Vlaamse Regulator van de Elektriciteits- en Gasmarkt 1

Dirk Van Evercooren, Director Markets VREG

18 June 2013

2° EUROPEAN ENERGY CONFERENCE ON CONSUMERS & SUSTAINABLE ENERGY:FROM THE FREE MARKET TO ENERGY EFFICIENCY

Can I ask you a question?What percentage of families and small and medium sized business feel that the liberalisation of the energy market is a good thing for them as energy customers?

Less than 40%? Between 40% and 70%? More than 70%?

Did you know?In a survey conducted with more than 1000 families last year in Flanders/Belgium:

74% see the effect of liberalisation as positive for them (up from 56% in 2011)

Young people are more positive (79%) than 55+ (69%)

Families that switched energy supplier have a more positive attitude (80%) than those that contracted with the default supplier (73%) or that are still passive (68%)In a survey with more than 1000 small and medium businesses in Flanders/Belgium82% sees a positive effect (up from 66% in 2011) for them

LESSONS FROM 10 YEARS OF ENERGY LIBERALISATION

Before liberalisation

5

Production

Supply

Distribution

Transport

CPTE (Joint venture

Electrabel – SPE)

Inter-Municipalities

Goals of liberalisationMean: introduce competitionMonopolies are not consumer friendly!

Expected effects of liberalisation:

Service

Price

Innovation

6

But: Grid is a natural monopoly, so it

is not sensible to multiply parallel infrastructures

Competition requires a ‘level playing field’To achieve this, we need ‘unbundling’: splitting up monopoly activities and competitive activities

7

After liberalisation of energy market

8

Production

Supply

Distribution

Transport

CPTE

Inter-Municipalities

Competition

Before After

Competition

Monopoly

Monopoly

Level playing field?Comptition needs a level battle field!• Unbundling imposes equal treatment of competing suppliers by grid operators• But: not all competitors fight with equal weapons!• => (access to ) Production facilities determined possibilities for competitors• As a result, newcomers can have a disadvantage in the battle…

9

What has been done in 10 years?

A lot has changed: – in the industry: production, supply,

grids, lawyers, traders, consultancy,… – Public authorities: (a lot of) new rules,

control by the regulators

Regulation of network tariffs3 Generations of European DirectivesMore interconnections, Power and Gas Exchanges,...

CEER 2020 Customer Strategy

Putting customers first in the energy marketMeans giving consumers a voiceConsumer organisations can play a very positive role, defending customer rights and detecting flaws in market functioningRegulators should try to use this to improve the regulatory process

HOW TO DEAL WITH THE LIBERALISED MARKET AS A CUSTOMER

Context for CustomersEnergy price is now set by the

(international) market Competition can mitigate an upward

price evolution, not reverse it In many countries, what is gained on the

market, is ‘lost’ again in grid tariffs, due to taxes, costs of public service obligations,…

But markets need corrections, so efficient PSOs are needed…

Challenges for the market and for customers

Increasing decentralised productionHeat pumpsElectric vehiclesSmart metersSmart grids – bi-directional grids

=> Growing electrification of energyFlexible demand: domotics, Demand Side Management,…

Energy Efficiency Challenges in the Energy market are multiple

So end-user prices are not likely to come down in the long run, even if competition keeps prices low

So Electricity and Gas users need to ensure they use energy efficiently and be active on the market

In many countries, people get assistance: (free) advice, financial support, subsidies, interest free loans,…

More transparency will be instrumental – but in itself not sufficient – to empower customers

Thank you for your attention!

www.vreg.bedirk.vanevercooren@vreg.be