The Flemish Regulator for the Electricity and Gas Market (VREG)

A Case-Study in Light of GATS Principles

Some Views on Potential Disciplines

Mr. Ludo Deckers - Prof. Jan Wouters

WTO Workshop on Domestic RegulationGeneva, March 29-30, 2004

Part I

The Flemish Regulator for the Electricity and Gas Market (VREG)

A Case-Study in Light of GATS Principles

Mr. Ludo Deckers, VREG

EU Directive 2003/54 (electricity)(similar for natural gas)

Scope

Common rules for generation, transmission, distribution and supply of electricity

organisation and functioning of the electricity sector Grid operators vs suppliers/generators Published tariffs for grid access

access to the market criteria and procedures applicable to calls for tenders granting of authorisations operation of systems.

Basic Principles of EU Directive (I)

• Competitive, secure and environmentally sustainable market without discrimination between undertakings

• EU Member States may impose public service obligations

But: clearly defined, transparent, non-discriminatory, verifiable and equal access suppliers to customers

Basic Principles of EU Directive (III)

• Installation of a Regulator for ensuring non-discrimination, effective competition and the efficient functioning of the market

• Measures on consumer protection

Flemish Legislation (I)

Electricity and Natural Gas Decrees (2000-01)

• Overall objective: reconcile liberalization with

o public service obligations

o objectives of social and environmental policy

Flemish Legislation (II)

• Public service obligations

o Minimum supply of electricityo (limited)Free electricity for householdso Environment-friendly electricityo Rational use of energyo One invoiceo Universal service obligation for connection to distribution

grid for electricity

Functions of VREG (I)

• Advice to Flemish Government

• Supervision compliance with Flemish rules

• Attribution and observance of supply licences

• Designation and observance of distribution grid operators

Functions of VREG (II)

• Definition and observance technical grid codes for distribution grids

• Supervision compliance with public service obligations by suppliers and distribution grid operators

• Issue of Green Certificates, development and observance of market

• Mediation/settlement of disputes on access to distribution

Functions of VREG (III)

• Observance Flemish energy market in a European context

• Observance behaviour and positioning of market parties

• Observance development of competition and, if necessary, guiding this process

• Instrument: VREG Market Reports

Part II

Some Views regarding Potential Disciplines on Domestic

Regulation

Prof. Jan Wouters, KU Leuven

Domestic Disciplines and Regulated Industries (I)

• Specific features of regulated industries, e.g. electricity/natural gas energy sector

o network sectors; natural monopolies; access concerns

o universal service concernso environmental policy concerns

Domestic Disciplines and Regulated Industries (II)

• How to define “energy services” for GATS purposes? e.g.

o exploration/productiono construction of energy facilitieso networkso supplyo final use

Domestic Disciplines and Regulated Industries (III)

• How to apply principles of domestic regulation to regulated industries?

o transparencyo necessityo equivalencyo technical standardso impartiality

Domestic Disciplines and Regulated Industries (IV)

• How to reconcile these principles with

o public service obligations

o objectives of social and environmental policy