Benchmarking State Energy Authorities

PHLG Meeting26 March 2004Durres, Albania

Dr Helene RydingAthens Process Secretariat

A EuropeAid project

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What is a State Energy Authority?

• A government body within a Ministry • At State level• With responsibility for energy policy• With a primary purpose of ensuring the

provision of energy under secure conditions with high level of public service and consumer protection

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Why is it necessary?

• EU Entry and SEEREM requires major task of legal harmonisation

• The tasks must be led by a Ministry

• Monitoring the implementation of SEEREM is a ministerial task

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Why benchmark?

Four components to be benchmarked:

• Existence

• Adequacy of legislation

• Operation in practice

• Performance

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Existence

Existence:• Must be at national level (only national negotiations with

the EU) .• Bosnia and Herzegovina, Serbia and Montenegro need

clarification

Separate or combined?• With environment (plus spatial planning)• With industry and trade• Energy and mining• Must include nuclear energy

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Adequacy of legislationMinistry must have policy control for:

• Competitive energy supply• Security and reliability of supply• Environmental protection (including nuclear safety, pollution and

climate control)• Promotion of energy efficiency and renewable energy supply• Consumer protection: reliability and affordability; • Public service provision

Overlaps with Competition, Environment, Social Security and needs clear division of responsibilities

Requires liberalisation and reduction of State controlled activities

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Adequacy of legislation

Withdrawal from:• Price control by the Ministry• Detailed planning of future investment.• Operational control of state owned enterprises• Non-corporatised legal form of state enterprises• Social responsibilities of state owned enterprises• Energy inspection of enterprises

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Adequacy of legislation

Ministerial Duties• Policy-making• Drafting legislation• Monitoring and enforcementRights of the public for ministerial service • Appropriate, accurate, and prompt information• Civil service neutrality• Transparency • No corruption• Mechanism to challenge policy and administrative

decisions

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Adequacy for practical operation

• Strategic management

• Resources

• Competences

• Working culture

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Strategic ManagementA Ministry is a business but:• The management board regularly gets kicked out by the shareholders• Short term perspective of senior managers means that there is no long

term planning (succession planning, fast track promotion)• Often board members have no management skills• Workers survive by not rocking the boat inside the organisation• Promotion and demotion can be linked to politics not merit• Change management skills not always available• Inherited working culture is difficult to change• Some bureaucracy is inevitable in public organisation• Some differences in management skills needed between public and

private organisations

This applies to EU Member States and the European Commission as well

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Resources

• Annual or rolling 3 year budget?

• Merging ministries to save money?

• Resources match expanding workload with EU entry?

• Reallocation of existing staff to new tasks without training?

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CompetencesCompetences of a modern Ministry of Energy:• Economic analyses and policy development• Initiation and management of the legislative process• Monitoring of policy implementation and control• Strategic management of state owned assets• International negotiations on energy issues• Management control over agencies

Existing competences: • Mainly technical• Shortage of lawyers and legal experience• Impressive ability to pick up new language

Need to employ specialists to fill the gap, but are too expensive to hire in-house

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Working culture

Important because organisation already exists doing a similar job

Independent Regulator is completely newIndependent TSO “begins again” as a new organisation

with new tasks and new management

Working culture needs to change to bring• Management effectiveness• Civil service neutrality/ culture• Decent employment conditions• Transparency• Public service

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Performance tests

• Deadlines of Athens Memoranda for legislation are met

• Are new institutions independent or does Ministry try to interfere?

• Legal harmonisation of the energy acquis: does national legislation accurately transpose the acquis?

• Is the public properly informed?• Are State-owned assets performing profitably?• Is competition developing?• Is market opening taking place as planned?