9 of the 2009/72/EC Directive. The DSO is responsible for
managing, operating and developing the network, safeguarding access to the
distribution network and equal treatment for all users. EAC has unbundled the
accounts of the DSO.

 Wholesale
     Markets

Electricity
Whilst full
liberalisation of the market was legally achieved on 1st January
2014 when a derogation granted under the Second Energy Package pursuant to its
status of small isolated system expired, Cyprus is not integrated and not interconnected with any neighbouring
power systems. No wholesale market is currently operating in Cyprus; in the Memorandum of Understanding with the “Troika” (the European Commission, the
International Monetary Fund and the European Central Bank) Cyprus engaged to develop open and competitive energy markets.
The installed
generating capacity in 2012 was 1,546 MW, out of which 1,374 MW was thermal
power stations and 172 MW was renewable capacity mainly from wind parks. The
installed capacity of cogeneration of heat and power was 9.4 MW in 2012[89].

Based on the
supply interruption data for 2012 the overall minutes lost per voltage level
per year are estimated at 41 minutes for H/V, 157 minutes for M/V and 8 minutes
for L/V. This represents an increase over the years for which data was
available[90].

Gas
Currently,
natural gas is not supplied to Cyprus. However in December 2011, significant
gas resources were discovered within the Eastern Mediterranean Sea. The Cypriot
authorities have established two National Hydrocarbons Companies whose
respective tasks and functions are currently being defined: in principle EYK
(formerly KRETYK) should be in charge of upstream and export issues, while DEFA should
focus on the development of domestic market. Both have the legal form of private
companies 100% owned by the State. In addition, an interim solution was planned
for the supply of the electricity generation sector with natural gas until the
indigenous natural gas reserves are made available. On 27 September 2012, DEFA
and EAC issued an invitation for the Expression of Interest for the supply of
natural gas to Cyprus. Seventeen applications were submitted, but none was
accepted. A second invitation was issued in January 2014 with a deadline of 24
March 2014[91], subsequently extended to 14 April
2014.

 Retail
     Markets

Domestic
consumers became legally eligible to switch suppliers on 1st January
2014. However, EAC is still the sole electricity supplier in Cyprus and thus switching procedures do not exist. Electricity prices are well above the EU
average. The network component in households represented 15% of the total bill,
while in industry it represented 11% of the end price[92].
Figure 3: Electricity price change by component 2010 – 2013
(source: Eurostat, energy statistics)
Electricity
demand in 2012 decreased by 4.6% compared to 2011, which was the largest drop
amongst all EU Member States[93].

According to EU
law, Member States are obliged to ensure the deployment of smart metering
systems, which may be subject to a cost-benefit analysis, on 80% of electricity
customer premises by 2020 where positively assessed. To prepare for this medium-term
goal, the EAC is implementing a pilot project of 3,000 smart meters[94]
[95].

 Consumers

The retail
electricity market in Cyprus is performing just below the EU average (70.7
points compared to 72.0[96])
and ranks 18th EU-wide. The proportion of consumers encountering
problems in this market is the lowest in the EU.
(The questions on switching, ease of
switching and choice have not been asked given that the market is a monopoly).[97]
The consumer
protection measures, including those set out in Annex I of the directives
2009/72/EC and 2009/73/EC, are effective and enforced through the Laws
N.211(I)/2012 and N.219(I)/2013 on Regulating the Electricity and Gas Markets,
respectively. As stated earlier, from 1st January 2014 the
electricity market is technically fully liberalised, but there is still only
one supplier, and no scope for switching. Energy poverty, vulnerable consumers'
categories and measures to protect them were defined in a Ministerial Decree,
which includes measures such as reduced prices on electricity tariffs and
financial incentives for participating in a Plan for setting up a Photovoltaic
system at their house, with a capacity of up to 3kW with the net-metering
method. In 2012, 3% of all household consumers were defined as consumers with
special needs.

 Infrastructure

In accordance
with the requirement in the TEN-E Regulation, Cyprus authorities have
established a one stop shop for the permitting of Projects of Common Interest
(PCIs).
Prior to the
discovery of gas resources in the EEZ of Cyprus, the construction of an LNG
regasification terminal and pipelines to the three power stations in Vasilikos,
Moni and Dhekelia were planned by the Cypriot Authorities. The construction of
the pipelines is supported under the European Energy Program for Recovery
(EEPR) and entitled to a EUR 10 million grant.
With the recent
discoveries, infrastructures are also planned for the export of gas. Pipeline
and LNG projects are currently being assessed and should allow for gas export
by the end of the decade. These infrastructures have been identified as PCIs
under the Regulation on the Guidelines for the Trans-European Energy Network.  
A future interconnection
project called “Euroasia Interconnector” is in the feasibility phase. The
project will have a capacity of 2,000 MW and interconnect the Cypriot, Israeli
and the Greek transmission networks. 
In total four
projects involving Cyprus have been identified as PCIs in accordance with the
guidelines for Trans-European energy infrastructure.

 Security
     of supply

The consequences
of the energy crisis after the explosion which damaged the Vassilikos Power
Station in July 2011, ended earlier than originally estimated. This was due to
both the adequacy and the swift repair achieved in restoring Vassilikos Power
Station and to a reduction in demand. Although the installed capacity of
thermal power stations in 2012 was 1,374 MW (a decrease of 13.6% compared to 2011[98]),
including 286.6 MW of temporary generating units, the maximum generation demand
was 997 MW, achieving a reserve of 38%, which was the largest reserve recorded
since 2004[99]
[100].
All existing fossil fuel generators run on heavy fuel oil or diesel oil, and some
can be converted to run on natural gas. 

 Key
     indicators 
 
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 1 || Number of entities bringing natural gas into country || N/A 
 Number of main power-generation companies || 1 || Number of main gas entities || N/A 
 Market share of the largest power-generation company || 100% || Market share of the largest entity bringing natural gas || N/A 
 Number of electricity retailers || 1 || Number of retailers selling natural gas to final customers || N/A 
 Number of main electricity retailers || 1 || Number of main natural gas retailers || N/A 
 Switching rates (entire electricity retail market) || N/A || Switching rates for gas (entire retail market) || N/A 
 Regulated prices for households – electricity || Yes || Regulated prices for households – gas || N/A   
 Regulated prices for non-households – electricity || Yes || Regulated prices for non-households – gas || N/A 
 HHI in power-generation market || 10000 || HHI in gas supply market || N/A 
 HHI in electricity retail market || 10000 || HHI in gas retail market || N/A 
 Electricity market value[101] (bn€) || 1.2 || Gas market value18 (bn€) || N/A 
 Installed generation capacity (MW) || 1,742 ||   ||   
 Peak load (MW) || 997 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Czech Republic
Key issues
Coupling of the day-ahead markets between the Czech Republic,  Slovakia and Hungary improved price stability in the region. Market coupling
with the rest of European regions remains a priority. 
Further investment in cross-border interconnectors
will increase market competition and energy security. Unscheduled power flows
from Germany remain a big concern for the Czech Republic as they risk the safe
operation of its transmission networks.
The Czech Republic should reinforce its power
distribution and transmission network in order to integrate power generating
facilities, including dispersed renewables. 
The major concerns regarding security of supply relate
to depleting lignite reserves, an ageing electricity infrastructure (including
the generation portfolio) and high networks costs, which influence the
electricity prices for end-users. 

1.    
General
Overview

Energy
consumption in 2012 (42.78 Mtoe) was based largely on fossil fuels, notably
coal (with a share of 40% in the energy consumption mix). The renewable energy
share is increasing and has reached 11,2%[102] in 2012,
mainly due to solar and hydro contributions (8%[103]).
The Czech Republic was above its 2011/2012 interim trajectory and is on track
to achieve its national 2020 RES target of 13% by 2020. The power generation
mix in 2011 (87.5 TWh) was dominated by solid fuels.
Cogeneration[104] provided for 12.8% of the total
electricity generation in 2011, falling slightly comparing to 2010.
Figure 1: Gross inland consumption
2008 – 2012 (source: Eurostat)
 
Figure 2:
Gross electricity generation 2008 – 2011 (source: EU Energy in Figures –
Pocketbook 2012 and 2013)
 

 Regulatory framework

General
The Czech Republic has introduced amendments to their incentive scheme for renewables[105]
and the support for all new installations except small hydro ceased at the end
of 2013. This has slowed down the development of the sector which had increased
rapidly in the previous period. 
National Energy Regulator
The Energy
Regulatory Office ("Energetický regulační úřad", ERO)
is responsible for energy regulation in the Czech Republic. In 2012/13, ERO
employed 178 staff. The 2012 budget of EUR 8 million doubled compared to 2011[106],
due to the amendment to the Energy Act which markedly reinforced the ERO’s
powers, in particular those of supervision, oversight penalisation and remedial
measures in cases of violations of legal regulations and in the enforcement of
sanctions. 
Unbundling
In 2012, ERO certified the ownership unbundling of the
electricity TSO, ČEPS. In the gas sector, at the beginning of 2013 ERO
issued a certification decision concerning NET4GAS, which opted for the status
of Independent Operator (ITO). Gas distribution companies are legally unbundled
from the TSO, gas trading companies and gas storage operators. 

 Wholesale markets

Electricity
The
concentration of wholesale power generation remains very high. ČEZ is the
dominant electricity generator with a market share close to 80%[107].
In the Czech Republic, electricity is traded at Prague-based
Power Exchange Central Europe (PXE), and in spot markets (day-ahead and
intraday) organised by OTE, a.s. (a joint stock company established in 2001
which acts as the Czech electricity and gas market operator). In 2012, a total
of 112 TWh was traded under bilateral contracts registered in the OTE system
with an additional 11 TWh traded in the organised spot markets. A total of 19,8
TWh was traded at the PXE in future energy exchange products (a market volume
of EUR 944 million). 
The market
coupling of the Czech, Slovak and Hungarian day-ahead markets started in
September 2012 and has been successful so far. The price convergence between
the countries reached 76% [108]
after the launch of the market coupling. Cross-border capacity allocation for
power transmission for German, Polish and Austrian borders takes place through
Central Allocation Office, GmbH. Capacity allocation with Slovakia is based on long-term nominations. The average Czech day ahead wholesale price in
2012 was approximately EUR 43 /MWh for base load power (a decrease compared to
2011). 
Gas
In 2012, 25 entities imported gas into the Czech Republic. The largest entities importing gas were RWE Transgas, WINGAS GmbH & Co.
KG, and VNG Energie. The volume of natural gas imports reached 6.9 Mtoe[109]
in 2012. It was bought mostly from Russia and Norway under long-term contracts,
but also at European energy exchanges, or from domestic resellers. The average price for gas imported from Russia was EUR 37.4/MWh in
the third quarter of 2012[110].

Trading activity
on the Czech virtual trading point increased significantly in 2012 and reached
107 TWh in bilateral contracts (compared to 0,258 TWh in 2011). The increase
was due to new brokering activities of three companies: 42 Financial Services
(42FS), Tradition Financial Services (TFS) and ICAP.[111]
In 2012, a bi-directional transmission between the Czech virtual trading point
and Slovakia was enabled. 

 Retail markets

Electricity
Market
concentration remains very high, but the dominant position of three main power suppliers,
ČEZ, E.ON and PRE is gradually decreasing. The three companies covered
close to 70% of the market in 2012 down from 85% in 2011.[112]

Czech power
prices are fully liberalized. The supplier switching ratio in 2012 was
relatively high (7.96%[113]).

Between 2008 and
2012, power prices decreased for industrial consumers and increased for
household consumers[114].

Figure 3: Electricity price change by component
2008 – 2013 (source: Eurostat, energy statistics)
The network
component of electric energy prices for households has increased since 2010
(figure 3). The levies related to the share of renewables in electricity
consumption grew from less than 2% of the total energy bill for households in
2009 to more than 9% in 2012. 
Gas
Competition in the retail supply market is increasing.
In 2012, there were 59 active gas suppliers in the retail market, 10 more than
in 2011[115].
Nevertheless concentration remains high. ERO reports that the retail market may
saturate if the number of traders continues to grow[116].
In 2012, gas was distributed by six regional companies.
Figure 4: Natural gas price change by component 2008 – 2012
(source: EC, EPCR metadata)
Gas prices are generally determined by long-term
contracts but a growing number of suppliers offer prices reflecting spot market
prices. Gas prices for industrial consumers decreased between 2008 and 2012 as
network and tax related components of natural gas prices for industry decreased
(figure 4). In the first part of 2013, gas prices for household consumers
reached EUR 0.064/kWh. In the same period, gas prices for industrial consumers
reached EUR 0.034 EUR/kWh.[117]
In the gas sector, switching rates have remained
stable in the past few years, at around 12% for both the whole retail market
and households[118].

Smart meters
The outcome of the cost benefit analysis of smart
meter deployment, undertaken by the Czech government, was negative.
Consequently, a formal decision was made not to proceed with the roll-out of
smart metering in both the electricity and gas sectors[119].
In 2014 the European Commission formally requested the Czech Republic to ensure that final energy consumers are provided with individual meters[120].

 Consumers

Retail gas market is assessed below the EU average
(72.0 points compared to 74.1[121])
and ranks 19th EU-wide. The market is also assessed below the
average of 31 domestic services markets (24th position). In
particular, trust in providers is 4th lowest in the EU. However,
switching rates are the second highest in the EU while the ease of switching
receives the fourth highest score. Overall, this market has remained stable
compared to 2012. Consumer assessment of the electricity retail market is above
the EU average (72.9 points compared to 72.0[122]),
corresponding to 15th place. It increased by 3 points between 2012 and
2013, in particular with regard to overall consumer satisfaction, choice of
providers, actual switching and ease of switching. The two last components have
the 5th highest score in the EU. [123]
Czech consumers no longer only switch from vertically
integrated incumbents to new suppliers, but also between suppliers to obtain
the lowest price. The total number of switches in the electricity sector was
472,000 in 2012 (from that 382,000 households) and in the gas sector it was
348,000 (from that 316,000 households).
Consumers can access a tool providing information on
electricity suppliers on ERO’s website[124]. Consumers may
address their complaints, questions, and suggestions to the Consumer Protection
Unit operating with ERO. The most frequent subject of complaints concern unfair
commercial practises, switching and billing. Czech law does not define a
“vulnerable customer”[125].
The amendment of the Energy Act is currently under preparation and non-economic
support should be foreseen in it.

 Infrastructure

The Czech authorities should ensure a proper and
timely adoption of the measures stemming from the TEN-E Regulation, including
the establishment of the one-stop-shop for Projects of Common Interest (PCIs)
(due by 16 November 2013), and other measures foreseen for 2014 and 2015,
including the publication of the manual on the permit granting process for
project promoters, and the adoption of legislative and non-legislative measures
streamlining the environmental assessment procedures. 
Electricity
The increasing share of renewables in the energy mix
of the Czech Republic and other countries in the region, as well as the
foreseen increasing demand (up of about 200 MW per year depending on
scenarios), call for an ambitious investment in the Czech energy
infrastructure. 
Several Projects of Common Interest (five in total)
being developed in the Czech Republic aim to increase capacity at the country’s
North-Western and Southern borders. Pending investments also include the
upgrade of the transmission network to connect the new and modernised power
plants. Improvement of distribution infrastructure is needed to enable the
expansion of dispersed renewables. There is an on-going replacement and
expansion project for the 400 kV grid. It is planned to be completed by 2030,
but investment is slow and lead times are long.
Gas
In 2012, the GAZELLE gas pipeline was completed to
connect to the OPAL and MEGAL gas pipelines that expand to the transmission
system supplying Germany and France. Also, in 2012, the interconnector between
the Czech and Polish gas transmission systems (the STORK project) was completed
(partly financed with funds from the European Energy Programme for Recovery).
The Czech-Polish interconnector plays an important role in the integration and
liberalisation of the gas market in the region. Following the implementation of
reverse flow projects (also co-financed by the EEPR), security of supply has
substantially improved in the Czech Republic and Slovakia.  A second pipeline
between the Czech Republic and Poland is already planned to start operation end
2018, with two other projects with Austria planned to come online after 2020
(all these three are PCIs under the guidelines for Trans-European energy
networks)[126].

 Security
     of Supply

Electricity
The Czech Republic's degree of electricity dependence
is one of the lowest in the EU (25.2 % in 2012)[127].
The generation mix is well diversified as the national strategy does not allow
any single source of energy to provide for more than 65% of the total. Abundant
domestic coal resources are gradually declining. They can be exploited until
2050. The country is a net electricity exporter. Major concerns relate to the
depleting lignite reserves, ageing electricity infrastructure and high networks
costs which influence the electricity prices for end-users.
The Czech Republic is interconnected with the
Austrian, German, Polish and Slovak markets. The relatively high
interconnection rate is generally positive for Czech security of supply, but
has a downside. The Czech network suffers from unscheduled flows of power
originating in Germany (loop flows). 
Gas
Almost all gas consumed in the Czech Republic is imported from Russia (90%) and Norway (9%)[128]. Security of
supply is relatively robust and has benefited from the new interconnectors and
reverse flow capabilities on existing pipelines being put in place. The
contractual gas prices are mostly linked to oil products and hard coal. This
maintains stable prices, but carries financial penalties in case of early
termination. In this regard, an important precedent was set in October 2012
when RWE’s Czech subsidiary succeeded in its dispute with Gazprom over gas
contracts. The court ruled for the first time that a company did not have to
pay fines under a "take-or-pay" clause[129].

 Key
     indicators
 
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 73 || Number of entities bringing natural gas into country || 25 
 Number of main power-generation companies || 1 || Number of main gas entities || 1 
 Market share of the largest power-generation company || 78% || Market share of the largest entity bringing natural gas || 82.3% 
 Number of electricity retailers || 360 || Number of retailers selling natural gas to final customers || 59 
 Number of main electricity retailers || 3 || Number of main natural gas retailers || 11 
 Switching rates || 7.96[130] || Switching rates for gas (entire retail market) || 12.03 
 Regulated prices for households – electricity || No || Regulated prices for households – gas || No 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || No 
 HHI in power-generation market || N/A || HHI in gas supply market (domestic) || 3,358 
 HHI in electricity retail market (domestic) || N/A || HHI in gas retail market (domestic) || 1,632 
 Electricity market value[131] (bn€) || 5.001 || Gas market value30 (bn€) || 2.505 
 Installed generation capacity (MW) || 20,520 ||   ||   
 Peak demand (2012, MW) || 11,324 ||   ||   
 Number of smart meters installed || 50,000 ||   ||   
Denmark
Key Issues
The energy mix
will change significantly due to ambitious policy targets for renewable energy
(wind power set to account for up to 50% of electricity generation by 2020). To
address this interconnection capacities with neighbouring countries are being developed to maintain a high level of security
of supply. 
Danish household
customers pay one of the highest electricity prices in EU, mainly due to a very
high level of energy taxes. Compared to electricity prices for industrial
consumers the price for household customers is three times higher. However, the
electricity price without taxes for industrial consumers is below the EU-27
average (5% in 2012).
Annual domestic
gas production was reduced by approximately 10% in 2012. Denmark now partly relies on imports through Germany to balance its gas supply and demand. Denmark's security of supply is closely linked to that of Sweden due to the fact that the latter is
entirely dependent on Denmark. 
Regulated
end-user prices will be phased out by October 2015 (electricity) and, based on
legislation yet to be proposed, by October 2016 (gas). A bill on a supplier
centric model for the electricity retail market was adopted in June 2012 and
will come into force by October 2015.
General overview 
Gross energy consumption has decreased from 20.2 Mtoe
(2008) to 18.1 Mtoe (2012). In 2012, Denmark relied on crude oil and petroleum
products (39.0%), renewable energy sources (23.3%), natural gas (21.8%) and
solid fuels (13.6%)[132].
Figure 1:
Gross inland consumption mix 2008 – 2012 (source: Eurostat)
Total gross electricity generation in 2012 dropped to 30.7 TWh[133]. In 2011, renewable energy sources
provided the largest share for the first time (40.34%), whereas solid fuels
were the second most important source (39.77%). Natural gas had a share of
16.48 % and crude oil of 1.42 %. 
Figure 2:
Gross electricity generation 2008 – 2011
(source: EU Energy in Figures - Pocketbook 2012 and 2013)
The RES share in gross final energy consumption in Denmark reached 26% in 2012 and is expected to rise to more than 35% by 2020. In spring
2011, the Danish government decided to raise the share of renewable power to
50% by 2020, thus exceeding the European targets. Cogeneration[134] provided between 40.7% and 49.2% of the total energy generation between
2008 and 2011.[135]
 Regulatory framework 
General
The Third Energy Package was implemented in national
law with the adoption of Act
no. 466 on 18 May 2011.[136]
National energy regulator
The Danish Energy Regulatory Authority (DERA) was
founded in 2000 and employs
about 50 employees with a budget of about EUR 5.56 million in 2012. Compared
with 2011 this is an increase by more than 10% in staff and budget.[137] 
Unbundling 
The TSO for both gas and electricity is Energinet.dk.
DERA adopted final certification decisions in February 2012 in accordance with
the rules of the ownership unbundling model and making use of the provisions
related to separation within the state. 
Wholesale markets

Electricity 
The largest electricity generators in Denmark are Dong Energy and Vattenfall who together account for about 56.7% of the total
generation capacities. Denmark is part of the Nord Pool Spot, a joint energy
exchange for the Scandinavian countries. More than 70% of the energy generated
in the area is traded at Nord Pool Spot. 
Denmark is divided into two market areas (Western Denmark DK1 and Eastern
Denmark DK2). The energy is either traded day-ahead or intraday. The total
volume traded day-ahead was 20.3 TWh in DK1 and 15.3 TWh in DK2 (2012), while
the volume traded intraday was 0.2 TWh in DK1 and 0.2 TWh in DK2 (2012)[138]. The average price (arithmetic mean) in
2012 was EUR 36.33/MWh in DK1 and EUR 37.56/MWh in DK2. 
The Danish electricity wholesale market is part of the
day-ahead market coupling project which began operation in February 2014.
Gas
The annual gas production for 2012 in Denmark was 5.455 mcm,
production decreased by about 10% compared with 2011. The gas consumption was
at 3.696 mcm while an amount of 2.830 mcm was exported. Only a very small
amount was imported from Germany. The three important export countries were Sweden (37.84 %), the Netherlands (35.19 %) and Germany (26.96%).[139]
The Danish wholesale market is mostly based on
bilateral trading (OTC trading), but volumes traded at the Danish gas exchange
(Gas Point Nordic) have by 2014 reached 25%. It has been possible to trade gas
on the gas exchange since 2008. The gas exchange was established in 2007. The
average prices were EUR 27.98/MWh in 2013, EUR 25.16/MWh in 2012 and EUR
23.25/MWh in 2011.
Retail markets 
Electricity
The electricity market was liberalised in 2003. There
are currently 33 active suppliers in the retail market. DERA recognises that
the level of competition needs to improve. In 2012, 6.7% of the end consumers
switched supplier, which is an increase on 2011 levels (3.18%), but still low.
Since 2003, all Danish electricity consumers are free to choose whether to join
the regulated market with regulated prices or the liberalised market where
prices are not regulated. Consumers above 100,000 kWh, covering about 50% of
the retail market (in terms of consumption), are active in the market, whilst at least until the end of 2012, between 90
and 95% of electricity consumers had not exercised their right to change
supplier and remained on default contracts with regulated prices. However, for most consumers, the regulated prices
will cease by October 2015. 
Figure 3: Electricity price change by component
2008 – 2013 (source: Eurostat, energy statistics)
The electricity prices for consumers are frequently
updated by DERA and published on www.elspristavlen.dk where both fixed and
variable prices are shown. The prices did not rise between the first half of
2012 and the first half of 2013, remaining constant at EUR 0.3/kWh, which is
the highest electricity price within the EU and primarily caused by the highest
level of taxes and levies including VAT (56.7%).[140] 
In 2013, the Danish Energy Agency issued a new
regulation securing the full roll-out of smart meters in Denmark by 2020. Large scale replacement of existing meters began in 2010/2011 and
currently more than 50% of consumers have smart meters. There are already 1.63 million metering
points where a smart meter is installed following a voluntary roll-out led by
the distribution system operators (DSOs), and the remaining 1.38 million will
be also equipped following a positive cost-benefit analysis.
On 1st October 2015, the electricity retail market will change to a supplier
centric system, where electricity suppliers buy grid services on a wholesale
basis, and sell “delivered electricity” to consumers. By the same date,
regulated prices will cease for almost all consumers. The suppliers of electricity will become the primary
contact for consumers. This should make bills easier to read as there will only
be one price for electricity covering both energy consumption and transmission
costs. Due to this simplification consumers may be encouraged to become more
active. One
important initiative to boost the competitiveness of the retail market is the
so-called 'datahub', a data platform developed and managed by the
ownership-unbundled Danish TSO, Energinet.dk, which simplifies the extensive
data traffic between the players in the Danish electricity market and makes it
easier for electricity consumers to change supplier and to access their own
consumption data. The datahub has been operational since March 2013.  
Gas
The gas market was liberalised in 2004. In 2012, a
total number of 14 retail suppliers were active in the market. On average the
Danish customer is able to choose between at least 12 different suppliers. In
2012, 7.7% of end-consumers switched supplier. The retail market concentration
is relatively high with a Herfindahl-Hirschman Index (HHI) of 3.648 in 2013[141]. Customers are able to choose between
regulated and unregulated prices. However, at least until the end of 2012, the vast majority of
smaller gas consumers had not exercised their right to change supplier and
remained on default contracts with regulated prices. For most consumers, regulated prices will cease by
October 2016. The majority of small scale customers are not active in the
unregulated market segment, whilst large scale consumers are. The prices for
consumers are monitored by DERA and published on www.gasprisguiden.dk. The average natural gas price
for households was EUR 13.82/GJ
in 2013, decreasing constantly in the last two years (2011: EUR 16.47/GJ). The
average price for industrial consumers was at EUR 10.74/GJ in 2013 which is an
increase of 4.51% compared to the previous year.[142]
Figure 4: Natural gas price change by component 2008 – 2012
(source: EC, EPCR metadata)
At the moment there are no plans to implement smart
gas meters on a large scale.
Consumers 
Danish consumers rate the performance of their retail
electricity and gas market above the EU average (75.4 points compared to 72.0
and 77.0 compared to 74.1[143]), corresponding to 12th and 9th place EU-wide, respectively. The gas market also
ranks above the average of all domestic services markets (12th place out of 31), while the electricity
market scores just below the average (17th place). The incidence of problems is the second
lowest for electricity and lowest for gas in the EU. Both markets score high on
trust in providers and overall satisfaction (2nd and 3rd highest in the EU in the case of gas market). On the other hand,
comparability is amongst the lowest rated in the EU, (lowest for the gas market
and 5th lowest for electricity) [144].
There are no specific provisions regarding vulnerable
consumers in energy law; instead this issue is dealt with in social
legislation.
Denmark is
one of very few countries to protect energy consumers in remote areas[145].
Infrastructure 
The Danish authorities should ensure a proper and
timely adoption of the measures stemming from Regulation 347/2013 on the
trans-European energy infrastructure, including the establishment of the
one-stop-shop for Projects of Common Interest, PCIs (due by 16 November 2013),
and other measures foreseen for 2014 and 2015, including the publication of the
manual on the permit granting process for project promoters, and the adoption
of legislative and non-legislative measures streamlining the environmental
assessment procedures.
Electricity 
The highly ambitious goals for the Danish energy
policy to meet all energy demand by renewables by 2050 are a challenge to the
electricity transmission system. Hence, Denmark is enhancing its electricity
interconnections with neighbouring countries i.e. Germany and the Netherlands and strengthening or expanding existing interconnectors. Some of these projects
are long-term with commissioning dates foreseen for years 2018 – 2022.
Gas 
As a result of
the gradual depletion of the Danish gas production in the North Sea, Denmark (and Sweden) require access to new gas resources. 
The expansion of
the gas infrastructure in the Southern part of Jutland was completed in October
2013. The expansion includes establishment of a new compressor station at
Egtved and looping of the existing transmission pipeline from the German border
to Egtved. Furthermore, the first phase of expansion of the transport capacity
in the Northern part of Germany is completed and the next phase of the expansion
is planned to come into operation in October 2015. The expansion of the
cross-border connection will allow Denmark (and Sweden) to increase imports of
gas from Germany in order to compensate for the decreasing Danish North Sea
production. The bi-directional flow on this interconnection allows Denmark to export gas to Germany during the summer time and import gas from Germany during winter time, where gas consumption in Denmark (and Sweden) is high due to need for
gas for heating purposes. The German part of the expansion of the gas system is
part of the list of PCIs.
Security of
Supply
Electricity 
ENTSO-E predicts power imbalances from winter 2016,
mainly caused by the ambitious targets for renewable energy. However ENTSO-E’s
calculations do not take into account that Germany is phasing out its nuclear
power plants. Nevertheless, the Danish grid has been very reliable in the past.
To maintain this high level, Energinet.dk is extending its electricity
infrastructure with the surrounding countries to avoid becoming dependent on
the capacity of a single country. In 2013, Energinet.dk and National Grid
signed a cooperation agreement to consider the feasibility of an electricity
interconnector between Denmark and the UK.
Gas 
Denmark implemented the requirements of the EU Regulation 994/2010 in October
2012, including an Emergency Plan for the Danish gas
transmission system. The expansion of the gas transmission system towards Germany will ensure increase in import capacity from Germany in order to supplement gas supplies
from the Danish North Sea as the production is foreseen to decrease in
forthcoming years. However, the new Hejre gas field is expected to come on
stream in 2016/2017 and will increase the production in the North Sea.
Key indicators
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || ~1300 || Number of entities bringing natural gas into country || N/A 
 Number of main power-generation companies || 2 || Number of main gas entities || N/A 
 Market share of the largest power-generation company || 37% || Market share of the largest entity bringing natural gas || N/A 
 Number of electricity retailers || 55 || Number of retailers selling natural gas to final customers || 14 
 Number of main electricity retailers || N/A || Number of main natural gas retailers || N/A 
 Switching rates (entire electricity retail market) || 6.7% || Switching rates for gas (entire retail market) || 0.9% 
 Regulated prices for households – electricity || partly || Regulated prices for households – gas || partly 
 Regulated prices for non-households – electricity || partly || Regulated prices for non-households – gas || partly 
 HHI in power-generation market || N/A || HHI in gas supply market || N/A 
 HHI in electricity retail market || N/A || HHI in gas retail market || 3,648[146] 
 Electricity market value[147] (bn€) || 5.053 || Gas market value (bn€) || 1.514 
 Installed generation capacity (MW, 2011) || 13,580 ||   ||   
 National instantaneous peak load (MW) || 6,169 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Estonia
Key issues
Following the
successful establishment of the power grid connection Estlink2 − the
second electricity interconnection with Finland – in March 2014, cooperation
with Latvia (and Lithuania) on making available increased interconnection
capacity – both through better use of existing capacity and by building a new
interconnector – must now be accelerated with a view to improve electricity
wholesale market functioning in the wider Baltic area.
Estonia’s
gas market remains isolated from the rest of Europe. Estonia should increase
efforts to diversify its gas supplies, primarily through a regional Baltic LNG
terminal and the construction of the BalticConnector. Preparations should also be made to the law to legally lay down the rules
applicable after the end of this isolation and the related exemption from
market opening.
General overview
The Estonian national gross energy
consumption in 2012 was 6.13 Mtoe[148].
It was based largely on solid fuels (shale oil), less notable was crude oil,
petroleum products and natural gas, while the share of renewables in gross
final energy consumption in 2012 amounted to 25.2%[149].
According to Eurostat, the renewables share between 2008 and 2012 grew from
19.0% to 25.2% accordingly. The Estonian renewables target for 2020 is 25%.
Figure 1: Gross inland consumption
mix 2008 – 2012 (source: Eurostat)
In 2012, the total power generation
was 11.967 TWh[150],
a significant part of it was derived from solid fuels (81%). Renewables and
natural gas took smaller parts, respectively 12.3%[151]
and 1.0%. Renewables increased from 2.1% to 12.3% (between 2008 and 2011). In
2012, the increase in Estonia’s electricity demand was higher than in the rest
of the EU countries – 8.7% (in comparison to 2011 level)[152].
Figure 2: Gross
electricity generation mix 2008 – 2011 (source: EU Energy in Figures – Pocketbook 2012 and 2013)
Cogeneration[153] represented 9.75% of gross
electricity generation in 2011[154]. In 2012, the total import and
consumption of natural gas in Estonia amounted to 0.545 Mtoe[155]. Estonia has cross-border natural gas connections with Russia and Latvia only, and Russia (OAO Gazprom) is the sole supplier of gas to all three Baltic countries.
Regulatory
framework
General
Estonia transposed fully the Third Energy
Package Gas Directive in April 2014. In 2014, additional amendments will be
enforced both in the Electricity Market Act and in the Natural Gas Market Act,
which harmonise other requirements arising from the transposition of the Third
Package into the Estonian legislation[156]. 
National Energy Regulator
The Estonian Competition Authority
(ECA) acts as the regulator for several sectors. It employs 61 staff members
(of which 21 work on energy issues) with an annual budget of almost EUR 1.83
million in 2012[157].
The Commission questions whether the allocated human and financial resources
are sufficient for ECA to carry out its regulatory tasks.
Unbundling
The electricity TSO, state-owned Elering AS, was certified by the ECA in December 2013 as compliant with the ownership
unbundling rules. There is a single operator in gas, AS EG Võrguteenus, which
provides transmission and distribution services and belongs to the vertically
integrated gas supply company AS EestiGaas. Although art. 49 of Directive
2009/73/EC sets out an exemption for Estonia and does not require the
unbundling of the transmission system, on 8 July 2012 the amendment to the
Natural Gas Market Act chose not to apply the exemption in future, but selected
the route of complete ownership unbundling. On 31 December 2012, the
system operator EG Võrguteenus submitted to ECA the plan for the fulfilment of
the requirements of the ownership unbundling that are planned to be finished by
1 January 2015.
Wholesale markets
Electricity
The 2012 load in the Estonian
electricity system peaked at 1,572 MW (on 6  February 2012), while
the installed capacity in the Estonian electricity system was 2,278 MW.
Effective competition is limited by the dominant position of Eesti Energia AS,
which accounted for 88% of the total electricity production in 2012[158].

There are 17 traders that operate
through the Nord Pool Spot's Estonian price area and in total there are 201
eligible customers in Estonia who buy electricity either through bilateral
contracts or from the power exchange. An average price in the Nord Pool Spot
Estonian price area in 2012 was EUR 39.20/MWh, which is lower than the 2011
price by almost 10%[159].
In 2012, the highest hourly price was EUR 183.48/MWh, while the lowest was EUR
-7.06/MWh.
From 1 January 2013 Estonia’s electricity market was completely opened and all customers are eligible
consumers. An average price in the Nord Pool Spot Estonia price area in 2013
was EUR 43.14/MWh. In 2013, the highest hourly price was EUR 210.01/MWh, while
the lowest was EUR 5.08/MWh.[160]
Gas
Estonia imports natural gas exclusively from Gazprom.
During winter, the Inčukalns gas storage facility in Latvia is used by Gazprom to supply Estonia. In 2012, gas imports amounted to 679 mcm (100% of gross
inland consumption)[161].
In 2012, there was only one wholesale trader on the market – AS EestiGaas. An
import license has been issued to other two companies: AS Nitrofert, which
obtains gas only for its own needs, and to Baltic Energy Partners OÜ, which has
not made any material gas imports so far. 
As there is no competition between
the sellers or traders, there is no organised gas hub. According to the
contract, the import price of gas is calculated using a price formula based on
the previous nine months heavy and light fuel oil average prices in USD/ton
proceeding to the accounting month, taking into account the USD/EUR exchange
rate.
Retail markets
Electricity
In 2012, the share of eligible
consumption was 2.785 TWh, which equals to 37.6% of the final consumption of
electricity (total consumption without network losses – 7.407 TWh)[162].
The largest share of 82.9% of electricity sales in 2012 was held by Eesti
Energia AS, followed by Imatra Elekter AS with 2.7% and VKG Elektrivõrgud OÜ
with 2.6%.Elektrum Eesti AS with 13.0% and 220 Energia OÜ with 1.5%. In 2012,
the number of electricity retailers to final consumers was 42[163].
In 2012, there were five independent
suppliers, who sold electricity to eligible consumers. Non-eligible consumers
were obliged to buy electricity from regulated suppliers. According to the
Electricity Market Act, in 2012 ECA approved the average selling price to
non-eligible customers.
Figure 3: Electricity price change by component
2008 – 2013 (source: Eurostat, energy statistics)
As non-eligible customers did not
have an option to change supplier, between year 2011 and 2012 there was no
supplier switching[164].
In 2013 there were 15 suppliers[165],
who had an opportunity to sell electricity to consumers which now can change
supplier.
The roll-out of smart meters is due
to be dealt with in the next Energy Sector Development Plan 2030. The Estonian
grid code determines that all consumers must be provided with a “remote reading
device” by 2017. No cost-benefit analysis has yet been carried out.
Gas
Similar to the wholesale market, AS
Eesti Gaas also has a dominant position in the retail market. Its retail market
share in 2012 was 89.0%, while the remaining 11.0% was sold by another 27
licensed gas sellers. The number of customers in the retail market is
approximately 42,000, of which 41,000 are households. In 2012, 1,913 customers
switched (1,810 of these were households), or 4.5% of the customers. 
The import price of gas is calculated
according to the changes in the average price of oil derivatives (heavy and
light fuel oil), which drive the fluctuation of the gas price. End users pay
the full import price, plus transportation cost and a regulated profit margin. 
Figure 4: Natural gas price change by component 2008 – 2012
(source: EC, EPCR metadata)
In 2013, the average gas
retail price consisted of: energy and supply costs – 51%; network costs – 22%;
VAT and other taxes – 26%[166].
No formal decision and no plan to roll-out smart meters in natural gas system
had been made by 2013[167].
Consumers
The retail gas market is assessed
fourth highest in the EU (79.3 points compared to 74.1), with the fifth highest
score on the overall consumer satisfaction. The incidence of problems is second
lowest in the EU, following a small but steady decrease since 2010. However,
consumer assessment of the choice of providers is the lowest in the EU, and
switching rates are the second lowest (and have been falling since 2010). 
In contrast to the gas market, the
performance of the retail electricity market is assessed below the EU average
(23th position with 66.2 points compared to 72.0) and the lowest
among 31 domestic services markets. The performance of this market has seen the
largest decrease of all electricity markets in the EU between 2012 and 2013 and
the largest decrease among domestic services markets. Trust in providers and
comparability are particularly low, and the latter indicator has considerably
decreased in score since 2012. On the other hand, however, the market scores
high on switching (6th place out of 25).[168] 
ECA acts as an alternative dispute
resolution body. Consumers can also contact the Consumer Protection Board of
Estonia. In 2012, the Competition Authority received 82 complaints and
inquiries concerning the electricity retail market and 19 inquiries concerning
the natural gas retail market[169].
There is no price comparison site available for the electricity and gas retail market.

In Estonia, during 2013, there was no
definition of a “vulnerable consumer” in the electricity sector[170].
Nevertheless interruption of electricity supply is very detailed regulated in
the Electricity Market Act. The supply of electricity to household customers
(household customer who heated residential space in full or primarily by
electricity) in the winter period may be interrupted only after the consumer
has been given 90 days to pay the bill. In the summer it is 15 days. As regards
natural gas, the term “vulnerable consumer” is defined. The supply of natural
gas to vulnerable customers (family or individual receiving subsistence
benefits) may be interrupted only when the consumer has been given 45 days in
the winter period to pay the bill. In the summer it is 7 days.
Infrastructure
Electricity
Estonia is interconnected to the EU
electricity market through the Estlink1 and Estlink2 interconnectors with Finland and has recently joined the Nord Pool Spot by creating the Estonia price area for the day-ahead
market, intraday and trading in the power exchange. 
However, the limited capacity of the
connection between Estonia and Latvia creates cross-border bottlenecks, which
have an adverse impact on the electricity markets of Estonia and other Baltic States. 
Gas
Estonia’s gas grid is connected to the Russian Federation gas system as well as to Latvia. There is no link with the rest of the EU gas
market. 
The BEMIP initiative is launched with
a view to end the isolation of the Baltic region in general and Estonia in particular from the European market. Proposed investment projects include an
interconnection between Lithuania and Poland, and a planned regional LNG
terminal. The BalticConnector is a proposed natural gas pipeline between Finland and Estonia, which would connect the Baltic and Finnish gas
grids. 
In 2013, it was decided that a
regional Baltic LNG Terminal would be best placed on either the Finnish or the
Estonian side of the Finnish gulf. It is important that the Baltic States reach
a final agreement on the location of the terminal in order to start
construction and introduce diversification of gas supplies as soon as possible.
Security of
supply
Electricity
Estonia has sufficient production capacity
to cover domestic electricity demand and for export to Latvia and Lithuania. The Estlink projects enhanced security of electricity supply and Estonia's independence of Russian supplies was increased. However, the Estonian grid
continues to operate in synchronous mode with the Russian and Byelorussian
grids. In 2012, negotiations were launched by the European Commission with the
aim to conclude an Intergovernmental Agreement. Negotiations have been
suspended at the request of the Baltic States pending their analysis of a study
on the de-synchronisation of the Baltic grids and a move towards
synchronisation with continental European grids. 
Gas
Estonia has two interconnections with the
Russian natural gas network (Värska and Narva) and an interconnection with Latvia (Karksi). However, natural gas in the share of final consumption of energy in 2012
was only circa 5%. For the Estonian gas network criterion N-1 equals 104.5%,
thus the coverage of infrastructural peak demand or the coverage of supply
deficit is ensured[171].
However, given that the gas from the Latvian Incukalns storage facility is
contracted from the same supplier, the de facto insecurity of supply continues
to exist. 
Key indicators
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 6 || Number of entities bringing natural gas into country || 1 
 Number of main power generation companies || 1 || Number of main gas entities || 2 
 Market share of the largest power generation company || 87.0% || Market share of the largest entity bringing natural gas || 86.5% 
 Number of electricity retailers || 42 || Number of retailers selling natural gas to final customers || 27 
 Number of main electricity retailers || 1 || Number of main natural gas retailers || 1 
 Switching rates (entire electricity retail market) || 0 || Switching rates for gas (entire retail market) || 4.5 
 Regulated prices for households – electricity || Yes || Regulated prices for households – gas || No 
 Regulated prices for non-households – electricity || Yes || Regulated prices for non-households – gas || No 
 HHI in power-generation market || 7,748 || HHI in gas supply market || >8,500 
 HHI in electricity retail market || 6,869 || HHI in gas retail market || 7,943 
 Electricity market value[172] (bn€) || 0.427 || Gas market value38 (bn€) || 0.093 
 Peak load (MW, 2012) || 1,572 ||   ||   
 Installed generation capacity (MW, 2012) || 2,647 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Finland
Key issues
Currently, Finland is reliant on electricity imports during peak demand periods. It will continue to
be reliant until the 1600 MW nuclear power plant, Olkiluoto
3, is complete. It is expected that the demand for reserve and balancing power
will increase in the medium term.
Finland reached 97% smart metering at the end of 2013, with hourly
settlement down to domestic level. Plans are in place for greater demand
response by consumers and a common electricity retail market with Sweden, Norway and Denmark.
Finland should step up the
development of cross-border gas connection to diversify supply sources and
continue to promote competition through better integration of the Baltic energy
markets. A decision on the location of the LNG terminal
and BalticConnector should be taken urgently to improve gas security of supply
and improve market functioning. Currently, Finland is only connected to Russia. 
General overview
Finnish national
gross energy consumption in 2012 amounted to 34.1 Mtoe of which renewable
sources (mostly biomass and hydropower) provided 34.3%[173],
showing good progress towards the renewable energy target of 38% for 2020. 
Figure 1:
Gross inland consumption mix 2008 – 2012 (source: Eurostat)
Finland’s electricity generation was 73.5 TWh in 2011,
of which renewables, nuclear and fossil fuels each accounted for roughly one
third. There was a significant decline of 9% in electricity generation from
2010. This was mainly due to mild weather, the waning growth of manufacturing
and higher hydropower imports from Norway and Sweden. Finland has a relatively high share of combined heat and power (CHP) capacity that
represented 36.2% of gross generation in 2011. The Finnish power production mix
is illustrated in Figure 2.
Figure 2:
Gross electricity generation mix 2008 – 2011
(source: EU Energy in Figures – Pocketbook 2012 and 2013)
Installed
electricity generation capacity in Finland was 16,947 MW[174]
at the end of 2012. The peak demand in that year was 14,433 MW and occurred in
early February.
Regulatory
framework
National Energy Regulator
The Energy
Market Authority was renamed the Energy Authority in the beginning of 2014.
This marked the introduction of new roles in promoting energy efficiency,
counselling and communication, ecological design and energy labelling. By the
end of 2012, the Energy Market Authority employed 66 people and had an annual
budget of EUR 6.3 million. 
Unbundling
The electricity
transmission system operator Fingrid Oyj was certified in accordance with the
model of ownership unbundling within the state in 2014 following the sale of
shares by Fortum Power and Heat Oy and Pohjolan Voima Oy (PVO) to the Finnish State. 52 of the 83 DSO operators in Finland were legally declared unbundled in
July 2013. Finland was granted a derogation from the obligation to liberalise
its natural gas market, as long as the country only has one main supplier of
natural gas and is not connected to the European gas network[175].
This situation will change once a regional Baltic LNG Terminal becomes
operational. 
Wholesale markets
Electricity
The generation
market is dominated by two companies: Fortum and Pohjolan Voima. Together these
companies owned 50.5% of the production capacity in 2012. Apart from these
companies, in 2012, there were approximately 120 companies producing
electricity from 550 power plants.
Finland forms an integrated wholesale electricity market with the Nordic
and Baltic countries. Physical day-ahead and intraday trading takes place in
the Nord Pool Spot[176]
market. 62% of the Finnish consumption was traded through Nord Pool Spot in
2012 and the rest via bilateral agreements. Since 4 February 2014 the market is
coupled to the Central Western and North Western European market.[177]
There has been
little congestion within Finland, but insufficient transmission capacities
between countries have led to price differences. For example, prices between Finland and Sweden diverged 53% of the time in 2012. Average wholesale electricity price fell from
EUR 49.30 in 2011 to EUR 36.64 in 2012 due to the good hydro situation and
reduced consumption. Net imports accounted for 20.5% of the total electricity
consumption in 2012. However, imports from Russia have decreased since 2011
when the Russian market introduced a capacity charge on the price of exported
electricity.
Gas
Finland does not produce natural gas, but imports gas exclusively from Russia. Gasum Oy acts as the sole importer and transmission system operator on the basis of
long term supply contracts. Gasum Oy also operates Kaasupörssi Oy, a natural
gas exchange, for short term products and a bilateral secondary market where
large consumers can make offers.
Retail markets
Electricity
There is no
retail price regulation in Finland. Consumers can select their retail supplier
freely. The annual switching rate of suppliers has settled at a level of 7-8%.
There were approximately 74 retail suppliers of which 44 offered their products
nation-wide in 2012. Market concentration at retail level was moderate as there
were four retail suppliers with a market share above 5%. The market share of
the three largest retail suppliers has been around 35-40%. 
One of the
strengths of the Finnish retail market is smart metering[178].
The rate of smart metering reached 97% by the end of 2013. Balance is settled
hourly down to domestic level. Implementation of supply contracts and end-user
applications which encourage demand response is expected to increase in the
following years.
Distribution
tariffs are on the rise due to the aging electricity grid and the increased
need for network investments to comply with reliability requirements.
Investments in distribution networks increased in 2012 (+10% compared to 2011).

Retail prices
have sustained a steady growth since 2006 with notable increases in taxes in
2011. Wholesale energy prices are reflected in the
retail prices.
Figure 3:
Electricity price change by component 2008 – 2013 (source: Eurostat, energy
statistics)
Gas
Market
concentration at the retail level was high at the end of 2012, as gas retailers
in Finland have a monopoly within their own distribution network. There were 23
natural gas retail suppliers, most of whom only had a dozen customers. Natural
gas retail prices for industrial users are shown in Figure 4, where it is also
possible to see that the price of natural gas has increased during the last few
years.
Consumers
Finnish
consumers rate the performance of their retail electricity market above the EU
average (77.5 points compared to 72.0), corresponding to 7th place EU-wide. The
market has seen an increase of 2.8 points between 2012 and 2013. It scores
better than EU average on all indicators with the exception of comparability
and complaints and is assessed particularly well (3rd highest in the EU) on
overall consumer satisfaction, choice of providers and trust. Results show a
small but steady year on year increase in score on trust since 2010. [179]
Electricity
retail customers are satisfied with the ease by which they can switch supplier
and the clarity of billing[180].
The Energy Market Act (588/2013) specifies rules for supplier switching,
information on customer bills, metering, meter reading and stipulates a
standard compensation payable to customers for power outages. A price comparison
tool provided by the Energy Authority has been used actively[181].
There is no charge to change supplier and customers have rights to their own
consumption data free of charge.
Social
assistance is a last-resort form of income security in Finland. It is based on the client's essential expenses, which include electricity and
heating bills[182].
The Electricity Market Act (588/2013, §103) guarantees customers with a
reasonable notice to allow them time with bills while waiting for social
assistance for households heated by electricity during the winter.
Disputes between
consumers and enterprises can either be taken to a general court of law or
solved through the Consumer Disputes Board. The Board does not charge fees and
its written decision is a recommendation.
Infrastructure
The Finnish authorities should ensure a proper and
timely adoption of the measures stemming from the TEN-E Regulation, including
the establishment of the one-stop-shop for Projects of Common Interest (PCIs)
(due by 16 November 2013), and other measures foreseen for 2014 and 2015,
including the publication of the manual on the permit granting process for
project promoters, and the adoption of legislative and non-legislative measures
streamlining the environmental assessment procedures.
Electricity
Finland is connected to Sweden, Norway, Estonia and Russia. The total import capacity of electricity at the end of 2012 was 4,650 MW,
which is about 27.4% of the production capacity. On the Finnish-Russian
connection currently only importing is possible, but exporting (up to 350 MW)
has become technically possible during the first half of 2014.
A second
submarine cable between Finland and Sweden, Fenno-Skan 2, with capacity of 800
MW was commissioned in 2011, but overall connection capacity between Finland and Sweden is 80% full. Another 100 MW, that connects mainland Finland through Åland to Sweden, is planned for 2015. Furthermore, a new 650 MW cable to Estonia, Estlink2, started operation at the beginning of 2014. The new cable triples the
interconnection capacity and has improved connection with the Baltic States.
The Electricity Market Act (588/2013) includes new reliability requirements. This will result in significant future investment requirements in
rural areas.
Gas
The Finnish
natural gas market is isolated, as it is only connected to Russia. The Baltic Energy Market Interconnection Plan (BEMIP), launched by the Commission
in 2008, examines the options of diversifying gas supplies in the region. The
plan points out that the most efficient option is the development of the of LNG
facilities together with the necessary interconnectors. 
Finland in cooperation with Estonia should make its best endeavours to
develop the gas interconnector the BalticConnector which is identified as a
Project of Common Interest under the guidelines for trans-European energy
infrastructure.
Security of
supply
Electricity
Until 2016 the
available domestic production capacity will not be able to cover winter peak
demand[183].
The resulting deficit must be met by imports. A new nuclear power plant,
Olkiluoto 3 by Teollisuuden Voima, with  a capacity of 1,600 MW is due to be
commissioned between 2016-2020 and remove most of the capacity deficit.
The Capacity
Reserves Act (117/2011) is designed to ensure the balance between supply and
demand. Strategic reserves which are not allowed to participate and bid on the
commercial market, have been defined.
Gas
In 2012 there
were no interruptions in gas supply to Finland. A substantial part of the gas
consumption can be substituted with alternative fuels[184]. The National Emergency Supply Agency acts as the responsible
authority in defining measures to safeguard security of gas supply[185]. Investments into LNG terminals in the region and the
BalticConnector would help secure and diversify the gas supply.
Key indicators 
 Electricity ||   || Gas ||   
 Number of companies representing at least 95 % of net power generation || 30 || Number of entities bringing natural gas into country || 1 
 Number of main power-generation companies || 4 || Number of main gas entities || 1 
 Market share of the largest power-generation company || 25.6% || Market share of the largest entity bringing natural gas || 100% 
 Number of electricity retailers || ~70 || Number of retailers selling natural gas to final customers || 23 
 Number of main electricity retailers || 3 || Number of main natural gas retailers || 1 
 Switching rates (entire electricity retail market) || 7.7% || Switching rates for gas (entire retail market) || N/A 
 Regulated prices for households – electricity || No || Regulated prices for households – gas || No 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || Yes 
 HHI in wholesale market || 1,102 || HHI in gas supply market || N/A 
 HHI in electricity retail market || N/A || HHI in gas retail market || N/A 
 Electricity market value[186] (bn€) || 6.979 || Gas market value15 (bn€) || N/A 
 Installed generation capacity (MW) || 16,947 ||   ||   
 Peak demand (MW) || 14,433 ||   ||   
 Number of smart meters installed (December 2013) || 97% ||   ||   
France
Key
issues
Both wholesale
and retail electricity and gas markets continue to be highly concentrated.
Despite improvements, especially for gas, regulated tariffs continue to prevent
alternative suppliers from entering the retail and wholesale markets. France would benefit from further liberalising the wholesale electricity market which
remains one of the most concentrated in the EU. The renewal of hydroconcessions
appears as an opportunity to foster a more competitive landscape for
electricity generation in France. 
Despite a good
degree of market integration, limited electricity interconnection capacity with
neighbouring countries (especially with Spain) continues to inhibit the
development of competition and constrain the security of supply. 
Gas
infrastructure should also be developed to alleviate internal congestion
between balancing zones and increase cross-border flows. 

 General
     overview

The structure of
the national energy mix has remained relatively stable. Nuclear energy
continues to hold the highest market share (approximately 43%), followed by oil
products (32%) and natural gas (14%).
Figure 1: Gross inland consumption
mix 2008 – 2012 (source: Eurostat)
France has an obligation to reach 23% of RES share in gross final energy
consumption by 2020. Despite the fact that France has stayed somewhat below its
2011/2012 interim target (12.8%), the share of renewable energy has
nevertheless increased from 11.3% (2011) to 13.4% thus showing a positive trend
(2012). This positive result is mainly due to contribution from the heating and
cooling sector, which increased as a result of improved use of biomass.
On 18th June
2014, the French Energy Minister presented to the Council of Minister a draft
law on Energy Transition. It will be debated in the French Parliament this
autumn and adopted early 2015. It sets ambitious targets such as a 40%
reduction in greenhouse gas emissions in 2030 and a target of 32% of renewables
in the total final energy consumption by 2030, 30% reduction in fossil fuels
consumption by 2030 and final energy consumption to be divided by 2 at horizon
2050. It also foresees the public tendering of hydroconcessions, 
According to the
electricity TSO RTE[187],
gross electricity demand, peaked in 2010 (513 TWh) and later returned to near
2008 levels (495 TWh in 2013), with a record day consumption level registered
in February 2012 (102.1 GWh). Trends show that demand is becoming more
sensitive to daily temperatures, as a result of the increased use from the
residential sector. 
The market share
of nuclear generation is stable at around 74% of market supply, whilst the
contribution of renewables has progressively increased, reaching 19% in 2013
(in comparison to 14% in 2010), with a decline in oil and gas generation.
However, there has been a slowdown in the growth rate of both wind and
photovoltaic productions, reflecting both the financial crisis and a reduction
in incentives.
Figure 2: Gross electricity
generation mix 2008 – 2011 (source: EU Energy in Figures – Pocketbook 2012 and
2013)

 Regulatory
     framework

General
France has notified full transposition of the Third Energy Package
Directives.
National Energy Regulator           
Despite the new
duties and powers attributed to the French National Regulatory Authority (Commission
de Régulation de l’énergie - CRE) [188] with the
adoption of the NOME Law in 2010 (new organisation of the electricity market)[189]
and with the adoption of the law of 15 April 2013[190], its resources have further decreased reaching 18.9 million euros[191]
in 2014. The staff limit will decrease in 2014 to 130, thus reinforcing the
pressure on the resources of the regulator. CRE has expressed once more serious
concerns about the situation as this puts at risk the fulfilment of its tasks.
Unbundling
Réseau de
Transport d’Electricité (RTE) is entirely owned by
EDF, the historical national utility company. RTE owns and manages the electricity
transmission network. The high pressure gas network is owned by two operators.
The first operator is GRTgaz, who is jointly owned by GDF SUEZ (75%) and by Caisse
des Dépôts et des Consignations and CNP Assurances (25%). The second
operator is TIGF, which since July 2013 is owned by a consortium of Snam
(Italian utility, 45%), GIC Private Limited (Singapore utility, 35%), and EDF
(20%). All three operators were certified in January 2012 as TSOs under the ITO
model. Further to a change in its shareholders, TIGF has been recertified in
2014 under the full ownership unbundling model.
There are three
DSOs operating in the natural gas sector that serve more than 100,000
customers. In the electricity sector, one DSO (ERDF, a 100% subsidiary of EDF)
serves over 95% of French consumers. DSOs compliance with the rules of
independence remains mixed. If for some DSOs the situation has improved, the
NRA noticed that some of its annual requests and recommendations have remained
unanswered and several breaches of DSOs independence rules were discovered in
2012 and early 2013.[192]


 Wholesale
     markets

Electricity
The power
generation market is highly concentrated. The HHI index as regards installed
capacity is still above 8 000 for electricity generation. Next to EDF who still
exploits 91.5% of installed capacity, GDF Suez exploits 5,1% of the installed
capacity and E.On France 2.6%[193].
Efforts are being made to reduce market concentration
through measures such as the ARENH price, which secures access to a limited
volume of nuclear generation (maximum of 100 TWh/year) under regulated tariffs
for alternative suppliers[194],
or Virtual Power Plants. These measures should be further improved to continue
to promote market access for alternative suppliers. France plans to start tenders for hydroelectric
concessions in the first half of next year to bring competitors into the
market. The vast majority of France’s hydro plants, the nation’s biggest source
of power after nuclear reactors, are run by EDF (more than 80%),
the remaining being operated by GDF Suez. Under the
latest plan, the government may group them by valley into concessions and
adjust the expiry dates for current operating contracts. The renewal of these
concessions appears as a unique opportunity to reshape the French electricity
market in a more competitive way. 
The wholesale
market in France has low liquidity; with the majority (87% in 2012) of trading
taking place over-the-counter (OTC). In February 2014 the Northwest European
coupling of the day-ahead markets from the Nordic region, Great Britain and the Central Western Europe region (with which France was already coupled) went
live. It was further extended to Spain and Portugal in May and should extend to
 Italy and Slovenia at the end of 2014. Intraday market integration of the Northwest Europe region is on-going. A project for coupling with spot markets is also under
consideration.
Baseload spot
price decreased by 7.8% in 2013, with respect to 2012, assuming an average
value of EUR 43.24/MWh. Production costs have decreased due to low coal prices
as well as low CO2 emissions prices. Furthermore, the high production of
renewables in Germany influences the French wholesale prices. The decline of
the day-ahead price also continued into the first quarter of 2014 with
temperatures above normal.
Gas
France imports almost all its natural gas. The majority of imports (40.4%)
came from Norway. LNG market share, reflecting the low competitiveness of LNG
prices, decreased from 35% (2011) to 18% (2013). The market has traditionally
been dominated by long-term import contracts linked to oil product prices.
Despite historical dominance, these contracts decreased from 92% of overall
imports (2010) to 85% (2013). In addition, renegotiation efforts of French gas
importers resulted in more hub indexation within the price formula of long-term
contracts.
In France there are three virtual trading points (PEG Nord, PEG Sud and PEG TIGF). The PEGAS
project was launched in 2013 as a cooperation agreement between Powernext and
European Energy Exchange (EEX). It combines both
companies’ natural gas market activities, increasing
the liquidity.  PEG Nord and PEG Sud day-ahead gas price
increased in 2013 by 8% and 12% respectively. PEG Nord evolution
reflects the trend of the adjacent continental hubs whereas PEG Sud
suffers from the physical congestion at the North-to-South link of GRTgaz’s
transmission system. Despite a still sluggish industrial demand, total
consumption increased by 1.4% in 2013, mainly due to the cold weather
conditions during winters 2011-2012 and 2012-2013.

 Retail
     markets

Electricity
Market concentration
at retail level remained high in 2012 as only 8%[195]
of consumers were served by alternative suppliers. Since 2007, consumers have
had the choice between opting for free market prices and regulated tariffs
which can only be offered by incumbents[196]. However by the end of 2013, 92% of residential customers and 86%
of non-residential customers remained under regulated tariffs. 
Switching rates
in the retail electricity market decreased in 2012 to 3.4 % in number of sites
(a decrease of 0.3 points compared to 2011). It should be noted that there was
also a registered increase in market opportunities awareness[197].
Regulated
tariffs were raised significantly in July 2013[198] and are expected to increase again in 2014[199].
This is mainly due to the financing needs of EDF and especially to the
modernisation of its nuclear fleet[200]. These increases still do not cover totally EDF costs.
Nevertheless, they slightly improved the competitiveness of free market priced
offers.
Figure 3: Electricity price change by component 2008 –
2013 (source: Eurostat, energy statistics)
Gas
Competition
increased during the past few years. On the segment of industrial consumers, in
2013, 99% of consumption was on market offers in volume, including 51% from
non-incumbents. On the other segments, similarly to electricity, concentration
in gas at retail level remained high in 2012 with approximately 12% of the
final consumers supplied by alternative suppliers. Consumers have the choice
between opting for regulated or non-regulated prices. However in 2013, 77% of
residential sites and 50% of non-residential sites, remained under regulated
tariffs[201].
The principal gas supplier, GDF-Suez, which is the exclusive provider of the
regulated gas tariffs set by the government[202], still
dominates the market for households and small businesses. Switching rates
retail market increased slightly, from 3.5% in 2010 to 4.0% in 2011, and
reached 5.0% in 2012.[203]
Figure 4: Natural gas price change by component 2008 –
2012 (source: EC, EPCR metadata)
A formal decision
to proceed with the roll-out of smart-meters has been taken for both the
electricity and natural gas sector, after the cost-benefit analysis returned a
positive outcome. There are currently two pilot projects on smart metering
going ahead:

 Linky:
     started in 2010, the project conducted by ErDF involves 300,000 customers
     connected to the low-voltage grid. The project is at an early stage of
     intelligent network construction and aims for a final installation target
     of 35 million smart meters.
 Gazpar:
     the mass roll-out of gas smart meters was officially launched in the
     summer of 2013. The project is on behalf of GrDF and will start with a
     pilot project of 150 000 smart meters by 2016, to be extended to 11
     million meters between 2017 and 2022[204]. 
 Consumers

French consumers
rate the performance of their retail electricity market well above the EU
average (79.2 points vs. 72.0, corresponding to 4th place) as well
as above the average of all domestic services markets (12th place
out of 31). The market has the third lowest percentage of complaints and second
highest assessment of trust in the EU. However, switching remains low in this
market. This component is in fact the only component evaluated below the EU
average. The assessment of the retail gas market is above the EU average (77.6
points compared to 74.1), which corresponds to 7th place in the EU
ranking. The market is evaluated above EU average for all its components except
for switching, which remains low in France. The proportion of consumers
complaining for having encountered a problem is the lowest in the EU, but
consumers tend to complain more towards third-parties (5th highest
proportion in the EU). Both markets have seen a considerable increase in score
since 2012 (4 points in the case of electricity market and 4.6 points in the
case of electricity). [205]
CRE and the
Energy Ombudsman (MNE) jointly manage an information website on energy issues
which provides information on the opening-up of energy markets and a comparison
tool for electricity and gas retail prices. In 2012, 371,000 consumers received
information through the energie-info platform. An online tool for
network tariff calculation is also available on CRE’s website[206].
Special tariffs
are reserved for households with an income below or equal to a threshold of
entitlement to supplementary universal health cover. These tariffs are
available for both electricity and natural gas consumers. From the end of 2013[207],
these social tariffs were further extended to cover all households with an
annual reference fiscal income per unit (revenu fiscal de reference)
lower than EUR 2,175. The number of households benefitting from the social
tariff is expected to increase from 1.9 million to 4.2 million, equivalent to 8
million people[208].

 Infrastructure

The French
authorities should ensure a proper and timely adoption of the measures stemming
from the TEN-E Regulation, including the establishment of the one-stop-shop for
Projects of Common Interest (PCIs) (due by 16 November 2013), and other
measures foreseen for 2014 and 2015, including the publication of the manual on
the permit granting process for project promoters, and the adoption of
legislative and non-legislative measures streamlining the environmental
assessment procedures.
Electricity 
The French
electricity network is interconnected with all neighbouring countries through
export capacities totalling 12 GW and import capacities of 8 GW. This
export/import percentage represents between 8% and 10% of the French maximum
consumption[209].
  France is the largest exporter of electricity in the world according to the
IEA (47.6 TWh in 2013). The use of import capacity from Germany[210]
reached its maximum limit during 50% of the hours in 2013. The 2013 RTE’s
ten-year network development plan, foresees investments of 3 billion euros in infrastructure
before 2017. The first direct current underground trans-European link should be
commissioned between France and Spain in 2015, for a total investment of EUR
700 million, including EUR 225 million from the European Energy Programme for
Recovery (EEPR).
In the context
of the TEN-E Regulation, France has 9 PCIs that will help increase
interconnection levels with the United Kingdom, Ireland, Belgium, Italy and Spain, remove bottlenecks and integrate RES to the network. Furthermore, these
PCIS will contribute to reach the 10% Barcelona target by 2020 with all the
neighbouring countries with the exception of Spain.
Gas
Natural gas
infrastructure in France consists of 6 entry/exit points, 15 storage facilities
and 3 LNG terminals[211].
Market development has been facilitated by the implementation of a full
entry-exit system. The number of market zones has progressively been reduced.
However, market development is limited by a division in three market zones. The
creation of a single French hub by 2018, which requires important investments
to eliminate internal congestions, is under study. In this respect, the
commissioning by CRE of a cost-benefit analysis to evaluate the creation of a
single French hub by 2018 was an important step forward. The interconnection
capacity between France and Spain (doubling the size of the Larrau
interconnection) was successfully upgraded in both directions in 2013, which
further reinforces the North-South interconnections. Interconnection with Belgium and the reinforcement of the French network in the North of France by GRTgaz are ongoing,
while a fourth LNG terminal in Dunkirk is being developed by EDF.

 Security of
     supply

Electricity 
System’s
adequacy is measured through the capacity margin/shortfall indicator[212]
addressed in the national adequacy assessment report elaborated by RTE. RTE
considers it guaranteed until 2015[213].
However from 2016 onwards, the risk of failure of the system is expected to
increase. Despite a drop in total electricity demand, the hourly peak load of France has recorded a drastic growth rate over the past few years, increasing by 18%
between 2006 and 2012. At the end of 2012 a decree introducing a decentralised
capacity obligation mechanism, involving both the demand and the supply side,
was approved. In 2013 RTE launched a consultation on the design and rules
governing this new mechanism. The Minister of Energy approved the findings in
November 2013. The expected first delivery year for the capacity market is
anticipated between around 2017.
In addition, the
modalities of several reserve procurement mechanisms to ensure short term
operational security reserves (ancillary services, replacement) were adapted to
foster competition, economic efficiency and to facilitate wider involvement of
balance service providers. 
Gas
In terms of
infrastructures, the French system has good capacity levels at entry points,
LNG terminals and storages. Recent market developments have, however, led to a
decrease in LNG imports, due mainly to the rerouting of cargoes towards the
Asian market where prices have been much higher than in Europe. As a result,
the French market has suffered from higher prices in the Southern region which
is heavily dependent on LNG. At the same time, the volume of gas in storages
has been tightening up, raising some concerns about security of supply in case
of cold winter. Consequently, through a governmental decree adopted in March
2014, the French authorities have decided to increase the level of mandatory
storage that must be booked by all gas suppliers operating on the French
market. 
Irrespective of
levels of interconnection capacities at the borders, it should be noted that France is constrained on its internal interconnection between the North and the South of
the country. This constraint has not prevented gas flows to Spain to grow significantly after the commissioning of new interconnection capacity in 2013
at Larrau. Some interoperability limitations with other countries in
north-western Europe can be mentioned, affecting the potential capacity of France to contribute to the security of supply of Germany and Belgium. Two projects are under
discussion which could benefit security of supply. The doubling of the Burgundy
artery between the PEG North and PEG South zones of GRTgaz and the de-odorisation
of natural gas and the implementation of reverse flows at the border with Germany which would allow flows from France to Germany of about 100 GWh per day. 

 Key
     indicators
 
 Electricity[214] ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || >5 || Number of entities bringing natural gas into country || 20 
 Number of main power-generation companies || 1 || Number of main gas entities || 4 
 Market share of the largest power-generation company || 86% || Market share of the largest entity bringing natural gas || 59% 
 Number of electricity retailers || 183 || Number of retailers selling natural gas to final customers || 77 
 Number of main electricity retailers || 1 || Number of main natural gas retailers || 3 
 Switching rates (entire electricity retail market) || 5.7% || Switching rates for gas (entire retail market, 2011) || 4.5% 
 Regulated prices for households – electricity  || Yes || Regulated prices for households – gas || Yes 
 Regulated prices for non-households – electricity || Yes || Regulated prices for non-households – gas || Yes 
 HHI in power-generation market || >8,500 || HHI in gas supply market || 4,000-5,300 
 HHI in electricity retail market || >4,500 || HHI in gas retail market || >3,000 
 Electricity market value[215] (bn€) || 34.259 || Gas market value28 (bn€) || 14.422 
 Installed generation capacity (MW, 2011) || 131,353 ||   ||   
 Peak demand (MW) || 102,098 ||   ||   
 Number of smart meters installed || 270,000 ||   ||   
Germany
Key issues
High volumes of renewables have changed the way the
electricity market in Germany operates. In 2012 direct marketing increased, in
particular in onshore wind, due to a change of the Renewable Energy Sources Act
(EEG). A major review of the EEG is now underway and a
revised law entered into force on 1 August 2014. It is expected to have strong
impact on the future costs, expansion and market integration of renewables in Germany. It is of central importance that the revised law ensures
that as of certain thresholds all new beneficiaries of the RES support scheme
will have to sell their electricity directly in the market and will be subject
to balancing obligations. 
In general, the coordination of the
energy policy with neighbouring countries should further improve, also in order
to keep the overall costs of transforming the energy system to a minimum, in
particular by reviewing the cost-effectiveness of energy policy instruments
designed to achieve the renewable energy targets and by continuing efforts to
accelerate the expansion of the national and cross-border electricity and gas
networks. Recent efforts of the German administration to coordinate reflections
on future policy developments with neighbouring countries are very welcome.
Network development is slower than planned. Further
efforts on both intra-German infrastructure and cross-border interconnections
are needed to better synchronise intermittent renewables expansion with grid
development and avoid congestion and unscheduled flows towards the networks of
neighbouring countries.

1.    
General
overview

Gross energy
consumption in 2012 (319.5 Mtoe) was based largely on crude oil and petroleum
products (33.9%), solid fuels (25.2%), and natural gas (21.3%). The share of
renewable energy sources (RES) in overall energy consumption (10.3%) has
constantly increased over the last years and surpassed the share of nuclear
energy in 2011 which decreased over the same period to 8.0%.[216]

Figure 1:
Gross inland consumption mix 2008 – 2012 (source: Eurostat)
The gross
electricity generation in 2011 was 608.9 TWh. The biggest share in the
generation mix came from solid fuels (43.1%). RES became the second most
important production technology (21.2%) followed by nuclear (17.7%) and natural
gas (15.3%).[217]
In 2011 the German Parliament decided to phase-out nuclear power generation by
2022. Eight of the 17 nuclear power generation units have already been shut
down, while the remaining power stations will close by 2022 in a defined order
from 2015 onwards. 
Figure 2:
Gross electricity generation 2008 – 2011 (source: EU Energy in Figures –
Pocketbook 2012 and 2013) 
The German RES target under the Renewable Energy Directive
2009/28/EC, defined as the percentage of energy from renewable sources in total
gross final consumption of energy, stands at 18% by 2020 which is 5.7
percentage points above the level of 2012. The National Renewable Energy Action
Plan expects a share of 19.6% by 2020.

 Regulatory framework

General
The German
energy law was amended following the nuclear moratorium in 2011 and the
associated substantial changes of location of generation. Power plants must now
announce their shutdown one year in advance and electricity TSOs can intervene
to this shutdown in case there is a technical necessity of the particular plant
in terms of network stability. TSOs are now obliged to analyse reliable
available generation capacity, its development with a view to the next winter
period as well as the five following years, and the potentially necessary
reserve capacity. 
The support
schemes for renewable energies (notably solar PV, onshore and offshore wind)
have been reviewed by recent legislation. One major element of the amended EEG
is the gradual introduction of an obligation for all new RES producers covered
by the support scheme to sell their electricity directly on the market. From 1
August 2014, this applies as of 500
kW generation capacity, which will be lowered to 100 kW on 1 January 2016.
Further, the new legislation foresees planning corridors for the development of
different technologies for renewable generation capacities. A further important
element is the gradual introduction until 2017 of competitive tenders for
renewable support, a part of which will also be open for operators established
in other EU Member States. 
On 18 December
2013 the Commission adopted an opening decision on the EEG to examine whether
the German RES support scheme and in particular the surcharge reduction granted
to energy-intensive industries is compatible with EU state aid rules. On 23
July 2014 the Commission declared the aid to be compatible, taking into account
the recent amendments. 
National Energy Regulator
The German
Federal Network Agency for Electricity, Gas Telecommunications, Posts and
Railways (Bundesnetzagentur) was set up in 1998. Bundesnetzagentur is a separate higher federal authority within the Federal
Ministry of Economics and Energy. In 2012 BNetzA employed 2,324
employees (FTEs) and had a budget of EUR 181.2 million (ca. EUR 24 million
thereof for energy regulation). Since 2011, the
BNetzA has taken on additional duties relating to network development so as to
accelerate the expansion of the extra-high voltage electricity networks, via
efficient planning and approval procedures. 
Unbundling
There are four
onshore electricity transmission system operators (TSO) and 15 gas TSOs which
have filed certification requests. Three of the four onshore electricity TSOs
have received the certification while one application was rejected for the time
being, due to insufficient financial resources, against the opinion of the
Commission. For an offshore electricity TSO (the Baltic Cable), BNetzA opened ex
officio certification procedures and, in accordance with the Commission
Opinion, refused certification as no information had been provided by the TSO. 
Local networks
are largely still integrated on the basis of an exemption from the statutory
provisions on legal and operational separation of network and retail businesses
that applies to distribution system operators (DSO) with less than 100,000
connected customers. About 90% of the electricity and 95% of the gas DSOs fall
under this “de minimis rule”. 

 Wholesale markets

Electricity
In the
generation market (electricity not eligible for payments under the Renewable
Energy Sources Act) the four main power generation companies (E.ON, RWE, EnBW
and Vattenfall) had a market share of 76% of installed capacity (81.4 GW) in
2012. The aggregated net generation volume of the four biggest companies (332.8
TWh) in relation to the net generation volume (426.2 TWh) that was fed into the
grids of public supply resulted in a market share of 78%. In this calculation
only generation capacities were taken into account that fed into the grids of
public supply and that were not remunerated according to the Renewable Energy
Sources Act.[218]
There are two
power exchanges in Germany: EPEX SPOT for day-ahead and intraday markets and
EEX for any forward products. The volume traded (245.3 TWh) at day ahead market
increased by 10% in 2012. Prices decreased for peak load by 15% (EUR 48.51/MWh)
and for base load by 17% (EUR 42.6/MWh) at spot markets. 
Energy directly
sold from renewable sources, particularly onshore wind, increased by more than 400%
(51.163 GWh) in 2012 following an amendment of the EEG allowing RES operators
to choose among three forms of direct marketing: Direct marketing for the
purpose of claiming a market premium, direct marketing for the purpose of an
electricity supplier reducing the EEG surcharge, or other direct marketing. 
The number of
traders active on the different markets further increased to a total of 363
(EPEX Spot 194, and EEX 169).
As of February
2014 Germany coupled its day-ahead market with other North West European
markets. Germany is also part of the market coupling project for intraday
market of these markets plus Austria and Switzerland. In the market-coupled
area, prices started to realign in the second quarter of 2013, after
significant price divergences observed in earlier periods.                          
Gas
Gas production
in Germany further declined in 2012 by 9.7% to 10.7 bcm and imports increased
by 8.78% to 1.535 TWh in 2012. The imported volumes primarily came from Russia (about 45%), the Netherlands (26.5%), and Norway (25.9%). Exports (667.3 TWh) increased by
29.12% and were mainly directed to Czech Republic, France, the Netherlands and Switzerland. 
While the German
gas market was initially fragmented into more than 20 market areas, there now
remain only two market areas: Net Connect Germany (NCG) and GasPool. There is
one German gas exchange EGEX (European Gas Exchange GmbH). Trading activities
strengthened on both OTC and exchange markets, with OTC (trading volume 2012
was 2.460 TWh) remaining the preferred market. The daily average reference
price over both market areas rose by almost 10% (NCG: EUR 25.19/MWh and GasPool
EUR 25.11/MWh). This increase was caused partly by temporary bottlenecks in the
gas supply in February 2012, when prices increased up to EUR 40/MWh. The daily
average cross border price was EUR 29/MWh (+12.6%) and the gas forward price
was EUR 24.66/MWh (+4.8%) at the EEX in 2012. 
While the three
largest importers increased their market share by 11.4 percentage points (to
67.2%), the total share of the five largest companies fell by 11.1 percentage
points (to 80.3% in 2012). 
Germany has suffered from contractual congestion in the past, but booking
levels have recently decreased due to the cancellation of contracts. According
to ACER's Annual Report on Congestion[219] contractual
congestion remains high, mainly at Germany's border connections with the Netherlands. It therefore remains important that Germany cooperates with neighbouring
countries to ensure effective implementation of congestion management regimes
on its interconnection points in accordance with EU law[220].


 Retail markets

Electricity
With an HHI of
2,021 the German electricity market is reasonably competitive even though the
four largest supply companies increased their market share by 3.3 percentage
points to about 45.5% (228.1 TWh). 
Despite a clear
downward drift of wholesale prices on the spot and forward markets, the retail
prices for households significantly increased on average (+12.3%) in 2013.
Electricity retail prices in Germany rank among the highest in Europe. On the one hand, this can be attributed to the fact that the cost of expanding the
share of renewable energy is borne by final consumers. On the other hand, the
legislator put in place taxes and fees on energy consumption to incentivise
rational use of energy and internalise externalities. Taxes (electricity and
VAT) have been stable for a long time and add up to a share of 22.9% and total
levies to around 26.1%. 
Figure 3: Electricity price change by component
2008 – 2013 (source: Eurostat, energy statistics)
Despite some
measures taken to limit the increase of the EEG-surcharge, the financing costs
amounted in total to EUR 19.4 billion in 2013. 
In 2012,
electricity customers were able to choose among a large number of suppliers.
Household customers were able to choose between 72 suppliers on average (2011:
65). In 2012, 7.8% of household customers and 11.3% of industrial customers
switched supplier in terms of consumption volumes. In the entire retail market
over 2.8 million customers switched their supplier, leading to a switching rate
of 10.4% of the total volume.
In response to
the Commission's procedure challenging the exemption by law of industrial users
from network charges[221],
  Germany has adopted legislative changes to reduce the number of
beneficiaries. A revised law on feed-in tariffs intends to help keeping energy
prices for consumers stable in the next years. 
Gas
The emitted gas
volume to final consumers (including gas-fired power plants) increased by 5% in
2012 (815.4 TWh) driven by an increase in household consumption (+10%) during
the very long and cold winter 2012/13. The three largest companies have a
market share of only 28.5%. Diversification improved further such that in
almost 86% of the network areas consumers can choose among at least 31
different gas suppliers. 
However, the
number of customers who switched their supplier declined, especially for small
consumers. In 2012, 7.92% of household customers and 13.38% of industrial
customers switched supplier in terms of consumption volumes. In terms of all
final consumers, the consumption volumes-based supplier change rate was 10.68%.
This is a decrease of 18% compared to 2011[222].
Figure 4: Natural gas price change by component 2008 – 2012
(source: EC, EPCR metadata)

 Consumers

German consumers
consider their electricity and gas retail markets as above the EU average (81.4
and 77.4 points compared to 72.0 and 74.1, respectively), ranking 1st
and 8th among EU countries. However, while the electricity market
has seen a consistent increase in score since 2010, the gas market has slightly
decreased its performance between 2012 and 2013, reversing the positive trend
observed since 2010[223].
Both markets score better than the EU average on all the components with the
exception of actual switching. Electricity market scores highest among EU
countries on trust in providers and and ease of switching, 2nd
highest on comparability and 4th highest on choice while the
incidence of complaints is second lowest in the EU. For gas services, Germany scores among the best EU countries for comparability and choice (5th
place). At the same time, only around 6% of electricity and gas consumers have
switched their provider or tariff with the existing provider in the past 12
months, which is in both cases around half of the EU average. [224]
In line with the
provisions of the Third Energy Package, consumer protection rights have been
strengthened by the shortening of the supplier exchange process and by
establishing new standards for contracts, information and financial reporting
by suppliers. BNetzA has been assigned the role of central information centre
for energy consumers. Energy consumers now have the right to file complaints
against their supplier. In 2012 the consumer service of the BNetzA recorded a
total of 22,112 incidents (electricity 19,771 and gas 2,341) of which a
significant portion focused on inconsistencies in the energy bill. Furthermore a new arbitration body, the “Schlichtungsstelle
Energie e.V.”, was founded to provide consumers with additional cost-free
extrajudicial resolution with regard to their electricity and natural gas
suppliers as well as distribution system operators.

 Infrastructure

BNetzA was
designated as the “one stop shop” for permitting procedures for electricity
Projects of Common Interest (PCI), while for gas the designation has not yet
been communicated.
Electricity
In 2012 the four
TSOs spent EUR 1.15 billion on network infrastructure which is an increase of
investment volume of 36% mostly due to the energy transition. The expansion of
the electricity transmission network has been advancing slower than planned. By July 2014, about 416 of 1877 kilometres (22 %) of
the projects listed since 2009 in the Electricity
Grid Expansion Act (EnLAG) were realised. TSOs now expect to finish 40%
of the projects by 2016, 10 % less than what had been expected still in early
2014.[225]
Network development is clearly behind schedule and subject to increasing
resistance, including on the level of regional governments. In 2012, BNetzA
approved about 2,800 km new lines and 2,900 km of network enhancements beyond the EnLAG. 
With the
adoption of the Federal Requirements Plan Act (Bundesbedarfsplangesetz) in
2013, further efforts have been made to commonly agree upon and realise the
most crucial and urgently needed transmission infrastructure projects. It
however remains to be seen, and becomes increasingly doubtful in view of
delays, whether the actual speed of network infrastructure construction is
sufficient. Some projects included in the Bundesbedarfsplan are also labelled
as projects of common interest as they are particularly important from the
European perspective.  In total 20 electricity PCIs are located in Germany. Most urgently, lines from the North to the South of Germany are needed to
eliminate internal bottlenecks and help avoid unscheduled “loop flows” which
are currently congesting the borders with Germany’s neighbours. Also,
cross-border lines with neighbouring countries will increase interconnection
capacity and ensure that electricity flows where it is most valued.  
Gas
The German
Energy Act requires the gas TSOs to jointly prepare a National Development Plan
(NDP) Gas on an annual basis.  The current NDP will lead to new pipelines with
a total length of 522 km and new or extended compressors with a total capacity
of 344 MW. Most of these measures are important for the transport of gas from
North to South. They are also important to help to relieve critical situations
in the supply of gas down to the distribution systems, especially in southern Germany. Furthermore, capacities at cross-border points will be enhanced. For the first
time, the NDP Gas also focuses on decreasing L gas volumes, in particular in
the Netherlands, and identifies specific grid areas for conversion to H gas. 

 Security
     of supply

Electricity 
Bundesnetzagentur
has prepared a series of reports[226]
assessing security of electricity supply in order to establish the need for
reserve capacity during the winter period. The aim of maintaining reserve
capacity is to provide relief when critical situations arise in the
transmission network as a result of the increase in energy from renewable
sources and conventional plant shutdowns. Network operators contracted 2.6 MW
of reserve capacities for the winter of 2012/2013. In addition to this, TSOs
can use generation units nominated for decommissioning if they define these
units as systemically relevant entities. The owner of such reserve capacities
is then compensated for costs of keeping the unit available and generating the required
power. Until now five of such nominated generation units with a total net
capacity of 668 MW were defined as systemically relevant. Finally, TSOs may
intervene into generation dispatch plans in order to stabilize the system.
System interruption is still at a low level of 15.91 minutes in 2012. 
In respect of
the national balance between demand and supply, ENTSO-E calculated a negative
reserve margin of -0.6% for Germany for the winter of 2012/2013 which indicates
that national demand of electricity could be higher than available generation
capacities. Germany may therefore need to rely on imports in certain
situations.
In 2012, total
electricity demand remained almost constant whilst the total volume of traded
electricity across the border increased by 7.7% (79.7 TWh). The net export
increased significantly, by 700% to 21.7 TWh (2011 imports: 35.5 TWh and
exports 38.4 TWh), so that Germany became a net exporter of power. The
cross-border trading volume of electricity increased from 74 TWh in 2011 to 79.7
TWh in 2012, of which 50.7 TWh were exported and 29 TWh imported. The biggest
change occurred in the export between Germany and the Netherlands which more than doubled and the imports from France which dropped by almost one third. 
Gas 
The average interruption
duration in gas was constantly on a low level in 2012 (1.91 minutes). During
gas year 2011/2012 capacities have been shifted from entry to exit in parallel
to significant sign offs of booked capacities after price increases. Given the
total volume of 2.69 billion kWh transported, only 0.05% of the nominated
quantities of gas were interrupted in the gas year 2011/2012.

 Key indicators 
 
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || >450 || Number of entities bringing natural gas into country || 38 
 Number of main power-generation companies || 4 || Number of main gas entities || 3 
 Market share of the largest power-generation company || N/A || Market share of the largest entity bringing natural gas into country || 30.1% 
 Number of electricity retailers || >1,000 || Number of retailers selling natural gas to final customers || 851 
 Number of main electricity retailers || 4 || Number of main natural gas retailers || 3 
 Switching rates (entire electricity retail market) || 10.4%[227] || Switching rates for gas (entire retail market) || 10.68%[228] 
 Regulated prices for households – electricity || No || Regulated prices for households – gas || No 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || No 
 HHI in power-generation market || 2,021 || HHI in gas supply market || 1,886 
 HHI in electricity retail market || n/a || HHI in gas retail market || 300 
 Electricity market value[229] (bn€) || 74.906 || Gas market value (bn€) || 27.511 
 Installed generation capacity (MW) || 171,681 ||   ||   
 National instantaneous peak load (MW) (2012) || 81,858 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Greece
Key Issues
Electricity
prices were fully liberalised in July 2013 but no effective entry into the
market has taken place and the incumbent electricity company remains the
dominant supplier as a result. Electricity prices should be cost-reflective and
appropriate steps should be taken towards the creation of an investment-friendly
framework in order to attract new potential suppliers and effectively open up
the retail market to competition while ensuring a smooth transition for
consumers.
In gas, the
continued independent operation of gas TSO DESFA after its privatization needs
to be ensured by the national regulatory authority. Greece should furthermore
draw a timeline and an action plan for facilitating the transition to a more
mature gas market model, fostering competition also on the retail level, ending
the exclusivity rights of regional gas suppliers and thus allowing consumers to
switch suppliers and reap benefits from the liberalised market.

 General
     overview

The gross inland
energy consumption in 2012 was 27.04 Mtoe, a decrease of 2.9% compared to 2011.
Crude oil and petroleum products account for 46.2%. Solid fuels represent
30.1%, natural gas represents 14.1% and renewable energies provide 9.6% of
gross inland energy consumption. In 2012, the renewables share in gross final
energy consumption reached 15,1%[230],
and thus Greece is showing good progress towards achieving its 2020 RES target
of 18%[231].
Figure 1:
Gross inland energy consumption mix 2008-2012 (source: Eurostat)
The gross
electricity generation in 2011 was 59.4 TWh. Electricity is generated mainly by
indigenous lignite, which represents 51% of the total electricity production,
followed by natural gas (23.5%), renewable energies (14%) and crude oil and
petroleum products (10%). The increase of electricity generation in 2012 came
mainly from renewables, which increased its share by 23% compared to 2011
levels. This was due to the additional solar photovoltaics installed in the
year. 
Figure 2: Gross electricity generation
mix 2008 - 2011 (source: EU Energy in Figures –
Pocketbook 2012 and 2013) 
Cogeneration[232]
of heat and power represents 4.5% of gross electricity generation in 2011[233].


 Regulatory
     framework

General
The Third Energy
Package was implemented in Greek legislation in August 2011. In the gas sector
a decoupled entry-exit tariff model was introduced in 2013 by the Regulatory
Authority. 
National
Energy Regulator
The Regulatory
Authority for Energy (RAE), which was established in July 2000, is an
independent administrative authority. The Board of Commissioners of RAE is
comprised of 7 members[234].
The budget of RAE was EUR 7.3 million in 2012, a decrease of 11% compared to
2011[235].
Since the
transposition of the Third Energy Package, the Regulator has been influenced by
severe budget and salary cuts and, most importantly, a hiring freeze, that has
limited its ability to carry out the increased powers and duties assigned to it
by the Third energy package. 
Unbundling
Following the
Energy Law 4001/2011, the Public Power Corporation (PPC), which is the state
owned vertically integrated electricity company, established a 100% subsidiary,
ADMIE SA, which owns and operates the transmission system, according to the
Independent Transmission operator (ITO) model. In 2012, the Regulatory
Authority for Energy (RAE) certified ADMIE SA as the independent power transmission
system operator. The government decided to fully separate ADMIE from PPC, which
should be completed still during 2014[236]. The
distribution network ownership remained with PPC, although its operation was
assigned to another 100% subsidiary of PPC, DEDDIE SA.
In the gas
sector, the TSO of the national grid is DESFA SA. It is currently controlled by
Hellenic Petroleum ("HP", 35%) and the Hellenic Republic Assets
Development Fund ("HRADF", 65%). In 2012, HP and HRADF signed an
agreement with the Azeri State-owned company SOCAR for the sale of 66% of the
shares in DEFSA. The certification of DESFA as controlled by SOCAR is currently
pending.

 Wholesale
     Markets

Electricity
In May 2013, the
government decided to establish a new vertically integrated electricity company,
which will be formed from the transfer of approximately 30% of the assets of
PPC. The new company should be fully operational in the first quarter of 2015.
17% of the PPC’s shares owned by the Hellenic Republic Assets Development Fund
(HRADF) are foreseen to be sold by the first quarter of 2016. 
In July 2013 RAE
decided to reform aspects of the market design, which, due to the technical
nature of the plant dispatch algorithm, creating stronger incentives for
gas-fired power plants to follow the fluctuations of the demand curve and
wholesale prices to better reflect marginal costs. Further reforms of the
capacity mechanism are planned to be introduced in 2014.
The Greek
electricity sector was hit in 2012 by a liquidity crisis. Several factors, such
as unpaid electricity bills, liquidity tensions in the Greek banking system and
structural deficiencies of the Greek energy market have tightened the cash
position of PPC. In parallel, the market operator, LAGIE SA, had accumulated
unsustainable debts due to the renewable energy support schemes, given the
level of revenues from the market which was insufficient to cover the payments
to RES generators. As a result, the main actors in the Greek electricity system
have significant arrears[237].

The Hellenic
Parliament adopted a temporary tax on revenues from renewable energy
installations in 2012[238].
Following an increase in the renewables levy in July 2013, the authorities
committed to further adjustments every six months in order to eliminate the
debt in the renewables account by the end of 2014[239].
Gas
DEPA is the
incumbent natural gas importer and supplier. Pending the privatisation process of DEPA the state owns
65% of DEPA while the remaining shares are held by Hellenic Petroleum SA. 
Since 2010 other
companies than DEPA a total of six companies have started importing natural
gas. In 2012, from the total natural gas imports 48.1 TWh in Greece, 90% were imported by DEPA SA, and ten percent (10%) by two other market players.
However a sharp decline was observed in the year of 2013 in the percentage
share of gas imports by the other parties. This is mainly attributable to the
increased price of LNG worldwide as most of the competition in the market
stemmed from third party access to the Revythoussa LNG Terminal. In March 2014, DEPA and GAZPROM EXPORT agreed to the decrease of the
price of the imported natural gas by 15%, approaching the respective average EU
price[240]. 

 Retail
     Markets

Electricity
Electricity
prices for both industrial and domestic consumers increased significantly in
2012 (29% and 37.3% respectively), although in both cases they remained below
the EU average. In part these increases were due to the introduction of
non-recoverable tax rates[241],
but also due to the gradual move towards cost recovery and removal of cross
subsidies. Retail prices in Greece also include a public service obligation
levy to recover the higher cost of power generation in the non-interconnected
islands. Low-voltage end user prices have been completely liberalised since 1
July 2013.
In 2012,
domestic tariffs (competitive elements only) of the incumbent (PPC) increased
by around 11-34%, depending on the consumption category. The evolution of retail prices in households and industrial
consumers is presented in the following figures.
Figure 3: Electricity price
change by component 2008 – 2013 (source: Eurostat, energy statistics)
Electricity
demand in 2012 declined by 0.2% compared to 2011. This decline was very close
to the average EU27 rate[242].
The concentration on the retail electricity market remains high. The switching
rate in Greece was 3.6 % (volume-related) in 2012, mainly due to the exit of
four suppliers from the market and the temporary (3-month) activation of the
supplier of last resort. In 2013, electricity demand declined further by 1.9%,
while the switching rate was confined to merely 0.27%.
Greece is proceeding with (and has mandated) a large-scale roll-out of
smart meters to 80% of consumers by 2020. A pilot programme involving the
replacement of 160,000 old electricity meters with smart metering systems was
announced, and is expected to be completed in 2015.
Gas 
Distribution and
supply of natural gas to retail consumers is done by three companies (called
EPAs) for the regions of Attica, Thessaloniki and Thessalia. DEPA supplies
natural gas to these three local monopoly distributors. In general, only those
customers with an annual consumption of greater than 100 GWh are eligible to
select their supplier of gas in Greece. A major reform
of the Greek gas retail market is envisaged that seeks to abolish the regional
monopolies of the EPAs for gas supply and to progressively extend eligibility
to all retail customers. A total of ten natural gas
supply authorizations have been issued in the period 2010-2013.  
Natural gas
price in households was EUR 2.3/GJ in 2012. The total taxes were EUR 4.8/GJ
(EUR 3.2/GJ for VAT and EUR 1.6/GJ for other taxes). The tariff for the
industrial sector in 2012 was EUR 16.1/GJ, while the non-recoverable taxes were
EUR 1.6/GJ[243].
The Pre-Tax Total Price (PTP) for gas in Greece was the high­est among EU-27. 
Gas demand in
2012 decreased by 7.7% compared to 2011. DESFA forecasts that gas demand will
almost double by 2019, compared to 2009 levels. This increase will mainly come
from electricity generation.

 Consumers

Despite
considerable improvement since 2012 (of 4.9 points), the retail electricity
market is assessed fourth lowest in the EU, with a score which is almost 7
points below the EU average (65.2 compared to 72.0). In addition, the market is
considered to be the worst of all 31 domestic services markets. Overall
consumer satisfaction is the 2nd lowest in the EU and the incidence of consumer
complaints is the 2nd highest[244].

The
assessment is more favourable for the gas market for which Greece is more than
4 points above the EU average (78.5 vs. 74.1), which corresponds to 6th
position in EU and 16th position in the ranking of 31 domestic services
markets. Greek consumers show the 3rd highest level of trust in providers.
However, the percentage of Greek consumers who have switched their provider or
tariff plan with the existing provider in the past 12 months is the lowest in
the EU (less than 1% against an average of almost 10% in the EU).  
A
total of 9.8% of all residential customers benefit from
a social tariff, to a total of 560,126 in February 2014[245].
In 2013, the Electricity Supply Code was published, which also includes
provisions for consumer protection measures and a Ministerial decision was
issued defining criteria, conditions and the procedure for a consumer to be
classified as vulnerable electricity consumer and to be included in the
registry.
The provisions
of the definition of vulnerable gas consumers of Law 4001/2011 have not been
fully adopted by the EPAs. Compliance with the categories of vulnerable groups
and economic protection schemes and the Supply Code is not yet available. The
distribution license of the EPAs, operating under a regime of exclusive right
for both the activities of distribution and supply of gas in their areas,
include some non-economic provisions for domestic customers “with special
needs”[246].
6.    
Infrastructure
As required by
the TEN-E Regulation, Greece has established a one-stop-shop for the permitting
of Projects of Common Interest (PCIs).
Electricity
In 2012, the
total installed generating capacity was 18.879 MW[247].
Thermal power plants accounted for 9.624 MW, hydroelectric power plants were
3.017 MW, wind power farms were 1.466 MW and solar photovoltaic power
generating units were 1.126 MW. The electricity generation capacity of wind
farms increased by 23%, while the electricity generation capacity of
photovoltaic parks more than tripled, compared to 2010 levels[248].

The Greek
network has a central position in South-East Europe with the existing and
future connections to Italy, Bulgaria, Turkey and the Western Balkans.
Therefore, Greece could play the role of an electricity hub in the region. Greece is investing in the connection of islands to the grid and the integration of RES.
In October 2013,
two electricity interconnections were labeled PCIs by the European Commission:
the AC 400kV interconnection between Maritsa East 1 (in Bulgaria) and Nea Santa (in Greece) and the DC 600kV underwater interconnection between Israel, Cyprus and Greece[249].

Gas
Greece has the potential to become a regional gas hub as it is located at
the EU entry door of the Southern Gas Corridor, has access to LNG and gas
supplies from Russia. It has therefore all the characteristics needed for the
development of a liquid hub, providing price competition, security of supply
and market integration in the Region.
The Trans
Adriatic Pipeline (TAP) was selected by the Shah-Deniz Consortium in June 2013
as the route to transport gas from the Shah-Deniz II field in Azerbaijan to
Europe. Together with the Southern Caucasus Pipeline and the Trans Anatolian
Pipeline, the TAP will form part of the Southern Gas Corridor allowing for the
supply of Europe with gas from Caspian sources.
The regulatory
framework for the development and operation of TAP was also concluded in June
2013 following the comprehensive assessment of TAP AG’s exemption application
by the regulatory authorities of two Member States (Greece and Italy) and one
Contracting Party of the Energy Community (Albania) on the basis of the energy
third package.
Several projects
are currently planned to enhance supply opportunities and connections with its
direct neighbors. This is most notably the case with the upgrade of the 
existing LNG terminal (Revithoussa) and the development of new ones,
interconnections with Bulgaria through the reverse flow in Kula-Sidirokastron
and the IGB, to Italy with the Trans-Adriatic Pipeline and, potentially, with
IGI Poseidon and from Turkey with the upgrade of the compressor station in
Kipi.
7.    
Security of Supply
Electricity
Electricity
demand in 2012 remained fairly stable, exhibiting a minor decline of 0.5%
relatively to 2011, while electricity production increased by 3.54% compared to
2011. Exports of electricity in 2011 increased by 40.4% compared to 2010,
particularly due to exports to Albania[250]. Imports of
electricity decreased by 15.7% in 2011, reaching 7,180 GWh. The main importers
were Bulgaria and Turkey, accounting for 75.4% of total imports[251].
To enhance
security of supply to the Aegean islands and facilitate further development of
renewable energy, underwater interconnection of the Cyclades islands is planned
by ADMIE. The first phase of the interconnection will be completed by 2016
while the second phase is planned for 2017. According to the last approved
10-year network development plan[252], the interconnection of Crete is planned to take place during the
period 2017-2020.
Gas 
The demand for
natural gas in 2011 was 4.80 bcm, out of which approximately 66% was for the
power generation sector[253].
Imports of natural gas amounted to 41.8 TWh in 2013, the majority of which (66%
of total imports) came from Russia[254]. During 2012 DEPA imported gas primarily through existing long-term
contracts from three different suppliers, namely Gazprom, Sonatrach (LNG) and
BOTAS, while several spot cargoes were also unloaded in Revithoussa. 
During 2012,
there was no change regarding interconnection infrastructure of the Greek
transmission system with neighboring gas systems, namely Bulgaria and Turkey. 
RAE has been
assigned by the Greek State as the Competent Authority for the implementation
of the provisions of Regulation 994/2010/EC concerning measures to safeguard
security of gas supply. During 2011-2013 the risk assessment study, the
preventive action plan, the emergency action plan, and the joint reverse flow
proposal of the two TSOs, of Greece and Bulgaria, for the activation of reverse
flow on the border of Greece and Bulgaria have been approved by RAE.
8.    
Key indicators
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 3 || Number of entities bringing natural gas into country || 3 
 Number of main power-generation companies || 1 || Number of main gas entities || 3 
 Market share of the largest power-generation company || 63.5% || Market share of the largest entity bringing natural gas || 88.6% 
 Number of electricity retailers || 11 || Number of retailers selling natural gas to final customers || 4 
 Number of main electricity retailers || 1 || Number of main natural gas retailers || 3 
 Switching rates (entire electricity retail market, by volume) || 3.6% || Switching rates for gas (entire retail market) || 0.0% 
 Regulated prices for households – electricity || No || Regulated prices for households – gas || Yes 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || Yes 
 HHI in power-generation market || 6,183 || HHI in gas supply market || N/A 
 HHI in electricity retail market || >9604 || HHI in gas retail market ||   
 Electricity market value[255] (bn€) || 4.249 || Gas market value30 (bn€) || 0.753 
 Installed generation capacity (MW) || 16,521 ||   ||   
 Peak load (MW) || 9,894 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Hungary
Key issues
In September
2012, the Czech-Slovak-Hungarian market coupling became operational, resulting
in an increased price convergence towards regional markets. It also increased
liquidity on the Hungarian power exchange, decreased price volatility and
narrowed spreads on the national market. Efforts to extend market coupling to
southern neighbours and successively couple with North-Western and
South-Western European markets should be continued.
Key parameters
for calculating network tariffs are set by the Ministry and seriously limit the
NRA's ability to set network tariffs autonomously. The NRA should have
effective powers to set network tariffs independently from the government. In
addition, appeal procedures appear to be unsuited to ensure that regulatory
decisions can be challenged effectively. The independence of the national
regulatory authority should be strengthened. 
Regulated energy
prices were cut by 20% in 2013 and further cuts in the regulated price are
occurring in 2014 for both electricity and gas. In combination with other
regulatory measures (e.g. special taxes), and market interventions network
operators and energy suppliers now suffer financial losses. The investment
climate has deteriorated as a result of changes in the regulatory framework. As
foreign utilities are selling their businesses to the Hungarian State, Hungary
is on the trajectory to have a largely state owned energy sector. Overall, the
country would benefit from adhering to a regulatory framework which is stable
and conducive to investment and competition in the electricity and gas markets.

General overview
Gross energy
consumption in 2012 amounted to 23.569 Mtoe[256]. Consumption
decreased by 12.1% compared to 2008. The primary energy mix remained largely
the same as in previous years, although demand dropped further for oil (to
25.22%) and natural gas (to 35.24%). 
Directive
2009/28/EC requires from Hungary a 13% renewables share within the total gross
energy consumption by 2020. However, this target was raised in Hungary's
National Reform Programme to 14.65%; above the binding minimum target. The
level of renewables in the overall energy production remained stable in 2012
(7.52%). The share of total renewable energy in the gross final energy
consumption was 9.57% in 2012. In 2012, Hungary was on track of its national
action plan trajectory for overall share of renewable energy in the final
energy consumption and in heating sector. However, in 2012 Hungary was behind
its national action plan trajectory in the electricity and transport sectors in
which the share of renewable energy decreased in 2011 and 2012 (In the
electricity sector the share of renewable energy in 2012 was below 2009 level).
Limited progress has been made on development of a stable, efficient and
reliable legal and regulatory framework for the support for renewable energy
sources.
In 2012, total
power generation amounted to 34.6 TWh, significantly less than in 2008 (40.02
TWh). In parallel, net imports have been growing significantly, reaching 7.97
TWh in 2012, up from 3.90 TWh in 2008. Total gross electricity demand in 2012
was 39.95 TWh, slightly less than in 2008 (41.3 TWh)[257].
Electricity
generation from fossil fuels is decreasing. Due to market trends – and
decreased profitability, natural gas constituted only 27.12% of total
generation compared to around 40% prior to the economic crisis. Cogeneration[258]
represented 16.6% of gross electricity generation in 2011.
Figure 1:
Gross inland consumption mix 2008-2012 (source: Eurostat)
Natural gas
consumption continues to sharply decrease, as it has in prior years, reaching
8.3 Mtoe in 2012. Domestic production accounted for 20.32% of total demand.
E.ON Földgáz Trade (purchased by the state owned company MVM in 2013) has a
long-term gas supply contract with Gazprom. In 2012 imports from the West (from
Austria, HAG-pipeline) exceeded imports from the East (from Ukraine,
Beregdaróc) while in 2013 imports from the East were higher again. A large
share of the western entry capacity was contracted by E.ON for Russian imports.
Small scale gas transit has occurred in the direction of Serbia, Romania and
Croatia[259].
Figure 2:
Gross electricity generation mix 2008 - 2011 (source: EU Energy in Figures –
Pocketbook 2012 and 2013)
      Regulatory framework
General
The political
and regulatory debate during 2012 and 2013 continued to focus on the price
moratorium, on special utility sector taxes and since December 2012 on price
cuts for household consumers. The Minister of National Development approved a
price adjustment equal to annual inflation at the beginning of 2012.
Nevertheless, the price rise in gas imports created a mismatch between the
level of regulated retail prices and the wholesale import price. 
The energy
sector is subject to an energy tax, a differentiated profit tax and a crisis
tax. The crisis tax was set on (generation and supply) energy companies'
taxable revenue and was due to expire in 2013. However, the government at the
same time imposed a new tax on infrastructure, set by the length of
transmission and distribution lines and pipelines. 
In 2013,
regulated prices for household consumers in the gas and electricity sector were
cut by 20% and further decreases were announced for 2014 (electricity by 5.7%
and gas by 6.5%). 
National Energy Regulator
The Hungarian
Energy and Public Utility Regulatory Authority ("Magyar
Energetikai és Közmű-szabályozási Hivatal") - HEA, called until
2013 the Hungarian Energy Office, HEO - is an independent body of the
administration. In 2012, HEO employed 122 staff and had a EUR 12.68 million
budget. Recently its staff and budget increased due to its widening
responsibilities. At the end of 2013, the HEA staff was 235.
Since 1st
January 2012, HEA is obliged to calculate gas tariffs using the methodology
imposed by the Ministry. 
Parliament
adopted a new law increasing HEA's competence in the public utility realm. This
new law foresees that some of the regulatory decisions (namely decisions on
connection prices and system use charges) are made in the form of HEA
regulation which cannot be appealed in regular courts, but only before the
Constitutional court. 
Unbundling
The electricity
TSO, MAVIR Zrt., is owned by the state-owned company Magyar Villamos Művek
Zrt. (Hungarian Electricity Ltd., MVM), a major player both in generation and
on the wholesale markets. Mavir was certified by the Regulator in March 2012 as
an independent transmission system operator (ITO). The gas TSO FGSZ Zrt. is
owned by MOL (Magyar Olaj-és Gázipari Nyrt, MOL Hungarian Oil and Gas Plc.), a
listed company, and is also certified as an ITO.
Wholesale markets
Electricity
The generation
market is relatively concentrated within the hands of state-owned MVM. 
Net imports have
been growing steadily reaching 19.95% of gross demand in 2012. Hungary is also
an important transit country connecting markets between the Balkans and Central
Europe. Imports come from Slovakia, Austria and Ukraine (76.77% share of total
imports), exports are the highest towards Croatia and Serbia (73.74%)[260].
In September
2012, the Czech-Slovak-Hungarian market coupling became operational. This resulted
in an increased price convergence towards regional markets and decreased price
volatility, narrowing spreads on the national market. The market coupling was
an essential factor in the liquidity increase of HUPX, the Hungarian power
exchange, a subsidiary of MAVIR. Day-ahead turnover was 3.78, 6.32 and 9.07
TWh, in 2011, 2012 and 2013 respectively[261]. Prices fell
from EUR 55.81/MWh in 2011 to EUR 42.33/MWh in 2013. Trade in physical futures,
launched only in 2011, has also seen steady growth. 
Gas
In 2012, 20.32%
of gas consumption was supplied by domestic sources, the rest being mainly
imported from Russia. E.ON Földgáz Trade is a major player on the wholesale
market. It was purchased by state-owned MVM in October 2013. 
Gas wholesale
market concentration has been decreasing for a couple of years primarily due to
diversified imports and their increased share in the reduced domestic demand.
In 2013, MVM increased further its presence on the wholesale market, in
particular in imports previously dominated by E.ON, GdF and MOL[262].
The gas exchange market, CEEGEX, owned by MVM, became operational in early
2013.
Transit through
Hungary comes from Russia via Ukraine flowing towards Serbia and
Bosnia-Herzegovina[263],
with smaller scale exports to Romania and Croatia. Negotiations about reverse
flow to Ukraine were actively conducted at the end of 2012, with gas flows
starting in April 2013.
Retail markets
Electricity
In 2012, 12.19
TWh of electricity was purchased under regulated prices. Almost all households
remain under the regulated price regime with four companies covering 67.93% of
the retail market. The switching rate for household consumers remained low i.e
1.6%, up from 0.3% in 2011. Non-household consumers had higher switching rates
with 13.3% of those customers switching supplier in 2012, up from 9.7% in 2011.
Household prices
were composed of electricity and supply costs for 43%, network costs for 35%.
VAT and other fees and costs make up the remaining 22% of the total price. Due
to a decrease in the European wholesale prices, the price moratorium in 2010
did not have significant effects until 2012. In 2013, the 20% utility rate cut
led to some distortions and increased the price divergence between wholesale
and retail markets. 
Figure 3: Electricity price change by component 2008 – 2012
(source: Eurostat, energy statistics)
Gas
In 2012, 3.66
bcm of natural gas was purchased under regulated prices, 88% of which were sold
to household consumers. Almost all households remain under the regulated prices
regime. The retail market is relatively concentrated with six companies
covering almost the entire retail market (83.79%). The switching rate for
household consumers was 1.5%, down from 10.4% in 2011. The high figure for
2010-2011 was probably due to the liquidation of EMFESZ, a supply company with
considerable retail books. Data for 2012 is likely to be much more typical for
the market. Industrial consumers on the wholesale markets switch more
frequently (ratios for consumers equipped with metering devices above 20 m3/h
vary between 18.2% and 31.5%). Non-household prices are only regulated for
consumers with gas meters below 20 m3/h.
Figure 4: Natural gas price change by component 2008 – 2012
(source: EC, EPCR metadata)
Consumers
The overall
assessment of the retail electricity market in Hungary is slightly below the EU
average (71.5 points compared to 72). This is also reflected in the country's
position in the EU ranking (17th position) and the ranking of 31
domestic services markets (20th position). Switching, ease of
switching and overall consumer satisfaction are within the 5 lowest ratings in
the EU, and the incidence of consumer problems is the 5th highest in the EU.
Yet, trust in providers is above the EU average. The retail gas market ranks
lowest in the EU (with a score of 65.9 points compared to the EU average of
74.1) and 28th among 31 domestic service markets. It has also seen a
4.9 point decrease in its score since 2012 (highest in the EU). The market
scores lowest in the EU in terms of overall consumer satisfaction, and 2nd
lowest on comparability of offers while the incidence of problems is the
highest in the EU.
Consumer
satisfaction with electricity services was down slightly in 2012, with gas
services steeply below EU27 average[264].
Consumers can turn to both HEA and the Hungarian Authority for Consumer
Protection (HACP) with their complaints. These institutions also provide
dispute settlement opportunities. 
Since 2008, the
legislation recognises vulnerable consumers on a social and on a health-related
basis. Depending on their category vulnerable consumers may benefit from
deferred payment, prepayment options, individual assistance to help consumers
understand their bills, consumers with disabilities whose life or health is
directly jeopardized if disconnected from the electricity supply system,
including any disruption in service, may not be disconnected in case of late
payment or non-payment of charges, etc. 
Infrastructure
Hungary has a
robust infrastructure both in electricity and natural gas sectors. Due to
important utility rate cuts in 2013 and extraordinary taxation on energy
infrastructure, companies are dissuaded from making further investments.
Investment levels within the electricity and gas sectors have decreased, and
some non-essential assets have been mothballed. Development of infrastructure
has been limited to state-owned actors (primarily MVM) mainly with the support
from EU funds. 
The Hungarian
authorities should ensure a proper and timely adoption of the measures stemming
from Regulation 347/2013 on the trans-European energy infrastructure, including
the establishment of the one-stop-shop for Projects of Common Interest (PCIs)
(due by 16 November 2013), and other measures foreseen for 2014 and 2015,
including the publication of the manual on the permit granting process for
project promoters, and the adoption of legislative and non-legislative measures
streamlining the environmental assessment procedures.
Electricity
Hungarian
electricity infrastructure is relatively strong, containing robust
interconnections (equal to 30% of domestic installed capacity) with the
neighbouring countries. The Hungarian network facilitates North-South transit
flows between Central-Europe and the Balkans. It is involved in five PCIs under
the guidelines for trans-European energy infrastructure: Two new 400kV
interconnections with Slovakia are planned for 2018 and a 3rd one
for 2021. Negotiations on a similar interconnection with Slovenia are under way
and planned to be commissioned in 2016.
Gas
Hungary has
almost finished its major interconnectivity programme launched in 2009.
Interconnections with Romania and Croatia were commissioned in 2010 and 2011.
It is involved in seven PCIs on the 2013 list. Negotiations about reverse flow
in the former case (from Romania to Hungary, PCI), as well as on the HAG
pipeline (from Hungary towards Austria) are under way. Construction of the
Hungary-Slovakia pipeline is also under way (PCI) and has received funding from
the European Energy Programme for Recovery from an amount of up to EUR 30
million. The Hungarian section of the South Stream pipeline is in the planning
phase. Other PCIs with planned commissioning dates after 2017 (altogether five)
and some minor improvements to facilitate better management of internal flows
have been significantly postponed or cancelled due to the deteriorating
investment climate.
Security of
supply
Efforts in
diversification of supply continue in both the electricity and gas sectors.
Both trends rely on favourable regional economic processes and articulated
policy efforts. 
Electricity
Electricity
imports from European markets are growing due to the phasing-out of domestic
gas power generation. Cross-border capacities are adequate both for imports and
North-South transit towards the Western Balkans. These achievements were
fostered by the Czech-Slovak-Hungarian market coupling in autumn 2012, which
resulted in increased price convergence towards regional markets and decreased
price volatility on the domestic market.
Gas
Natural gas
imports from Austria grew due to favourable price conditions, putting
considerable pressure on Take-or-Pay clauses in the long-term contract with
Gazprom. Increasing interconnectivity is one of the policy goals, reiterated by
the National Energy Strategy. Romanian and Croatian interconnectors were built
prior to 2012, but remained underutilised. At the same time imports from
Austria were constrained by scarce pipeline capacity (4.6 bcma) in 2012.  The
construction of Hungarian-Slovak interconnector (max. capacity 5 bcma) in 2015
will further diversify transportation routes. 
Key indicators 
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 32 || Number of entities bringing natural gas into country || 20 
 Number of main power-generation companies || 4 || Number of main gas entities || 4 
 Market share of the largest power-generation company || 47.10% || Market share of the largest entity bringing natural gas || 32.91% 
 Number of electricity retailers || 43 || Number of retailers selling natural gas to final customers || 30 
 Number of main electricity retailers || 4 || Number of main natural gas retailers || 6 
 Switching rates (households) || 1.6% || Switching rates for gas (households) || 1.5% 
 Regulated prices for households – electricity || Yes || Regulated prices for households – gas || Yes 
 Regulated prices for non-households – electricity || Yes || Regulated prices for non-households – gas || Yes 
 HHI in power-generation market || 2,296.85 || HHI in gas supply market || 1,494.26 
 HHI in electricity retail market || 1,584.38 || HHI in gas retail market || 1,245.89 
 Electricity market value[265] (bn€)    || 2.758 || Gas market value15 (bn€) || 2.327 
 Installed generation capacity (MW) || 9,551 ||   ||   
 Peak demand (2012, MW) || 6,016 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Ireland
Key issues
Irish
authorities and their Northern Irish counterparts should continue efforts to
align the SEM market design with the European target model. The TSO
certification process needs to be completed to ensure compliance with the
Electricity Directive[266].
Efforts for the
diversification of its gas supplies should continue as power generation relies
heavily on gas imports from the UK and both interconnectors experienced outages
in winter 2012/13. The limited sourcing options have also resulted in the lack
of a liquid gas wholesale market (trading is in the highly liquid UK market instead).
Gas field development, greater storage and LNG capacity have all been proposed,
but developments keep being delayed. A revision of the permitting process for
these projects may help ensure they can be developed more rapidly.
Ireland should
continue developing networks and systems to accommodate a large proportion of
wind generation, which is particularly challenging in a small system. 
Retail market
competition in the case of gas remains below the required level for retail
price deregulation while in electricity the incumbent's market shares remain
high. Further efforts are required to improve competition in the retail sector
and encourage customers to switch. 
General overview
Energy
consumption in 2012 (14.0 Mtoe) was based largely on fossil fuels, notably
petroleum products, natural gas, and to a lesser extent solid fuels. The
contribution from renewable energy sources was less significant in the overall
energy mix at 7.2%.[267]
The 2020 renewable target for the energy sector is 16%, which is lower than the
EU-27 average (20%). 
Figure 1:
Gross inland consumption mix 2008 – 2012 (source: Eurostat)
 
The power
generation mix in 2011 (27.5 TWh) remained dominated by gas-fired power
generation (with a share of 54.2%) and solid fuels (25.2%). The renewable share
of power generation increased to 19.8% and cogeneration[268]
provided 7.1% of the total electricity generation in 2011.[269]
For 2012 the estimated electricity fuel production mix in Ireland is as below –
gas continues to be the biggest fuel source, with renewable generation (mostly
wind) now accounting for approximately 20% of the mix in Ireland.
Figure 2:
Gross electricity generation mix 2008 – 2011 (source: EU Energy in Figures –
Pocketbook 2012 and 2013)
Regulatory
framework
General
In January 2012,
the European Commission referred Ireland to the European Court of Justice for
failure to adopt EU gas market rules. This was resolved in 2012, when the
access conditions to the Irish gas network at the Moffat Interconnection Point
and the South-North gas pipeline were amended to include a reverse flow.
In January 2014,
Ireland was referred to the European Court of Justice for failing to fully
transpose the EU’s renewable energy directive. The aspects of the EU directive
not yet transposed include the commitment that 10% of all transport energy
would come from renewable sources by 2020, the management of grid access for
renewable electricity and sustainability criteria for biofuels and bioliquids.[270]
An infringement
procedure for partial transposition of the Third Energy Package Electricity
Directive is still on-going and has been referred to the Court of Justice of
the EU in February 2014. Ireland had failed to adopt provisions related to
unbundling of transmission system operators.[271]
National Energy Regulator
The Commission
for Energy Regulation (CER) is Ireland’s energy regulator with a range of
economic, safety and customer functions. In 2014 the CER was also appointed as
Ireland’s economic water regulator. The CER’s economic responsibilities in
energy are to regulate the Irish electricity and natural gas sectors. As part
of this role, CER jointly regulates the all-island wholesale Single Electricity
Market (SEM) with its counterpart in Northern Ireland, the Utility Regulator
(NIAUR) as part of the SEM Committee. The Committee consists of three NIAUR
representatives, three CER representatives, an independent member and his
deputy. 
The number of
staff at CER is currently about 90, though many of these staff works in
non-energy economic areas, for example energy safety and water. The CER’s
actual expenditure in 2012 was EUR 10.8 million across the range of its
functions.
Unbundling
ESB owns the
electricity transmission network assets and owns and operates the distribution
network. EirGrid is responsible for the operation and development of the
transmission system. ESB and Eirgrid are both state-owned. EirGrid has been
certified as an independent transmission system operator for Ireland in 2013.
The certification followed the decision of the European Commission[272]
that the arrangements in place, if effectively implemented; clearly guarantee
more effective independence of the TSO than would be the case under the other
unbundling options[273].
However, to ensure their effective implementation and as set out in both the
European Commission's and CER's decisions, CER now needs to monitor and assess
these arrangements. CER expects to receive an application from EIL (East-West
Interconnector Ltd) in due course for certification of the East-West
interconnector between Ireland and Britain.
Bord Gáis
Éireann is a vertically integrated state owned company, with both transmission
and distribution gas infrastructure (Bord Gáis Networks) and retail supply of
gas and electricity (Bord Gáis Energy), although it has no interests in
production activities. The system operator Gaslink is an independent subsidiary
of Bord Gáis Éireann.
In 2010, BGE
confirmed its intention to adopt the “Independent Transmission Operator model”
by amalgamating Gaslink and Bord Gáis Networks, to form a new independent
subsidiary. In 2013, CER certified BGE as an ITO subject to the completion of
outstanding work items.[274]
The Irish Government is in negotiations to sell the retail arm of the business,
and in December 2013 they announced their preferred bidder: a consortium of
Centrica, Brookfield Renewable Power and iCON Infrastructure[275].
The State will retain ownership of the gas network (both transmission and
distribution). Following the transaction, Bord Gáis Éireann will be fully
ownership unbundled.
Wholesale markets
Electricity
Since 2007, the
SEM has been the electricity market for Ireland and Northern Ireland. The SEM
includes a centralised all-island gross mandatory pool market. All electricity
is bought and sold through a market clearing mechanism. Generators receive the
System Marginal Price (SMP), payments through a capacity mechanism and
constraint payments. 
SMP closely
follows the gas price, since gas is the key fuel for electricity generation. In
recent years, the average SMP fell from over EUR 80/MWh in October 2008 to
under EUR 40/MWh for most of 2009, and then increased to over EUR 50/MWh in
2010 and EUR 60/MWh in 2011 and 2012. [276]
To help ensure
that there is no abuse of market power, the Regulatory Authorities’ Market
Modelling Group has the power to require any market participant deemed able to
independently influence market prices to issue “Directed Contracts”. Currently,
only ESB Power Generation is required to sell Directed Contracts (2013)[277]
since they have circa 45% share of the SEM spot market. Without action the spot
market would be quite highly concentrated; Directed Contracts are set to
achieve a concentration level of 1.150.
The close
relationship between SMP and the biggest fuel input (gas) is an indication that
there has been no significant exercise of market power in SEM. 
The Moyle and
East-West interconnectors make capacity available through explicit long-term,
daily and intraday auctions. “Use-it-or-sell-it” conditions apply to long-term
capacity. 
European market
integration creates some unique challenges for Ireland. The EU Target Model was
not designed with centralised pool markets like the SEM in mind. The more
common European market design is decentralised bilateral trading with
self-dispatch and the Target Model generally reflects this. Therefore the
change required to implement the Target Model with SEM is substantially greater
than for most other Member States. ACER and ENTSO-E therefore proposed to
include for Ireland a two year transitional period in the Network Code on
Capacity Allocation and Congestion Management (CACM). The SEM Committee has
committed itself to implementing the Target Model by the end of 2016. This
commitment is not only based on compliance with EU legal requirements. The SEM
Committee views the implementation of the Target Model as a positive
development that will bring significant benefits, especially in light of the
developments that have occurred since the creation of the SEM in 2007. These
include increased interconnection with the market in Great Britain, increased
generation from renewable resources and the potential for more active
involvement of the demand side in market arrangements.[278]
Gas
Ireland
currently sources most of its gas from Great Britain. Great Britain provided
91% of Ireland’s gas demand in 2012/13.[279] There is
production at the Kinsale and satellite fields, but it is declining. The
Southwest Kinsale Gas Field was adapted for gas storage in October 2001. 
In the 10 year
forecast, the Irish gas market is expected to continue to be heavily reliant on
interconnection with the UK market for the foreseeable future, and gas demand
is forecast to rise by 12% over the period to 2021/22.[280]
The capacity limits of Moffat are expected to be approached in 2014/15 and any
subsequent years that Corrib is delayed. Bord Gáis Networks and Gaslink have
recommended reinforcements in Scotland to improve capacity, and the EU has
identified this reinforcement project in the UK as a potential “Project of
Common Interest” in improving supply to Ireland. To decrease Ireland's dependence
on import from Britain, potential new sources of supply will include the Corrib
gas field, which is currently expected to begin commercial flows in 2015, and
the Shannon Liquefied Natural Gas (LNG) terminal (also a “Project of Common
Interest”), which could become operational in 2017. Unfortunately development
of both projects has been significantly delayed due to planning permission
issues with the Corrib field and disputes over levies that Shannon LNG should
pay (on this latter issue, the High Court in Ireland found in favour of the
CER). 
Most gas for
Ireland is sourced from Great Britain's National Balancing Point (NBP) which is
characterised by high levels of liquidity. Trades in Ireland can take place at
a notional balancing point called the Irish Balancing Point (IBP), however the
IBP is extremely illiquid. Elements of the revised guidelines on Congestion
Management Procedures (CMP[281])
were implemented on the GB-Irish interconnectors on 1 October 2013 (some other
elements remain to be implemented), and the network code on Capacity Allocation
Mechanisms (CAM[282])
is required to be implemented by November 2015.[283]
Since 2008, the two regulators on the island (CER and NIAUR) have been working
together to develop Common Arrangements for Gas (CAG). This would allow the gas
transmission systems in Ireland and Northern Ireland to operate on an
all-island basis.[284]
However, there have been challenging issues raised including physical capacity
limitations to the operation of a single physical balancing regime, so
implementation has been delayed.
Retail markets
Electricity
In electricity,
Electric Ireland continues to be the largest supplier in terms of customers
across all segments and in terms of energy supplied in the domestic
(residential) and Large Energy User (LEU) markets. The domestic market share
(MWh) of Electric Ireland is just under the threshold at which it was
deregulated at 60%, while CMP measures introduced in 2013 will require review
to ensure that they remain compatible with CAM rules when introduced in 2015.  
Figure 3:
Electricity price change by component 2008 – 2013 (source: Eurostat, energy
statistics)
Gas
The incumbent
supplier in the gas retail market is Bord Gáis Energy, who is the largest
supplier. The Irish gas market has not yet been price deregulated as CER judge
that Bord Gáis is still in too dominant a position (January 2014). The
threshold market shares for deregulation are 60% with rebranding and the 55%
without rebranding.  Although the market is close to these levels, it has not yet
reached that point, suggesting that retail competition is still too low in
Ireland.
CER is leading
the implementation of the smart meters roll-out. Phase 1 consisted of trials
and cost benefit analysis carried out from 2008 to 2011. ESB Networks installed
10,000 meters and provided over 1000 in-home displays as part of the smart
metering trial.[285]
In July 2012, CER announced its decision to approve the rollout of smart
meters. Since then, CER has worked with stakeholders to formally initiate Phase
2. While not yet decided, the roll-out is expected between circa 2016 and 2019.
Consumers
Irish consumers assess the performance of their retail
electricity and gas markets above the EU average with the difference being very
small for the latter (75.1 points compared to 72.0 and 74.6 compared to 74.1[286]),
which corresponds to 13th and 14th place in the EU
ranking. In addition, both markets show a score slightly above the one seen for
the average of all domestic services markets (electricity is in the 14th
position and gas in the 15th position out of 31 markets). While the
performance of electricity market has stayed relatively stable since 2012, the
gas market has decreased its score by 2.3 points. Both markets are assessed
particularly well on the ease of switching (electricity 3rd and gas
5th highest in the EU) and switching gas providers/tariffs is 5th
highest in the EU. [287]
Competition
continued to develop in the electricity and gas retail markets in 2012 and
switching rates were above 10% in both markets. The total number of switches
completed in the electricity market in 2012 was 252,056 (a decline of 25% from
2011 levels).[288]
While good by EU standards, this still means a large number of customers have
never switched. To support switching, CER has set-up an accreditation process
for price comparison websites.[289] 

CER's Energy
Customers Team[290]
acts as single contact point providing consumers with information on
electricity and gas. They also provide a free dispute
resolution service. In 2012 the Energy Customers Team received 3,067 contacts
from customers, an increase of almost 11% on 2011.[291]
The reasons that customers contact the ECT vary, from straightforward requests
for information to complex complaints. Although complex complaints made up just
10% of the customer contacts in 2012, they made up the majority of the team’s
work. 
In 2012, CER set
out the minimum service levels that suppliers must provide their customers
with.  CER has also put obligations on suppliers to ensure that disconnections
are a last resort. Prior to disconnection, all suppliers are required to offer
customers a free Pay-As-You-Go meter.[292]
Infrastructure
The Planning
Board has been appointed as the one-stop-shop (OSS) for the permitting of
energy infrastructure Projects of Common Interest (PCI).
Electricity
The new 500 MW
EirGrid East-West electricity interconnector to the UK began full commercial
operation in May 2013. It received an EU funding of EUR 110 million from the
TEN-E Initiative. Investment in the onshore electricity network has also been
necessary, for the connection of expanding wind power as well as system
security and efficient distribution. 
Ireland has a
grouping process or “Gate“ process for connecting the large number of renewable
generators, and the next round to be developed will be connected under Gate 3
which is intended to help meet Ireland’s 20:20:20 targets from an electricity
perspective – in other words to meet an Irish Government target of 40% of
Ireland’s electricity consumption coming from renewable generation by 2020. The
CER is commencing the process of reviewing the connection and access policy for
renewable and non-renewable generators to the grid, post Gate 3.
CER authorised
over a billion euros of investment in the electricity transmission system over
the years 2011 to 2015.[293]
To facilitate renewables integration and improve flexibility, several PCIs are
on the scope. Some PCIs regard further interconnections with UK (Northern
Ireland and Great Britain), and possibly France; Hydro Storage is also
addressed under PCI scheme in connection to these developments.
Another cluster
of PCIs will facilitate connecting generation from renewable energy sources,
both in Ireland and the UK, such as an offshore interconnected electricity grid
based on renewable resources (wind, wave and tidal, connecting 3200 MW)
consisting of 850 km of HVDC interconnectors with a capacity of 500-1000MW in
the northern area.
Gas
To meet Third
Package requirements, in 2013 Gaslink as TSO has submitted a draft Network
Development Plan[294]
to the CER which was submitted to ENTSO-G. The network plan found that high
pressure transmission system currently have sufficient capacity to meet
forecast gas demand, although the southern part of the network is anticipated
to require reinforcement in the mid-to long term. 
In order to
provide for more flexibility to the gas supply, a cluster of Project of Common
Interest will address implementing of reverse flows between Ireland and UK -as
in Moffat-, increased storage in Northern Ireland and the LNG plant in Shannon.
The need for greater interconnection (through reinforcements in GB) and LNG
investment is highlighted elsewhere in this report.
Security of
supply
CER has a duty
to monitor the security of supply of electricity and can take such measures as
it considers necessary to oblige the regulated companies to take action. Given
the significant reliance on natural gas, CER requires gas generators to hold
fuel stocks for between 3 and 5 days. 
Key indicators 
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 5 || Number of entities bringing natural gas into country || 13 
 Number of main power-generation companies || 5 || Number of main gas entities || 5 
 Market share of the largest power-generation company || 55% || Market share of the largest entity bringing natural gas || 42% 
 Number of electricity retailers || 6 || Number of retailers selling natural gas to final customers || 8 
 Number of main electricity retailers || 4 || Number of main natural gas retailers || 6 
 Switching rates || 10%* || Switching rates for gas (entire retail market) || 10%* 
 Regulated prices for households – electricity || No || Regulated prices for households – gas || Yes 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || Yes 
 HHI in power-generation market || 1,150 || HHI in gas supply market || N/A 
 HHI in electricity retail market || 4,759 || HHI in gas retail market || 4,780 
 Electricity market value[295] (bn€) || 3.207 || Gas market value31 (bn€) || 0.800 
 Installed generation capacity (MW, 2011) || 8,791 ||   ||   
 Peak demand (MW) || 4,589 ||   ||   
 Number of smart meters installed || 10,000 ||   ||   
* Domestic 10% across gas and
electricity
Italy
Key issues
Competition in
the electricity market has been enhanced by the development of the electricity
network and the excess of supply caused by demand reduction and growth in
renewables. Despite all this, power prices in Italy are generally still higher
than in other EU member states. 
Increasing
interconnection capacity and developing congestion management rules with
neighbouring markets should be encouraged to allow the secure integration of
renewables and better price alignment with adjacent countries. National
infrastructure capacity should be increased to tackle the North-South
disparities within the country. 
Competition
within the gas sector has improved due to successful unbundling of the TSO and
the implementation of new capacity allocation rules. Nevertheless, the spot
market liquidity is still low. Security of supply at peak periods is limited
due to low flexibility. Access rules to interconnection capacity should be
further developed to avoid contractual congestions.

1.    
General
overview

In 2012, after a
5% decrease, gross energy consumption reached 163 Mtoe. The share of oil
products over the total consumption (37%) fell below the share of natural  gas
(38%) for the first time, while the share of solid fuel and renewables (13.5%)
increased, thus moving Italy closer to achieving the 2020 renewables target  of
17%.
Figure 1: Gross
inland consumption mix 2008 – 2012 (source: Eurostat)
Figure 2:
Gross electricity generation mix 2008 – 2011 (source: EU Energy in Figures –
Pocketbook 2012 and 2013)

 Regulatory framework

General
A new national
energy strategy (Strategia energetica nazionale, SEN) was
approved at the beginning of 2013[296]
and confirmed by the latest Italian Government. Infrastructure development,
import reduction and further integration into the European single market are
among the primary goals for the electricity sector.  Meanwhile, the natural gas
sector focused on continuous development and integration into the European gas
market, with the final aim of Italy becoming the primary hub in southern
Europe.
In 2012,
Legislative decree 28/11 came into force, reshaping incentives for renewables:
the Green Certificates mechanism was replaced by feed-in tariffs, with caps to
limit overall expenditure and to incentivise capacity.  Auction procedures are
planned for larger plants. 
National Energy Regulator
The  Italian 
National Energy and Water Service Regulatory Authority (Autorità per
l’Energia Elettrica,  il  Gas ed il sistema
idrico), which has been in operation  since  1997,
working in both energy and water services regulation  had 
172 staff  in  2012  with  an  annual budget of EUR 58.5 million. The Authority
collects levies from energy market and water service stakeholders to cover this
budget. 
Unbundling
In the first
half of 2013 the Italian Regulator certified Terna, the main transmission
system operator, under the ownership unbundling regime. There is a total of 138
electricity distributors, 10 of which serve more than 100,000 customers each.
In 2012, the market share of Enel Distribuzione, the dominant operator in
distribution, remained stable at 86% of total volume distributed.
Snam Rete Gas’s
unbundling process from its former parent company (Eni) has been concluded and
it is now certified as an ownership unbundled TSO. In September 2013
Infrastrutture Trasporto Gas was certified as independent transmission
operator. There were 232 gas distributors in 2012, of which 35 served more than
100,000 customers. In 2013, there were five distributors with market share
higher than 5%, with Snam providing almost 23% of market. In the coming years,
the number of gas distributors will be reduced to 177 and each concession will
be auctioned.

 Wholesale markets

Electricity
Competition on
the wholesale market continues to improve: the market share of the four largest
operators decreased by 5%, compared to 2011 (49%). ENEL remains the main market
operator holding 25% of the market (26% in 2011), followed by ENI (9%), Edison
(7.2%) and E.On (4.4%). Further progress was made by small-sized operators
whose collective shares rose to 30.2%[297]. Global national
electricity consumption dropped from 328.2 TWh in 2012 to 317.1 in 2013.[298]

Congestion
management rules were improved as the introduction of market coupling between
Italy and Slovenia brought about tangible benefits, mainly by improving
efficiency in cross-border capacity transmission rights allocation. As a result
of this and a decrease in natural gas prices, a decline of the day-ahead prices
was observed from the end of 2012. Even though Italy remains one of the best interconnected European
countries, the average price of electricity was still above the rest of the
Europe due to the generation park composition by far led by combined cycles gas
fired plants (see Fig. 2).  
Gas
Final gas
consumption continued to decrease, reaching the lowest level since sector’s
liberalisation (70 Gm3 in 2013 against 74.9 Gm3 in 2012).
Net volumes of imported gas fell consequently as well, but Italy’s dependency on gas imports remains high (90%). In 2012, Russia was Italy’s main supplier (35.2%) followed by
Algeria (32.2%).[299]
LNG is imported mainly from Qatar. Most imported gas is
based on long-term contracts, with just 4.6% of the total import purchased on
European exchanges. 
Eni, Edison and
Enel continued to dominate gas supply, increasing their share to a combined amount
of 78.2% (74.3% in 2011) but the concentration remains low (HHI in 2012 below
500). 
Despite rather
low market liquidity (the churn rate of the Italian PSV remained stable at the
2011 level of 2.6) the level of competitiveness was enhanced by early introduction
of congestion management rules at the North border. Prices on the OTC spot
market at PSV, after a 21% increase in 2012, remained largely stable at around
EUR 28/MWh with reduced spread in respect of main European hubs. Products
available at the gas exchange are increasing (the organised forward market was
activated in 2013). 

 Retail markets

Electricity
Due to a
significant downturn in power demand the size of the retail market in 2012
decreased by 4.2% compared to 2011, reaching 264 TWh. Despite the numerous
active suppliers (about 140), the standard offer market remained concentrated,
as 85.4% of the total supply was provided by Enel. The free market was less
concentrated with a combined share of the three main operators (Enel, Edison
and Eni) at 34.3%, of which the leading operator (Enel group) accounted for
20.3%. The competition on the overall retail market was at medium level (HHI
just above 1800) with only two companies having a market share greater than 5%.
In Italy,
consumers that do not choose a supplier remain with a default supplier, the
local DSO, which provides electricity according to a ‘standard offer’. In this
case, the local DSOs buy electricity from the Single Buyer at wholesale market
price. Today the majority (80%) of households and SMEs are still served on the
base of this ‘standard offer’. Other consumers (i.e. other than households and
SMEs) are obliged to find a supplier, but if they cannot find a suitable offer,
electricity is supplied by a Last Resort Supplier, selected through an open
auction. Customers remained relatively active in switching suppliers: 7.6% of
the total number of withdrawal points changed supplier in 2012 (compared to
7.0% in 2011). An independent data hub to support the switching process has
been launched in 2013.
Figure 3: Electricity price change by
component 2008 – 2012 (source: Eurostat, energy statistics)
Gas
In 2012, domestic demands in the gas sector decreased by 9% compared to 2011, with 64.2 Gcm of natural gas sold to the end
market. As the share of the top three sellers (Eni, Enel and Edison) decreased
slightly (from 49% in 2011 to 47.5% in 2012) the market remained concentrated.
Consumers have
been able to choose their own supplier since January 2003. Nevertheless, the
majority (84%) of households and SMEs are still served on the base of this
‘standard offer’. 4.7% of overall gas customers changed supplier in 2012,
representing 45.2% of the total volume of gas consumption. An independent data hub to support the switching process has been
launched in 2013. 
In 2013 the gas
retail market regulatory framework in Italy has been redefined. The new
balancing market, introduced in 2011, decoupled the price from petroleum
products, which led to a renegotiation of prices and quantities.  This reform
has incentivised the wholesale spot market and has brought prices more in line
with those of other European markets. The aim was to pass on the benefits
deriving from wholesale spot commodity prices to consumers through a reform of
the economic terms for the "servizio di tutela gas" (standard
offer for domestic consumers).  
Figure 4: Natural gas price change by
component 2008 – 2012 (source: EC, EPCR metadata)

 Consumers

Italy has
implemented several instruments to protect consumers and promote informed
choices. The NRA acts as single point of contact providing online information
to consumers through the Consumers' Atlas as well as an online price
comparability tool. Italy has undertaken specific institutional communication
campaigns. In 2013, the NRA set up a new Energy Customer Conciliation Service[300] parallel to the existing joint dispute resolution procedure
protocols.
In 2012, the
number of cases processed by the Energy Help-Desk [301]
decreased by 6% when compared with 2011 and numbering almost 36,000, submitted mostly
by residential customers. The NRA has also adopted a Resolution on the
transparency of billing. Other forms of protection are the presence of a last
resort supplier and of social tariffs available for vulnerable customers who
suffer from financial hardship or serious health conditions[302]. The number of families who have benefited from social tariffs is
957,192 for the electricity sector and 609,301 for the gas sector[303].

The assessment
of both retail electricity and gas markets in Italy is the 5th lowest
in the EU and well below the EU average (65.7 and 71.0 points compared to 72.0
and 74.1, respectively). In addition, the score of both markets is well below
the average observed for 31 domestic services markets (almost 8 points for
electricity and over 2 points for gas), with 30th and 21st
position in the ranking. While the performance of gas market has stayed
relatively stable since 2012, the electricity market has seen a considerable
(4.2) decrease in score. The electricity market scores below the EU average on
all indicators (with the third lowest score on trust in providers) with the
exception of switching provider or tariff plan with the existing provider
(which is 4th highest in the EU).  Likewise gas services are
assessed below EU average on all the components with the exception of switching
provider or tariff plan (with the 4th lowest EU score on overall
consumer satisfaction and 4th highest incidence of complaints).
[304]

 Infrastructure

The Italian
authorities should ensure a proper and timely adoption of the measures stemming
from Regulation 347/2013 on the trans-European energy infrastructure, including
the establishment of the one-stop-shop for Projects of Common Interest (PCIs)
(due by 16 November 2013), and other measures foreseen for 2014 and 2015,
including the publication of the manual on the permit granting process for
project promoters, and the adoption of legislative and non-legislative measures
streamlining the environmental assessment procedures.
Electricity
Various upgrades
of the internal grid were completed in 2012 allowing better integration of
different market zones and improving the transit of electricity throughout the
critical South-Central-South section. Future investments include 19 Projects of
Common Interest under the guidelines for trans-European energy infrastructure,
mainly interconnecting Italy with France, Switzerland and Austria and the
necessary internal reinforcements. Altogether such investments will ease the
grid constraints and reduce differences between price zones. The SAPEI project
doubled the existing interconnection capacity between Sardinia and the Italian
mainland thus contributing to resolving congestion issues in that area. A
sub-sea transmission cable between Sicily ("Sorgente-Rizziconi") and
the continent is still under construction; entry into operation is expected in
2015. The Italian TSO is among a small number of
entities worldwide that have decided to implement electricity storage pilot
projects on a large scale to manage congestion caused by renewable generation. The electricity sector roll-out of the smart meters is almost
complete, ENEL has installed over 32 million smart meters.
Gas
The new offshore
LNG regasification terminal in Livorno was completed at the end of 2013.
Despite the third party access exemption obtained, the terminal asked for
admission to the regulated system. Another one in Porto Empedocle, Sicily,
started construction activities in 2013.
Snam Rete Gas is
developing a Project of Common Interest within the North-South East Corridor to
allow future flows from the Southern Gas Corridor project, the construction of
Trans Adriatic Pipeline transporting Azeri gas from the Turkish border to the
South of Italy through Greece and Albania will start in 2015. It also has a PCI
ensuring reverse flow capacity towards the north western markets and a planned
pipeline for Algerian gas through Sardinia.  
The AEEG has
proposed updating[305] 
the previously established[306]
timeframe for the mass roll-out of smart meters in the gas sector, delaying it
by 2018.

 Security
     of supply 

Electricity
The Italian
system is characterised by substantial surplus of generation capacity which
currently stands at over twice the peak load. The excess of available capacity
has been enhanced by a very large amount of new renewable generation capacity
commissioned in the last two years. A capacity market mechanism is
expected to substitute the existing temporary scheme of capacity payment.
According to the proposed scheme, the TSO will purchase guaranteed options from
the generation companies (physically backed call options) for the amounts
required to ensure system adequacy, however, implementation is still awaiting
final approval. 
Gas
Despite the
excess of overall import capacity Italy’s reserves at peak daily demand are
rather tight. Given the high (and increasing) share of residential consumption
over the total demand (around 30%), the daily demand is very sensitive to
temperatures. The new storage site of Bordolano (Stogit) is completed and
expected to go on online in 2015, meanwhile the construction of the San Potito
e Cotignola (Edison Stoccaggio) and Cornegliano (Italgas Storage) sites have
been delayed and the concession for Rivara (Independent Resources plc) was
cancelled. Because of the high share of gas fired generation capacity a
shortage of gas may create flow problems in the electricity sector. The
emergency plan for the gas system, in line with Regulation 994/2010 is based on
reactivation of cold reserve oil plants and disconnection of industrial
customers.

 Key
     indicators 
 
 Electricity[307] ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 291 || Number of entities bringing natural gas into country || 85 
 Number of main power-generation companies || 3 || Number of main gas entities || 3 
 Market share of the largest power-generation company || 25% || Market share of the largest entity bringing natural gas || 44.6% 
 Number of electricity retailers || 412 || Number of retailers selling natural gas to final customers || 465 
 Number of main electricity retailers || 2 || Number of main natural gas retailers || 4 
 Switching rates (entire electricity retail market) || 7.6% || Switching rates (entire retail market) || 4.7% 
 Regulated prices for households – electricity || No || Regulated prices for households – gas || No 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || No 
 HHI in power-generation market || 884 || HHI in gas supply market || <500 
 HHI in electricity retail market || 1,865 || HHI in gas retail market || 1,275 
 Electricity market value[308] (bn€) || 39.410 || Gas market value13 (bn€) || 23.110 
 Installed generation capacity (MW) || 124,224 ||   ||   
 Peak demand (MW) || 54,113 ||   ||   
 Number of smart meters installed || 32 mln[309] ||   ||   
*
AEEG updates and publishes every 3 months standard conditions for households
and small enterprises based on wholesale market conditions
Latvia
Key issues
Improper
functioning of the wholesale electricity market is the key issue for the power
sector, along with the necessary renewal of outdated infrastructure. Electricity connections to Estonia are inadequate
and challenges remain as regards smooth functioning of the regional electricity
market. Active participation of Latvenergo to Nord Pool Spot market is
necessary. The electricity retail market is not developing and the phasing out
of regulated tariffs is one of the key measures to be implemented. 
For gas, the
focus needs to be on creating a functioning market. Crucial infrastructures for
the diversification of supply need to be put in place. The Latvian Parliament
adopted the amendments to end the emergent market derogations on 13 March 2014.
However, its enforcement was postponed until 2017, meaning that the monopoly in
the gas markets de facto continues. Unbundling of DSOs would support the
transition as Latvia’s gas infrastructure is integrated into the Baltic and EU
gas systems. Latvia should urgently
develop and implement clear rules for third party access to the Incukalns
storage.
General overview
Latvian national
gross final energy consumption in 2012 amounted to 4.538 Mtoe[310].
The energy consumption mix has the highest renewables share (35.8%) in all
three Baltic States[311].
The main renewable sources in Latvia are hydropower and biomass. The country’s
renewables target for 2020 is 40%, which is twice as high as the EU average of
20% and Latvia is currently on track to achieve it. Natural gas, oil and
petroleum products also played an important role in gross energy consumption in
2012 with a share of 30% and 27% respectively (Figure 1)[312].
Figure 1:
Gross inland consumption mix 2008 – 2012 (source: Eurostat)
In 2012, total
power generation reached 6.17 TWh[313]
with most derived from natural gas (55.1%). The remaining electricity
production came from renewables[314].
The vast majority of electricity produced from RES today comes from the Daugava
hydropower plants cascade, which consists of three large HPPs and in total
generated 3.63 TWh of electricity, which constitutes 53% of the total
electricity output in 2012[315].  

Figure 2:
Gross electricity generation mix 2008 – 2012 (source:
Eurostat)
Regulatory
framework
General
Latvia was
granted a derogation from the Third Energy Package as an emergent gas market.
In March 2014 amendments to the Energy Law were adopted in the third and final
reading. The gas market in Latvia will not be opened before April 2017, but a
gradual liberalisation of the gas market is implemented in several stages
starting from 4 April 2014. The liberalisation of the electricity retail market
envisaged for 1 April 2014 was postponed until 1 January 2015. The market for
industrial users is fully liberalised since November 2012. 
National
Energy Regulator
The Latvian
national regulator, the Public Utilities Commission (PUC), is a multi-sector
regulator. PUC employed 120 staff members (21 of them responsible for energy)
in 2013 and had a budget of around EUR 4.7 million.
Unbundling
The electricity
TSO is Augstspriegumatīkls JSC. Legally unbundled since 2005, it became an
independent company in January 2012. The PUC has certified
Augstspriegumatīkls JSC as an independent transmission system operator.
The main DSO is Sadalestīkls JSC and there are another ten smaller local
electricity distribution companies. 
The gas TSO is Latvijas Gāze with E.ON and Gazprom owning the
majority of its shares. Latvia has an explicit derogation from the Gas
Directive exempting it from unbundling rules (Article 49). The certification of
this gas TSO has therefore not taken place yet. 
Wholesale markets
Electricity
The dominant
electricity producer, Latvenergo AS, produced 89% of all power in 2012 and it
was the only company with market share exceeding 5%. In total there were 17
companies in 2012,   representing at least 95% of electricity generated[316].
In 2012, the total installed capacity of power plants
in Latvia was 2,576 MW. Of this total, hydropower
plants had an installed capacity of 1,576 MW, while combustible fuels power
plants contributed 964 MW. The peak load was 1,368 MW[317]and
electricity consumption increased by 1.6%, to 7,459 TWh[318].
In November 2012, the electricity market for industrial users was
fully liberalised. Latvia joined the regional Scandinavian – Baltic Nord Pool
Spot market for electricity contracting in June 2013. However, performance was
not as good as anticipated. The interconnector with Estonia was often
congested, contributing to price spikes in the Latvian/Lithuanian price area.
The largest electricity producer Latvenergo AS did not participate, which
resulted in low activity on the spot market.
In 2013 the
majority of demand was met by domestic generation (80.3%) and the remainder was
imported (19.7%)[319].

Gas
Latvia does not
have its own natural gas resources and all gas consumed is imported from the
Russian Federation. Latvijas Gāze JSC is the only player in the wholesale
gas market with a market share of 100%[320]. In 2012 the
average price of imported gas was EUR 31.7/MWh[321].
Total
consumption of gas in Latvia in 2012 was 1,508 mcm, a decrease of 6%, compared
to 2011[322].
The reduction was due to lower heating demand (including cogeneration) and
greater use of biomass.
Gas imported
from Russia during the summer is stored at Inčukalns underground gas
storage (UGS) facility. During the winter Latvia satisfies all its natural gas
needs from Inčukalns UGS, which is also used to supply Estonia and to a
lesser extent Lithuania.
Retail markets
Electricity
In 2012, most
customers (90%) bought electricity from Latvenergo, which imports and exports
electricity, and also fulfils the functions of the supplier of last resort as a
public trader. Latvenergo supplied 6,708 GWh of electricity to Latvian
consumers[323],
while the other five electricity retail market participants[324]
supplied the remaining 10%.
Power prices for
households and industrial consumers have been increasing in recent years,
mostly due to an increase in commodity prices.
Figure 3: Electricity price change by component
2008 – 2013 (source: Eurostat, energy statistics)
It is possible
to switch suppliers for industrial consumers, and in 2013 the switching rate
for non-household customers was 15%.[325] There are no
legal provisions in place for smart metering and a cost-benefit analysis has
not been conducted.
Gas
As in the
wholesale market, Latvijas Gāze JSC is the only player in the gas retail market
in Latvia. Switching supplier is therefore not an option. The price is indexed
to oil derivatives.
Figure 4: Natural gas price change by component 2008 – 2012
(source: EC, EPCR metadata)
Until the end of
2013 there was no formal decision and no plan to roll-out smart meters in the
natural gas system.
Consumers
Latvian consumers' assessment of the performance of
their retail electricity market in 2013 is more than 3 points below the EU
average (68.6 vs. 72.0), corresponding to 21th place EU-wide. The
market is also around 10 points below the average for domestic services markets
(second worst among 31 markets). The retail gas market is assessed somewhat
above the EU average (75.4 vs. 74.1), corresponding to 13th place
EU-wide, but has seen a decrease of 2.2 points[326] since 2012. For the retail electricity
market, the country scores the lowest in the EU on comparability, 2nd
lowest on ease of switching and choice and 5th lowest incidence of
switching (provider or tariff plan). As for gas services, the country is in the
4 last positions of the EU ranking on comparability, choice of providers,
incidence of switching  and ease of switching while, on the positive side, the
incidence of problems is the 5th lowest in the EU and the incidence
of complaints is second lowest.
[327]
According to the
Law on Regulators of Public Utilities, PUC deals with customer complaints.
Consumers can also approach the Consumer Rights Protection Centre for
out-of-court dispute settlement. No particular actions to improve consumer
access to information about the market and/or their rights have been taken
recently. There is no clear definition of vulnerable consumers yet, but plans exist to introduce several measures to inform and
support vulnerable consumers.
Infrastructure
The Latvian authorities
should ensure a proper and timely adoption of the measures stemming from the
TEN-E Regulation, including the establishment of the one-stop-shop for Projects
of Common Interest (PCIs) (due by 16 November 2013), and other measures
foreseen for 2014 and 2015, including the publication of the manual on the
permit granting process for project promoters, and the adoption of legislative
and non-legislative measures streamlining the environmental assessment
procedures.
Electricity
There are
currently no bottlenecks between Latvia and Lithuania. However, the
interconnector between Latvia and Estonia is regularly congested. For
historical reasons, the Latvian electricity system is heavily interconnected
with the networks of Belarus, Russia, Estonia and Lithuania. 
In March 2013,
the three Baltic States’ TSOs – Litgrid (Lithuania), AugstspriegumaTīkls
(Latvia) and Elering (Estonia) – signed an agreement on the principles of
calculation and allocation of the cross-border capacity within the Baltic
States and with third countries. The agreement contributes to a successful
integration of the Baltic electricity markets.
As part of the
NordBalt project, funded by the EEPR, the interconnector between Lithuania
and Sweden and the transmission network in Latvia and Lithuania are reinforced,
improving the supply reliability in the region. The project is expected to be
completed by the end of 2018. The third interconnector between Latvia and
Estonia, a Project of Common Interest under the guidelines for Trans-European infrastructure,
will enhance security of supply, effectiveness of operation and competitiveness
of energy markets in the entire Baltic region. The project is scheduled to be
completed by 2020, but as this is the project that is expected the biggest
beneficial impact on wholesale market functioning Latvia should assess ways to
accelerate its construction.  
Gas
Latvia is
dependent on gas imports from Russia for all of its gas consumption with no
alternative suppliers or supply routes. The Latvian gas market is isolated from
the rest of the EU and only has interconnection with Lithuania and Estonia. 
The enhancement
of the Latvian-Lithuanian interconnection was realized in early 2013 by
increasing cross-border capacity to more than 6 mcm/day in both directions. Moreover,
a further enhancement to 12 mcm/day on a 40-kilometer section between Daugmale
and Iecava is currently planned and has been granted PCI status under the
guidelines for trans-European energy infrastructure. At the same time, the
enhancement of the Estonia-Latvia interconnection is also part of the first PCI
list.
Security of
Supply
Electricity
Currently, in
the event of failure of large generating units in Latvia and Lithuania,
security of supply for the entire Baltic Region could be in danger. The
infrastructure investments under construction will significantly increase
security of supply, in particular the third interconnector to Estonia. In
particular, the investments will have a positive effect on the voltage and
stability level under stressed network conditions.
Gas
In 2012, the
total consumption of natural gas in Latvia represented about 43% of
transmission capacity, which means the natural gas delivery system is never
over-loaded and can ensure a stable supply of natural gas to all consumers. According
to 2012 data, the N-1 criterion equals 188.6%, implying that coverage of peak
demand or supply deficit is ensured from an infrastructure perspective.
Gas supply is
mainly secured by the Inčukalns UGS, where 4.47 bcm of gas can be stored
(of which 2.32 bcm is active or regularly extracted). The capacity of the
Inčukalns UGS can be increased to 3.2 bcm of active gas. 
Key indicators
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 17 || Number of entities bringing natural gas into country || 1 
 Number of main power generation companies || 1 || Number of main gas entities || 1 
 Market share of the largest power generation company || 89% || Market share of the largest entity bringing natural gas || 100% 
 Number of electricity retailers || 6 || Number of retailers selling natural gas to final customers || 1 
 Number of main electricity retailers || 2 || Number of main natural gas retailers || 1 
 Switching rates (entire electricity retail market) || 0% households, 15% non-households || Switching rates for gas (entire retail market) || 0 
 Regulated prices for households – electricity || Yes || Regulated prices for households – gas || es 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || no 
 HHI in power generation market || 7,932 || HHI in gas supply market || 10,000 
 HHI in electricity retail market || 8,196 || HHI in gas retail market || 10,000 
 Electricity market value[328] (bn€) || 0.512 || Gas market value28 (bn€) || 0.165 
 Peak load (MW) || 1,885 ||   ||   
 Installed generation capacity (MW, 2011) || 3,691 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Lithuania
Key issues
Lithuania remains highly dependent on electricity
imports, particularly from the Russian Federation. Interconnectors with Sweden
and Poland have to be completed so as to decrease the generation deficit and
foster security of supply and wholesale market functioning. Lithuania should
continue to promote competition
through better integration of the Baltic energy markets.
Lithuania relies on Gazprom as its single source of
gas supplies. Diversification of gas supply will be introduced by an LNG
terminal in Klaipeda, expected to start operating in December 2014. It is
important that the planned interconnector with Poland (GIPL) is also
constructed in order to further diversify gas supplies to the country and the
larger Baltic region. 

 General
     overview

The Lithuanian national gross final energy consumption
in 2012 was 7.084 Mtoe[329]. It was based largely on natural gas (37%)
and oil (35%). The renewables share increased from 18.0% to 21.7% between 2008
and 2012, and the country is currently very close to reaching the 2020 national
renewable energy target of 23%[330].
Figure 1: Gross inland consumption mix 2008 – 2012
(source: Eurostat)
In 2012, the total power generation was 5.043 TWh[331], the largest part of it was derived from
natural gas (63%). The major change in power generation occurred in 2010, when
Ignalina Nuclear Power Plant was decommissioned and power generation in the
country dropped by 63%. As a result Lithuania became dependent on electricity
imports (in 2012 electricity import was 169.8% higher than gross inland
production)[332]. In 2012 Lithuania’s electricity demand
increased by 5.9% in comparison to the 2011 level[333].
Figure 2: Gross electricity generation mix
2008 – 2011 (source: EU Energy in
Figures – Pocketbook 2012 and 2013)
Cogeneration[334]
represented 37.5% of gross electricity generation in 2011[335]. In 2012 gross inland consumption of
natural gas in Lithuania was 2.65 Mtoe[336].

 Regulatory
     framework

General
Lithuania has by
now fully transposed the provisions of the Third Energy Package.
National Energy Regulator
In 2013, the Lithuanian Regulator, the National
Commission for Energy Control and Prices (NCC), employed 83 staff members and
an annual budget of almost EUR 2.78 million in 2013. 
Unbundling
In the electricity sector, the ownership unbundling
model was chosen for unbundling the state-owned TSO Litgrid AB, making use of
the possibility provided for in Article 9(6) Electricity Directive to implement
the ownership unbundling model by means of separate public bodies within the
State.  Litgrid AB received its final certification decision by NCC in August
2013. In 2013, there was one major DSO (LESTO AB) and six other smaller
electricity DSOs.
The vertically integrated gas company Lietuvos Dujos
AB submitted its unbundling plan to the NCC on 31 May 2012. On 1 August 2013 a
newly established, legally unbundled company, Amber Grid AB, commenced
operations as a TSO. Certification is to follow after implementing full
ownership unbundling which is to take place by 31 October 2014. The planned
implementation of ownership unbundling has been challenged by Gazprom
(co-shareholder of Lietuvos Dujos AB and Amber Grid) and the case is currently
in arbitration. In 2013, in the gas distribution sector Lietuvos Dujos AB had a
market share of over 99%. Five other small gas DSOs were also active in the
market.

 Wholesale
     markets

Electricity
The closure of Ignalina NPP in 2009 created
opportunities for new suppliers on the market with the bulk of the shortfall
being replaced by imports from Russia . In 2013, there were six main
electricity generating companies with 24 generating companies representing at least
95% of the national net electricity generation[337]. 
The total installed capacity of the power plants in
2013 increased by 1.2% up to 4,304 MW, including an increase in thermal power
plants and renewables[338]. Final electricity consumption decreased
by 0.13%, from 9.659 TWh to 9.646 TWh[339]. 
The Lithuanian Power Exchange operated by Baltpool
commenced operation in Lithuania in January 2010. Trade is based on the Nord
Pool Spot model since June 2012 when the administration of Lithuanian Power
Exchange has been transferred to the power exchange operator for Nordic and
Baltic countries – Nord Pool Spot AS licensed by the Norwegian energy
regulator, with bilateral exchanges between producers, importers and suppliers.
In 2013, the volume of electricity traded on the Lithuanian electricity market
was circa 7.983 TWh with an average price of EUR 0.0489/kWh[340]. 
Low liquidity and limited interconnection capacity in
the region have caused price spikes to occur in the summer and autumn of 2013.
In the short run, cooperation between the Baltic TSOs is necessary to better
calculate available cross-border capacities. In the mid term the interconnector
with Sweden is essential for better market functioning.
Gas
Lithuania does not have natural gas resources of its
own. All its gas is imported from Russia via a single pipeline from Belarus. On
the upstream gas market Gazprom is the only market player.  Natural gas supply
undertakings have an obligation to accumulate and store the natural gas
reserves sufficient for vulnerable consumers to meet their gas demand in cases
foreseen in Art. 8(1) of EU Regulation No. 994/2010. As a result,
Inčukalns underground gas storage facility in Latvia stores gas reserves
for Lithuanian gas supply companies amounting to 37 mcm on 1 September 2013.   The
new LNG terminal, which is planned to start its operation by December 2014, is
intended to increase competition and security of supply. It will have an
initial capacity of 2bcma which could be expanded to 4bcma.  LNG supplies that
are not immediately consumed are likely to be stored in Latvia as well. For the
Klaipeda LNG Terminal to fully exploit its role as a regional supplier it is
necessary that the transmission grid is expanded, notably on the border with
Latvia.
In 2013, Lithuania imported 2,701.5 mcm of natural gas
which was 18.6% less than in 2012[341]. During 2013, the main players in the gas
market remained unchanged and included Lietuvos Dujos AB, Achema AB, Haupas
UAB, Kaunas CHP Plant and Dujotekana UAB (the only one that purchases gas from
OAO Gazprom via Gas Stream AG LT).
In 2013, the price of the imported gas was on average
5.4% lower than in 2012 and made EUR 359.5/tcm (the average price of the
imported gas in 2012 was EUR 380.2/tcm)[342]. A new gas exchange to organize secondary
trade in natural gas, operated by Baltpool, was launched on 1 March 2012. In
November 2012, NCC issued second gas exchange operator license for UAB GET
Baltic. Trade on the UAB GET Baltic exchange since the beginning of 2013 resulted
in a total traded volume in a 176 deals realized against an average price of
EUR 334,91/tcm[343].

 Retail
     markets

Electricity
In 2013, the independent electricity suppliers
supplied 5,646.0 GWh of electricity to customers; the public supplier AB LESTO
supplied 2,582.7 GWh of electricity to the regulated customers and 478.1 GWh of
electricity to the eligible customers. When 2013, is compared to 2012, the
share of AB LESTO in the retail supply market decreased from 42.6% to 35.2%. 
Changing electricity supplier in Lithuania was
permitted but during 2013 no switches were made[344]. A cost-benefit analysis addressing smart
meters has been carried out, but no formal decision or plans about smart meters
roll-out has been made so far.
Today, end-user price regulation still exists for
household consumers. Full liberalization is scheduled for the beginning of
2015. For industrial consumers, price regulation was fully removed at the
beginning of 2013.
Power prices for households and industrial consumers
have kept increasing during the recent years, mostly due to the transmission
and commodity prices, but also because of public service obligation's component
during 2012-2013. This component in electricity price includes: compensation to
electricity generation company “Lietuvos energijos gamyba” AB, operating as reserve
capacity; support to CHPs; promotion of renewables; and financing
infrastructure of strategic importance.
Figure 3: Electricity price change by component
2008 – 2013 (source: Eurostat, energy statistics)
Gas
The functioning of the natural gas retail market is
determined by the situation on the wholesale market. Theoretically, the market
is 100% liberalised and customers are free to choose among gas suppliers,
however during 2013 only modest interest in switching was observed.
Natural gas was supplied to customers by eight supply
companies and in 2013 gas sales totalled 1,430.0 mcm. As compared with 2012,
the sale of natural gas decreased by 11.4%[345]. Retail gas supply as well as the
wholesale is dominated by one supplier (Lietuvos Dujos AB), which together with
UAB Dujotekana holds 98.1% of natural gas supply market (Lietuvos Dujos AB -
69%  and UAB Dujotekana - 29% accordingly)[346]. Other gas supply companies' joint market
share  is as low as 2% of the retail market. Gas prices for final consumers
followed a similar trajectory to that of electricity prices.
Figure 4: Natural gas price change by component 2008 – 2012
(source: EC, EPCR metadata) 
A cost-benefit analysis addressing
smart meters in natural gas is being carried out by NCC, but no formal decision
or plans about smart meters roll-out has been made so far[347].

 Consumers

The assessment
of both the electricity
and the gas retail markets in Lithuania is well above the EU average thus
placing the country high in the EU ranking (6th and 2nd
place, respectively). Both markets have considerably improved their performance
since 2012 (by 4.6 points in the case of gas and 7.5 in the case of
electricity, which represents the highest and 2nd highest increase
EU-wide). The electricity market in the country shows the highest score in the
EU as far as comparability is concerned while on the negative side the
incidence of problems is the fourth highest in the EU and the scores on
switching, ease of switching and choice of providers are below EU average. As
far as the gas market is concerned, Lithuania has the second EU score on
comparability and the 2nd highest on overall consumer satisfaction
with respect to expectations.[348]
The NCC, the State Energy Inspectorate and the State
Consumer Rights Protection Authority investigate individual consumer
complaints. The number of complaints per thousand inhabitants in 2012 was more
than three and was almost two times higher than in 2011[349]. It was documented by the NCC that 30
complaints concerning natural gas market[350] were received during 2013.
The supply of natural gas is guaranteed as a matter of
priority to those groups of vulnerable consumers — household customers and
non-household customers — which consume less than 20,000 cm of gas per year.
According to the Law on Electricity, suppliers have to conclude agreements for
supply of electricity at the public electricity price to consumers who have not
chosen independent electricity supplier, also to socially vulnerable customers.

 Infrastructure

The Lithuanian authorities have already established
the one stop shop for Projects of Common Interest (PCI) as required by the
TEN-E Regulation.
Electricity
Lithuania is not directly connected to the European
grid and therefore is working in BEMIP towards the creation of the Baltic
regional electricity market. 
Two electricity projects are of key importance. The
cross-border electricity transmission line "NordBalt" is the 700 MW
capacity (400 kV) cable from Klaipeda (Lithuania) to Nybro (Sweden). This link
is expected to increase possibilities for electricity trade, and by December
2015 and it will allow full integration of the Baltic and North European
electricity markets. 
Secondly, the cross-border electricity transmission
line "LitPol Link", a PCI project, is the 500 MW capacity (400 kV) double
circuit electricity transmission line from Alytus (Lithuania) to Elk (Poland).
The interconnector will link the electric power systems of the Baltic States
and Continental Europe and will create preconditions for electricity trade, and
will enhance the security of electricity supply in Lithuania. 
Gas
The Lithuanian gas network is connected to the
Belarusian, Latvian and Russian Federation (Kaliningrad) gas systems.
Enhancement of the Latvian-Lithuanian interconnection was successfully
finalised in early 2013 by increasing the cross-border capacity to more than 6
mcm/day in both directions. Secondly, the new Klaipeda – Jurbarkas pipeline was
constructed and made operational in 2013. It allows for looping the national
gas transmission system and it will also ensure the efficient send-out from the
LNG terminal in Klaipeda that is to become operational in December 2014.
The Lithuania-Poland gas interconnection
("GIPL") which is necessary to end pipeline-based the energy
isolation of Lithuania and other Baltic States should be considered a top
priority project. In 2013, its feasibility study was started and the project
could be finalised by 2018. Furthermore, Lithuania should make efforts to
upgrade the Klaipeda – Kursenai pipeline that is necessary to achieve the full
4bcma operation of the LNG terminal and for enhancing its interconnection with
Latvia.

 Security
     of supply

Electricity
After the shutdown of the Ignalina NPP, Lithuania has
become an importer of electricity.  The abovementioned NordBalt link and LitPol
Link are necessary to integrate Lithuania into a common European electricity
market, thus contributing to a more reliable electricity supply, more stable
prices and enhanced competition on the Lithuanian market. 
At present, the Lithuanian grid is operated in
synchronous mode with the Russian and Belorussian grids.  In 2012, negotiations
were launched by the European Commission with the aim to conclude an
Intergovernmental Agreement. Negotiations have been suspended at the request of
the Baltic States pending their analysis of a study on the de-synchronisation
of the Baltic grids and a move towards synchronisation with continental
European grids.
As regards the local supply security, the total
investments into the network infrastructure were increased by 9.59% to EUR
148.1 million in 2012.
Gas
To diversify the supply of gas, as per the approved
National Energy Independence Strategy of 2012, Lithuania has determined the
necessity for the LNG Terminal and interconnection with the gas network of
Poland to enable access to the EU-wide natural gas system.
Making the LNG Terminal operational requires
investment in the outdated gas transmission line extending in the northern part
of Lithuania and also connecting Latvia (Klaipeda – Kursenai). The underground storage
facility in Inčukalns (Latvia) is used for the supply security for
vulnerable consumers of Lithuania in case of emergency. Analysis has revealed
that the present status of the Lithuanian gas network failed to fulfil the EU
requirements prescribed by the EU regulation No. 994/2010. The analyses of the
N-1 rule showed a result equal to 31.4% while the requirement of regulation
states that N-1 must be above 100% in order to have a secure network.

 Key
     indicators
 
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 30 || Number of entities bringing natural gas into country || 5 
 Number of main power generation companies || 6 || Number of main gas entities || 4 
 Market share of the largest power generation company || 25% || Market share of the largest entity bringing natural gas || 69% 
 Number of electricity retailers || 27 || Number of retailers selling natural gas to final customers || 8 
 Number of main electricity retailers || 5 || Number of main natural gas retailers || 2 
 Switching rates (entire retail market) || N/A || Switching rates for gas (entire retail market) || N/A 
 Regulated prices for households – electricity || Yes || Regulated prices for households – gas || Yes 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || No 
 HHI in power-generation market || 1162.6 || HHI in gas supply market || >5000 
 HHI in electricity retail market || 2124.4 || HHI in gas retail market || >5000 
 Electricity market value[351] (bn€) || 0.733 || Gas market value (bn€) || 0.274 
 Installed generation capacity (2013, MW) || 4,304 ||   ||   
 Peak load (MW) || 1,686 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Luxembourg
Key issues
The share of
renewable energy levels remains far from the target of 11%. 
To improve
security of supply, further investments are required in new interconnectors
with neighbouring countries, and in additional generation capacity capable of
providing flexibility to the electricity system.
The natural gas
sector is almost 100% dependent on imports. Reinforcing the interconnections
with neighbouring countries would alleviate current concerns. Firm entry
capacity in Luxembourg remains limited, and a better congestion mechanism would
help to address this issue.
More should be
done to encourage competition in the retail market, especially for domestic
customers.

1.    
General
overview

Oil products for
energy production provided 63% of Luxembourgian gross inland consumption in
2012, while the share of natural gas increased to 24% (compared to 2011). The
contribution of renewable sources also increased,
reaching 3.1%. However, this figure continues to fall short of the 11% target
for 2020. In 2011, power generation saw a decline of 20% in internal production
(mainly thermal generation) from 2010 levels due to one of the combined
cycles operating on reduced availability[352]. Gas is the
primary fuel for electricity generation (62% of total electricity generated),
followed by renewable energy (35% with most coming from hydro power). 
Figure 1: Gross
inland consumption mix 2008 – 2012 (source: Eurostat)
Figure 2:
Gross electricity generation mix 2008 – 2011 (source:
EU Energy in Figures – Pocketbook 2012 and 2013)

 Regulatory framework

General
Two laws[353]
came into force in August 2012 transposing Directives 2009/72/EC and
2009/73/EC, concerning common rules for the internal market in electricity and
gas. An infringement procedure for incorrect transposition of the Third Energy
Package Directives was launched in March 2014 and is on-going[354].
National Energy Regulator
In 2012, the
Luxembourg national regulatory authority, the Institut Luxembourgeois de
Régulation (ILR), had 51 employees and an annual budget of almost EUR 7
million. ILR is also responsible for regulating other sectors such as the
telecoms and postal sectors.
To promote
competition in the electricity and natural gas markets, new responsibilities
were assigned to the ILR in network access and pricing, cross-border
cooperation, monitoring investment plans and monitoring the function and
transparency of the energy markets.
Unbundling
Luxembourg has
been granted a derogation from the unbundling provisions of the Third energy
package on the basis of Article 44(2) of the Electricity Directive and Article
49(6) of the Gas Directive. The legislative framework, however, guarantees a
relative degree of independence of system operators through legal, functional
and financial requirements.  The electricity grid is jointly managed by Creos
Luxembourg S.A (who has been granted transmission and distribution system
operator license), five distribution system operators (DSOs) and one industrial
system operator (ISO). In the gas sector Creos is the transmission and the main
distribution system operator. The gas distribution grid is also managed by two
other DSOs. 

 Wholesale markets 

Electricity
At generation level, the three largest
producers (GdF Suez, Enovos, Soler) provided 89% of power generation volume. 
The volume of electricity traded on the
wholesale market in 2012 amounted to 6.93 TWh (17% less than the previous
year). Luxembourg relies on imports from neighbouring countries, mainly
Germany, for the majority of its domestic consumption (57%)[355]. 
There is currently no power exchange or
spot market for electricity, but the absence of congestion on interconnectors
means wholesale operators can participate on other power exchanges. 
Gas
The national consumption
of natural gas was 13.6 TWh, slightly higher than 2011. 2012 was characterised
by a particularly high peak demand due to extreme temperatures in the beginning
of the year. The vast majority of gas is imported from Belgium, Germany and (to
a lesser extent) France, with only a small part locally produced by biogas
plants. The Luxembourg market has been is impeded by the limited availability
of firm entry capacity. However, in 2013 and 2014, additional firm entry
capacity has been made available which has resolved congestion issues.
There is no
wholesale market in Luxembourg and the gas market has a quasi monopolistic
structure. In 2012, the dominant company (Enovos) consolidated its market share
despite the fact that transparent and non-discriminatory access to transmission
capacity has been made available.

 Retail markets

Electricity
2012 saw 11
suppliers provide around 6.4 TWh of electricity to final consumers. The retail
market was concentrated as the four biggest distributors accounted for 93% of
the total amount of energy supplied. Enovos dominated the market for all three
segments (residential, business and industrial) with 55% of the total
consumption. The supplier switching rate in 2012 was 0.22% by customer number
and 9.7% by consumption volumes, demonstrating that industrial users were more
active in switching suppliers. 
Figure 3:
Electricity price change by component 2008 – 2012 (source: Eurostat, energy
statistics)
Gas
The natural gas
sector was much more concentrated than the electricity sector. In 2012, a total
of eight suppliers served final consumers, with just three suppliers holding
94% of the market. Competition differs significantly within the different
segments. As a result of the small number of players a monopoly within segments
of industrial consumers and power producers has been created. The opening of
the gas sector remained very low with supplier switching rates less than 0.1%.
Figure 4:
Natural gas price change by component 2008 – 2012 (source: EC, EPCR metadata)

 Consumers

The consumers' assessment of both the electricity and gas retail markets in Luxembourg is the 3rd
highest in the EU and in both cases well above the EU average (80.3 points vs.
72.0 and 79.7 vs. 74.1 respectively). The electricity market scores better than the EU average on
all components (with the lowest incidence of consumer complaints in the EU)
with the exception of switching (which is third lowest in the EU despite
Luxembourg being 6th in the EU ranking on the ease of switching). A
similar picture is seen for gas services, with all the components – except for
switching – assessed above the EU average. Comparability, ease of switching and
choice are within the 3 best EU ratings and the incidence of complaints is the
third lowest in the EU.[356]
Various services
are now available to consumers to provide information on services and their
rights. An online information point[357]
provides extensive support to customers with details on suppliers, products,
switching procedures, opportunities and rights and responsibilities in the
context of the non-regulated market. An automated on-line price comparison tool[358]
is now available to residential customers. Additional services include the
alternative dispute resolution procedure which has been available to
residential customers since 2011. In 2012, two dispute resolutions were
registered under the alternative dispute resolution procedure. In addition the
ILR is responsible for the electricity labelling system to provide customers
with information on environmental impact depending on type of energy sources
used.
All customers
are de facto considered as potentially vulnerable in Luxembourg. Both the
electricity and the gas legislations foresee provisions governing the situation
of customers in default payment of their bill. Clear rules determine
disconnection conditions in case of default payment and the installation of
prepayment meters for individuals in a precarious social situation. Situations
of default payment are also covered by the law of 18 December 2009 on social
aid. 

 Infrastructure

The Luxemburgish
authorities should ensure a proper and timely adoption of the measures stemming
from the TEN-E Regulation, including the establishment of the one-stop-shop for
Projects of Common Interest (PCIs) (due by 16 November 2013), and other
measures foreseen for 2014 and 2015, including the publication of the manual on
the permit granting process for project promoters, and the adoption of
legislative and non-legislative measures streamlining the environmental
assessment procedures.
Electricity
The total
generation capacity amounted to 1,785 MW, including the Vianden pump
storage power plant (1,096 MW of capacity installed) which is directly
connected to the German transmission grid. The generation assets currently
available are not sufficient to provide the required electricity to cover the
national demand of Luxembourg, which relies on imports from neighbouring
countries.
Upgrade of the
existing internal grid is underway and there are planned investments to ensure
continued n-1 contingence on internal lines. Luxembourg's transmission network
is connected with Germany by two interconnectors whilst the industrial grid of Sotel
is connected to the Belgian transmission network. 
PCIs under the
guidelines for trans-European energy infrastructure have been identified in
order to increase the capacity at the Belgian/Luxembourg border, also including
Phase Shift Transformers for better load management.
Gas
Internal
production of natural gas is only from three biogas plants being connected to
the gas network in 2013. Almost all gas for consumption is imported from
neighbouring countries through high pressure pipelines from Germany and Belgium
and medium pressure pipelines from France. There are four entry points: two on
the Belgian border, which are combined in one virtual entry point, one for the
German border and one on the French border. 
Luxemburg has no
storage infrastructure; it relies upon the storage capacity of neighbouring
countries. PCIs foresee increase of the existing interconnection with France
and Belgium.
Two new Laws in
August 2012 provide the opportunity for mass roll-out of smart meters. This is
expected to reach 95% of electricity consumers by 2018, and 95% of natural gas
consumers by 2020. Provisions for the public charging infrastructure of
electric vehicles were made to promote their use.

 Security
     of supply 

Electricity
According to the
latest evaluations, the n-1 criterion is covered by existing German
interconnections. The need for investment in new cross-border interconnections
with Belgium and France, in new generation capacity and in upgrades of the
internal grid is being analysed to improve security of supply. As there are insufficient emergency generation reserves in
Luxembourg, load shedding might be the only viable emergency response tool[359]. 

Gas
In 2013 and
2014, additional firm entry capacity has been made available resolving
congestion issues. Interruptible capacity and flexibility mechanisms are
currently used by Creos in order to manage cases of missing firm capacity. Due
to the absence of storage facilities in the country, load shedding can be used
in case of emergencies. However, it has never been used till now. With about
half of the gas supplied through the German entry point, Luxembourg does not
comply with the N-1 rule. However, it obtained a derogation under Regulation
994/2010.

 Key
     indicators
 
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 4 || Number of entities bringing natural gas into country || 5 
 Number of main power-generation companies || 2 || Number of main gas entities || 1 
 Market share of the largest power-generation company || 82% || Market share of the largest entity bringing natural gas || N/A 
 Number of electricity retailers || 11 || Number of retailers selling natural gas to final customers || 8 
 Number of main electricity retailers || 4 || Number of main natural gas retailers || 3 
 Switching rates (entire electricity retail market) || 0.22% || Switching rates for gas (entire retail market) || 0.1% 
 Regulated prices for households – electricity || No || Regulated prices for households – gas || No 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || No 
 HHI in power-generation market || 2,311 || HHI in gas supply market || High 
 HHI in electricity retail market || High || HHI in gas retail market || High 
 Electricity market value[360] (bn€) || 0.425 || Gas market value10 (bn€) || 0.282 
 Installed generation capacity (MW, 2012) || 1,785 ||   ||   
 Peak demand (MW) || 1,009 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Malta
Key issues
Given the current physical isolation of Malta’s
electricity sector, the high voltage connection with Italy should be seen as a
high priority project to secure electricity supply and reduce the vulnerability
of the sector. 
Malta should step up its
efforts to diversify the energy mix
and energy sources, notably by developing renewable energy and by creating
access to natural gas. 
Currently progress towards
European targets for renewables has been slow but has improved recently thanks
to the increased use of solar energy.  Development of renewable energy post
2020 may be challenging due to geophysical restrictions.
General overview
Malta is almost 100% dependent on oil and petroleum
products. The gross inland energy consumption in 2012 was 0.91 Mtoe, a decrease
of 2.5% compared to 2011. Renewable energy accounted for only 1.1% of gross
inland energy consumption. There is no supply of natural gas. 
The gross electricity generation in 2012 was 2.290
TWh, an increase of 4.4% compared to 2011. Electricity generation in Malta is
dominated by crude oil and petroleum products. In 2011, a small amount of
electricity (8 GWh) was generated by photovoltaic systems, increasing to 13 GWh
in 2012. 
Malta has an obligation to reach 10% of renewable
energy in the gross energy consumption by 2020[361]. According to the present reporting data
available in Eurostat, the RES share in gross final energy consumption for 2012
is below Malta's 2011-2012 indicative trajectory and the country therefore
appears to lag behind its 2020 obligation. Cogeneration[362]
of heat and power remained negligible during 2012 (only 0.4%) [363].
Regulatory framework
General
The Third Energy Package has been transposed in 2011,
it however provides for ample derogations. 
National Energy Regulator
The Malta Resources Authority (MRA) was established in
2002 and is responsible for the regulation of energy, mineral and water
resources. MRA is composed of seven Board members and 39 employees  within the
organisation. The 2012 budget for MRA was approximately EUR 2 million[364]. 
Unbundling
There is no electricity transmission system in Malta.
A single distribution system serves all electricity consumers. The function of
the distribution system operator (DSO) is carried out by the Enemalta PLC, a
vertically integrated power utility. The requirements regarding the unbundling
of transmission system operators and distribution system operators do not apply
to Malta, which has derogations from Article 9 on the unbundling of TSOs,
Article 26 on the unbundling of DSOs, Article 32 on third party access and
Article 33 on market opening. 
Wholesale Markets
Enemalta PLC enjoys legal monopoly in electricity
supply and is currently the main producer of electricity in Malta. The existing
independent electricity producers are small and generate electricity from
renewable energy sources either for their own consumption or to sell to
Enemalta PLC. In the absence of large independent electricity producers a
wholesale market is not in place and the balancing between generation and
demand is carried out by Enemalta PLC. 
Retail Markets
Enemalta PLC has a 100% share of the electricity
retail market, which is not open to competition and therefore customer
switching is not possible in Malta. There were no changes in the methodologies
used to determine the tariffs during 2012. All consumers of electricity are on
regulated retail tariffs.
Malta's electricity prices, for industrial consumers,
have been at the same level for the last four years, after an increase in 2010
due to the increase of energy and supply cost component. The electricity prices
for domestic consumers have been revised downwards in 2014, whereas those for
the industry are expected to be reduced during 2015. The prices for Malta’s
industry were above the EU average while the retail prices for households were
below EU average[365]. Electricity generation remained dependent
on heavy fuel oil and gasoil, thus making the cost of electricity in Malta
highly susceptible to changes in the international market price of these two
fuels. A
new 215MW gas-fired Combined Cycle Gas Turbine (CCGT) plant together with a
floating LNG storage and regasification unit, which would shift Malta’s
electricity generation away from fuel oil and significantly increase the
overall generation efficiency, is planned for 2015.
The energy component accounted for 82% of the
household electricity price while for industrial consumers the energy component
was 88%. The network component represented 13% and 12% of the total bill for
households and industry, respectively[366]. In Malta, a charge for the support of
renewables is not included in the electricity tariff, as this support is
financed through taxes in the national budget[367].
Figure 3:
Electricity price change by component 2008 – 2013 (source: Eurostat, energy
statistics)
Electricity demand in 2012 increased by 5% compared to
2011, which was the 4th largest percentage among all EU Member
States. However, Malta was the only one of these four Member States which did
not witness a respective GDP increase. In Malta, the increase in consumption
was due to the weather conditions, since electricity is the main source for
heating and air conditioning[368].
Consumers
The assessment
of the retail electricity
expressed by Maltese consumers is well above the EU average (76.1 points vs.
72.0[369])
with the country occupying the 10th position in the EU ranking. The incidence
of both problems and complaints is the 4th lowest among EU
countries, and trust in providers is the 5th highest. (The questions on switching, ease of switching and choice have not been
asked given that the market is a monopoly).[370]
Vulnerable consumers, including families with low
income, persons with a disability and other humanitarian cases and families on
social assistance or special unemployment benefit, persons with an age pension
or a career’s pension, may benefit from energy bill discounts. During 2012,
24,142 consumers received energy benefits[371]. 12% of household consumers were defined
as consumers with special needs[372].
The replacement of electricity meters with smart
meters is underway. By the end of 2012 the number of smart meters installed was
170,346 (62%). The full replacement of the electricity meters with smart meters
is expected to be completed by the end of 2014[373].
Infrastructure
The Maltese authorities have ensured the adoption of
the measures stemming from the TEN-E Regulation, including the establishment of
the one-stop-shop for Projects of Common Interest (PCIs), and other measures
foreseen for 2014 and 2015, including the publication of the manual on the
permit granting process for project promoters, and the adoption of legislative
and non-legislative measures streamlining the environmental assessment
procedures.
Electricity
In December 2012, a new generation plant came into
operation and thus the nominal generation capacity of the two power stations of
Malta increased to 620 MW. A 225[374] MW high voltage interconnection between
Malta and Sicily, which is currently under construction, is expected to be
completed by the end of 2014. In 2013, the government of Malta agreed to the
construction, by private investors, of a new 215 MW CCGT power plant using gas
supplied by an LNG Floating Storage Unit permanently berthed at Delimara. An
existing 149 MW Combined Diesel Engine currently operated on heavy fuel oil
will be converted to natural gas. 
Gas 
Natural gas is not available in Malta. For an interim
period, natural gas for electricity generation will be provided by an LNG
Floating Storage Unit (FSU) permanently berthed at Delimara Power Station with
an onshore re-gasification unit once the infrastructure is available. 
A project consisting of the FSU and a pipeline connecting it to both Delimara (Malta)
(12km approximately) and Gela (Sicily) (150km approximately) for transmission
of Natural Gas, entitled: Floating LNG Terminal in
Malta and new interconnection Malta to Italy, was selected as a Project of Common Interest (PCI).[375] The final design of the project will
depend on the outcome of the cost-benefit and feasibility study which is
currently being carried out. 
Security of supply
Electricity
The installed electricity generation capacity by
thermal power plants was 571 MW, in 2011[376]. In 2012, the nominal generation capacity
was increased to 620 MW. The maximum peak demand was 429 MW and was recorded on
9 August 2012. The total fossil fuel electricity generation capacity available
when the peak demand occurred was 505 MW[377]. Additional electricity generation
capacity is required to ensure security of supply. 
Gas 
To increase the diversification of primary energy
sources, Malta has submitted a project to connect Malta to the European gas
grid as a project of Common European Interest (PCI).
Key indicators
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 1 || Number of entities bringing natural gas into country || N/A 
 Number of main power-generation companies || 1 || Number of main gas entities || N/A 
 Market share of the largest power-generation company || 100% || Market share of the largest entity bringing natural gas || N/A 
 Number of electricity retailers || 1 || Number of retailers selling natural gas to final customers || N/A 
 Number of main electricity retailers || 1 || Number of main natural gas retailers || n/a 
 Switching rates (entire electricity retail market) || N/A || Switching rates for gas (entire retail market) || N/A 
 Regulated prices for households – electricity || Yes || Regulated prices for households – gas || N/A   
 Regulated prices for non-households – electricity || Yes || Regulated prices for non-households – gas || N/A 
 HHI in power-generation market || 10,000 || HHI in gas supply market || N/A 
 HHI in electricity retail market || 10,000 || HHI in gas retail market || N/A 
 Electricity market value[378] (bn€) || 0.350 || Gas market value22 (bn€) || N/A 
 Installed generation capacity (2012, MW) || 620 ||   ||   
 Peak load (MW) || 429 ||   ||   
 Number of smart meters installed || 244,000 ||   ||   
Poland
Key issues
Although
important improvements have been made to modernise Polish energy
infrastructure, significant investments are still needed to ensure a
sustainable supply of energy, reduce the share of carbon-intensive plants and
increase the exploitation of renewable energy sources. Despite significant
emission reductions realised over the last two decades, Poland is reluctant to
support ambitious EU climate policy targets beyond 2020. This seems to be due
to its concerns about energy security and its heavy reliance on coal, of which
it has the biggest reserves in the EU and which is instrumental for electricity
generation. 
Poland should
step up its efforts and extend the
development of the electricity grid. Obstacles in electricity cross border
exchange should be eliminated and the problems resulting from unscheduled flows
properly addressed.
The gas sector
in Poland has yet to complete its liberalisation process. Market conditions
have improved. Progress so far includes implementation of the European Network
Codes with the introduction of the virtual trading point, pilot projects with
bundled capacities, capacity auctioning platform[379],
market-based balancing, and launching of both virtual
and subsequent physical reverse flow on the Yamal pipeline at Mallnow.
In addition, a gas exchange (PolPx) was established and an exchange trade
obligation was put in place. 
However, these
measures which have improved Polish chances to develop a competitive wholesale
gas market have proven to be insufficient so far to boost competition on the
market and change the current market structure. Although a process has been
initiated, Poland still needs to phase out regulated prices in the gas sector,
what would help to reinforce competition[380]. Effort should
be made to further accelerate new
gas interconnections and expansion of the existing ones with neighbouring
countries. Barriers to trade (including the import diversification
requirements) should be revised.
Security of gas
supply is expected to improve thanks to the country’s first LNG terminal to be
commissioned in 2015 (to enter into commercial operation mid-2015) as well as
development of new infrastructure to support the North-South gas corridor.
Poland has improved considerably its interconnections with Germany (Lasow
interconnection point and the introduction of physical reverse flow on Yamal at
Mallnow). 
General overview
Polish national
gross final energy consumption in 2012 amounted to 97.97 Mtoe. It
was based mostly on fossil fuels: hard coal (41%), oil (26%), gas (13%), and
lignite (11%)[381].
In 2012, share of renewables in gross final energy consumption amounted to 11%,
increasing from 7.8% in 2008. Poland remained above its 2011/2012 interim
trajectory and is currently on track to achieve its national binding target for
renewables of 15%. 
In 2012, total
power generation reached 162 TWh with most (88.6%) coming from fossil fuels,
principally coal and lignite. Renewables accounted for 10.7%. In 2012, a rise
in share of lignite was caused by decreased profitability of hard coal power
generation. Poland maintained traditional export of electricity, mainly to the
Czech Republic and Slovakia[382].

Figure 1:
Gross inland consumption mix 2008 – 2012 (source: Eurostat)
Figure 2: Gross electricity generation mix 2008 – 2011
(source: EU Energy in Figures – Pocketbook 2012 and
2013)
Regulatory
framework
General
The Third
Package Directives were transposed only in 2013 and their compliance is
currently under review. An infringement procedure on regulated gas prices for
non-household customers and the Third Energy Package Gas Directive is ongoing
before the Court.[383] In
March 2013, the European Commission referred Poland to the Court of Justice for
non-transposition of the renewables directive[384],
which has been controversial and hampered for many years. Arguments arise mainly
about the design of the support scheme for renewables. 
National Energy Regulator
The President of
Energy Regulatory Office (URE) is a central body for governmental
administration and has been in operation since 1997. In 2012, URE employed
about 300 staff. Its annual revenues totalled EUR 23.8 million while
expenditures reached EUR 8.8 million[385]. The surplus
of income is part of the government budget. Amendments to Energy Law introduced
a 5-year term for President of URE with a possibility of one reappointment.
Unbundling
The TSO in
electricity is PSE S.A. and for gas, Gaz-System S.A. Both companies were
certified as ownership unbundled TSOs (on the networks they own) in the course
of 2014. The rules on certification of independent system operators were only
adopted in 2013. 
There were 158
electricity DSO’s at the end of 2013, but only five serve more than 100,000
customers. Each company within the “big five” is legally unbundled[386]
and 4 of them are controlled by the Polish State Treasury. In 2013 distribution
of gas was performed by 40 system operators including one incumbent system
operator[387]
subject to legal unbundling[388].

Wholesale markets
Electricity
The Polish
wholesale power generation market still remains rather concentrated. However,
initial data for 2013 show that HHI for electricity production dropped to less
than 2000, meaning that the market shall no more be considered as highly
concentrated. PGE, TAURON, and EDF remained the biggest power generators in 2012 and in 2013. The
market concentration HHI index for installed capacity was 1587.9 in 2012. For
the amount of power introduced to the grid this index reached 2096. The HHI
index decreased further in 2013 based on the recently published data.[389]
In 2012, the
power exchange’s role became well established, following the introduction in
2010 of obligation to sell certain percentage of produced electricity by
generators through the power exchange. Electricity sold through the exchange
accounted for 61.8% of electricity sold by generation companies in 2012 (up
from 58.8% in 2011). Bilateral contracts represented around 33% of wholesale
trade in 2012. It has to be noted that the volumes traded on the exchange
decreased in 2013.[390]
According to the
Polish Power Exchange (POLPX), in 2012 the annual average wholesale day-ahead
power price was PLN 179.45/MWh, which is a decrease from PLN 205.19/MWh in 2011
(12% decrease). The annual traded volume in day-ahead transactions in 2012 was
19.1 TWh[391].

Poland
participates, currently as an observer, in a five-way market coupling project
known as “5M”. Poland intends to join the Czech Republic, Slovakia, and Hungary
in the arrangement of capacity allocation on the common borders in implicit
auctions later in the context of the CEE FBMC (Central East Europe Flow-Based
Market Coupling) initiative[392].
Poland also participates in the coupling of the North-Western European Market
via the SwePol Link. 
Gas
Annual natural
gas inland consumption in 2012 amounted to approximately 15,9 bcm. The total
imports of natural gas to Poland in 2012 amounted to 11,6 bcm, out of which
imports from Russia and Central Asian countries were 9,2 bcm, corresponding to
57,6% of gross inland consumption and 79,8% of all imports. Imports from
Germany amounted to 1,7 bcm and from Czech Republic 0,55 bcm[393].
Domestic gas production in 2012 was 4,46 bcm (in terms of methane-rich natural
gas) which accounted for approximately 28% of the annual demanded of all
consumers.[394]
It should be
noted that imports from Germany increased thanks to physical connection via Lasow
and the reverse flow via Mallnow. However, the import diversification
requirement under the Polish law remains an obstacle limiting abilities of gas
shippers to use the reverse flow on Yamal. 
The wholesale
gas market in Poland was still dominated by PGNiG in 2012 (ca 95%). The
remaining 5% of total sales were supplied by other
traders. Since 2013 the gas exchange obligation has provided grounds for
competition in the Polish gas market, but in 2013 PGNiG failed to trade the
mandatory 30% share on the exchange as there were too few buyers. The prices
available under bilateral agreements were temporarily lower than prices offered
on the exchange and the overall demand for gas was insufficient to drive sales
up. However, in 2014, the situation changed – the volume of gas traded on the
gas exchange is now increasing.
In 2012, as a
result of the renegotiation of the long-term supply contract with PGNiG,
Gazprom lowered the price of natural gas deliveries to Poland. The agreement
ended the price dispute between PGNiG and its Russian partner. Even after the
correction, Poland still pays one of the highest prices for Russian gas in the
EU.
The latest legal
developments are positive for natural gas market liberalisation, including
already mentioned amendments of the Energy Law in 2013, an important change
concerning the structure of the incumbent and the adoption and the subsequent
changes in the Transmission Grid Code. The code includes provisions of the
Third Energy Package as well as system operation rules for capacity allocation
The code also introduced a virtual trading point for gas[395]
and allowed for early introduction of bundled capacity products between Poland
and Germany which are tested until September 2014[396].
[397].
Subsequent changes, which entered into force in August 2014, implemented
Network Code on Congestion Management Procedures (CMP), Capacity Allocation
Mechanisms (CAM) and Balancing (BAL), improving the interoperability of polish
gas system with those of neighbouring countries.
Retail markets
Electricity
Poland continues
to regulate retail electricity prices for households. The approval of the
electricity prices by the President of ERO remains for households. In 2012 the
regulation of electricity prices for households applied to all consumers who
did not switched to the free market.  Similarly to the previous years,
“incumbent” suppliers continued to detain the largest share in sale of
electricity to the end-users in 2012. In 2012, 82 active suppliers were
operating on the electricity market. The total number of entities licensed to
trade amounted to around 360, but these were mainly the vertically integrated
industrial power companies conducting sale and distribution services. In 2012
the main five retailers, which used to be part of distribution companies before
the market opening, covered 80% of the market[398].

In 2012 four
times more consumers exercised their right to switch supplier than in 2011. In
total the number of non-household consumers who switched the supplier increased
from 21,716 (cumulative numbers for 2007-2011) at the end of 2011 to 66,019 in
2012[399].
The number of households supplied under the TPA rule increased from 14,341 to
77,284 consumers[400].
This was partially caused by an increased advertising activity of the
suppliers, resulting probably from the decrease in electricity demand in the
business consumers segment. 
Figure 3:
Electricity price change by component 2008 – 2013 (source: Eurostat, energy
statistics)
Gas
In 2012, gas
prices for households and industry were regulated. Nevertheless, following
Poland's referral to the Court of Justice on regulated gas prices for
non-household customers, Poland decided to introduce some changes in the way
prices for non-household customers are determined. Prices for households and
small commercial consumers are expected to be deregulated at later stage. 
In February
2013, the President of Energy Regulatory Office published the “Roadmap of
Natural Gas Prices Liberalisation” making the deregulation of prices for
commercial and household consumers a priority[401].
This, however, did not translate into the deregulation of gas prices to
non-household customers and derogations are still decided by the President of
ERO. This is subject to a court case which is now pending before the Court of
Justice. 
The Polish gas
market is still characterized by very high concentration levels with the gas
incumbent, PGNiG Capital Group holding 95% of the wholesale and retail markets
in 2012 in 2013. The remaining 5% of the gas market is supplied by several
dozen of other entities striving for strengthening their position on the
market. In 2012, the households constituted the largest group (96.9%) among all
PGNiG Capital Group’s consumers. The number of gas retailers, independent from
PGNiG, is growing, but their market position is highly fragmented. At the end
of 2013 there were 120 gas retailers.
In 2012, 99.5%
of households were supplied with gas under regulated prices (in 2011 this share
was 99.9%). The number of consumers switching gas supplier has increased
significantly in the past years but is still relatively low. In 2011, only a
few switches were noted. In 2012 there were 210 cases and 402 by the end of
September 2013. 
Figure 4:
Natural gas price change by component 2008 – 2012 (source: EC, EPCR metadata)
Consumers
The Information Point for Electricity and Gas
Consumers, established in September 2011, received during its first year of
activity first full year of functioning 2.636 questions
in total. Almost a half of the cases concerned the
supplier switching procedure. In case of gas consumers the most frequent
problems were related to the settlements as well as to changes in gaseous fuel
prices and invoicing.
To address those
issues, the URE organized a nationwide campaign promoting an effective and
economical management of electricity. The right to switch the supplier was a
leading motive of this campaign. Information on consumers' rights and on how to
switch supplier is provided in the regulator’s website. There is a special
section in place (“You have a choice”)[402]. URE also
offers an internet tool that compares prices (tariff calculator). 
Consumers'
overall assessment of retail electricity market is slightly below the EU
average (70.6 points compared to 72.0, which corresponds to 19th place EU-wide)
and below the average of 31 domestic services markets (24th place). Retail gas
market is ranked slightly above the EU average (75.5 points compared to 74.1),
ranking 12th EU-wide and among 31 domestic services markets. The market records
the 3rd lowest incidence of consumer problems in the EU. Both
markets have seen a considerable improvement in overall assessment since 2012,
with increases of 4.4 and 2.9 points, respectively (first and second highest
increase domestically). This is due to
improvements in all the components (except for switching rates), in particular
the ease of switching and choice[403].
An amendment to
the Energy law was adopted in 2013 which provides consumers with new rights. In
addition, new energy allowances were introduced for which consumers with
financial difficulties may apply. 
Infrastructure
The Polish
authorities should ensure a proper and timely adoption of the measures stemming
from Regulation 347/2013 on the trans-European energy infrastructure, including
the establishment of the one-stop-shop for Projects of Common Interest (due by
16 November 2013), and other measures foreseen for 2014 and 2015, including the
publication of the manual on the permit granting process for project promoters,
and the adoption of legislative and non-legislative measures streamlining the
environmental assessment procedures. However, gas infrastructure projects of
major importance are now streamlined by specific a legal act, which purpose is
to facilitate process on the administrative level.
Electricity
A large part of Polish energy infrastructure is
ageing and in need of replacement. Significant investments in energy sector are
in progress, mostly based on fossil fuels, while future investment plans
include construction of two nuclear power plants, expected to be commissioned
by 2025. 
At distribution
level, half the extensive grid replacement will take place, with half the
financing coming from the EU’s Cohesion Fund[404]. 400,000 smart
meters have already been installed and are currently tested[405].

The
interconnector between Poland and Lithuania (LitPol link) is expected to be
operational in late 2015. It will connect the Baltic countries with the Western
European Electricity System and increase energy security in the region.
Gas
The major
on-going investment in gas infrastructure is linked to the construction of the
LNG terminal in Swinolujscie. It will have a 5 bcm capacity and is scheduled to
be operational in 2015. In 2012 Poland enhanced its gas interconnection with
Germany (in Lasow). In 2014, the investment enabling physical reverse flow at
the border with Germany (in Mallnow) was completed. Furthermore, the expansion
of the existing UGS facilities (e.g. in Wierzchowice) and the construction of
the new UGS facility (Kosakowo) should also be noted. 
Construction of
the gas interconnector between Poland and Lithuania ("GIPL") that is
necessary to end the energy isolation of the Baltic countries should be
considered a top priority by Poland. There are also plans to develop import
capacity at the southern border with Slovakia and with the Czech Republic (as a
part of North-South gas corridor). Moreover, from the security of supply point
of view, one of the most significant investments was a modernisation of
Polish-German interconnection point at Mallnow. The investment (completed on
April 1, 2014) enabled provision of physical reverse flow of gas from Germany
to Poland. In February 2014 Polish and German TSOs carried out a pilot auction
on a bundled capacity at Mallnow which is the first stage of the procedure of
physical reverse allocation.
Security of
supply
Electricity
Polish
generation capacity reserves may reach a record low in 2014. According to the
Polish TSO, if the peak demand for electricity increases above 26 000 MW (in
2012 the instantaneous peak load was almost 24 000)[406],
the system will fail to deliver without support from neighbouring countries.
Therefore, there is a need for enhanced demand side response. The TSO already
work with large industrial users to develop system management.  Poland is
considering developing capacity market measures. 
Limited grid
connections between the North and South of Germany result in unscheduled flows
to Poland limiting cross-border capacity available to market participants very
often to zero MW. In 2014, Polish and German TSOs reached an agreement on the
operation of phase shifting transformers to better manage the flows[407],
but the issue requires long term solutions.
Gas
In 2013, the
Ministry of Economy, responsible for the security of gas supply, adopted the
Preventive Action Plan and Emergency Plan meeting the requirement set in the
Regulation 994/2010 concerning measures to safeguard security of gas supply[408].

Heavy dependence
on gas imported from Russia is  balanced with domestic gas production. Further
diversification is expected when the LNG terminal in Świnoujście is
commissioned and if shale gas could be exploited on a sufficient scale. The gas
import trend is upward, but imports from the East have fallen in favour of
purchases from Germany and Czech Republic[409]. In October
2012 the Polish TSO opened up the possibility of transporting gas to Ukraine.
Key indicators
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 32 || Number of entities bringing natural gas into country || 40 
 Number of main power-generation companies || 6 || Number of main gas entities || 1 
 Market share of the largest power-generation company || 39,3% || Market share of the largest entity bringing natural gas || 96,9% 
 Number of electricity retailers || 82 || Number of retailers selling natural gas to final customers || 120 
 Number of main electricity retailers || 5 || Number of main natural gas retailers || 1 
 Switching rates (entire electricity retail market) || 0,6% (0,86% for households)   || Switching rates for gas (entire retail market) || 0,8% 
 Regulated prices for households – electricity || Yes || Regulated prices for households – gas || Yes 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || Yes 
 HHI in power-generation market by volume of power fed into a grid || 2,096 || HHI in gas supply market || N/A 
 HHI in electricity retail market || 2,099 || HHI in gas retail market || 9,073 
 Electricity market value[410] (bn€)   || 9.376 || Gas market value26 (bn€) || 3.658 
 Installed generation capacity (MW, 2011) || 34,554 ||   ||   
 Peak demand (MW) || 23,970 ||   ||   
 Number of smart meters installed || 400,000 ||   ||   
Portugal
Key issues
Electricity and
gas sectors have undergone reforms as part of the Financial Assistance
Program.  Regulated tariffs are being phased out gradually until 2015 and some
State-controlled companies will be privatised. At present, both the wholesale
and retail markets are still concentrated. However, deregulation has led to an
increase in customer switching.
In the gas
sector, wholesale market development is still constrained due to slow
integration with the Spanish market. Integration should be promoted notably
through the harmonisation of entry-exit tariffs in both transmission systems,
the use of platform PRISMA to allocate capacity, the harmonization of the
congestion management procedures and the creation of an Iberian Gas hub in line
with the South Gas Regional Initiative and the Gas Target Model. 
General overview
Portuguese energy demand decreased again in 2012 by
5.9%, to 22.2 Mtoe, following a 2.9% drop in 2011. Falling demand has reduced fossil fuel consumption, although it remains the main source of
energy.
Figure 1:
Gross inland consumption mix 2008 – 2012 (source: Eurostat)
The power
generation mix in 2011 (52.5 TWh) was dominated by renewables (47.0%),
gas-fired power generation (28.4%) and solid fuels (18.7%). Net imports were
2.7 TWh, to a total electricity demand of 49.2 TWh. The share of gas-fired
generation has however decreased considerably in the last two years.
Figure 2:
Gross electricity generation mix 2008 – 2011 (source: EU Energy in Figures – Pocketbook
2012 and 2013)
The domestic
power generation mix in 2013 (47.8 TWh) was made up by 53.8% from hydro, coal
and CCGT and 46.2% from renewable resources[411]. The share of renewable energy varies yearly due to hydrological
and wind conditions. Portugal’s 2020 renewables target[412] is 31%, which is higher than the EU-27 average. According to
Eurostat data, between 2008 and 2012, the renewables share in gross final
energy consumption increased from 22.8% to 24.6% and the country is showing
good progress towards its 2020 RES obligation.  
Regulatory framework
General
The evolution of the energy sector in Portugal has
been driven by reforms as part of the Financial Assistance Program. These
reforms aim to reduce the energy tariff deficit. The privatisation of Redes Energéticas Nacionais SGPS and Energias de Portugal (EDP) was accelerated and regulated gas and electricity retail tariffs are being phased out.
In this context, Portugal is undertaking other measures, discussed later in this report. 
National Energy Regulator
The independent
Portuguese Energy Services Regulatory Authority, Entidade Reguladora dos
Serviços Energéticos (ERSE) has been in operation since 1997. It had a budget of almost EUR 9 million in 2012 and employed a staff
force of 75 people.[413]
Unbundling
REN (Rede
Elétrica Nacional) and REN Gasodutos are the electricity and gas
TSOs.
Both are part of REN SGPS (Redes Energéticas Nacionais SGPS). After the
re-privatisation of a 40% share capital of REN SGPS in 2012,  the process
continued and currently the Portuguese government does not hold shares in the 
capital of REN SGPS. These TSOs have both been certified in 2014 under the
ownership unbundling model, after the opinion of the Commission issued in May
2014[414]
and subject to the fulfilment of a number of conditions.[415]
EDP is the main
electricity distributor and was privatized in 2013. It holds the concession to
operate the national distribution network in high and medium voltage, and most
municipal concessions to operate in the low voltage distribution network. There are a few other smaller electricity
distributors.  The distribution of natural gas is
provided by six distributors (four of them belong to GALP) that work under
concession contracts and five autonomous natural gas distribution units (four of
them belonging to GALP) which have a license. 
Wholesale markets
Electricity
Total
electricity consumption in Portugal stabilised in 2013 at 49.1 TWh after a
two-year period of decline. Electricity production was 12.4% higher, driven by
higher than average rainfall. Generation from hydro plants in 2013 more than
doubled compared to 2012. Renewables also increased their production 16.4% when
compared with 2012 data. This increase was compensated by a reduction in
imports, CCGT  and coal production. 
Electricity
generation in Portugal has an unconventional structure. While EDP, the former
State-owned company, remains the largest generation entity (43% of electricity
sold in 2013), a 42% share is supplied through regulated agents which are not
exposed to market risks.[416]
REN Trading, which accounts for 7.6% of the domestic power generation mix, acts
as a regulated market agent for the two historical PPAs. The renewable and CHP
generators, which earn a feed-in-tariff, are represented in the market by a
regulated single buyer. Imports account for 6% of energy supply and there is a
high level of market integration and price convergence with Spain.
Changes to one of the most contentious issues, the
regulated contracts for difference known as CMECs that aim to compensate for
stranded costs arising from the liberalization process, are still pending.
Portugal has already reduced the discount rate applied in the CMECs, but it is
studying a retrospective reduction in previous years payments after the energy
regulator and the antitrust authority advised of flaws in ancillary service
related payments. 7
Portugal and
Spain have been integrating their electricity markets into a single Iberian
Electricity Market, MIBEL. They share a common spot market operator, OMIE,
which has been operating in both countries since July 2007, and a forward
market operator, OMIP, launched in July 2006.  In 2013, day-ahead prices were
the same in both countries. In February 2014, OMIE was coupled with the Central
and Northern European markets. In 2013, 54.5 TWh were traded in the Portuguese
part of OMIE day-ahead market.[417] 
The average price in the day-ahead market in Portugal was EUR 43.65/MWh in
2013.  Since March 2014, OMIP has auctioned FTR
for the Spain-Portugal interconnection and allowed continuous trading of that
product in its trading platform.[418]
In 2012 Portugal started auctioning forward contracts on energy produced by
renewable and CHP plants under feed-in-tariffs. All forward contracts are
settled financially, since no bilateral energy was delivered in the daily
schedule in 2013.[419]
In the last two years there have been some changes in the Portuguese wholesale
market. In 2012, CHP feed-in tariffs were reviewed and capacity mechanisms were
reduced and limited to hydro power plants during the Financial Assistance
Program.[420]
Moreover, in order to promote the sustainability of the system, 80% of the
income of the CO2 allowance auctions are used to compensate for the
over-costs due to the renewable feed-in tariffs.[421]
In April 2012, ERSE approved a new system operation regulation[422]
and in June 2013 the Government approved a new measure aimed at cancelling out
the effects of external events, specifically the increase in prices from new
generation taxes in Spain. At the end of 2013, the Portuguese Government
announced an extraordinary tax on energy production, transmission, storage and
distribution activities in order to decrease the tariff deficit and promote
energy efficiency measures.[423]
Gas
Portuguese
natural gas consumption dropped by 12.7% in 2012, mainly due to a 44% reduction
of gas-fired power generation (all CCGT). Since Portugal does not produce
natural gas, it covered its consumption in 2012 through LNG imports (23.9 TWh[424])
and through two pipelines that connect Portugal with Spain (27.9 TWh). Portuguese
supply still comes mainly from a few long term contracts held by GALP with
Algeria (through Spain) and Nigeria (imported as LNG) and signed before
liberalisation. At present, the Portuguese market does not have a transparent
market-based natural gas price reference.
So far,
Portugal´s gas market development has been constrained by its limited size and
the slow progress of integration with the Spanish market, partially due to
cross border entry-exit charges between both gas transmission systems. Increased
integration would create the Iberian Gas Market, MIBGAS and promising
developments are now ongoing. In recent years Portugal has taken steps towards
market opening and integration with Spain. Portugal abolished transmission exit
fees in the interconnection with Spain in June 2012 and Spain reduced the exit
price (towards Portugal) in the cross border tariffs. Interconnection capacity
between both countries was auctioned for the first time in 2013 and for the
second time in March 2014. 
As part of the review
of the gas regulations finalised in 2013, the regulator allows the allocation
of binding capacity rights in transmission, underground storage and LNG
terminal infrastructures, for periods of up to one year.
Retail markets
In August
2012, the government announced the complete elimination of regulated tariffs. A
transitory tariff (that includes an aggravation factor with a view to promoting
switching) will be in place for three years. ERSE will review this tariff on a
quarterly basis. 
Electricity
As a consequence
of the previous monopolistic supply structure and price regulation, the retail
market remains concentrated. In December 2013, the HHI for domestic and
industrial consumers amounted to 6,778 and 2,239 respectively. The market share of the three biggest
companies in the liberalised market was 85% in 2013. In 2013 Portugal had its highest switching rate so far of household
consumers:  26,8% compared to 13.2% in 2012.
Customers’
prices have increased considerably in previous years. From 2008 to 2012, final
electricity prices have increased annually on average by 7.8% for domestic
customers and 6.2% for industrial customers.[425]  The price
increase for both domestic and industrial customers was due to an average
annual increase in taxes and levies[426]
of 16% and 19%, respectively. This is influenced by a set of subsidies to
ordinary producers, namely the compensation for stranded costs due to the
liberalization process and the payments of feed-in tariffs for renewable and
CHP.   
Figure 3:
Electricity price change by component 2008 – 2012 (source: Eurostat, energy
statistics)
Gas
In April 2013,
ERSE approved a new regulatory framework for natural gas to support the changes
in commercial relationships following the removal of regulated tariffs. The
modifications, which were aimed at strengthening consumer protection and
enhancing competition, included extending the quality of service to all
retailers, reinforcing unbundling provisions, adjustments to the supplier
switching procedure and modifications in capacity allocation and pricing
provisions.
The gas retail
market in Portugal remains highly concentrated as liberalisation is recent and
there remain some barriers to wholesale imports. At the end of 2012, GALP still
supplied 68.8% of total consumption, followed by EDP with a share of 16.5% and
Gas Natural with 10%. Nevertheless there are positive signs for the
liberalisation process, such as the entry of new retailers[427]
and the ability for consumers to switch supplier. 
Portuguese gas retail prices for household consumers
(EUR 0.0836/kWh) are one of the highest in Europe, while prices for industry
(EUR 0.055/kWh) are average respectively in the first part of 2013.[428]
This is partly due to the high share of network costs in the final price (in
2012, network charges for household consumers represented up to 42% in Lisbon)[429].

Figure 4:
Natural gas price change by component 2008 – 2012 (source: EC, EPCR metadata)
Consumers
Consumers' overall assessment of retail electricity
market is below the EU average (22nd place and 66.3 points compared
to 72.0, corresponding to 22nd place EU-wide) and second lowest
among domestic services markets. However, the market has seen a considerable
improvement (of 3 points) between 2012 and 2013.  The incidence of consumer
problems is third highest in the EU and trust in providers is fourth lowest.
Retail gas market is ranked just below the EU average (74.0 points compared to
74.1[430],
corresponding to 16th place EU-wide) and just above the average of
31 domestic services markets (14th place). However, in both markets
the scores on choice, ease of switching and actual switching have improved
considerably since 2012. The proportions of gas and electricity consumers who
have switched their provider or tariff in the past year saw increases of over
10 percentage points (in the electricity market, this has translated to a
change from 3rd lowest place in the EU in 2012 to 3rd
highest in 2013). [431]

Around 80% of complaints (7,053 in 2012) dealt with by
ERSE are concerned with the electricity sector, while the remaining 20% relate
to the gas sector. These complaints are mostly related to tariffs, switching of
supplier and connection to the network. ERSE offers a price simulation tool on
their website for electricity and natural gas customers and operates a
telephone information service. A collective switching
in the electricity sector took place, organised by a Portuguese consumer
organisation. 
Portugal
maintains public service obligations through the concept of vulnerable
customers, defined as those who are beneficiaries of government social support
plans.[432] 
They will keep the right to a regulated tariff with a limited increase
established by the Government for each year. In 2012, 665,695 electricity and
17,000 natural gas consumers were eligible for this social tariff. During 2012,
Portugal approved the new provisions for customers’ protection in accordance
with the Third Energy Package. 
Infrastructure
The Portuguese authorities should ensure a proper and timely
adoption of the measures stemming from the TEN-E Regulation, including the
establishment of the one-stop-shop for Projects of Common Interest (PCIs) (due
by 16 November 2013), and other measures foreseen for 2014 and 2015, including
the publication of the manual on the permit granting process for project
promoters, and the adoption of legislative and non-legislative measures
streamlining the environmental assessment procedures.
Electricity
Investments in
electricity transmission have slowed down. The length of the transmission
network, which had been growing in recent years, in 2013 reached 8,519 km. The
Portuguese transmission network has eight interconnection lines with the
Spanish Transmission Grid. In the context of the TEN-E Regulation, Portugal has
4 projects of common interest (PCI) that will help to increase interconnection
level with Spain and reach the 10% Barcelona target.
Gas
The Portuguese
natural gas system has three entry points: an LNG terminal at Sines (whose LNG
storage capacity was expanded by 943 GWh in 2012) and two interconnections with
Spain (Campo Maior and Valença do Minho). A third interconnection pipeline with
Spain, aimed at increasing the integration of the Iberian Gas Market, is in the
initial phase of construction. Additionally, Portugal has 2115 GWh of underground storage capacity. In 2012, Portugal
commenced work on the expansion of underground storage capacity at Carriço.
In May 2013, the
TSO presented a proposal investment plan for 2014-2023 that had to be analysed
by ERSE that intended to expand the gas network in Northern Portugal. ERSE asked REN to review the gas investment
plans for 2014-2023, worth EUR 524 million, due to the anticipated increase in
consumer bills. After ERSE's opinion, the government is responsible for the
final approval of the plan. 
In the context
of the TEN-E Regulation, Portugal has 1 project of common interest (PCI) that
will increase interconnection level with Spain (and further on with France) and
will help Portugal to reinforce its security of gas supply.
Security of supply 
Electricity
Portugal’s
dependence on imported energy has been historically high. Yet, due to an
increasing amount of renewable energy in the generation mix, total energy
dependence has been declining.  The National Action Plan for Renewable Energy
foresees a total increase of special regime generation capacity from 6,610 MW
in 2012 to 8,780 MW by 2020. Addition new capacity is planned or underway as
some hydro power plants are being built and the Government has granted
permission to four new CCGT plants.
At the beginning
of 2013, the Secretary of State announced a plan to upgrade the electricity
network in the Western part of the country (worth EUR 135 million). 
Gas 
The LNG Terminal
at Sines has allowed Portugal to diversify its supply sources, as well as to
take advantage of supply diversification in the Spanish market. The expansion
of gas infrastructure, including the LNG storage tank, is expected to further
improve the diversification of supply sources and help meet the standard
required by the European regulation of security of supply. 
The entry capacity in the
system (re-gasification plus interconnection capacity) is expected to remain
above gas peak consumption in the next few years. In 2012, the average daily peak in consumption
represented 36.5% of the entry capacity offered in SNGN.
Key indicators 
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 104 || Number of entities bringing natural gas into country || 5 
 Number of main power-generation companies || 4 || Number of main gas entities || 1 
 Market share of the largest power-generation company || 44.9% || Market share of the largest entity bringing natural gas || 85.3% 
 Number of electricity retailers || 10 || Number of retailers selling natural gas to final customers || 20 
 Number of main electricity retailers || 4 || Number of main natural gas retailers || 3 
 Switching rates (only for electricity household consumers) || 13,2% || Switching rates for gas (entire retail market) || N/A 
 Regulated prices for households – electricity || No || Regulated prices for households – gas || No 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || No 
 HHI in power-generation market || 3,567 || HHI in gas supply market || 3,883 
 HHI in electricity retail market (domestic consumers) || 6,918 || HHI in gas retail market || 4,484 
 HHI in electricity retail market (industrial consumers) || 2,815 || HHI in gas retail market (industrial consumers) || 5,509 
 Electricity market value[433] (bn€) || 4.856 || Gas market value20 (bn€) || 0.897 
 Installed generation capacity (MW, 2011) || 19,938 ||   ||   
 Peak demand (MW) || 8,554 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Romania
Key Issues
Correct and
complete transposition of the Third Energy Package and its practical
application needs to continue. Romania should complete the corporate governance
reform of state-owned enterprises in the energy sector in line with the
internal energy market legislation.
Romania's
roadmap for phasing out regulated gas and electricity prices and improving
retail competition and energy efficiency needs to be fully implemented. The
process of electricity market coupling should be finalised following the target
model.
The completion
of gas interconnections and reverse flow projects, including physically linking
the Romanian gas system with the transit pipelines, are necessary to strengthen
security of supply and to enable increased exploitation of domestic gas
resources.
Further
electricity interconnection is needed to exploit the high generation capacity.
Romania is on
track to meet its 2020 renewable target but upgrades to the network would help
integrate more renewables.
General overview
In 2009, the
economic downturn led to a decrease in consumption which has recovered slightly
since 2011. In 2012, the overall renewables contribution was 22.9%, close to
the 24% national target for 2020. 
Figure 1: Gross inland consumption mix 2008 – 2012
(source: Eurostat)
In 2012,
domestic natural gas consumption amounted to 109 TWh (75.68% of total
consumption) while imports were 35 TWh[434]. In 2013, the 8.4% decrease in consumption led to a 58%
reduction in import while domestic production remained at 2012 levels. 
In 2013, the
breakdown of electricity generation was 46.2% thermal, 25.9% hydro and 19.9%
nuclear[435].
Renewable energy sources amounted to 4.348 MW installed capacity. The
renewables share in gross final energy consumption reached 22.9%[436]
in 2012 and thus Romania is almost at its national 2020 target of 24%.
Figure 2: Gross electricity generation mix 2008 – 2011
(source: EU Energy in Figures – Pocketbook 2012 and
2013)
Regulatory
framework
General
In September
2014 Romania adopted amendments to its energy legislation intended to ensure
full transposition of the Third Energy Package Electricity and Gas Directives.[437] An infringement procedure on
restrictions on the export of gas, initiated in 2012 under the TFEU and the Gas
Directive, is on-going[438].
National Energy Regulator
The National
Energy Regulator, ANRE, was established in 1998. By law, ANRE may employ a maximum of 300 persons. Its total budget in 2013 was EUR 15.8 million.
Unbundling
Electricity
sector unbundling has been ongoing since 2000[439]
when CNTEE Transelectrica SA was appointed as the electricity TSO. SNTGN
Transgaz SA Medias was appointed as the gas TSO. Both companies are state-owned
and were certified as independent system operators by ANRE in 2013[440],
subject to fulfilling certain additional requirements to be complied with[441].
It has meanwhile been able in 2014 to issue final certification decisions after
it deemed that these additional requirements were satisfied. Legal unbundling
of electricity and gas distribution operators has been ongoing since 2007.
Wholesale markets
Electricity
Energy Complex
Oltenia, Hidroelectrica and Nuclearelectrica are the three largest generators
with a total market share of 70.01%[442]
(69.7% in 2013). The HHI in the wholesale market is 1,914 (1,759 in 2013). 2012
was a dry year, leading to very high prices in the wholesale electricity
market, and a spot base load price of EUR 48.8/MWh. The spot base load price in
2013 decreased to EUR 35.3/MWh, due to lower demand, normal hydrology and a
large amount of wind generation. Due to significant changes in primary
legislation, transactions performed on the centralised competitive wholesale
markets organised by Opcom SA (the operator of wholesale market) significantly
increased. The volume sold on Opcom SA platforms is almost double than that of
2012, and represents 71% of internal consumption.
The TSO develops and administrates balancing, ancillary services and
cross-border capacity markets. Bilaterally coordinated auctions for long and
short term were organised as of 2012 for cross-border capacity allocation on
the borders with Hungary and Bulgaria and, since December 2012, on the border
with Serbia. 
In July 2013, the Czech Republic, Slovakia, Hungary, Romania and
Poland signed a Memorandum of Understanding to extend the existing market
coupling in Central Eastern Europe by including Romania and Poland. 
Gas
In 2012, demand
was met by imports and six domestic producers. The two leading gas producing
companies, Romgaz and OMV Petrom, provided 97.5% of domestic production. The
market is highly concentrated and the sum of market shares of the three main
suppliers in the wholesale market (Romgaz, OMV Petrom and OMV Petrom gas) is
78.4%. 
In 2012, trading was through long term bilateral contracts and
capacity allocation on a "first-come first-served" basis. In July
2013, OPCOM[443]
and the Romanian Commodity Exchange BRM[444] were licensed
by ANRE to organise gas centralised trading. The gas market development should
be fostered by completion of the interconnection and reverse flow projects with
neighbouring countries.
Retail markets
Electricity
The gradual
phasing-out of regulated prices was completed in December 2013 for
non-household consumers, whilst for households it should be completed by
December 2017. The number of consumers supplied on a competitive basis (which
have chosen to change suppliers) has constantly increased; in December 2013 it
was close to 19,200. The switching rate in the retail electricity market is
still very low (0.03% in 2012). 62 suppliers operate in the retail market while
the degree of real market opening has only slightly increased from 55% in 2012
to 57% in 2013. Due to the negative or slim margins
allowed by price regulation, suppliers are discouraged from making offers
outside their supply areas, therefore consumer choice is in reality often very
limited. 
Figure 3:
Electricity price change by component 2008 – 2013 (source: Eurostat, energy
statistics)
To ensure universal service, five appointed suppliers of last resort
are required to procure a progressively increasing share from the wholesale
competitive market, with the costs transferred to end-consumers.
Gas
In 2012, gas
consumption was 145 TWh of which household consumption was 20%. During the
period 2010–2012, household prices including taxes and levies have remained
constant, while the price for industrial users has continued to increase.
However, the on-going phasing out of regulated prices will have an impact on
prices for both categories.
Figure 4: Natural gas price change by component 2008 – 2012 (source:
EC, EPCR metadata)
Phasing out of regulated prices for non-households will be completed
in December 2014 (or end 2015 if there is a significant difference between the
domestic gas price and European import price that could endanger market
stability). For households, the process lasts until December 2018.
Consumers
Consumers'
overall assessment of the retail electricity and gas markets is just above the
EU average (72.7 points compared to 72.0 and 74.4 compared to 74.1),
corresponding to 16th and 15th place EU-wide, respectively. The gas market has
seen a considerable improvement (of 3.4. points) between 2012 and 2013 (second
highest increase domestically). However, both markets score low on actual
switching, ease of switching, choice and overall consumer satisfaction (for gas
market the latter three rank among the three lowest in the EU). In addition,
the incidence of consumer problems is relatively high (3rd highest in the gas
market) [445].
Vulnerable customers are defined as household consumers with low
income within the limits laid down in the Ordinance 27/2013. The road maps for
phasing out regulated electricity and gas prices includes social measures for
vulnerable consumers by providing direct subsidies, informing consumers about
the process of market liberalisation, reviewing the process for changing
suppliers and detailing electricity and gas bills. Financial aid for social
protection during the cold season is in place.
Developing a price comparison tool has been debated, but the
decision is pending. Independent dispute settlement commissions will be
established within ANRE for both gas and electricity.
A study[446]
has concluded that implementing smart metering is feasible for electricity
consumers, while for gas consumers’ installation will be optional and the
decision will be left to the DSOs. The promotion of pilot projects on smart
metering of electricity distribution systems is one of the measures included in
"Main Commitments for the National Reform Programme 2013"[447].

Infrastructure
The Department
of Energy within the Ministry of Economy has been designated as National
Competent Authority responsible for facilitating and coordinating the permit
granting process for projects of common interest in accordance with the
provisions of the TEN-E Regulation (“one-stop shop”).
Electricity
Transelectrica
is involved in several infrastructure projects with neighbouring power systems
to improve the cross-border exchange of electricity, relief congestion and
improve the integration of RES. The projects are focused on enhancing
interconnector capacity with Serbia, Bulgaria and Republic of Moldova[448].
Six out of seven Projects of Common Interest (PCI) which have been identified
under the guidelines for trans-European energy infrastructure on Romanian
territory focus on the upgrade of the internal electricity system with new 400
kV overhead lines. Romania meets the 10% interconnectivity target set by the
Barcelona Council in 2002.
Gas
Transgaz has
planned the redefinition of domestic gas transmission routes in line with
envisaged national and European flows, including off-shore gas reserves, the
shale gas perspective and the Southern Corridor. The plan includes new high
pressure pipelines and rehabilitation of existing assets.
The interconnection with Bulgaria will ensure minimum gas flow for
emergency supply, with bi-directional flows expected by the end of 2016.
Further development of the interconnector with Hungary, commissioned in 2010,
will lead to full capacity of 4.4 bcm/year in 2016. The project provides a
transmission corridor from the Black Sea and Bulgaria to the markets in Central
and Eastern Europe. The development of interconnection with Moldova and Serbia
will only achieve its full potential if additional investments are made on both
sides of the interconnectors.
The above mentioned issues are covered through the seven gas
Projects of Common Interest with Romanian participation. The construction of a
LNG terminal in Constanta could help to diversify the country's supply
portfolio.
Security of Supply
Electricity 
A peculiarity of
the Romanian electricity system is its current overcapacity in combination with
limited export capacity. The existing capacity is largely meeting demand, but
maintaining this capacity will require improvements in export conditions. 
Gas
In the gas
sector security of supply is jointly ensured by the TSO, the 41 DSOs and the
two operators of underground storage. Special care is given to ensuring
conditions for continuity and safety of gas supply by ensuring a minimum stock
of gas in underground storage. The obligations of licensed suppliers to
maintain the minimum level are set by ANRE.
Key indicators
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 11 || Number of entities bringing natural gas into country || 18 
 Number of main power-generation companies || 5 || Number of main gas entities || 2 
 Market share of the largest power-generation company || 26.7% || Market share of the largest production and import gas company || 41.7% 
 Number of electricity retailers || 54 || Number of retailers selling natural gas to final customers || 65 
 Number of main electricity retailers || 5 || Number of main natural gas retailers || 5 
 Switching rates (entire electricity retail market) || 0.033 || Switching rates for gas (entire retail market) || N/A 
 Regulated prices for households – electricity || Yes || Regulated prices for households – gas || Yes 
 Regulated prices for non-households – electricity || No[449] || Regulated prices for non-households – gas || Yes 
 HHI in power-generation market || 1,914 || HHI in gas supply market || N/A 
 HHI in electricity retail market || 1,472 || HHI in gas retail market || N/A 
 Electricity market value[450] (bn€)   || 3.471 || Gas market value19 (bn€) || 1.786 
 Installed generation capacity (MW) || 18,756 ||   ||   
 Peak load (MW) || 8,627 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Slovakia
Key issues
Slovakia should enhance the independence of national
regulatory authority and ensure its accountability. Slovakia should
promote a regulatory framework conducive to investment in and integration of
the electricity and gas markets, including by reviewing the impact of price
regulation and changes in network charges. Currently network distribution and transmission charges in
Slovakia are among the highest in the EU. 
Slovakia should facilitate greater regional integration and
strengthen interconnections with neighbouring countries in both gas and
electricity networks. Market coupling with the Hungarian and the Czech day-ahead electricity markets is a positive development
and such efforts should be continued.  
Slovakia should continue its efforts to diversify gas
imports in order to foster security of supply and in order to address the concentration
on the wholesale market. 

1.    
General overview

Energy consumption in 2012 (16.7 Mtoe) was based largely on
natural gas, crude oil and petroleum products. The share of renewables in gross
final energy consumption was 10.4%.[451] Slovakia remained above its 2011/2012 interim
trajectory and is currently on track to achieve its 2020 renewables target of
14%.
Figure 1: Gross inland consumption mix
2008 – 2012 (source: Eurostat)
The biggest share in the power generation mix in 2011
(28.66 TWh) was nuclear (53.8%) and renewables (18.7% - mostly hydro). The
share of natural gas increased in 2011 compared to 2010 while the volume of
power generated from solid fuels and oil power remained unchanged.
Figure 2: Gross electricity generation mix 2008-2011 (source: EU Energy in Figures – Pocketbook 2012
and 2013)
Cogeneration[452] provided 24.5% of gross electricity generation
in 2011, increasing
considerably from 2010.[453] 
Final consumption of electricity in 2011 was 10.8 Mtoe and
decreased compared to 2010. The consumption of natural gas by final consumers
declined in 2012 to 54.2 TWh. The economic crisis boosted energy efficiency and
reduced power prices in Slovakia.

 Regulatory
     framework

General
In July 2012, Slovakia adopted laws to transpose the
Directives of the Third Energy Package into its national law. The main purpose
of the adoption of that legislation was the further liberalisation and
harmonisation of the rules governing the functioning of the energy market and
ensuring compliance with the provisions of the third energy package. Some
stakeholders have raised concerns with regard to the independence, transparency
and accountability of the national regulatory authority. In particular concerns
were raised that decisions to substantially change network charges have been
introduced without sound consultations and proper economic analysis
underpinning the decisions, in particular without analysis on the deterioration
on the investment climate and the integration with neighbouring markets this
decision may have. Network distribution and transmission charges in Slovakia
are among the highest in the EU.[454]
National Energy Regulator
Energy regulation in Slovakia is undertaken by the
Regulatory Office for Network Industries ("Úrad pre reguláciu sieťových
odvetví" - URSO) which was
established in 2001. URSO employed 100 staff members in 2012 and its annual
budget reached almost EUR 2.95 million. The laws transposing the Directives of
the Third Energy Package do not fully ensure that URSO can take autonomous
decision independently from the Ministry and the State Inspection and do not
foresee that decisions taken be URSO have to be fully reasoned and justified.
Unbundling
SEPS unbundled in 2001 and as a result of unbundling, three
vertically integrated companies were formed to provide electricity
distribution, electricity supply and services. In 2013 SEPS, the Slovakian
electricity transmission system operator, was certified under the ownership
unbundling model by means of separate public bodies within the State.[455]  
Eustream the only gas transmission system operator in
Slovakia was certified as Independent Transmission System Operator (ITO) in
2013.[456] SPP-distribúcia, the only operator of the gas distribution
system, was legally unbundled from SPP in 2006. 

 Wholesale
     markets

Electricity
The power generation market is highly concentrated. The
largest power generating company (Slovenské elektrárne) had a market share of
almost 78% in 2011[457]. 
Trading takes place mostly through bilateral contracts. 10%
of total annual power production in Slovakia has been traded on short term
day-ahead exchange platforms.[458] The main power exchange in Slovakia is Power
Exchange Central Europe (PXE). Slovakia is part of the Central Eastern Europe
regional market. The price convergence between Slovakia, Czech Republic, and
Hungary increased from 11% to 82% after market coupling in September 2012[459]. In 2012, liquidity of Slovakian intraday market was just
0.04 TWh, indicating poor competition on the wholesale market. 
In 2013 an obligation for electricity producers to pay a
network charge, so-called G-component was introduced. Furthermore for 2013 and
2014, the Ministry of Economy has imposed obligations on the electricity
producer Slovenké elektrárne, on the transmission system operator and on
electricity distributors and suppliers in order to ensure the production and
supply of a certain amount of electricity from indigenous coal. These
obligations cover 6.7% of total domestic consumption of electricity in Slovakia
in 2012. The corresponding electricity price should be maintained at the level
determined by the Office for the Regulation of Network Industries. 
Gas
Concentration of the gas wholesale market remained very
high in 2012. SPP withholds almost 70% of gas supply and it imports gas within
a long-term contract with Gazprom. The contractual price SPP has to pay to
Gazprom has been re-negotiated and lowered in 2014 in order to better reflect
the lower prices on spot markets. 98% of gas consumed in Slovakia comes from
Russia[460]. On the Slovak wholesale gas market no major trading
activity takes place however some sporadic over-the-counter deals take place on
border points, the Slovak virtual trading point and the domestic points. 
In 2012 transit volumes reached 56.5 bcm compared to 5.2
bcm of domestic consumption and transit capacity of 90 bcm/a. Transit volumes
of natural gas from Russia to the EU through Slovakia dropped from 80% of total
Russian flows to Europe a few years ago to about 54 % in 2013 due to the launch
of Nord Stream. In the meantime, gas has been entering Slovakia in reverse flow
from the Czech Republic via Lanzhot cross-border point.[461] In 2013 the network charge for entering the
Slovak gas transmission system from the Czech Republic increased by 300% and
from Austria by 50% compared to tariffs in force in 2012.
In 2013, Slovakia, Hungary, Czech Republic and Poland
adopted a “Road Map towards the regional gas market among Visegrad 4 countries”[462]. 

 Retail
     markets

Electricity
The number of licenced power retailers in the whole retail
market has been constantly growing and it reached 407 at the end of 2012. 19
retailers provide electricity to household consumers at the end of 2012[463]. Despite the growing number of
competitors in the power supply market, prices for household consumers and
small and medium companies remain regulated. Deregulation of prices for the
commercial sector in 2012 was only temporary and URSO decided to revert to
previous regulation due to increase in power prices for small and medium undertakings.
In 2013, electricity prices for household and industrial
consumers decreased compared to 2012[464]. Network charges are among the highest in all
of the EU member states.[465] 
Figure 3: Electricity price change by component 2008 – 2013
(source: Eurostat, energy statistics)
The numbers of consumers switching power providers are
increasing every year, which is a good sign for energy market liberalisation.
57,307 consumers switched in 2012 against 39,762 in 2011, but the total number
of switches remains relatively low. 
According to URSO, switching was not beneficial in every
case, as some power suppliers failed to set prices in a transparent manner.
Irregularities related mostly to invoicing issues. As a result, in 2013 URSO
returned to regulating prices for small and medium commercial users.
A rollout of smart metering in Slovakia is still being
discussed. Distribution system operators install smart meters on a voluntary
basis, usually for energy-intensive customers.
Gas
In 2012, 74 % of all inhabitants in Slovakia had access to
gas[466]. Slovakia, after the Netherlands, is
the second most gasified country of the EU. The demand for gas dropped by 5%
between 2012 and 2011[467] due to decreasing power demand
displaced by the increasing use of renewables in electricity production.
In Slovakia the distribution system is balanced separately
from the transmission system which creates a potential barrier for market
players to enter the retail market.
Retail market concentration is high. In 2012 there were 23
gas retailers[468] in the entire retail market, of which
the dominant supplier is Slovenský plynárenský priemysel, SPP (70% share of gas
market), followed by RWE Gas Slovensko (18.7%). 
Gas prices for household consumers increased between 2008
and 2012. Gas prices for industrial users decreased over the same period
because their energy component decreased by almost 20%.[469] Prices for households remained regulated. 
Figure 4: Natural gas price change by component 2008 – 2012
(source: EC, EPCR metadata)
The number of household consumers who switched gas
suppliers in 2012 reached over 131,000 (9.25% of all the households) and was
six times bigger than in 2011. The number of switches is still relatively low.

 Consumers

Consumers' overall assessment of the retail electricity and
gas markets is above the EU average (78.1 points compared to 72.0 and 79.2
compared to 74.1), corresponding in both cases to 5th place EU-wide. Both
markets are also assessed above the average of 31 domestic services markets
(13th and 10th place, respectively). They score better than the EU average on
all indicators, with the exception of consumer complaints (which are more
numerous than in other EU countries) and in the case of electricity market
switching rates are also slightly lower than the EU average. [470]
In 2012, the number of complaints submitted to URSO by the
gas and electricity entities increased fourfold. In 2012, automatic
compensation payments for the violation of quality standards for energy
services were introduced, but were used only occasionally. Customers reported
over 200 potential infringements of electricity and gas market rules and the
majority of complaints related to switching. For better consumer empowerment,
URSO has a power price comparison tool and energy price calculator on their website[471].
A definition of “vulnerable consumer” was introduced in
2012. Its scope was extended from the previous definition including only
households, to a broader one also covering small businesses. Even though
Slovakia has defined "vulnerable consumers" and “energy poverty”,
there are no specific support measures available for vulnerable customers and
consumers in energy poverty.

 Infrastructure

Electricity
An important part of energy infrastructure investment in
Slovakia involves funds from BIDSF (Bohunice International Decommissioning
Support Fund). Almost EUR 150 million has been made available to private
companies and housing associations for implementation of energy efficiency and
renewable energy projects[472]. 
Slovakia is interconnected to Czech Republic, Hungary and
Poland. The Slovak transmission system is affected by the loop flows which
originate most frequently from Germany and are passed through Poland into Czech
Republic and Slovakia. Significant congestions also occur on the
Slovak-Hungarian border. Further interconnections with Hungary are planned,
three projects having been selected as Projects of Common Interest (PCIs) under
the guidelines for Trans-European Energy Infrastructure. Adding to these, the
reinforcement of the national grid is envisaged through the construction of two
internal lines projects that also have PCI status.  The importance of the PCIs
implementation is reflected in the increase of the electricity interconnection
level (import capacity/net generation capacity) from 37% nowadays to 54% after
their implementation. Moreover, the impact is even more visible for
neighbouring countries, such as Hungary, increasing from 15-30% to values above
30% on the 2020+ time horizon.
The construction of two additional units at Mochovce power plant
was started in 2008.
Gas
A bi-directional high pressure gas pipeline interconnecting
the gas systems of Hungary and Slovakia has been constructed and is expected to
start operating very soon. The project is co-financed through the European
Energy Programme for Recovery and has also acquired PCI status. The
Polish–Slovak interconnection, also a PCI, is currently being developed. These
projects will diversify the routes of gas supply pipelines, running across
Visegrad group countries, and connect two LNG terminals in Poland and Croatia. 

 Security
     of Supply

Electricity
Security of supply in Slovakia is expected to be
strengthened considerably after the two additional units at Mochovce nuclear
power plant, each of 440 MW installed capacity, are commissioned. 
Slovakia suffers from unscheduled electricity loop flows
from Germany, threatening the secure grid operation and cross-border wholesale
trade. To mitigate the loop flows Slovakia reconfigurated its border
substations. It helped to restore the N-1 security principle, but also
increased losses in the transmission system. Slovakia has considered installing
phase shift transformers. This problem could also be alleviated by increased
interconnecting capacity. 
Gas
Natural gas is currently the most significant energy
source in Slovakia and roughly 98% of domestic gas consumption is covered by
import under the long-term contracts between SPP and Gazprom. The gas supply
disruption of 2009 was an important lesson that Slovakia needs to consider
diversifying its energy portfolio. Gas storage capacities have been increased
and reverse flow at the Western border interconnectors has been enabled.
Ongoing investment in gas interconnecting infrastructure will open new
directions for gas import to Slovakia. 

 Key
     indicators
 
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 11 || Number of entities bringing natural gas into country || 8 
 Number of main power-generation companies || 1 || Number of main gas entities || 3 
 Market share of the largest power-generation company || 78.9% || Market share of the largest entity bringing natural gas || 61.8% 
 Number of electricity retailers || 71 || Number of retailers selling natural gas to final customers || 22 
 Number of main electricity retailers || 4 || Number of main natural gas retailers || 2 
 Switching rate || 5% || Switching rate for gas (household consumers) || 11.56% 
 Regulated prices for households – electricity || Yes || Regulated prices for households – gas || Yes 
 Regulated prices for non-households – electricity || Yes || Regulated prices for non-households – gas || Yes for SMEs 
 HHI in power-generation market || N/A || HHI in gas supply market (domestic) || N/A 
 HHI in electricity retail market (domestic) || N/A || HHI in gas retail market (domestic) || N/A 
 Electricity market value[473] (bn€) || 2.662 || Gas market value20 (bn€) || 1.135 
 Installed generation capacity (MW, 2011) || 8,056 ||   ||   
 Peak load (MW) || 4,395 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Slovenia
Key issues
Further
strengthening of the power grid is needed to ensure the reliable and safe
operation of the national electricity system. Planned investments in additional
cross-border capacity are needed to improve competition and integration in the
internal energy market. Investments in more flexible sources with lower
environmental impact would improve supply diversification and integration in
the IEM. Finally, the electricity TSO ELES needs to be certified urgently. 
Contractual
congestion of gas interconnection capacity frequently occurs, implying the need
for the reinforcement of existing capacity. Investments in new gas pipelines
could help to diversify the Slovenian energy supply, but current projects
(notably South Stream) tend to extend the role of current suppliers. Slovenia
still has to adapt its national legislation to comply with the provisions of
Regulation (EC) No. 994 on security of gas supply. Finally, more should be done
to encourage competition in the generation market.
General
overview
35% of gross inland energy consumption in 2012 (7.00
Mtoe) was accounted for by oil and petroleum products, followed by nuclear
energy and solid fuels (20%) and renewables (15%)
In 2012,
renewables increased to 20.2% of gross final energy consumption, showing good
progress to the 2020 renewables target of 25%. The share of renewables
increased mainly due to greater contribution (+1.9%) of heating technologies[474].

Figure 1:
Gross inland consumption mix 2008 – 2012 (source: Eurostat)
In 2012, the
market share of different fuels in the electricity generation mix changed
slightly compared to 2011 levels. Nuclear fuel remains the primary source of
overall inland energy generation at 36%, with solid fuels accounting for 32%.
Renewables rised from 25% in 2011 to 29% while the contribution of gas remained
negligible at 3%.
Figure 2: Gross electricity generation
mix 2008 – 2011 (source: EU Energy in Figures – Pocketbook 2012 and 2013)

1.    
Regulatory
framework

General
Slovenia's
legislation transposing the Third Energy Package was approved by Parliament in
February 2014. 
National Energy Regulator
The Slovenian
national regulator, the Energy Agency of the Republic of Slovenia (AGEN-RS) has
been in operation since 2000. In 2013 it had a budget of EUR 2.8 million and 46
employees. 
Unbundling
Electricity
infrastructure is managed by one TSO (ELES) and one DSO (SODO), which are both
state-owned. The gas TSO Plinovodi is responsible for natural gas
infrastructure, together with 16 DSOs. These DSOs service less than 100,000
customers in total, and therefore no legal unbundling is required.
Plinovodi was
certified as an independent transmission system operator (ITO) in 2012. ELES’s
certification is pending following the recent approval of the new Energy Act.

 Wholesale markets

Electricity
The Slovenian
electricity wholesale market remained highly concentrated in 2012. HSE, Gen
energija and TE-TOL were the three dominant (state-owned) market
players, both in terms of installed capacity (84.8% cumulative share) and
production (91.4% cumulative share)[475].
The measure of market concentration (HHI)  was 4,738 for generation, indicating
a high level of concentration.  The modest market size does not facilitate the
development of many generators. 
Following market
coupling with Italy, Slovenia is part of a much larger market, even though
cross-border capacity is still limited. Implicit auctions enabled Slovenia to
improve cross-border capacity utilization and increase market liquidity.
In 2012 the
day-ahead market[476]
registered 4.4 TWh of traded energy, three times larger than 2011 results. The
average baseload spot price was EUR 53.15/MWh, 7% lower than 2011 figures. In
October 2012, an intraday market and a balancing market were introduced.
Gas
Slovenia depends
entirely on imports to meet its domestic demand for gas. Demand in 2012
declined further compared to 2011 (-4%, reaching 0.87 bcm) due to the economic crisis.
42% of gas imports supplied from Russia, 35% from Austria, 16% from Algeria,
and 7% from Italy. Geoplin remained the principal importer, supplying over 90%
of demand. Significant development of the secondary capacity market was
observed in 2012 as the number of contracts increased together with the daily
exchange capacity.

 Retail markets

Electricity
Electricity
demand remained unchanged in 2012, amounting to 12.4 TWh. Eight out of thirteen
active suppliers provided a share higher than 5%. The largest supplier was
GEN-I, whose market share increased to 26.2% of the overall final customers. In
2012, more than five years since full market liberalisation (1 July 2007),
retail competition finally increased due to a new entrant, GEN-I in the household market segment. The market share of the three
largest suppliers increased slightly from 57% in 2011 to 59%. The concentration
of the retail market remained at a medium level, with an HHI of 1,575. This
indicator is however misleading as the retail market is supplied by many local
suppliers, each of them dominant in a specific area.
The switching
rate grew to 5.9% (+1.7% compared to 2011). The vast majority of switches were
undertaken by household customers (48,794 consumers) who changed their supplier
following the entrance of GEN-I and Petrol into the household market segment,
gaining 12.5% of the final consumers.
Figure 3: Electricity price change by component
2008 – 2013 (source: Eurostat, energy statistics)
Gas
The Slovenian
natural gas market is one of the smallest in the EU-28, totalling around one
billion standard cubic metres per year[477]. Most natural
gas sold in the retail market is consumed by industry and other non-household
consumers. The quantities of gas consumed by end customers amounted to 0.87 Gm3
in 2012. The dominant supplier, Geoplin, increased its market share to 63%,
followed by EnergetikaLjubljana (7.8%) and Adriaplin (7.2%). As a result, the retail gas market was concentrated, with an HHI of
4,186. Significant improvements in opening up the
retail gas market were recorded. This was confirmed by the switching rate
rising from 0.07% in 2011 % to 8.6% by the end of 2012 (reflecting GEN-I
entered the market) placing Slovenia at a level similar to those observed in
the Netherlands and Germany. In 2013, uniform tariffs for each entry and exit
point of the gas transmission network were introduced.
As a result of
GEN-I’s entry in the market in 2012, natural gas prices in Slovenia started
declining in the fourth quarter of 2012. GEN-I price strategy that included
prices lower than existing prices by around 10 cents per cubic metre (21.7%
lower than the largest player’s price before the new entry took place), lead to
a fast response from incumbent suppliers, that started modifying their own
offers to consumption patterns, taking into account seasonal elements and
changing their marketing strate­gies. Since October 2012 and well into 2013,
prices have been declining to less than 40 cents per cubic metre due to the
continued competitive response from incumbent suppliers, as well as seasonal
factors[478]. 
The percentage
of network charges in the final price of gas varies between 15% and 19% for
industrial customers, and between 17% and 28% for household customers (Figure
4).
Figure 4: Natural gas price change by component 2008 – 2012
(source: EC, EPCR metadata)
Slovenia is
among the Member States that have not yet initiated the mass rollout of smart
meters[479].
A formal decision on the rollout, together with the establishment of a rollout
percentage target has yet to be confirmed.

 Consumers

Slovenia had a
very significant increase in switching during 2012 (especially in the 4th
quarter of the year) due to the entry of a new player in the liberalised
market. The absence of price regulation allowed the new player to enter the
market with a pricing and sourcing strategy very different from that of the
existing players and obliging the incumbent suppliers to modify their price
strategies. The existence of the price comparability website maintained by
AGEN-RS was certainly an asset in promoting energy markets’ transparency and in
facilitating switching.
This situation
is also reflected in consumers' overall assessment of retail gas and
electricity markets which scores the highest and second highest in the EU
respectively (84.4 points compared to 74.1 and 81.0 compared to 72.0). Both
markets are also assessed very well in the ranking of 31 domestic services
markets (2nd and 9th highest, respectively). The electricity market is assessed
above the EU average on all indicators, with the exception of actual switching
(which is slightly below the EU average). Comparability, ease of switching and
overall consumer satisfaction rate among the 3 highest in the EU and the
incidence of problems is third lowest. The assessment of the gas market has
also slightly improved since 2012 (by 1.3 points[480]). All indicators are assessed above the EU average[481]. 

 Infrastructure

Slovenia has
nominated the Ministry of Infrastructure and Spatial planning as the competent
authority coordinating all permit granting processes (‘one-stop shop’). The one-stop shop is responsible for facilitating and coordinating
the permit granting process for Projects of Common Interest, in accordance with
the Regulation on Trans-European infrastructure..
Electricity
In 2012,
installed generation capacity amounted to 3.3 GW. In the medium term,
significant investments in thermal (including the controversial[482]
Šoštanj lignite power plant, TEŠ) and hydro power plants are expected in
accordance with the latest transmission network development plan for 2013-2022
published by ELES. This plan foresees an increase in installed generation
capacity by 2.4 GW in 2022. The plan also outlines a range of different
investment options, including the commissioning of a new nuclear reactor in
Krško.
Since June 2012,
when intraday allocation mechanism was also introduced for the Italian border,
two explicit auctions are held every day. Allocation of cross-border capacity
is carried out daily by implicit auctions within the market coupling mechanism
of Slovenia and Italy.
In terms of
infrastructure development, the interconnector with Hungary is expected to
become operational in 2016. There are several electricity Projects of Common
Interest under the guidelines for trans-European energy
infrastructure planned in Slovenia including two
electricity clusters with a high voltage transmission line between Slovenia,
Croatia and Hungary and a high voltage transmission line between Slovenia and
Italy. The Okroglo-Udine interconnection and HVDC line between Slovenia and
Italy (PCI 3.20.1) is not expected to be completed before 2022.
Gas
The Slovenian
gas transmission network is interconnected with the gas transmission networks
of Austria, Italy and Croatia. Of these, the Austrian border point was the most
congested and commercially attractive in 2012. Network investments in 2012
amounted to EUR 38 million (almost 50% less than in 2011), of which EUR 9
million was granted by the European Union within the European Energy Programme
for Recovery (total contribution for this project amounted to EUR 37 million)
for the construction of the Ceršak – Kidricevo section of the gas pipeline M1/1.
Two upgrades of the transmission network, M2/1b Rogaška Slatina−Trojane
and M2/1c Trojane–Vodice, were completed in 2013. Work on strengthening the
Kidričevo compressor station is ongoing.
There are
several gas Projects of Common Interest, which Slovenia is involved in,
including the LNG terminal in Krk (HR), which is a security of supply asset for
the region as well as several gas pipeline projects involving Italy, Croatia,
and Hungary.

 Security
     of supply 

Electricity
To ensure
network security, the transmission grid and electricity distribution networks
must adhere to the N-1 criterion. Network security is dependent on its import
capacities to meet internal consumption demands.
The adequacy of
Slovenia’s network varies significantly depending on seasonal peaks, with the
winter period highlighted as the critical period[483].
Summer reserve margins are expected to decrease from 10% in 2013 to 3% in 2020.
Gas
Gas supply in
Slovenia is entirely dependent on its interconnections with neighbouring
countries as there are no gas storage facilities. Nonetheless, in spite of extreme
weather conditions at the beginning of 2012, all customer service requirements
were fulfilled.
Despite efforts
in implementing the provisions mentioned in Regulation 994/2010, amendments in
the national legislation are needed to complete the new rules and regulations
for security of gas supply. 
8. Key
indicators
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 3 || Number of entities bringing natural gas into country || 5 
 Number of main power-generation companies || 2 || Number of main gas entities || 2 
 Market share of the largest power-generation company || 55.2% || Market share of the largest entity bringing natural gas || 90% 
 Number of electricity retailers || 13 || Number of retailers selling natural gas to final customers || 21 
 Number of main electricity retailers || 8 || Number of main natural gas retailers || 4 
 Switching rates (entire electricity retail market) || 5.9% || Switching rates for gas (entire retail market) || 8.6% 
 Regulated prices for households – electricity || No || Regulated prices for households – gas || No 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || No 
 HHI in power-generation market || 4,738 || HHI in gas supply market || 5,868 
 HHI in electricity retail market || 1,575 || HHI in gas retail market || 4,186 
 Electricity market value[484] (bn€) || 1.161 || Gas market value18 (bn€) || 0.432 
 Installed generation capacity (2011, MW) || 3,268 ||   ||   
 Peak load (MW) || 2,100 ||   ||   
 Number of smart meters installed || N/A ||   ||   
Spain
Key issues
In 2013, Spain
began an electricity market reform, with the main aim of eliminating the tariff
deficit. The Parliament passed a new Electricity law in December 2013, which
was followed by a range of new secondary regulations in 2014. The reform was
criticized for having retrospective effects and limited consultation with
stakeholders, therefore Spain should increase participation and transparency in
the regulatory process to reduce perceived regulatory risks. The market reform
should be completed, to reach further regulatory harmonization with the rest of
Europe and reduce State intervention. Also, necessary steps should be taken to
minimise impact of this reform on the renewable and cogeneration energy
production to ensure that Spain is able to meet its 2020 renewable targets.
Spain should
continue its efforts to complete
the electricity and gas interconnections with neighbouring countries,
particularly France.  The creation of an Iberian Gas
hub in line with the South Gas Regional Initiative and the Gas Target Model is
a key challenge. Consumer satisfaction remains low. Whereas for electricity a
large segment of the population is identified as vulnerable customers, for gas
no vulnerable customer group has been identified. 
General overview
Total gross
energy consumption has continued to fall in recent years in line with economic
output. In 2012 it totalled 127.3 Mtoe, 0.7% down from previous year and 10.2%
down from 2008. Despite the overall decrease, consumption from renewable
sources and solid fuel has grown and displaced other energy sources. In 2012,
the renewables share in gross final energy consumption reached 14,3%[485],
remaining above the country's 2011/2012 interim trajectory. Thus, Spain is
currently on track to achieve its national 2020 RES target of 20%.
Figure 1:
Gross inland consumption mix 2008 – 2012 (source: Eurostat)
Figure 2:
Gross electricity generation mix 2008 – 2011 (source: EU Energy in Figures –
Pocketbook 2012 and 2013)
Regulatory framework
General
In December
2013, the Spanish Parliament passed a new electricity law. The law is part of
an electricity market reform package which was announced in early 2013. It is
mainly aimed at eliminating the tariff deficit by reducing regulated costs
allocated to the system and increasing the revenue, e.g. from additional taxes.
The new regulatory framework establishes that no new costs shall be introduced
into the electric power system without an equivalent revenue increase or cost
reduction.
The reform
includes a new support scheme for existing and new renewable and CHP plants,
changes in the remuneration of network activities and changes in final users’
tariffs. The changes in tariffs include a new regulated price for small
customers and a new injection charge for those users with micro-generation
plants, created to reflect unavoidable supply costs. The new measures have been
objected to by energy producers (renewable and conventional), distribution
system operators, consumer associations and political parties on different
grounds. Most stakeholders complain that the reform unduly reduces their remuneration
while increasing regulatory risks, and consumers criticise the increase in
electricity charges. 
Increased
participation and transparency in the regulatory process could contribute to
reduce opposition and regain the trust of stakeholders and consumers.
Regulation in Spain could also benefit from greater harmonization with the rest
of Europe in topics such as retail and renewable support.
A reform of the
gas sector has also been announced. In particular, a new gas exchange is
planned to start functioning by 1 January of 2015, in order to increase
transparency for wholesale gas prices.
Spain could make
use of the on-going reform to simplify the legislative framework applicable to
the energy sector, to limit the number of legislative acts in force and to
reduce the recourse to urgent measures, for the sake of legal certainty of the
market players.  
National Energy
Regulator
In October 2013, the role of the National Energy
Regulator was attributed to a new agency, the National Authority for Markets and
Competition (Comisión Nacional de los Mercados y la Competencia, CNMC). The
CNMC is the result of a merger of the previous antitrust authority with six
regulatory agencies (responsible for telecom and audiovisual, electricity and
natural gas markets, postal sector, airport and certain aspects of the railway
sector).
The CNMC is a public law entity with its own legal
personality and full public and private capacity. 
The current annual budget of CNMC to carry out all of
its tasks – not just energy – amounts to 52.8 million Euros and the number of
staff is 519 people. It is important that CNMC retains adequate human and financial
resources and that it can exercise its powers and tasks  under the Third energy
package effectively and independently, especially on tariff setting. 
Unbundling
Currently, the
entire electricity transmission network is owned and operated by Red
Eléctrica de España (REE), a certified TSO. REE is independent of other
companies in the sector. Enagas Transporte, S.A.U. was certified as an
ownership unbundled TSO for its own network (more than 95% of gas transport
pipelines) and as ISO for other companies' pipelines. The electricity and gas
DSOs are legally and functionally unbundled. 
Wholesale markets
Electricity
Electricity
production in Spain fell in 2013 to 274 TWh – after a small recovery in the
previous year – driven by the continued fall in electricity consumption and a
reduction in electricity exports (which were 37.9% lower than in 2012).
Production from gas fuelled CCGTs saw the biggest reduction, while production
by renewable power plants increased.
In 2014, the
Iberian day-ahead market, OMIE, was coupled with the Central and Northern
European markets, as part of a Europe-wide market coupling process. OMIE has
been the market operator for both Spain and Portugal since mid-2007. The
coupling process will allow infrastructure between Spain and France to be used
more efficiently, although the interconnection is already used at nearly full
capacity.[486]
Conversely, congestion in the Spain-Portugal interconnection has continued
decreasing in 2013,[487]
partly due to the increase in the interconnection capacity. The next step will
be to focus on integrating the intraday market with the rest of Europe, which
is especially relevant in terms of facilitating renewable energy integration.
Also in 2014, on
March the 25th, the first joint auction of electricity
interconnection capacity between Spain and Portugal took place, under a
mechanism based on financial transmission rights (FTR)  established in the
MIBEL Council of Regulators (CR MIBEL). This auction constitutes the first
European capacity allocation mechanism based on financial transmission rights
(FTR).
Market
concentration, which had been falling for a number of years with the increase
in smaller renewable energy generating companies, has remained stable in recent
years. The largest generation company in Spain in 2012 accounted for a 23.8% of
the total energy sold and there were five other companies that generated more
than 5%. 
After a short-lived
reduction in 2012, forward trading in the Spanish market recovered its growth
trend. The trading volume in the period up to March 2014 (109.85 TWh) increased
42.2% compared to the same period in 2013. Furthermore, the OTC volumes cleared
and settled by the Portuguese and Spanish clearing houses (i.e. OMIP clearing
house (OMIClear) and by BME Clearing) measured 71.84 TWh, increasing
significantly (+95.1%) in year 2013 compared to year 2012 (36.82 TWh). OTC
physical trading consistently accounts for around 30% of the final energy
delivered in the daily schedule.[488]
Trading in the Spanish part of the day-ahead OMIE market recovered in 2013, to
185 TWh, but is still 17% below the 2008 figure. Intraday trading volumes also
dropped in 2013 to 36 TWh after a sustained increase during the previous years.
Balancing energy has also been falling, even after accounting for the decrease
in energy traded.
The average
price in the day-ahead market was EUR 44.26/MWh in 2013, falling from 47.23 in
2012 and 49.93 in 2011. 
Gas
Spain imports
most of the gas it consumes, since its gas production is minimal (392,599 GWh
of imports in 2012 against 393 GWh of domestic production). Natural gas
consumption decreased by 8% in 2013 because of the reduction of the use of gas
in power generation due to the favourable coal prices and the increase of
generation by renewable sources. By contrast, industry and household demand for
gas in 2013 remained constant, at 2012 level.
There are three
main supplier countries: Algeria (42.4%), Nigeria (15.4%) and Qatar (11.6%),
and up to eighteen companies injecting gas in the system (in 2012).[489]
In fact, Spain has one of the highest levels of gas supplier diversification in
Europe. In 2012, most imports were still in the form of LNG (60.6% of the total).
In 2012, Spain was the only major market in Europe which imported less gas
through pipelines than through LNG terminals. However, LNG imports are
decreasing (e.g. by 23% in the first quarter of 2013 compared to 2012), and in
2013 imports through pipelines surpassed LNG, due to a drop in demand, high LNG
prices and the newly commissioned interconnection with Algeria. In the last few
years, Spain has been re-exporting LNG.
Gas is traded
bilaterally, mostly through OTC contracts. At present there are two different
initiatives competing to become a Spanish gas hub. In March 2014 the two
initiatives signed a MOU that may result in a merge of both projects. To date,
trading can take place at eight balancing points (six LNG terminals as well as
the virtual balancing point and the virtual storage point). 78.2% of trades
occurred in the LNG terminals. In addition to OTC trading, the gas wholesale
market is comprised of auctions at different horizons for regulated activities
(for the Last Resort supply and working and cushion gas). These auctions are
run by OMIE, the electricity market operator.  
Due to the
absence of an organised gas hub, there is no single liquid transparent gas
reference price in Spain. CNMC has developed a gas import index price,
reflecting the cost of long term contracts supplying the Spanish gas market.
This index shows that gas import prices nearly doubled between July 2009 and
December 2012 (to EUR 27.10/MWh) linked to oil price developments. During 2013
the import price is in slight decline (to EUR 26.39/MWh in December 2013).
It would appear
appropriate for CNMC to review the entry-exit regime in Spain with the aim to
enhance cross-border trade and allocate system costs on a non-discriminatory
basis.
Retail markets
Electricity
Since 2003, all
electricity consumers are eligible to choose their electricity supplier.
However, most are still supplied under regulated tariffs. Customers with
contracted capacity below 10 kW have the right to be supplied under the
regulated regime (93.8% of all customers). At the end of 2013, 60% of those
customers were supplied under the regulated mechanism while in 2011 this share
was 76%. 
Competition in
retail supply continues to rise, with a significant and steady increase in the
switching rate (from 5.2% in 2009 to 12.1% in 2012). However, most competitors
focus on the commercial and industrial segments. The largest retailer at the
end of 2012 was Endesa with a 37% market share of the whole free market.
Despite the
competitive market conditions, final customers’ prices have increased
considerably in previous years. From 2008 to 2012, final electricity prices
have increased by an average 9.9% per year for domestic customers and 3% for
industrial customers.[490]
The increase for domestic customers is due to an increase in network costs and
taxes (26% and 14.8% annual increase respectively). In 2012 network costs
accounted for 54.0% of the price without taxes and 42.5% after taxes. For
industrial electricity prices, the share of network costs was 19.0% of the
final price.
Figure 3:
Electricity price change by component 2008 – 2012 (source: Eurostat, energy
statistics)
In July 2013,
the Government rebalanced the two components in the electricity tariffs, a
capacity component, per kW contracted, and an energy component, per kWh of
energy consumed. The change aimed to make tariffs more cost-reflective and
increased the average supply cost for customers with lower than average load
factors, such as holiday homes.
Since 1 April
2014, the Spanish Government has put in place a new mechanism that links the
retail market electricity price to the wholesale market price. This new
mechanism seeks to remove the regulation of the commodity prices in electricity
bills for householders in Spain established in 2009 and in place until now. Whilst
this is expected to bring positive changes with regard to competition, it
should be accompanied with intensive information campaigns addressed to
consumers at large.  
Gas
The market
concentration level of the Spanish natural gas retail sector shows moderate
concentration with a HHI of 2,250 in 2012. The three largest companies still
cover almost 70% of the share of natural gas supply, but there are stronger
signs of new entrants' activity. 
The total number
of gas consumers in December 2012 was 7.4 million, with gas demand of 362 TWh.
By December 2012, 69.07% of customers were supplied at a free price, while
30.93% remained under the regulated last resort tariffs. Only small customers,
consisting mostly of households are eligible for this tariff that the
Government sets with reference to periodic gas auctions.
Figure 4:
Natural gas price change by component 2008 – 2012 (source: EC, EPCR metadata)
Customers’
switching rate, 19.32% in 2012, stabilised around the 2011 value after the
previous year’s increases.  80% of the switching rate occurred within the free
market and less than 20% was due to a move from the last resort supplier to the
free market. 
Consumers
Spanish consumers rate the performance of their retail
electricity market second lowest of all EU countries (58.5 points compared to
72.0) and the assessment has further decreased (by 1.4 points[491])
since 2012. The market also ranks 4th lowest in the ranking of 31 domestic services markets. The scores on trust in providers and
overall consumer satisfaction are second and third lowest in the EU
respectively while the incidence of problems is second highest. The retail gas
market is ranked third lowest in the EU (69.4 points compared to 74.1), with
the 3rd lowest score for trust and highest incidence of consumer
complaints to third parties. Both markets score below
the EU average on all indicators, with the exception of switching in the
electricity market (which is slightly above the EU average). [492] 
New measures
have been introduced, including the Ministry taking over responsibility for
information and complaint handling,[493]
although the CNMC remains in charge of other protective functions, such as
operating web-based gas and electricity price comparison tools. Suppliers need
to inform clients about their rights and establish a procedure in the case of
complaints. Free customer information services must be made available.
Additionally, a new law adopted on 27 March 2014 has introduced new measures in
switching for gas and electricity, setting up clear procedures when desisting
from a switching request and procedures in case of non-requested switches.
Spain
maintains public service obligations through Last Resort Suppliers. Customers
whose retailers fail are supplied under the last resort tariffs until they sign
a new contract. The concept of vulnerable costumers has only been defined so
far for electricity customers. Vulnerable customers should fulfil at least one
of the following criteria: a large family or a family where all members are
unemployed; be low voltage consumers (less than 1 kV) with contracted demand
lower than or equal to 3 kW; or a pensioner older than 60 years with a minimum
level pension. Vulnerable customers’ electricity tariffs are reduced by means
of a “social bonus”, which sets their tariffs at the July 2009 level. As of
December 2012, 2,544,170 customers were defined as vulnerable. 
Infrastructure
The Spanish authorities should ensure a proper and timely adoption
of the measures stemming from the TEN-E Regulation, including the establishment
of the one-stop-shop for Projects of Common Interest (PCIs) (due by 16 November
2013), and other measures foreseen for 2014 and 2015, including the publication
of the manual on the permit granting process for project promoters, and the
adoption of legislative and non-legislative measures streamlining the
environmental assessment procedures.
Electricity
The reduction in
electricity demand has delayed the need for new infrastructure and led to
adjustments in the remuneration of networks. Conventional generation capacity
has been reduced by 1,600 MW since 2010 due to the closure of some old coal,
fuel-oil and diesel plants. However, renewable capacity commissioned in 2013
has decreased, following Government measures to freeze subsidy costs, although
at lower rates than in previous years. In mainland Spain, 540 MW of new
capacity was installed in 2013 against 2,860 in 2012. 
Reinforcements
to the transmission network have added 747 km of new line to the grid (1.9% of
the total network length), down from 860 km in 2012. Despite these
reinforcements, there has been an increase in transmission constraints in
recent years, potentially due to intermittent generation. 
In the context
of the TEN-E Regulation, Spain has 5 Projects of Common Interest (PCI) that
will help to increase interconnection level with Portugal and France and will
contribute to integrate RES into the grid. However, the 10% Barcelona target
will not be reached by 2020 with the selected PCIs.
Gas
Spain has six
LNG terminals and a seventh regasification plant in Gijon was completed in
2012. The new plant is not in operation at the current time as the stagnated
level of demand does not justify it. Spain has interconnection pipeline
connections with Morocco, Portugal, France and a direct connection with
Algeria. The transmission capacity with France was upgraded in 2013 providing
reverse flow interconnection at Larrau which reinforced the North-South
interconnections. There are four underground storage facilities covering 9.1%
of the demand. An underground storage project expected to enter into operation
in 2013 has been delayed after gas injection works led to intense local
earthquakes. The project would have increased the underground storage capacity
to around 14% of the demand. Forthcoming planned investments in gas
infrastructure were revised and delayed (excluding international commitments)
because of lower than expected demand.
In the context
of the TEN-E Regulation, Spain has one PCI that will help increase
interconnection level with France.
Security of
Supply
Electricity
Spain has a
comfortable generation capacity margin, due to earlier strong investments in
CCGT and renewable plants and the reduction in electricity demand. No
significant new capacity will be required in the coming years. 
The steady
increase in interconnection capacity with Portugal and France is helping Spain
to manage the integration of high volumes of renewable energy. In August 2012,
the Balearic Islands electricity system was connected to the Mainland system,
enhancing the security of supply in the islands. However, new investments in
transmission may still be required to provide better integration for those
areas facing frequent congestions.
Gas 
Spain has managed its dependency on
imported gas by increasing the capacity of LNG terminals and diversifying its
gas suppliers. In addition, it requires shippers to maintain a certain volume
of stored natural gas at the beginning of the winter season.
Key indicators
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || >15 || Number of entities bringing natural gas into the country || 18 
 Number of main power-generation companies || 5 || Number of main gas entities || 4 
 Market share of the largest power-generation company || 23.8% || Market share of the largest entity bringing natural gas || 48% 
 Number of electricity retailers || 225 || Number of retailers selling natural gas to final customers || 14 
 Number of main electricity retailers || 4 || Number of main natural gas retailers || 6 
 Switching rates (entire electricity retail market) || 12.07% || Switching rates for gas (entire retail market) || 19.32% 
 Regulated prices for households – electricity || Yes || Regulated prices for households – gas || Yes 
 Regulated prices for non-households – electricity || Yes || Regulated prices for non-households – gas || No 
 HHI in power-generation market  || 1,329 || HHI in gas supply market || 2,399 
 HHI in electricity retail market   || 2,240 || HHI in gas retail market || 2,264 
 Electricity market value[494] (bn€) || 27.199 || Gas market value10 (bn€) || 7.414 
 Installed generation capacity (MW, 2011) || 102,804 || HHI for gas imports || 2,710 
 Peak demand (MW) || 43,527 || HHI for retail market (household/industry/electricity generation) || 2,250 
 Numbers of smart meters installed || 7,910,569 || HHI for households (excluding industry and electricity generation) || 3,800 
Sweden
Key issues
The Swedish
electricity market is integrated in the Nordic market and works well. However,
congestion management and transparency provisions for cross-border exchanges
give rise to some concerns. The Swedish TSO, Svenska Kraftnät, has intensified
the investments in the grid to further develop the market and prepare for an
increased share of renewable electricity. 
Since 2009, the
Swedish DSOs are obliged to provide monthly meter readings to households and
hourly readings to industrial customers. This has resulted in a full roll-out
of smart meters.
Diversifying gas
supply sources would encourage more competition and improve Sweden’s energy
security. Several new LNG-stations are therefore
planned in Sweden including one of strategic importance for the Baltic market.
1.     General overview
In 2012, the
total energy consumption reached 49.8 Mtoe and was satisfied mostly by solid
fuels, nuclear, and oil products[495][496][497].
Sweden’s target for 2020 is to have 49% of renewables in gross final energy
consumption. The country has already achieved its national 2020 RES target as
the renewables share improved from 42.4% in 2006 to 51.0% in 2012[498];
this calls for a higher goal for 2020. 
Figure 1:
Gross inland consumption mix 2008 – 2012 (source: Eurostat)
The power
generation mix in 2011 (166.6 TWh) was dominated by
renewable and nuclear sources[499]. The share of cogeneration in
electricity production was 10% in 2011[500],
showing a significant increase compared to the level of 6.7% in 2005[501].
Figure 2: Gross electricity generation mix 2008 – 2011
(source: EU Energy in Figures – Pocketbook 2012 and
2013)
2.     Regulatory framework
National Energy Regulator
The Swedish
regulator, Energy Market Inspectorate (Ei), has been in operation since 2008,
employing 100 staff with an annual budget of around EUR 11 million[502].
Despite being an agency administratively attached to the Ministry of
Enterprise, Energy and Communication, it is an independent regulatory
authority.
Unbundling
Svenska Kraftnät
is the Transmission System Operator (TSO) for electricity, and Swedegas for
gas. Both TSOs have been certified under the ownership unbundling model. Baltic
Cable has so far not been certified. EI should cooperate with the Germany
regulator Bundesnetzagentur to ensure compliance of this cable with the
unbundling requirements. In electricity, 171 Distribution System Operators
(DSO) are functionally unbundled, and in gas, five.
3.     Wholesale markets
Electricity
The Swedish
wholesale power market is part of the integrated Nordic power market. In 2012,
electricity production was dominated by three companies, Vattenfall, Fortum and
E.ON, together controlling 79% of the generation[503].
However, due to the connection with Nord Pool, the actual number of players
active on the wholesale market is higher. The three incumbents have joint
ownership of nuclear power plants, and the Swedish Competition Authority is
concerned by the inherent risk of information being shared between sites, diminishing
confidence in a functioning market. This problem has been addressed by the
energy regulator, which forced the owners of nuclear power stations to agree on
common ethical rules. However, the risks arising from links among major
competing producers still remain and the Authority should continue to monitor
the situation, intervening when necessary. Nord Pool Spot is the common Nordic
market place with which the Swedish wholesale power market is integrated and
where three-quarters of Nordic electricity is traded. New market coupling
interconnections between the Continent and Nordic countries (Baltic Cable and
SwePol Link) are likely to increase continental influence on the Nord Pool
system price. This is seen as the first step towards Europe widemarket
integration. The average wholesale price on Nord Pool Spot’s day ahead bidding
market in four Sweden’s bidding areas in 2012 was
around EUR 32.5/MWh. In terms of liquidity, volumes traded on Nord Pool Spot
are the highest on European power exchanges. Swedish volumes reached 131 TWh,
94% of national electricity consumption.
Gas
Sweden does not
produce natural gas. In 2012, it imported all of its requirements, about 1.5
bcm, through the pipeline from Denmark.  Sweden has around 37,000 end-users, of
whom approximately 3600 are business customers and the remainder domestic. At wholesale level, two operators
are active, E.ON Sverige and Dong Energy. There is no wholesale market hub as
all gas is imported. To gain access to the Swedish market, a supplier needs to
acquire transmission capacity on the Danish interconnector.  There is currently
no congestion on the grid, either nationally or in the import link from
Denmark.
4.     Retail markets
Electricity
The same three
incumbents, Vattenfall, Fortum and E.ON, in the wholesale market hold 42% of
the retail market. Unlike the wholesale power market the retail market is
national in scope. In 2012, there were 121 retail electricity suppliers, though
smaller players have occasionally found it difficult to enter the market[504]. Switching of suppliers is relatively high. Around 10% of domestic
customers switched their electricity supplier in 2012 and a further 27%
re-negotiated their contract with their current supplier. Thus, 37% of domestic
customers took an active part in the retail market during 2012. The wholesale
price had a significant influence on the retail price, neither one being
regulated.
Figure 3:
Electricity price change by component 2008 – 2013 (source: Eurostat, energy
statistics)
By 2009, Swedish
DSOs were obliged to provide monthly meter readings to household customers and
hourly readings to commercial and industrial customers. This resulted in
practically a full roll-out of smart meters, enabling remote readings. However,
some meters are not suitable for hourly readings without additional investment,
preventing demand response services. Since October 2012, DSOs are obliged to
provide hourly meter readings to households requesting them.
Gas
In 2012, there
were six natural gas suppliers[505].
The three largest companies, E.ON, Dong Energy and Goteborg Energi, held around
85% of the market. The Swedish gas retail market consists of around 33,400
domestic customers in South-Western Sweden. It has been a free market since
2007. During 2012, 157 of these households switched suppliers, 44% fewer than
in the previous year, and about 0.5% of domestic customers[506].
This may be due to the small size of the gas market, which does not incentivise competition. End-user prices
are not regulated. Gas prices for final consumers moved in line with global gas and oil prices.
Both households and industry pay high taxes, amounting to almost half the retail price. 
Figure 4:
Natural gas price change by component 2008 – 2012 (source: EC, EPCR metadata)
5.     Consumers
Consumers’ overall assessment of retail electricity market
is slightly above the EU average (73.5 points compared to 72.0[507], corresponding to 14th place
EU-wide), and equal to the average of 31 domestic services markets (18th
place). The market has seen a considerable increase in score (7.4 points) since
2012 (which represents the highest and 4th highest increase
domestically and EU-wide, respectively). The choice of providers records the
highest EU score and switching rates are well above the average; yet the
comparability of offers is assessed as poor. The incidence of problems reported in the electricity retail
market is lower than the EU average but those who encounter a problem are more
likely to complain. [508] 
In 2008, Ei
launched an online electricity price comparison site, which enables consumers
to compare prices, terms, and conditions for all Swedish suppliers. For gas,
there is no single price comparison site. Electricity and natural gas consumers
may report disputes with companies to the National Board for Consumer Disputes
(named Allmänna reklamationsnämnden, ARN). ARN is a public authority which
adjudicates in disputes between customers and companies. Since 2011, there is a
definition of vulnerable consumers within the national legislation. This
category of consumer is protected in the Swedish electricity and gas markets by
social legislation in that the consumer has the right to receive assistance
with their payment of electricity and natural gas supplies.
6.     Infrastructure
The Swedish Energy Markets Inspectorate has been
designated as National Competent Authority responsible for facilitating and
coordinating the permit granting process for projects of common interest in
accordance with the provisions of the TEN-E Regulation ('one-stop shop').
Electricity
Sweden is
divided into four different bidding areas. Most of the electricity production
occurs in the two northern areas and most of the consumption is concentrated to
the south.  At times, this creates congestion within the national grid. Sweden
is interconnected to Norway and eastern Denmark through AC lines and to
Finland, Denmark, Germany and Poland through undersea DC cables. Svenska
Kraftnät, the Swedish TSO, has an extensive plan to develop the national grid
to ensure network stability and increase the capacity while increasing the
amount of variable energy on the grid. This is part of the Third Energy Package. Currently, work is progressing on the Nordbalt01 project, which has
received funding under the EEPR and will interconnect Sweden and Lithuania
through a HVDC submarine cable. Maintaining the grid transfer capacity and
ensuring the n-1 criterion for operation of the interconnection are being
addressed through the construction of the new OHL between Ekhyddan and
Nybro/Hemsjö on the Swedish territory (PCI 4.4.2).
Gas
Several new LNG
terminals are planned, including one in Gothenburg labeled as a PCI (8.6) and
planned to be commissioned in 2015 - which is of strategic importance for the
Baltic energy market and would contribute to increased security of supply and
flexibility for the Swedish market. 
7.     Security of supply
Electricity
Sweden is
working to ensure the power of supply both in short and long terms. Svenska
Kraftnät is responsible for balancing the grid and ensuring the delivery of
electricity to the customers. Local distributors are responsible for
maintaining their networks to ensure that the connections between each network
meet the required quality standards[509]. 
To ensure the
security of supply in the longer term, Sweden is investing heavily in wind
power generation. Wind power is one way of shifting the production areas to the
southern parts of Sweden where the consumption is high and decreasing the
congestion on the grid.  Sweden introduced strategic capacity reserves in 2003
to meet peaks in demand during winter. The mechanism will be gradually reduced
until 2020 when the energy only market is expected to be restored[510].
Gas
Since Sweden has
no national production of natural gas, it is completely dependent on import.
Interconnected only to Denmark, Sweden is vulnerable to gas supply disruption.
One possible route for diversification was investigated through the Skanled
pipeline running from Norway, but there are currently no plans to implement
this pipeline. Sweden is currently exempted from the N-1 obligation set out by
Regulation 994/2010 concerning measures to safeguard security of gas supply.
Sweden has no significant storage facilities, and relies on storage, mainly in
Denmark, to balance seasonal swings in demand.
In 2012, Ei
published a National Preventative Action Plan and a National Emergency Plan, in accordance with the requirements of regulation 994/2010 on the
security of natural gas[511].
The plans include market based methods to minimise the possible negative
effects on several scales and divides the responsibility for meeting the
natural gas demand.
8.     Key indicators
 Electricity ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 74 || Number of entities bringing natural gas into country || 1 
 Number of main power-generation companies || 3 || Number of main gas entities || 1 
 Market share of the largest power-generation company || 44% || Market share of the largest entity bringing natural gas || 100% 
 Number of electricity retailers || 120 || Number of retailers selling natural gas to final customers || 7 
 Number of main electricity retailers || 3 || Number of main natural gas retailers || N/A 
 Switching rates (entire electricity retail market) || 9.9% || Switching rates for gas (entire retail market) || 1.4% 
 Regulated prices for households – electricity || No || Regulated prices for households – gas || No 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || No 
 HHI in power-generation market || ~2,650 || HHI in gas supply market || ~5,000 
 HHI in electricity retail market || N/A || HHI in gas retail market || N/A 
 Electricity market value[512] (bn€) || 13.349 || Gas market value17 (bn€) || 0.456 
 Installed generation capacity (MW) || 37,353 ||   ||   
 Peak demand (MW) || 26,200 ||   ||   
 Number of smart meters installed || 100% ||   ||   
The Netherlands 
Key
issues
For electricity,
at the current pace of development, the Netherlands seems likely to miss its
2020 target for renewables. Implementing the recently established national
Energy Agreement for Sustainable Growth ('Energieakkoord') should speed up the
development. The problem of insufficient interconnection is seen when the price
drops in Germany because of high renewables production, but the price in the
Netherlands does not respond.
The increase in
earthquake activity has renewed concerns about the decline in Dutch gas
production. Following the recent decision to decrease production by 2016, the
Netherlands needs now to determine its gas production policy from 2017 onwards.

1.    
General overview

Energy
consumption in 2012 (82.0 Mtoe) was based mainly on fossil fuels, notably
natural gas, crude oil and petroleum products, and to a lesser extent solid
fuels. Renewable energy and nuclear energy were less important in the energy
mix (with shares of 4.3% and 1.2%, respectively).
Figure 1:
Gross inland consumption mix 2008 – 2012 (source: Eurostat)
 
The power
generation mix in 2011 (113.0 TWh) was dominated by gas-fired power generation
(with a share of 63.5%) and by solid fuels (18.9%); renewables represented
10.9% and other sources such as nuclear power (3.6%) were less important. 
Figure 2:
Gross electricity generation mix 2008 – 2011 (source: EU Energy in Figures –
Pocketbook 2012 and 2013)
The Netherland’s
2020 renewables target is 14%, which is lower than the EU average (20%). The
renewable share in gross final energy consumption grew slowly from 3.4% to 4.5%
between 2008 and 2012.[513]
At this pace, the 2020 target will not be reached. 
Cogeneration[514]
provided for 32.5% of the total electricity generation in 2011, and it has been
at a comparable level for several years. In 2012 electricity demand in the
Netherlands decreased by 1.5% in comparison to the 2011 level[515],
this decline can be attributable to the economic recession.[516]

 Regulatory framework

General
In September
2013 more than forty social organisations, including central, regional and
local government, employers and unions, nature conservation and environmental
organisations, and other civil-society organisations and financial institutions
– have endorsed the Energy Agreement for Sustainable Growth. The parties to the
Energy Agreement aim to achieve a saving in final energy consumption averaging
1.5% annually, and an increase in the proportion of energy generated from
renewable sources to 14% in 2020, in accordance with EU arrangements (and a
further increase in that proportion to 16% in 2023). It also involves the
shutting down by 2016-2017 of the 5 oldest coal fired power plants from the
1980s. Beyond 2020, the Energy Agreement includes the long-term goal of an 80
to 95% reduction on greenhouse gases for the whole economy.[517]
National Energy Regulator
The Dutch Office
of Energy Regulation is part of the Netherlands Authority for Consumers &
Markets (ACM). ACM was established on 1 April 2013, and is the new market
authority created through the consolidation of the Netherlands Consumer
Authority (CA), the Netherlands Independent Post and Telecommunication
Authority (OPTA) and the Netherlands Competition Authority (NMa). In 2012, the
Dutch Office of Energy Regulation employed
approximately 88.5 staff and had an annual budget of EUR 8.2 million.[518]
Unbundling
TenneT is the
national TSO for the transmission of electricity and Gas Transport Services
(GTS) is the TSO for gas. Both are fully owned by the Dutch state. It was
announced in October 2013 that privatisation will not be considered for the
time being, however the government encourages both TSOs to seek closer
cooperation with certified TSOs abroad, which is a commendable approach from an
internal market perspective. In December 2013, ACM certified both TSOs under
the ownership unbundling model. The TSOs operating the interconnectors BritNed
and BBL will also be certified. BBL was certified in August 2013 and the draft
decision for BritNed, was received by the Commission in March 2014. Both
interconnectors have been granted an exemption for new interconnectors.
Since the end of
2010, all but two DSOs are fully ownership unbundled from the integrated
company and are mostly owned by Dutch municipalities and provinces. There are
eight DSOs that distribute both gas and electricity and one that distributes
gas only. Due to a court decision, part of the law on ownership unbundling of
DSOs expired, which led the final two integrated companies to delay unbundling.
The Ministry of Economic Affairs appealed to the Supreme Court of the
Netherlands and a decision is pending. Following a request for a preliminary
ruling the European Court of Justice ruled in October 2013 that the Netherlands
could adopt stricter DSO unbundling measures (comparing to the Third package
requirements) that constitute restrictions on the free movement of capital if
such measures are justified by overriding reasons in the public interest (such
as undistorted competition).[519]
The Court said it was up to the Dutch Supreme Court to decide if the
government's measures passed that test taking into account the criteria that
the restrictions at issue need to be appropriate to the objectives pursued and
do not go beyond what is necessary to attain those objectives.

 Wholesale markets

Electricity
The Dutch power
generation market is moderately concentrated. Following several successful
market coupling projects in North-Western Europe, with years of increasing
price convergence, 2012 and 2013 saw a decline. Increasing shares of low
marginal cost renewables in Germany have led to an increase in exports to the
Netherlands up to the point where the cross-border capacity between the
Netherlands and Germany is no longer sufficient to absorb the price difference.
Hence, the price convergence in 2012 with Germany declined to 55%, coming from
88% in 2011. In 2012, the two interconnectors BritNed (with the UK) and NorNed
(with Norway) successfully implemented new allocation methods for intraday
trading.
In 2013, the
annual average of wholesale day-ahead power prices on the APX market was EUR
52/MWh, up from EUR 48/MWh in 2012. The annual traded volume of wholesale
day-ahead power in 2013 was 47 TWh.
Gas
The production
and wholesale gas markets in the Netherlands are highly concentrated due to the
exploitation of the large Groningen field by a single producer, the Nederlandse
Aardolie Maatschappij (NAM). The gas is produced by NAM is sold exclusively on
the wholesale market by the trading company GasTerra. In 2012, the average day
ahead gas price at the virtual trading point (the TTF hub) oscillated around
EUR 20/MWh in spring and summer months and EUR 23/MWh in autumn and winter. The
2012 average price has been unprecedentedly convergent with average prices on
the other major West European hubs. The traded volume of day-ahead gas on the
TTF hub increased steeply to 1,818 TWh in 2012.[520] 
The Netherlands
is the biggest natural gas producer in the EU. According to Eurostat data, the
country accounted for 43.2% of EU-28 gas production in 2012. The country’s
annual production was 57.4 Mtoe in 2012, down from 57.7 Mtoe in 2011. Dutch gas
production is forecasted to decline significantly by 2020. In addition to this
long term development, the government also decided in January 2014 to decrease
production in the short term due to the increase of earthquakes in the province
of Groningen. Through to 2016 production will be reduced by about 10 Mtoe a
year from recent production levels. How production will develop from 2017
onwards will be determined over the next couple of years.[521]

Following a
decision by ACM in December 2013, European rules on capacity allocation and
congestion management were implemented by 1 January 2014. This takes into
account rules on auctioning capacity at interconnection points, the surrender
of booked capacity, and capacity increase by means of an oversubscription and
buy-back arrangement.
 A higher
utilisation of the cross-border capacity with Germany and Belgium can therefore
be expected in 2014 compared to previous years.

 Retail markets

Electricity
Market
concentration at retail level was high, as the three largest companies covered
83% of the retail market at the end of 2012, while the HHI index was 2,338. For
both indices this implies a slight decrease compared to 2011.[522]

Figure 3:
Electricity price change by component 2008 – 2013 (source: Eurostat, energy
statistics)
In 2012, 12.6%
of small-scale electricity users switched supplier. This implies an increase
compared to previous years and contributes to the trend of increasing annual
switching rates over time.
In 2013 the two
year small-scale roll-out programme for smart meters came to an end. This
programme resulted in 458,182 smart meters being installed by July 2013.[523]
Following a positive cost-benefit analysis, the Netherlands are proceeding with
the large deployment of smart metering – the expected diffusion rate for electricity
is 100% of consumers for electricity and 80% of consumers for gas by 2020. The
Netherlands have launched pilot programmes since 2012 and have mandated a
large-scale smart metering roll-out to start in 2015 (exact timetable to be
confirmed). Relevant legislation for smart metering is pending Parliamentary
approval.
Gas
Even though the
market is fully liberalised in the Netherlands, market concentration at retail
level remains high, as the three largest companies covered 81% of the retail
market and the HHI index was 2,258 at the end of 2012.[524]

Figure 4:
Natural gas price change by component 2008 – 2012 (source: EC, EPCR metadata)
The number of
small-scale gas users that switched supplier in 2012 (12.3%) increased compared
to previous years, as a part of a trend of increasing annual switching rates
over time.

 Consumers

Dutch consumers
rate their electricity and gas retail markets above the EU average (76.3 and
75.8 points compared to 72.0 and 74.1[525]), which
corresponds to 9th and 10th place EU-wide, respectively. 
The assessment of the two markets is also slightly above the average of 31
domestic services markets (13th and 15th respectively).
Both markets rank well above average on choice (2nd and 1st
highest score in the EU, respectively), switching rates (2nd and 3rd
highest) and overall consumer satisfaction. Around 19% of electricity and gas
consumers have switched their provider or tariff with existing provider in the
past 12 months, almost double the EU average. Especially in the gas market,
consumers face fewer problems than the EU28 average; yet virtually all who
experienced a problem have complained about it to at least one party (highest
percentage in the EU). [526]
Online price
comparison tools for electricity and gas are available and operated by private
companies. ACM regularly monitors these tools and publishes the results on the
website of the national point of contact, Consuwijzer. Consumers can direct
requests for information and complaints to Consuwijzer, run by ACM. ACM also
handles complaints. Vulnerable consumers – defined by law as consumers for whom
being disconnected from electricity or gas would have very serious health
consequences – can never be disconnected. A ‘no-disconnection period’ running
from 1 October to 1 April also applies to all households. Low-income households
benefit from social support schemes.

 Infrastructure

The Dutch authorities should ensure a
proper and timely adoption of the measures stemming from Regulation 347/2013 on
the trans-European energy infrastructure, including the establishment of the
one-stop-shop for PCIs (due by 16 November 2013), and other measures foreseen
for 2014 and 2015, including the publication of the manual on the permit
granting process for project promoters, and the adoption of legislative and
non-legislative measures streamlining the environmental assessment procedures.
Electricity
To accommodate
the rise in generation capacity since 2008 (and to reduce the need for
congestion management and keeping re-dispatching costs down) the 380 kV grid
needs to be expanded. Expansion of the 380 kV grid in the West of the
Netherlands (‘Randstad 380 kV project’) has been under development since 2002.
The South ring was completed in September 2013 and the North ring is expected
to be completed in 2018. Further expansion of the 380 kV grid is under
construction in the North of the Netherlands (‘North-West 380 kV project’, PCI
project) and planned for in the South of the Netherlands (‘South-West 380 kV
project’). 
As a result of
previous investments and improved coordination, an additional 300 MW of
interconnection capacity became available between Belgium and the Netherlands
in 2012/2013. The fourth AC interconnector with Germany is planned for 2016 and
will increase interconnection capacity by 1.5 GW.
Energy
infrastructure investments that are judged to be of national importance are
being coordinated by the Minister of Economic Affairs according to the
‘Rijkscoördinatieregeling’ regulation. Decisions on permits and exemptions are
taken simultaneously in coordination between national and local governments.
Gas
The most recent
“Open Season” organised by GTS in 2012, showed that no expansion investments
are required to accommodate demand for transportation capacity. This experience
is consistent with the converging wholesale prices observed at the Northwest
European hubs and the low congestion levels.
The seasonal
storage system that is being developed by TAQA is due to become operational in
2014. Seasonal storage can deliver the flexibility to meet the seasonal residential
gas demand. In December 2013, ACM introduced specific entry and exit tariffs
for gas storages to be applicable from January 2014 onwards. One Project of
Common Interest has been identified in the gas sector.

 Security
     of supply

Electricity
The Dutch market
has surplus available (firm) production capacity. This surplus is expected to
increase to 11.7 GW in 2020.[527]
Generation adequacy therefore seems guaranteed for the coming years.
Gas
The Dutch government is preparing itself
for when more imports will be necessary with a strategy to become Europe’s ‘gas
roundabout’, and diversify supply sources (LNG, countries of origin). As
mentioned, production from the Groningen field will be reduced but will still
meet the peak demand of low-calorific gas in the Netherlands, Germany, Belgium
and France.
Dutch
legislation prescribes that GTS is responsible for reserving sufficient
transport capacity and gas for the additional demand of gas during days with a
temperature below minus 9 degrees Celsius.

 Key
     indicators 
 
 Electricity   ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 800 || Number of entities bringing natural gas into country || N/A 
 Number of main power-generation companies || 4 || Number of main gas entities || N/A 
 Market share of the largest power-generation company || N/A || Market share of the largest entity bringing natural gas || N/A 
 Number of electricity retailers || 35 || Number of retailers selling natural gas to final customers || 32 
 Number of main electricity retailers || 3 || Number of main natural gas retailers || 3 
 Switching rates (entire electricity retail market) || 12.6% || Switching rates for gas (entire retail market) || 12.3% 
 Regulated prices for households – electricity || No || Regulated prices for households – gas || No 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || No 
 HHI in power-generation market || 1,492 || HHI in gas supply market || 6,455 
 HHI in electricity retail market || 2,338 || HHI in gas retail market || 2,258 
 Electricity market value[528] (bn€) || 8.706 || Gas market value15 (bn€) || 9.474 
 Installed generation capacity (MW, 2011) || 28,049 ||   ||   
 Peak demand (MW) || 18,438 ||   ||   
 Number of smart meters installed (July 2013) || 458,182 ||   ||   
The United Kingdom
Key issues
Further
investment in the UK electricity network infrastructure and generation is
needed for delivery of 2020 targets. In particular, greater interconnection is
needed. 
Successive
legislative and regulatory changes are increasing the complexity of the UK
market, and may be of concern given the level of investment required. There is
a need to ensure that the interventions are in line with Internal Market and
State Aid rules[529]
and support the integration into the wider internal energy market. Existing and future support schemes should
provide a stable framework for investments whilst keeping costs of the energy
transition towards a decarbonised electricity generation to a minimum.
Consumer
confidence in the sector is relatively low. Further action is needed to address
wholesale and retail price formation and transparency. The UK should also
ensure both wholesale and retail markets are open to new entrants by removing
barriers to entry. Another key issue is to ensure that support for fuel-poor
and other vulnerable consumers is appropriately targeted. 

1.    
General overview

Energy
consumption in 2012 (202.3 Mtoe) was largely based on fossil fuels and to a
lesser extent on nuclear energy. Renewable energy sources were less important
in the overall energy mix than in other Member States (4.1%). The UK’s 2020
renewable target is 15%, lower than the EU average. Final consumption of
electricity in 2012 was broadly unchanged on 2011.[530]
The power generation mix in 2011 (363.8 TWh) remained dominated by gas-fired
power generation (with a share of 40.2%) and solid fuels (29.5%). The renewable
share of generation in 2012 increased to 10.1%. 
Figure 1: Gross inland consumption mix 2008
– 2012 (source: Eurostat)
Figure 2:
Gross electricity generation mix 2008 – 2011 (source: EU Energy in Figures –
Pocketbook 2012 and 2013)
In December 2013
the UK adopted the Energy Act as part of the Electricity Market Reform (EMR)
programme. The key elements include support for low carbon generation through
Contracts for Difference – a form of feed in premium - , an Emissions
Performance Standard set at 450g CO2/kWh –preventing new unabated
coal plants and a capacity market. The UK has also introduced a carbon price
floor in addition to the existing EU Emission Trading System (ETS).[531]
EMR is intended
to deliver the first step of a transition towards a low carbon energy system by
2050. These reforms promote renewables and new nuclear through Contracts for
Difference. The expected changes to the energy mix mean that the running of
thermal plant would change, so a capacity market is also planned to ensure
enough investment for security of supply. 
The Department
of Energy and Climate Change (DECC) was positive that the UK had achieved its
interim target for renewables by 2012.[532] However, some
within industry have criticised a lack of certainty caused by changes to
support schemes, lack of clarity about the market framework, and delays in
developing grid infrastructure. Recent publication of the proposed support
level for renewable technologies has improved this situation.
On 27 March 2014
Ofgem proposed to refer the market to the UK Competition and Markets Authority
(CMA) to investigate whether there are further barriers to effective
competition[533].

 Regulatory framework

General
The Third
Package Directives have been transposed into national law.
National Energy Regulator
The energy
regulator in Great Britain is Ofgem. The Northern Irish utility regulator is
UREGNI. Ofgem regulates prices for networks, but retail tariff regulation was
phased out by 2002 following the introduction of retail competition. Ofgem
employed 729 staff in 2012/13. The staff number and budget has increased in
recent years as it has major projects and price reviews underway. 
Unbundling
National Grid
Electricity Transmission (NGET) owns the onshore electricity transmission
network in England and Wales and has been certified as fully ownership
unbundled. In Scotland there are two onshore transmission networks which are
owned by Scottish Power Transmission Limited and Scottish Hydro Electric
Transmission plc. The GB onshore and offshore transmission network is operated
by NGET in its role as System Operator. The Scottish TSOs have been certified
under Article 9(9) of the Electricity Directive, which allows alternative
arrangements to the standard unbundling models in limited circumstances. To
date, Ofgem has also certified nine Offshore Transmission Owners (OFTOs) and
two preferred bidders, as ownership unbundled.
The
high-pressure gas transmission network in Britain is owned and operated by
National Grid Gas plc, which is certified as fully ownership unbundled. 
Ofgem has
certified: (i) the BritNed electricity interconnector on the ground of an
exemption granted in accordance with Article 22 of Directive 2003/55/EC
(“Second Package Exemption”); (ii) the IUK gas interconnector (until 3 March 2015
on the ground of being in a substantially similar position to someone
benefiting from a Second Package Exemption and thereafter on the ground of full
ownership unbundling provided that it demonstrates that it passes the ownership
unbundling tests at that time);(iii) the BBL and SNIP gas interconnectors as
fully ownership unbundled; and, (iv) the Moyle and IFA electricity
interconnectors as fully ownership unbundled. The interconnector between
Ireland and Britain operated by EirGrid, the Irish TSO, has not yet been
certified. 
In Northern
Ireland, as in Scotland, Article 9(9) has been applied. The electricity grid is
owned by Northern Ireland Electricity (NIE) and operated by the certified TSO,
SONI, with the Irish TSO, Eirgrid, under the all Island Single Electricity
Market. Bord Gáis Éireann and Mutual Energy own the
gas-transmission assets in Northern Ireland and have been certified as TSOs.
The sale of Phoenix Supply to Airtricity in June 2012 resulted in unbundling of
the gas supply company from the gas distribution company (Phoenix Natural Gas)
in the Greater Belfast area.[534]

 Wholesale markets

Electricity
There are two
main power exchanges in Great Britain: APX and N2EX. UK power futures exchange
traded contracts are also available on the Intercontinental Exchange (ICE). In
2012, around 85% of power was OTC traded (down from 95% in 2011) and around 15%
was exchange traded (up from 5%). The average day-ahead power price on the APX
market was GBP 44.54 (EUR 53.89)/MWh in 2012.[535]
The England-France Interconnector (IFA) and BritNed interconnectors are
participating in the North West European project on day-ahead market coupling
and intraday trading. 
The power
generation market is moderately concentrated. Seven companies had market shares
exceeding 5% and the largest three generated almost 45% of electricity consumed
in 2012. In response to concerns about liquidity, Ofgem has introduced a new
licence condition from 31 March 2014. This obliges six large
vertically-integrated suppliers to post prices at which they will buy and sell
a range of forward power products (a market making obligation). It also
requires the eight largest generating companies to follow rules when trading
with small independent suppliers. 
Northern Ireland
is part of the all-island Single Electricity Market (SEM) with Ireland. This is
discussed in more detail in the separate report covering the Republic of
Ireland.
Gas
UK natural gas
production is decreasing, and in 2012 was down 14% on 2011 to 452 TWh.[536]
The majority of the UK’s supplies are now imported, either from Norway,
Continental Interconnection or LNG terminals. The wholesale gas market includes
both OTC and exchange based trading (ICE and ICE Endex). The National Balancing
Point (NBP) is the virtual trading location for UK natural gas. It is the most
liquid gas trading point in Europe, with a churn rate between 10 and 20. The
number of parties trading at NBP is high with a total of 222 licensed shippers,
of which between 110 and 120 are usually active on a daily basis[537]. 
Market concentration in is low, with the largest market share of physical and
traded activity below 8%[538].


 Retail markets

Electricity
The retail
electricity market has been open to competition since the late 1990s. At the
end of 2012, there were 12 domestic and 24 non-domestic suppliers active in the
market. The domestic retail market is characterised by the existence of six
large, vertically integrated suppliers (the ‘Big 6’), which accounted for
approx. 95% of the market in 2013, a drop of 4% since 2011. These are British
Gas (Centrica), E.ON UK, EDF Energy, RWE npower, Scottish and Southern Energy
(SSE), and Scottish Power. All of the Big 6 suppliers have a market share of
above 10 %. Market concentration at domestic retail level remained high
with an HHI of 1,720. There were 12 small suppliers active in the market in
2012, with a combined market share of just 2%, up 1% from 2011.
Figure 3:
Electricity price change by component 2008 – 2013 (source: Eurostat, energy
statistics)
Gas
The British
retail gas market is fully liberalised. At the end of 2012, 13 domestic and 30
non-domestic gas suppliers were active in the market. The so-called ‘Big 6’
suppliers supplied approx. 95% of the 22.3 million domestic consumers in 2013.
British Gas (Centrica) is still the largest party active on the domestic
market, with a market share of around 40%. Market concentration at the domestic
retail level remained high with an HHI of 2,373 for smaller non-domestic
customers; it was 2,189 and for larger non-domestic customers 1,153. British Gas
remains the leading supplier, with a market share of 40%.
Figure 4:
Natural gas price change by component 2008 – 2012 (source: EC, EPCR metadata)
The British
government has decided to replace all of the nation’s 53 million gas and
electricity meters with smart meters. Smart metering roll-out[539]
is at an early stage, with mass roll-out planned from 2015. In both gas and
electricity markets the larger suppliers are operating 89,400 domestic smart
meters (0.2%) as well as 520,000 in smaller non-domestic sites.

 Consumers

Switching and trust
Consumer overall
assessment of retail electricity market is slightly below the EU average (69.3
points compared to 72.0, corresponding to 20th place EU-wide[540])
and saw a considerable decrease (of 3 points) between 2012 and 2013. The market
also ranks 3rd lowest among 31 domestic services markets. The
assessment of the retail gas market is 4th lowest in the EU (70.5
points compared to 74.1) and 5th lowest among domestic services
markets. The overall score has slightly decreased between 2012 and 2013[541],
continuing the downward trend observed since 2010. Both markets have
particularly poor scores on trust in providers and overall consumer
satisfaction, and above-average number of consumer complaints. The electricity
market has the third highest share of overall consumer complaints in the EU and
the highest share of complaints to third parties. At the same time, both
markets have above-average scores for choice of providers and actual switching.
In the gas market, choice and actual switching rank second and fourth highest
in the EU. [542]
In 2012, 12% of
electricity users switched supplier and 11% of gas users switched supplier[543].
By European standards this is high. However the capacity of consumers to
understand and choose the most appropriate tariff has been a concern. Ofgem
found that more than three out of five consumers (62%) claimed they have never
switched, meaning they are likely to be on standard tariffs with former
incumbent suppliers and typically paying above the most competitive prices in
the market[544].
The true proportion of those who have ‘never switched’ is probably lower, but
it does suggest that many consumers feel they are inactive in the market.[545]

Also, many
consumers have reported being confused by the number of tariffs on offer and
their differing structures[546].
As a result, new rules have been introduced to limit the number and complexity
of tariffs offered by suppliers. Online price comparability tools for
electricity and gas are available. Ofgem has a Confidence Code for switching
services, which many have signed up to[547]. A recent
innovation has been “collective switching” (the first was organised by Which?
and 38 Degrees in 2012). 
Complaints and vulnerable customers
If complaints
are unresolved after eight weeks, customers can seek redress through the
Ombudsman, who has the power to make a financial award of up to GBP 10,000.
Domestic consumers and micro businesses can go sooner if the company says it
can do no more to resolve the complaint.
Ofgem has a
Consumer Vulnerability Strategy[548]
and DECC reports on fuel poverty[549].
There are a number of measures targeted at vulnerable customers through the
benefits system and fuel payment. Measures include a universal fuel benefit for
older people and low-cost energy-efficiency measures through suppliers for
those in receipt of certain benefits. Vulnerable customers are protected from
disconnection in winter. Planned funding for energy efficiency under the Energy
Company Obligation has been scaled back as a result of complaints about the
impact on bills.
There is a
“priority services register” managed by network companies and suppliers, which
ensures the needs of vulnerable customers are met in the event of power cuts
and in other situations Awareness amongst consumers of these services is low,
however, and Ofgem is reviewing how take-up of services can be improved.

 Infrastructure

The recent
transmission price control (RIIO-T1) authorised around GBP 22 billion[550]
of investment in the gas and electricity transmission networks in Great Britain
over the period 2013-2021. Ofgem approves large infrastructure investments as
they arise throughout its 8-year period through Strategic Wider Works[551]
(electricity) and incremental capacity provisions (gas). 
Electricity
Existing
interconnection includes the 1,000 MW BritNed interconnector with the
Netherlands, the 2,000 MW IFA interconnector with France, and the 500 MW Moyle
interconnector with Northern Ireland. The completion of the 500 MW EirGrid
East-West Interconnector in 2012 increased interconnection between Britain and
neighbouring countries from 3.5 GW to 4 GW.
However, the
interconnectivity level is still low. As a result, around 10 GW of potential
new interconnection projects to 6 different markets have been proposed. Under
the guidelines for trans-European energy infrastructure, 17[552]
electricity infrastructure projects of common interest were selected in the UK.[553]
As part of its
Integrated Transmission Planning and Regulation project, Ofgem is reviewing
whether to move from the current developer-led approach to more centralised
planning of interconnection. The DECC also published the document ‘More
interconnection: improving energy security and lowering bills’ in December
2013.
A competitive
tender process is used to grant licences for electricity transmission
connections offshore. The regime has delivered investment of over GBP 1.4
billion to date[554].
Gas
The British gas
system is interconnected with Belgium, the Netherlands, as well as with
Northern Ireland and Ireland to the west (export only). The interconnector with
Belgium (IUK) can flow gas in both directions (import 27 bcm/year and export
20.1 bcm/year). The BBL interconnector with the Netherlands has an import
capacity of 19.3 bcm/year but does not allow physical reverse flow. The exit
capacity at Moffat is 11.0 bcm/year. There are three LNG import terminals (Isle
of Grain, South Hook and Dragon LNG) and one long range storage facility
(Rough).
A number of gas
projects of common interest were identified under the guidelines for
trans-European energy infrastructure. These include projects to allow
bidirectional flows between Great Britain, Northern Ireland and Ireland.[555]
The UK has
designated the Secretary of State for Energy and Climate Change as the National
Competent Authority (so called one-stop shop for Projects of Common Interest)
by a Written Ministerial Statement to the UK Parliament on 18 November 2013.
The one-stop shop is responsible for facilitating and coordinating the permit
granting process for projects of common interest. The UK has to ensure now that
the one-stop shop is functioning without any hurdles and that other measures
foreseen for 2014 and 2015, including the publication of the manual on the
permit granting process for project promoters, and the adoption of legislative
and non-legislative measures streamlining the environmental assessment
procedures are adopted timely.

 Security
     of supply

Electricity
There are
concerns about power generation adequacy in the mid-term. The introduction of a
capacity market under Electricity Market Reform is in response to these
concerns. There is a general expectation that generating margins will decrease
to historically low levels in the middle of the decade.[556]
There is also an expectation that generating margins may decrease in Northern
Ireland post 2020.[557]
Gas
Under the EU Gas
Security of Supply Regulation, DECC published the National Emergency Plan.
DECC’s risk assessment[558]
reported that UK gas supply infrastructure is resilient to ‘all but the most
unlikely combinations of severe infrastructure and supply shocks’ given the
success of the market in responding to record demand and supply pressures in
the winters of 2009/10 and 2010/11. 

 Key
     indicators
 
 Electricity   ||   || Gas ||   
 Number of companies representing at least 95% of net power generation || 17 || Number of entities bringing natural gas into country || 23 
 Number of main power-generation companies || 7 || Number of main gas entities || 6 
 Market share of the largest power-generation company || 25% || Market share of the largest entity bringing natural gas || 17% 
 Number of electricity retailers || 32 || Number of retailers selling natural gas to final customers || 36 
 Number of main electricity retailers || 6 || Number of main natural gas retailers || 7 
 Switching rates (domestic) || 12%* || Switching rates for gas (domestic) || 11% 
 Regulated prices for households – electricity || No || Regulated prices for households – gas || No 
 Regulated prices for non-households – electricity || No || Regulated prices for non-households – gas || No 
 HHI in power-generation market || 1,483 || HHI in gas supply market || N/A 
 HHI in electricity retail market || 1,720 || HHI in gas retail market || 2,373 
 Electricity market value[559] (bn€) || 33.670 || Gas market value (bn€) || 20.696 
 Installed generation capacity (MW) || 84,900 ||   ||   
 Peak demand (MW) || 56,200 ||   ||   
 Number of smart meters installed (June 2013) || 609,400 ||   ||   
*Domestic
12% across gas and electricity.
[1] Eurostat.
[2] Eurostat.
[3] The share of electricity produced in combined heat and power plants
(CHP).
[4] Eurostat.
[5] E-Control, Annual financial report, 2012. 
[6] By end of 2013 the former shareholders of
BOG E.ON and GRT Gaz sold their shares to OMV. As of 30 September 2014 GCA will
become, by way of merger, the universal legal successor to BOG.
[7] ACER/CEER Annual Report on the Results of Monitoring the Internal
Electricity and Natural Gas Markets in 2012, November 2013.
[8] ACER/CEER Annual Report on the Results of
Monitoring the Internal Electricity and Natural Gas Markets in 2012, November
2013.
[9] Eurostat
[10] http://ec.europa.eu/energy/gas_electricity/doc/at_energy_market_2011_en.pdf.
[11] ACER/CEER Annual Report on the Results of Monitoring the Internal
Electricity and Natural Gas Markets in 2012, November 2013.
[12] ACER/CEER Annual Report on the Results of
Monitoring the Internal Electricity and Natural Gas Markets in 2012, November
2013.
[13] However the difference is not statistically significant.
[14]  10th
Consumer Markets Scoreboard, http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[15] The hotline number is: 0810 10 25 54
(tariff EUR 0,044/minute).
[16] www.spritpreisrechner.at
[17] E-Control, Coordinated Network Development Plan 2014-2023, December
2013.
[18]
Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[19] Eurostat.
[20] http://ec.europa.eu/energy/publications/doc/2014_pocketbook.pdf

[21] ACER/CEER Annual Report on the Results of
Monitoring the Internal Electricity and Natural Gas Markets in 2012, November
2013.
[22] National Reform Programme 2013, April 2013http://ec.europa.eu/europe2020/pdf/nd/nrp2013_belgium_en.pdf.
[23] Eurostat.
[24] CREG, Annual Report 2012, 2013.
[25] http://www.creg.be/fr/index.html.

[26] CEER, Status Review on the Transposition of
Unbundling Requirements for DSOs and Closed Distribution System Operators, http://www.energy-regulators.eu/portal/page/portal/EER_HOME/EER_PUBLICATIONS/CEER_PAPERS/Cross-Sectoral/Tab/C12-UR-47-03_DSO-Unbundling_Status%20Review_Public.pdf.
[27] HHI and market share based on generation capacity.
[28] CREG National Report 2014 to the European Commission and ACER, July
2014.
[29] CREG, Annual Report 2012, 2013.
[30] Eurostat.
[31] Eurostat.
[32] Eurostat.
[33] Ref: C13-RMF-54-05 Status Review of Regulatory aspects of Smart
Metering.
[34] Two different CBAs were realised on behalf of VREG: the
first in 2008 and a second one in 2011. Among the three scenarios considered in
the 2011 CBA, only the reference scenario results in a positive net present
value. However the result under the reference scenario is considered to be inconclusive
as it does not yield a strong positive result. Nevertheless, in the Flemish region, Eandis and Infrax
(DSOs) started installing new smart gas and electricity meters as of 1 October
2012. 50,000 meters will be installed in different areas of Flanders during ten
months. The CBA for the region of Brussels capital by
BRUGEL results in negative net present value for all four considered scenarios.
A CBA for smart metering roll-out in Wallonia has been realised in 2012 by
CWAPE. The results reported are the following: the ‘Full roll-out’ is negative,
while the ‘Smart Meter friendly’ scenario is positive. The Walloon region has
decided, under current conditions, not to go ahead with a wide-scale roll-out
until 2020.
[35] However the difference is not statistically significant.
[36]  10th
Consumer Markets Scoreboard, http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[37]
Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[38] The share of electricity produced in combined heat and power plants
(CHP).
[39] Eurostat.
[40] Eurostat.
[41] SEWRC, Annual report 2012, July 2013.
[42] Ecologic, “Assessment of climate change
policies in the context of the European Semester, Country Report: Bulgaria”,
Report for DG Climate Action, 2013.
[43] Ecologic, “Assessment
of climate change policies in the context of the EU Semester”, Issue 03/2013,
June 2013.
[44]http://www.kpmg.com/BG/en/IssuesAndInsights/ArticlesPublications/Newsletters/Legal/Documents/2014-01-Important-amendments-to-the-Renewable-Energy-Act-effective-from-1-January-2014.htm.
[45] http://powermarket.seenews.com/news/bulgarias-beh-says-nek-eso-split-up-completed-403143

[46] http://www.bulgartransgaz.bg/.
[47]http://ec.europa.eu/energy/gas_electricity/interpretative_notes/certification_en.htm.
[48] SEWRC, Annual report 2012, July 2013.
[49] State Gazette of Bulgaria, issue 39 of 9
May 2014
[50] SEWRC's decision of 31 March2014
[51] SEWRC, Annual report 2012, July 2013.
[52] SEWRC, Annual report 2012, July 2013.
[53] ACER/CEER Annual Report on the Results of Monitoring the Internal
Electricity and Natural Gas Markets in 2012, November 2013.
[54] ACER/CEER Annual Report on the Results of
Monitoring the Internal Electricity and Natural Gas Markets in 2012, November
2013.
[55] The EC, Energy Prices and Costs report, 2014.
[56] However the difference is not statistically significant
[57] However the difference is not statistically significant
[58]  10th Consumer Markets Scoreboard,
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[59] SEWRC, Annual report 2012, July 2013.
[60] ENTSO-E, YS AR Report 2012.
[61] SEWRC, Annual report 2012, July 2013.
[62] SEWRC, Annual report 2012, July 2013.
[63] SEWRC, Annual report 2012, July 2013.
[64] ENTSO-E, Regional Investment Plan Continental South East, July
2012.
[65] Francese, Opening the Southern Gas Corridor, Trans Adriatic
Pipeline, December 2012.
[66] Bulgartransgaz, 10 year development plan, 2013-2022.
[67] ACER/CEER Annual Report  on the Results of
Monitoring the Internal Electricity and Natural Gas Markets in 2012, November
2013.
[68] ACER/CEER Annual Report  on the Results of
Monitoring the Internal Electricity and Natural Gas Markets in 2012, November
2013.
[69]Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[70] Eurostat
[71] The Croatian gas storage operator is Podzemo Skladiste Plina d.o.o
(PSP) operating the storage facility Okoli Underground Gas Storage http://www.unece.org/fileadmin/DAM/energy/se/pp/wpgas/23wpg_jan2013/NG_Croatia_Report_2012.pdf
[72]Eurostat.
[73] Official Gazette 120/12.
[74] Official Gazette 133/1.
[75] http://www.hera.hr/hr/html/dozvole_tab11.html.
[76] RWE Energija objective is to gain control
of 10% of the total electricity market over the next three years. RWE Energija is
entering the Croatian natural gas market: the aim is to expand its electricity
provision services to include gas provision.
[77] Croatia's biggest telecom operator, T-HT
(majority owned by Deutsche Telekom) announced it would start delivering
electricity to local households and companies as part of a diversification
plan.
[78] Eurostat
[79] http://www.energy-community.org/pls/portal/docs/2304177.PDF.

[80] MVA is a measurement that also takes into account the reactive
power in the power load.
[81] In 2012, the total cross-border Electricity
Exchange by Borders (GWh) was: power flows to Croatia, 1,3191; power flows from
Croatia, 5,568.
[82] Together with the Slovenian power system
and the power system of Bosnia and Herzegovina, the Transmission System
Operator HEP OPS constitutes the control block SLO – HR – BIH within the UCTE
grid.
[83] Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[84] Eurostat.
[85] CERA, 2013 National Report to the European
Commission, 2013.
[86] Eurostat.
[87] CERA, 2013 National Report to the European
Commission, 2013.
[88] Annual Report of the Cyprus Energy Regulatory Authority for the
year 2012, October 2013.
[89] Annual Report of the Cyprus Energy Regulatory Authority for the
year 2012, October 2013.
[90] CERA, 2013 National Report to the European
Commission, 2013.
[91] Annual Report of the Cyprus Energy Regulatory Authority for the
year 2012, October 2013.
[92] Eurostat.
[93] ACER/CEER – Annual
Report on the Results of Monitoring the Internal Electricity and Natural Gas
Markets in 2012, November 2013.
[94] V. Efthimiou, “Digital Agenda for Europe & Cyprus – Smart Meter
Agenda for Cyprus”, November 2011.
[95] European Monitoring Centre on Change, European Monitoring Centre on
Change, http://www.eurofound.europa.eu/emcc/.
[96] However the difference is not statistically significant.
[97] 10th Consumer Markets Scoreboard,
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[98] Eurostat.
[99] CERA, 2013 National Report to the European
Commission, 2013.
[100] Annual
Report of the Cyprus Energy Regulatory Authority for the year 2012, October
2013.
[101] Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[102] Eurostat.
[103] Eurostat.
[104] The share of electricity produced in combined heat and power plants
(CHP).
[105] Act no. 165/2012 on promoted energy sources and amendments to
certain laws.
[106] http://www.eru.cz/dias-read_article.php?articleId=51.
[107] Eurostat.
[108] OTE’s own estimations.
[109] Eurostat.
[110] http://ec.europa.eu/energy/observatory/gas/doc/qregam_2012_quarter2_quarter3.pdf.
[111] http://www.icis.com/resources/news/2012/12/28/9627306/year-in-review-czech-natural-gas-market/.
[112] Overall, in 2011 there were 356 power retailers in the Czech
Republic.
[113] ACER/CEER, Annual Report on the Results of
Monitoring the Internal Electricity and Natural Gas Markets in 2012, November
2013.
[114] Eurostat.
[115] Some of the suppliers offered their
services only during a part of the year, whereas others offered their services
to certain customer categories. Source: Eurostat, gas market indicators, number
of retailers selling natural gas to final customers, 2003-2012.
[116] Due to the high level of competition, motivation for newcomers may
be limited. 
[117] Eurostat.
[118] CEER database.
[119]http://www.ceer.eu/portal/page/portal/EER_HOME/EER_PUBLICATIONS/CEER_PAPERS/Customers/2013/7-1_C13-RMF-54-05-Status_Review_of_Regulatory_Aspects_of_Smart_Metering_FOR_PUBLICATION.pdf 
[120] http://ec.europa.eu/energy/newsletter/20140205-newsletter.htm.
[121] However the difference is not statistically significant.
[122] However the difference is not statistically significant.
[123] 10th Consumer Markets Scoreboard,
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[124] http://kalkulator.eru.cz/.
[125] ERO,  Annual report 2012, July 2013.
[126] Technical information on Projects of Common Interest accompanying
the Commission Delegated Regulation (EU)  No 1391/2013 of 14 October 2013 amending
Regulation (EU) 347/2013 of the European Parliament and of the Council on
guidelines for trans-European energy infrastructure as regards the Union list
of projects of common interest.
[127] Eurostat.
[128]Eurostat.
[129] http://ec.europa.eu/energy/observatory/gas/doc/qregam_2012_quarter2_quarter3.pdf.
[130] ACER/CEER, Annual Report on the Results of
Monitoring the Internal Electricity and Natural Gas Markets in 2012, November
2013. 
[131] Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[132] Eurostat.
[133] Eurostat.
[134]The share of electricity produced in
combined heat and power plants (CHP).
[135]Eurostat.
[136]DERA – Results and Challenges, http://energitilsynet.dk/fileadmin/Filer/Information/Resultater_og_udfordringer/Aarsrapport2011_eng/helepubl.htm#kap07.
[137] http://energitilsynet.dk/tool-menu/english/secretariat/.
[138] All values based on the bought quantities.
[139] www.ens.dk/en/info/facts-figures/energy-statistics-indicators-energy-efficiency/monthly-statistics.

[140]
Eurostat.
[141]
DERA, figures for 2013 (based on volumes).
[142]
Eurostat.
[143] However the difference is not statistically significant.
[144] 10th Consumer Markets Scoreboard,
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[145] The European Commission Vulnerable Consumer Working Group Guidance
Document on Vulnerable Consumers, November 2013.
[146] DERA, figures for 2013 (based on volumes).
[147] Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[148]Eurostat.
[149]Eurostat.
[150]Eurostat.
[151]Eurostat.
[152]ACER/CEER, Annual Report on the Results of Monitoring the Internal
Electricity and Natural Gas Markets in 2012, November 2013.
[153] The share of electricity produced in combined heat and power plants
(CHP).
[154]Eurostat.
[155]Eurostat.
[156] On 9 April 2014 Estonia notified new legislation for the
transposition of the Gas Directive which is under assessment by the Commission
in order to verify whether the Directive could now be considered fully
transposed.
[157]http://www.konkurentsiamet.ee/public/Aastaraamat/ECA_Annual_Report_2012.pdf.
[158]Eurostat.
[159].http://www.ceer.eu/portal/page/portal/EER_HOME/EER_PUBLICATIONS/NATIONAL_REPORTS/National%20Reporting%202013/NR_En/C13_NR_Estonia-EN.pdf.
[160] http://www.nordpoolspot.com/.
[161].ECA,http://www.ceer.eu/portal/page/portal/EER_HOME/EER_PUBLICATIONS/NATIONAL_REPORTS/National%20Reporting%202013/NR_En/C13_NR_Estonia-EN.pdf.
[162].ECA,http://www.ceer.eu/portal/page/portal/EER_HOME/EER_PUBLICATIONS/NATIONAL_REPORTS/National%20Reporting%202013/NR_En/C13_NR_Estonia-EN.pdf.
[163]Eurostat.
[164] ACER/CEER, Annual Report on the Results of
Monitoring the Internal Electricity and Natural Gas Markets in 2012, November
2013.
[165] http://mtr.mkm.ee/.
[166]ACER/CEER Annual Report on the Results of Monitoring the Internal
Electricity and Natural Gas Markets in 2012, November 2013.
[167]ACER/CEER Annual Report on the Results of Monitoring the Internal
Electricity and Natural Gas Markets in 2012, November 2013.
[168] 10th
Consumer Markets Scoreboard, http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[169].ECA,http://www.ceer.eu/portal/page/portal/EER_HOME/EER_PUBLICATIONS/NATIONAL_REPORTS/National%20Reporting%202013/NR_En/C13_NR_Estonia-EN.pdf.
[170] CEER, National Indicators Database, 2013.
[171].http://www.ceer.eu/portal/page/portal/EER_HOME/EER_PUBLICATIONS/NATIONAL_REPORTS/National%20Reporting%202013/NR_En/C13_NR_Estonia-EN.pdf.
[172]
Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[173] Eurostat.
[174] http://www.nordicenergyregulators.org/wp-content/uploads/2013/02/Nordic_Market-report_2013.pdf.
[175] http://www.tem.fi/en/energy/natural_gas_market.

[176] Nord Pool Spot is the common power market for the Nordic and Baltic
countries, http://www.nordpoolspot.com.
[177] http://www.nordpoolspot.com/How-does-it-work/European-Integration/NWE/.
[178] http://www.epsi-finland.org/images/stories/reports/Energy/electricity_2013_finland_press_release.pdf.
[179] 10th
Consumer Markets Scoreboard,
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
. 
[180] http://www.epsi-finland.org/images/stories/reports/Energy/electricity_2013_finland_press_release.pdf.
[181] Energy Market Authority, National report 2013 to the Agency for the
Cooperation of Energy Regulators and to the European Commission: Finland, 12
July 2013.
[182] http://www.stm.fi/en/income_security/social_assistance.
[183] Energy Market Authority, National report 2013 to the Agency for the
Cooperation of Energy Regulators and to the European Commission: Finland, 12
July 2013.
[184] Energy Market Authority, National report 2013 to the Agency for the
Cooperation of Energy Regulators and to the European Commission: Finland, 12
July 2013. 
[185] http://www.nesa.fi/.
[186]
Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[187] http://www.rte-france.com/uploads/Mediatheque_docs/vie_systeme/annuelles/Bilan_electrique/bilan_electrique_2013.PDF.
[188] The new
competences regard mainly four activity fields: network tariffs definition,
investments in network infrastructure development, TSOs’ certification and
regulation of the access to nuclear power generation of the incumbent.
[189] Nouvelle Organisation du
Marché de l’Électricité, 7 December 2010.
[190] This
law implements the REMIT regulation n°1227/2011 according to which national
regulators shall ensure that the prohibitions and the obligation set out in
this regulation are applied.
[191] http://www.assemblee-nationale.fr/14/budget/plf2014/b1428-tIII-a19.asp.
[192] CRE, Respect
des codes de bonne conduite et indépendance des gestionnaires de réseaux
d’électricité et de gaz naturel, September 2013.
[193] CRE, Annual Report to the European Commission, July 2014. 
[194] Alternative suppliers are defined as non-incumbent suppliers.
Incumbent suppliers are EDF, Local Distribution Companies and their
subsidiaries.
[195] CRE, Annual Report to the European Commission, July 2014.
[196] Return
to the regulated tariff is possible for consumers under certain conditions.
[197]http://www.cre.fr/documents/publications/rapports-thematiques/le-fonctionnement-des-marches-de-detail-francais-2012-2013.
[198] http://legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000027778284&categorieLien=id.
[199] http://www.cre.fr/operateurs/service-public-de-l-electricite-cspe/montant.
[200] For
more details, http://www.cre.fr/documents/publications/rapports-thematiques/analyse-des-couts-de-production-et-de-commercialisation-d-edf.
[201] CRE, Annual Report to the European Commission, July 2014.
[202] GDF is the only provider of regulated gas tariffs for customers
connected to the distribution network (GrDF). 
[203] http://www.cre.fr/documents/publications/rapports-thematiques/le-fonctionnement-des-marches-de-detail-francais-2012-2013.
[204] http://www.developpement-durable.gouv.fr/spip.php?page=article&id_article=37166.
[205] 10th Consumer Markets Scoreboard,
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[206] http://www.cre.fr/reseaux/reseaux-publics-d-electricite/calculatrices-des-tarifs.
[207]Décret
no 2013-1031 du 15 novembre 2013 portant extension à de nouveaux bénéficiaires
des tarifs sociaux de l’électricité et du gaz naturel, http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000028200044&dateTexte=&categorieLien=id.
[208]Based
on CRE estimations.
[209]CRE
estimates on average Net Transmission Capacities in 2012, http://www.cre.fr/documents/publications/rapports-thematiques/rapport-interconnexions-2012.
[210] Germany is the only net exporter of electricity to France.
[211] http://www.developpement-durable.gouv.fr/IMG/pdf/Panorama-energies-climat_E2013.pdf.

[213]Based on RTE indications on system adequacy, http://www.rte-france.com/uploads/Mediatheque_docs/vie_systeme/annuelles/bilan_previsionnel/bilan_actualisation_2013_v2.pdf.
[214] Table contains 2012 data unless stated otherwise. Peak demand is
taken from ENTSOE, Yearly Statistics & Adequacy Retrospective 2012. HHI in
power-generation market is in terms of power generation. HHI in gas supply
market is in terms of gross import of natural gas.
[215] Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[216] Eurostat.
[217] Eurostat.
[218] BNetzA, Monitoring Report, 2013. 
[219]http://www.acer.europa.eu/Official_documents/Acts_of_the_Agency/Publication/ACER%20Gas%20Contractual%20Congestion%20Report%202014.pdf.
[220]Commission Decision 2012/490/EU of 24 August 2012 regarding
congestion management guidelines on amending Annex I to Regulation (EC) No
715/2009 of the European Parliament and of the Council on conditions for access
to the natural gas transmission networks, OJ (2012) L 231.
[221] A formal investigation procedure under state aid provisions was
initiated on 6 March 2013. In parallel, contacts with national authorities have
been established to analyse the compliance of the exemption provisions with
internal energy market legislation. 
[222] BNetzA, Monitoring Report, 2013.
[223] The electricity market increased its performance by 2.2 points
while gas has seen a 1.6 decrease between 2012 and 2013.
[224] 10th Consumer Markets Scoreboard,
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[225] http://www.netzausbau.de/cln_1422/DE/Vorhaben/EnLAG-Vorhaben/EnLAGVorhaben-node.html.
[226]http://www.bundesnetzagentur.de/cln_1912/DE/Sachgebiete/ElektrizitaetundGas/Unternehmen_Institutionen/Versorgungssicherheit/Berichte_Fallanalysen/berichte_fallanalysen-node.html#doc266870bodyText3.
[227] In terms of volume of the entire electricity retail market 2012. The
switching rate in terms of metering points was at 5.8%.
[228] In terms of volume of the entire gas retail
market 2012. The switching rate in terms of metering points stood at 7.59%.
[229]
Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[230] Eurostat.
[231] Greek Ministry of Environment, Energy &
Climatic Change, National Renewable Energy Action Plan, http://ec.europa.eu/energy/renewables/action_plan_en.htm.
[232] The share of electricity produced in combined heat and power plants
(CHP).
[233] Eurostat.
[234] www.rae.gr.
[235] RAE’s Balance Sheet 2012, http://www.rae.gr/site/file/system/docs/ActionReports/balance2012.
[236] Greek Ministry of Environment, Energy &
Climatic Change.
[237] The EC, The Second Economic Adjustment
Programme for Greece First Review, December 2012.
[238] The EC, The Second Economic Adjustment
Programme for Greece First Review, December 2012
[239] The EC, The Second Economic Adjustment
Programme for Greece Third Review, July 2013.
[240] DEPA.
[241] The EC, Energy Prices and Costs report, 2014.
[242] ACER/CEER – Annual
Report on the Results of Monitoring the Internal Electricity and Natural Gas
Markets in 2012, November 2013.
[243] Eurostat.
[244]10th Consumer Markets Scoreboard,
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm.

[245] DEDDIE SA.
[246] RAE, 2012 National Report to European Commission, 2014.
[247] LAGIE, Monthly Report December 2012.
[248] LAGIE, Monthly Report December 2012.
[249] Greek Ministry of Environment, Energy &
Climatic Change.
[250] Eurostat.
[251] Eurostat.
[252] Government Gazzette B’ 556/05.03.2014.
[253] RAE, 2012 National Report to European Commission, 2014.
[254] Eurostat.
[255] Market value is an estimation of the size of the retail electricity
and gas markets.  It is calculated using data on electricity and gas consumption
in the household and non-household sectors (average bands) and annual average retail
prices.
[256] Eurostat. 
[257] HEA and MAVIR, Statistical Data of the Hungarian Power System 2012,
2012, http://www.mekh.hu/gcpdocs/86/MAVIR_MEKH_VER_statisztika_2012.pdf.

[258] The share of electricity produced in combined heat and power plants
(CHP).
[259]FGSZ Zrt, Foldgazszallito, Energikus Csapat 21. Szazadi
Teljesitmeny, 2012, http://fgsz.hu/sites/default/files/documents/fgsz_eves_jelentes_2012_magyar.pdf.

[260]HEA, http://www.mekh.hu/statisztika/energia-statisztika/adatok-es-tablazatok/villamosenergia-ipari-tarsasagok-adatai.html.
[261]HUPX, HUPX Year 2012 in Detail., 2012, http://www.hupx.hu/media/HUPX_Year_2012_in_detail_Final_339.pdf
and HUPX, HUPXDAM Annual Report 2013, 2013. http://www.hupx.hu/media/HUPX_DAM_ANNUAL_REPORT_2013_PUBLIC_404.pdf.
[262]MVM Csoport, MVM Csoport Eves Jelentes 2012, 2012, http://www.mvm.hu/hu/szakmai-informaciok/szakmai_kiadvanyok/eves-jelentes/Documents/MVM_EVES_2013_09_végleges.pdf.
Import capacity at HAG (Austria) interconnector was reallocated in favor of MVM
by the Ministry's decision in 2011.
[263] Data
is not available for this transit to Serbia and Bosnia-Herzegovina, from other
documents an educated estimate would be around 2 bcma. FGSZ Zrt.
“Foldgazszallito, Eves Jelentes 2012, 2012. http://fgsz.hu/sites/default/files/documents/fgsz_eves_jelentes_2012_magyar.pdf.
[264] 10th Consumer Markets Scoreboard,
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[265]
Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[266] Directive 2009/72/EC concerning common rules for the internal
market in electricity and repealing Directive 2003/54/EC. 
[267] http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/8-10032014-AP/EN/8-10032014-AP-EN.PDF. 
[268] The share of electricity produced in combined heat and power plants
(CHP).
[269] Eurostat.
[270] http://europa.eu/rapid/press-release_IP-14-44_en.htm.
[271] http://europa.eu/rapid/press-release_IP-14-155_en.htm.
[272] Pursuant Article 9(9) of the Electricity Directive. 
[273] Set out in Chapter V of the Electricity Directive.
[274] CER/13/161, CER’s ITO Certification Decision.
[275] There was no update on progress by 17 March 2014.
[276] CER, 2012 Ireland National Report to the European Commission, July
2013.
[277] http://www.allislandproject.org/en/market_decision_documents.aspx?article=2d921c38-f249-49ea-aba7-a78e04f9a99c.
[278] http://www.allislandproject.org/en/wholesale_overview.aspx?article=d3cf03a9-b4ab-44af-8cc0-ee1b4e251d0f.
[279] http://www.gaslink.ie/media/GaslinkNetworkDevlopmentPlan20131.pdf.
[280] http://www.gaslink.ie/media/GaslinkNetworkDevlopmentPlan20131.pdf.
[281] http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:231:0016:0020:en:PDF.
[282] http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:273:0005:0017:EN:PDF.
[283] http://www.gaslink.ie/media/GaslinkNetworkDevlopmentPlan20131.pdf.
[284] http://www.niassembly.gov.uk/Documents/RaISe/Publications/2013/north_south/13213.pdf.
[285] http://www.esb.ie/main/sustainability/smart-meters.jsp.

[286] However the difference is not statistically significant.
[287] 10th
Consumer Markets Scoreboard, http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[288] CER, 2013 Ireland National Report to the European Commission, July
2013.
[289] http://www.cer.ie/docs/000884/cer11144.pdf.
[290] http://www.cer.ie/customer-care.
[291] http://www.cer.ie/docs/000451/CER13288%20ECT%20Annual%20Report%202012.pdf.
[292] CER, 2012 Ireland National Report to the European Commission, July
2013.
[293]http://www.ceer.eu/portal/page/portal/EER_HOME/EER_PUBLICATIONS/NATIONAL_REPORTS/National%20Reporting%202013/NR_En/C13_NR_Ireland-EN.pdf.

[294] http://www.gaslink.ie/media/GaslinkNetworkDevlopmentPlan20131.pdf.

[295]Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[296] Interministerial decree of 8th
March 2013, http://www.sviluppoeconomico.gov.it/ http://www.sviluppoeconomico.gov.it/images/stories/normativa/decreto-8marzo2013-sen.pdf.
[297] AEEG, 2013 National report to the European
Commission.
[298] Assoelettrica, http://www.staffettaonline.com/articolo.aspx?ID=123738.
[299] AEEG, 2013 National report to the European
Commission.
[300] This service is provided completely online, and provides for a
third-party conciliator who is independent of the two parties with expertise in
mediation and energy.
[301] A help tool managed in collaboration with
the Single Buyer (Acquirente Unico) that is conducting material,
informational and fact-finding activities and ensuring the effective processing
of complaints.
[302] Resolution 02nd August 2012, 350/2012/R/eel pursuant to Ministry of
Health Decree dated 13th January
2011
entitled “Identification of medical‐therapeutic equipment powered by
electricity required to keep people with serious health conditions alive”, and
pursuant to the provisions of Ministerial Decree dated 28th December 2007.
[303] Resolution 72/2014/E/com  of 27th February  2014 (http://www.autorita.energia.it/it/docs/14/072-14.htm).
10th Consumer Markets Scoreboard, http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm 
[305] Resolution 575/2012/R/gas, http://www.autorita.energia.it/allegati/docs/12/575-12.pdf.
[306] Resolution ARG/gas 155/08, http://www.autorita.energia.it/allegati/docs/08/del.ARG-gas155-08.pdf.
[307] Table contains 2012 data unless stated otherwise. Peak demand is taken from ENTSOE, Yearly Statistics & Adequacy
Retrospective 2012. For the number of smart meters installed, see http://www.enel.com/en-GB/innovation/project_technology/zero_emission_life/smart_networks/smart_meters.aspx.
[308]
Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[309] http://www.enel.com/en-GB/innovation/project_technology/zero_emission_life/smart_networks/smart_meters.aspx.
[310]Eurostat
[311]Eurostat
[312]Eurostat
[313]Eurostat
[314]Eurostat
[315]http://latvenergo.lv/eng/about_us/generation/hpps/.

[316].Eurostat
[317] ENTSOE, YS&AR report, 2012
[318]Statistics Latvia, 2013.http://www.csb.gov.lv/en/notikumi/2012-export-energy-resources-has-grown-109-36464.html.
[319]Statistics Latvia, 2013, http://www.csb.gov.lv/en/statistikas-temas/energy-key-indicators-30736.html.
[320].http://epp.eurostat.ec.europa.eu/statistics_explained/images/archive/1/19/20110407081503%21Number_of_main_entities_bringing_gas_into_the_country_and_their_cumulative_market_share%2C_2009.png.
[321]EC, Quarterly Report on European Gas Markets, 2012.
[322]Statistics Latvia, 2013, http://www.csb.gov.lv/en/notikumi/2012-export-energy-resources-has-grown-109-36464.html.
[323] Latvenergo data, http://www.latvenergo.lv/eng/about_us/sales/.
[324]Eurostat
[325]ACER/CEER Annual Report on the Results of Monitoring the Internal
Electricity and Natural Gas Markets in 2012, November 2013
[326] However the difference is not statistically significant
[327] 10th
Consumer Markets Scoreboard,
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[328]Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[329]Eurostat.
[330]Renewable
Energy Directive 2009/28/EC.
[331]Eurostat.
[332]Statistics Lithuania, Energy Balance 2011, 2012.
[333] ACER/CEER Annual Report on the Results of Monitoring the Internal
Electricity and Natural Gas Markets in 2012, November 2013.
[334] The share of electricity produced in combined heat and power plants
(CHP).
[335]Eurostat.
[336]Eurostat.
[337].Eurostat.
[338] ENTSOE, YS&AR report, 2012.
[339]NCC, http://www.regula.lt/en/publications/annual-report/NCC_report_for_2012_EN.pdf.
[340] NCC, http://www.regula.lt/en/publications/annual-report/NCC_report_for_2012_EN.pdf.
[341]Energy in Lithuania 2012,http://www.lei.lt/_img/_up/File/atvir/leidiniai/2013/Lietuvos_energetika-2012.pdf.
[342] NCC, http://www.regula.lt/en/publications/annual-report/NCC_report_for_2012_EN.pdf.
[343] UAB GET Baltic, 
https://www.getbaltic.lt/en/news/news_1/reportoftradeonnaturalgasexchangeoffourthquarterof2013hasbeenannounced
[344]ACER/CEER Annual Report on the Results of Monitoring the Internal
Electricity and Natural Gas Markets in 2012, November 2013.
[345]NCC data, April 2014.
[346]Eurostat, http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Electricity_market_indicators.
[347]ACER/CEER Annual Report on the Results of Monitoring the Internal
Electricity and Natural Gas Markets in 2012, November 2013.
[348] 10th
Consumer Markets Scoreboard, http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm.
[349] ACER/CEER Annual Report on the Results of Monitoring the Internal
Electricity and Natural Gas Markets in 2012, November 2013.
[350] NCC, 2013 data.
[351]
Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[352] ILR, http://www.ilr.public.lu/electricite/documents_NEW/rapport/VERSION_FINALE_rapport_benchmark_2012_20130906.pdf.
[353] Law of 7 August 2012 on electricity market, http://www.legilux.public.lu/leg/a/archives/2012/0178/a178.pdf#page=2, and Law of 7 August 2012 on natural gas market, http://www.legilux.public.lu/leg/a/archives/2012/0179/a179.pdf#page=2.
[354] Information on the letter of formal notice
issued is available at http://ec.europa.eu/eu_law/eulaw/decisions/dec_20140328.htm.
[355] All figures on electricity and gas markets, including those of the
following paragraphs, are extracted from ILR’s latest report on energy markets
in 2012, unless otherwise specified, http://www.ilr.public.lu/electricite/documents_NEW/rapport/VERSION_FINALE_rapport_benchmark_2012_20130906.pdf.
[356] 10th Consumer Markets Scoreboard,
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm.
[357] http://www.ilr.public.lu/stroumagas/index.html or http://www.STROUMaGAS.lu.
[358] http://www.calculix.lu/web/tk/tk.
[359] http://www.creos-net.lu/index.php?id=556.
[360]
Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[361] MRA, Malta’s Report to the European
Commission on the Implementation of Directive 2009/72/EC, Directive 2009/73/EC
and Directive 2005/89/EC, July 2013.
[362] The share of electricity produced in combined
heat and power plants (CHP).
[363] Eurostat.
[364] MRA, Annual Report 2012.
[365] Eurostat.
[366] Eurostat.
[367] ACER/CEER, Annual Report on the Results of Monitoring the Internal
Electricity and Natural Gas Markets in 2012, November 2013.
[368] ACER/CEER, Annual
Report on the Results of Monitoring the Internal Electricity and Natural Gas
Markets in 2012, November 2013.
[369] However the difference is not statistically significant.
[370] 10th Consumer Markets Scoreboard,
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[371] MRA, Malta’s Report to the European
Commission on the Implementation of Directive 2009/72/EC, Directive 2009/73/EC
and Directive 2005/89/EC, July 2013.
[372] ACER/CEER, Annual Report on the Results of Monitoring the Internal
Electricity and Natural Gas Markets in 2012, November 2013.
[373] MRA, Malta’s Report to the European
Commission on the Implementation of Directive 2009/72/EC, Directive 2009/73/EC
and Directive 2005/89/EC, July 2013.
[374] http://ieeexplore.ieee.org/xpl/articleDetails.jsp?arnumber=6347769.
[375] http://ec.europa.eu/energy/infrastructure/pci/doc/2013_pci_projects_country.pdf. 
[376] Eurostat.
[377] MRA, Malta’s Report to the European
Commission on the Implementation of Directive 2009/72/EC, Directive 2009/73/EC
and Directive 2005/89/EC, July 2013.
[378]Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[379] Gaz-System Auctions Platform
[380] In some instance, the Regulator has released entities trading in
natural gas from the obligation to submit tariffs for his approval. 
[381] Eurostat and Polish
Central Statistical Office, Energy 2013, 2 September 2013. 
[382] Eurostat.
[383] C-36/14, See IP/13/580.
[384]  C-320/13, See IP/13/259.
[385] URE, Annual Report of the President of URE,
March 2013.
[386] URE, National Report 2013.
[387] Mid-2013, six unbundled DSOs merged into one. 
[388] URE, National Report 2013.
[389] URE, National Report, 2014
[390] URE, National Report, 2014
[391] POLPX data – Annual Summary for 2012, http://www.polpx.pl/pl/27/aktualnosci/307/podsumowanie-roku-2012-na-towarowej-gieldzie-energii.
[392] Memorandum of Understanding w sprawie przyłączenia Polski i
Rumunii do zintegrowanego mechanizmu market coupling na rynku dnia
następnego, 11 July 2013.
[393] Report on monitoring of security of supply (2012), Ministry of
Economy of Poland http://www.mg.gov.pl/files/upload/8356/PL_MG_DRO_Sprawozdanie%20za%202012.pdf
[394] Report
on the result of monitoring the security of gaseous fuels
supply for the period from 01 January 2012 to 31 December 2012
[395] Transmission Network Code, President of Energy Regulatory Office
Decision DRR-4322-5(9)/2013/JBu from 22 November
2013; Transmission Network Code of Polish Section of
the Jamal Pipeline, President of Energy Regulatory Office Decision DRR-4322-6(5)/2-13/2-14/KG01
from 3 February 2014.
[396] Produkt powiązany w Lasowie, http://www.gaz-system.pl/centrum-prasowe/aktualnosci/informacja/artykul/201643/.
[397] Transmission Network Code, President of Energy Regulatory Office
Decision DRR-4322-5(9)/2013/JBu from 22 November
2013; Transmission Network Code of Polish Section of
the Jamal Pipeline, President of Energy Regulatory Office Decision DRR-4322-6(5)/2-13/2-14/KG01
from 3 February 2014.
[398] Eurostat.
[399] URE, Annual Report of the President of URE,
March 2013.
[400] URE, Annual Report of the President of URE,
March 2013.
[401] URE, MAPA DROGOWA uwolnienia cen gazu ziemnego, Warszawa, January
2013.
[402] http://www.maszwybor.ure.gov.pl/.
[403] 10th Consumer Markets Scoreboard, http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[404] http://www.pgedystrybucja.pl.
[405] Energa operator.
[406] ENTSO-E, YS&AR Report, 2012.
[407] PSE operator, press release, http://www.pse-operator.pl/index.php?dzid=32&did=1669.
[408] Ministry of Economy, Plan Działań
Zapobiegawczych, Warsaw 2013.
[409] Ministry of Economy, Report on the results of monitoring the security
of gaseous fuel supply for the period from 01 January 2012 to 31 December 2012,
Warsaw 2013.
[410]Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[411] http://www.ren.pt/.
[412] Share of RES in Gross Final Energy
Consumption.
[413] Employment of 80 people in 2010.
[414] http://ec.europa.eu/energy/gas_electricity/interpretative_notes/doc/certification/certifications_decisions.pdf
[415] http://www.erse.pt/pt/imprensa/comunicados/2014/Comunicados/CertORT%20Decisao_Comunicado_vfinal.pdf

[416] Share over total production plus net Exchange. Source: REN, Sistema
eletroprodutor. Informação mensal, Dezembro 2013.
[417] Own estimation. OMIE quotes trading in Portugal based on purchases
for Portuguese customers (i.e. it does not report sales in Portugal that are
sold in Spain). Thus, it is underestimating the real market size.
[418] OMIE has auctioned interconnection contract for difference since
2009, but it is a forward contract -it is settled against the price difference
regardless the sign-, while OMIP’s FTRs is one-sided –they have value only if
prices in Spain is higher, or vice versa.
[419] Bilateral contracts in the day-ahead schedule are cancelled out
though participation in the day-ahead market, so no net energy is added.
[420] Although a new Ordinance approved in August 2012 sets an incentive
to generation capacity that will apply after the end of the Financial
Assistance Programme, initially in 2015.
[421] Although a new Ordinance approved in August 2012 sets an incentive
to generation capacity that will apply after the end of the Financial
Assistance Programme, initially in 2015.
[422] This regulation results from the merger of two previous regulations
and includes some changes regarding balance areas, registration of market
agents, an additional market for secondary reserve, settlement processes and retailers
balancing responsible parties.
[423] The proposal still has to be approved in
the parliament.
[424] Nigeria presents over 80 % of all LNG imports, while other imports
are also received from Qatar, Egypt and Trinidad y Tobago. 
[425] EuroStat.
[426] Includes concession fees, stranded costs and other taxes linked to
the energy sector, RES and CHP and the compensation for isolated islands, being
some of these charged in the Access Tariff.
[427] In 2012, 6.1% of the consumers switched to Goldenergy. 
[428] Eurostat. 
[429] ACER/CEER, Annual Report on the Results of
the Monitoring the Internal Electricity and Natural Gas Market in 2012,
November 2013.
[430] However the difference is not statistically significant
[431] 10th Consumer Markets Scoreboard, http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[432] These schemes are: solidarity supplement for elderly, unemployment
assistance, 1st step of child benefit, social disability pension and social
income supplements. Source: Diário da República, 1.ª
série, N.º 189. 
[433] Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[434] ANRE, National Report 2012, 31 August 2013.
[435] National Institute of Statistics, Press
Release no.37, 11.02.2014.
[436] Eurostat
[437] The Commission is examining whether the national legislation now
fully transposes the Directives and will decide on the respective infringement
procedures for partial transposition accordingly (Cases C-405/13 and C-406/13,
IP/13/260). 
[438] http://europa.eu/rapid/press-release_MEMO-14-470_en.htm
[439] Government Decision no. 627/13.07.2000 regarding the restructuring
of the National Electricity Company.
[440] ANRE Order no.90/11.12.2013
and ANRE Order no.3/22.01.2014, respectively.
[441] Decisions EC 6891 /14.10.2013 and 8485/25.11.2013, respectively.
[442] CEER data for 2012
[443] Licence no.1798 / ANRE Decision 2120/2013.
[444] License no.1797 / ANRE Decision 2119/2013.
[445] 10th Consumer Markets Scoreboard, http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm

[446] A.T. Kearney, "Smart metering in Romania", 3 September 2012.
[447] Romania, Ministry of Foreign Affairs, "Main
commitments for the National Reform Programme 2013".
[448] ANRE, National Report 2012, 2013.
[449] These regulated prices were totally removed since 1 January 2014.
[450] Market value is an estimation of the size of the retail electricity
and gas markets. It is calculated using data on electricity and gas consumption
in the household and non-household sectors (average bands) and annual average retail
prices.
[451] Eurostat and http://ec.europa.eu/energy/publications/doc/2014_pocketbook.pdf
[452] The share of electricity produced in combined heat and power plants
(CHP).
[453] Eurostat.
[454] The EC, Energy prices and costs report of 17.3.2014, SWD(2014) 20
final/2.
[455] After the European Commission has issued its opinion of 09.8.2013
pursuant to Article 3(1) of Regulation (EC) No 715/2009 and Article 10(6) of
Directive 2009/73/EC.
[456] After the European Commission has issued its opinion of 23.8.2013
pursuant to Article 3(1) of Regulation (EC) No 715/2009 and Article 10(6) of
Directive 2009/73/EC. 
[457] Eurostat.
[458] URSO, Annual report, 2013.
[459] ACER/CEER, Annual Report. on the Results of Monitoring the Internal
Electricity and Natural Gas Markets in 2012, November 2013.
[460] URSO, Annual report, 2013.
[461] ICIS Heren, European Gas Markets, March 2014.
[462] Road Map towards the regional gas market among Visegrad 4
countries, June 2013
[463] CEER database
[464] Eurostat.
[465] The EC, Energy Prices and Costs Report, 2014.
[466] ACER's Market  Monitoring Report
[467] ACER's Market  Monitoring Report
[468] CEER database
[469] The EC, Energy Prices and Costs report, 2014.
[470] 10th Consumer Markets Scoreboard, http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm

[471] http://www.urso.gov.sk:8088/CISRES/Agenda.nsf/KalkulackaElektrinaNewWeb.
[472] IEA, Energy Policy Highlights, 2013. 
[473]Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[474] http://ec.europa.eu/energy/renewables/reports/2013_en.htm
[475]The overall installed capacity and power generation were considered
in market shares’ calculation, including small producers connected to the
transmission and distribution networks. Only 50% of Krško nuclear power plan
has been taken into account.
[476]Organised by BSP Regional Energy Exchange.
[477]
ACER/CEER Annual Report on the Results of Monitoring the Internal Electricity
and Natural Gas Markets in 2012, November 2013.
[478]
ACER/CEER Annual Report on the Results of Monitoring the Internal Electricity
and Natural Gas Markets in 2012, November 2013.
[479]CEER, Status Review of Regulatory Aspects of Smart metering,
September 2013.
[480] However the difference is not statistically significant.
[481] 10th Consumer Markets Scoreboard, http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm

[482]http://www.sloveniatimes.com/thermo-plant-tes-6-showcase-of-catastrophic-corporate-governance.
[483]Considerations based on ENTSO-E’s Adequacy forecast report
2013-2030, Scenario B. System’s adequacy is evaluated through a reserve margin indicator
calculated as the ratio between Remaining Capacity, net of Adequacy
Reserve Maring, and the Reliable Available Capacity. ENTSO-E, Scenario
Outlook & Adequacy Forecast (SO&AF) 2013-2030,April 2013.
[484]
Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[485] Eurostat.
[486] Since June 2013, the Government has lifted the ban on electricity
imports imposed to companies tagged as dominant players.
[487] CNMC, Informe de supervisión del mercado peninsular mayorista al
contado de electricidad, July and August 2013.
[488] Sources: Part of the OTC physical trades is reversed in the
day-ahead market. Daily schedule refers to the PBF schedule. Source: based on
data from REE and OMIE.
[489] Including all companies which produce natural gas domestically as
well as abroad.
[490] Eurostat.
[491] However the difference is not statistically significant
[492] 10th Consumer Markets Scoreboard, http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[493] Law 3/2013, of creation of the National Markets and Competition
Commission.
[494] Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[495] Eurostat.
[496] http://www.energimyndigheten.se/Global/Engelska/Facts%20and%20figures/Energy_in_sweden_2012.pdf.
[497] http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-DK-13-001/EN/KS-DK-13-001-EN.PDF.
[498] Eurostat.
[499] Eurostat.
[500] Eurostat.
[501] ACER, http://www.acer.europa.eu/Official_documents/Acts_of_the_Agency/Publication/ACER%20Market%20Monitoring%20Report%202013.pdf.
[502] http://ei.se/sv/nyhetsrum/nyheter/nyhetsarkiv/nyhetsarkiv-2012/extra-pengar-till-ei-i-regeringens-budget/.
[503] Ei, National Report on the Swedish electricity and natural gas
markets 2012, June 2013, http://www.ceer.eu/portal/page/portal/EER_HOME/EER_PUBLICATIONS/NATIONAL_REPORTS/National%20Reporting%202013/NR_En/C13_NR_Sweden-EN.pdf.
[504] Ei, National Report on the Swedish electricity and natural gas
markets 2012, June 2013. 
[505] Ei, National Report on The Swedisch electricity and natural gas
markets 2012, June 2013.
[506] Ei, National Report on The Swedisch electricity and natural gas
markets 2012, June 2013.
[507] However the difference is not statistically significant
[508] 10th Consumer Markets Scoreboard, http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[509]http://www.energimarknadsinspektionen.se/Documents/Publikationer/rapporter_och_pm/Rapporter%202013/Ei_R2013_10.pdf.
[510] CREG, Study on capacity remuneration mechanisms, October 2012.
[511]http://www.energimarknadsinspektionen.se/Documents/Publikationer/rapporter_och_pm/Rapporter%202013/Ei_R2013_10.pdf.
[512]Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[513] Eurostat.
[514] The share of electricity produced in combined heat and power plants
(CHP).
[515] ACER/CEER, Annual Report on the Results of
Monitoring the Internal Electricity and Natural Gas Markets in 2012, November
2013.
[516] Ministerie van Economische Zaken, Landbouw en Innovatie,
Monitoringsrapportage Leverings- en Voorzieningszekerheid Elektriciteit en Gas
2012, July 2012.
[517] http://www.energieakkoordser.nl/.
[518] In 2012, the energy and transport regulation was combined in one department.
The provided data is the energy share of that directorate.
[519] http://curia.europa.eu/jcms/upload/docs/application/pdf/2013-10/cp130137en.pdf. 
[520] DG Energy, Quarterly report on European Gas
Markets, Market Observatory for Energy, vol. 5 issue 4, 4th quarter 2012, p.
15. For a more in-depth assessment of the liquidity on the Dutch market see
ACM's Liquidity Report 2014, https://www.acm.nl/nl/download/publicatie/?id=11897. 
[521] Minister of Economic Affairs, Letter to parliament “Gaswinning in
Groningen”, 17 January 2014.
[522] ACM, National report on energy regulation in 2012, 17 September
2013.
[523] ACM, Monitoringrapportage Kleinschalige
Aanbieding Slimme Meter, 7 November 2013.
[524] ACM, National report on energy regulation
in 2012, 17 September 2013.
[525] However the difference is not statistically significant
[526] 10th Consumer Markets Scoreboard, http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[527] Ministerie van Economische Zaken, Monitoringsrapportage Leverings- en
Voorzieningszekerheid Elektriciteit en Gas 2013, July 2013.
[528] Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.
[529] On 18 December 2013 the Commission opened an in-depth investigation
to examine whether UK plans to subsidise the construction and operation of a
new nuclear power plant at Hinkley Point in Somerset are in line with EU state
aid rules. http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_34947.
[530] Digest of UK energy statistics (DUKES), Chapter 5.
[531] The Carbon Price Floor is a tax on fossil fuels used to generate
electricity with levels designed and adapted on a yearly basis to ensure a
certain minimum effective carbon price, which came into effect on 1 April 2013.
[532] DECC, UK Renewable Energy Roadmap: 2013 Update, 5 November 2013.
[533] https://www.ofgem.gov.uk/press-releases/ofgem-proposes-reference-cma-investigate-energy-market.
[534] Ofgem, 2013 Great Britain and Northern Ireland National Reports to
the European Commission, 22 August 2013. 
[535] http://www.apxgroup.com/uncategorized/apx-endex-2012-volumes-up-by-12/.
[536] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/65800/DUKES_2013_Chapter_4.pdf.
[537] Ofgem, 2013 Great Britain and Northern Ireland National Reports to
the European Commission, 22 August 2013.
[538] Ofgem, 2013 Great Britain and Northern Ireland National Reports to
the European Commission, 22 August 2013.
[539] Smart Meters, Great Britain, Quarterly report to end June 2013.
[540] However the difference is not statistically significant.
[541] However the difference is not statistically significant.
[542] 10th Consumer Markets Scoreboard, http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm
[543] https://www.ofgem.gov.uk/ofgem-publications/74756/customer-engagement-energy-market-tracking-survey-2013.pdf.
[544] https://www.ofgem.gov.uk/ofgem-publications/74756/customer-engagement-energy-market-tracking-survey-2013.pdf.
[545] https://www.ofgem.gov.uk/ofgem-publications/39350/retail-market-review-final-domestic-proposals.pdf.
[546]
https://www.ofgem.gov.uk/ofgem-publications/39452/consumer-engagement-energy-market-information-needs-and-perceptions-ofgem.pdf.
[547] https://www.ofgem.gov.uk/ofgem-publications/74615/confidence-code.pdf.
[548] https://www.ofgem.gov.uk/ofgem-publications/75550/consumer-vulnerability-strategy.pdf.
[549] DECC, Annual Report on Fuel Poverty Statistics 2013, May 2013.
[550] https://www.ofgem.gov.uk/ofgem-publications/64003/pricecontrolexplainedmarch13web.pdf.
[551] https://www.ofgem.gov.uk/electricity/transmission-networks/critical-investments/strategic-wider-works
[552] http://ec.europa.eu/energy/infrastructure/pci/doc/2013_pci_projects_country.pdf.

[553] Regulation (EU) No 347/2013; OJ L 115, 25.4.2013, p. 39–75.
[554] https://www.ofgem.gov.uk/publications-and-updates/offshore-transmission-factsheet.
[555] http://ec.europa.eu/energy/infrastructure/pci/doc/2013_pci_projects_country.pdf.
[556] https://www.ofgem.gov.uk/ofgem-publications/75232/electricity-capacity-assessment-report-2013.pdf. 
[557]http://www.eirgrid.com/media/Generation%20Capacity%20Statement%202014.pdf.
[558] DECC, Risk assessment for the purpose of EU Regulation 994/2010 on
security of gas supply, November 2011.
[559] Market value is an estimation of the size of the retail electricity and gas markets. It is calculated using data on electricity and gas consumption in the household and non-household sectors
(average bands) and annual average retail prices.