NordREG
c/o Norwegian Water Resources
and Energy Directorate
P.O. Box 5091, Majorstua
N-0301 Oslo
Norway
Telephone: +47 22 95 95 95
Telefax: +47 22 95 90 00
E-mail: [email protected]
Internet: www.nordicenergyregulators.org
May 2009
Market Design
Common Nordic end-user market
Report 3/2009
Market Design
Common Nordic end-user market
Nordic Energy Regulators
2009
Report 03/2009
NordREG
c/o Norwegian Water Resources and Energy Directorate
P.O. Box 5091, Majorstua
N-0301 Oslo
Norway
Telephone: +47 22 95 95 95
Telefax: +47 22 95 90 00
E-mail: [email protected]
Internet: www.nordicenergyregulators.org
May 2009
Table of contents
Table of contents ................................................................................ 3 Preface................................................................................................. 8 Summary ............................................................................................. 9 1 Introduction................................................................................. 23 1.1 The scope of this report .................................................................23 1.2 History of the Nordic market integration .........................................23 1.3 Objective of end-user market integration .......................................24 1.4 The role of the market design ........................................................25 2 The main principles of a common Nordic end user market.... 29 3 The customer interface model................................................... 31 3.1 Evaluation of different customer interface models .........................31 3.2 Conclusions and suggestions ........................................................35 4 An indicative road map .............................................................. 36 4.1 A political commitment to the process............................................36 4.2 Indicative timetable ........................................................................37 5 Roles and responsibilities ......................................................... 41 5.1 Regulations related to the roles and responsibilities of different market
actors.......................................................................................................41 5.2 Roles and responsibilities of the DSOs ..........................................42 5.2.1 General obligations of the DSOs...........................................43 5.2.1.1 Introduction......................................................................43 5.2.1.2 Present situation in the Nordic countries .........................43 5.2.1.3 Identified differences .......................................................45 5.2.1.4 Conclusions and suggestions ..........................................46 5.2.2 Licensing of DSOs.................................................................47 5.2.2.1 Identified differences .......................................................47 5.2.2.2 Present situation in the Nordic countries .........................47 5.2.2.3 Conclusions and suggestions ..........................................48 5.2.3 Regulation of neutrality of the DSOs .....................................48 5.2.3.1 Introduction ..................................................................... 48 5.2.3.2 Present situation in the Nordic countries ........................ 49 5.2.3.3 Identified differences....................................................... 50 5.2.3.4 Conclusions and suggestions ......................................... 51 5.2.4 Unbundling rules................................................................... 51 5.2.4.1 Introduction ..................................................................... 51 5.2.4.2 Present situation in the Nordic countries ........................ 52 5.2.4.3 Identified differences....................................................... 56 5.2.4.4 Conclusions and suggestions ......................................... 58 5.2.5 Compliance program ............................................................ 58 5.2.5.1 Introduction ..................................................................... 58 5.2.5.2 Present situation in the Nordic countries ........................ 58 5.2.5.3 Identified differences....................................................... 63 5.2.5.4 Conclusions and suggestions ......................................... 64 5.2.6 Supervision of DSOs ............................................................ 64 5.2.6.1 Introduction ..................................................................... 64 5.2.6.2 Present situation in the Nordic countries ........................ 64 5.2.6.3 Identified differences....................................................... 66 5.2.6.4 Conclusions and suggestions ......................................... 67 5.3 Roles and responsibilities of the suppliers .................................... 67 5.3.1 Introduction........................................................................... 67 5.3.2 Present situation in the Nordic countries .............................. 67 5.3.2.1 General obligations to the suppliers................................ 67 5.3.2.2 Licensing......................................................................... 69 5.3.2.3 Stakeholders a supplier has to deal with ........................ 70 5.3.3 Identified differences ............................................................ 74 5.3.4 Conclusions and suggestions............................................... 75 5.4 Roles and responsibilities of balance responsible parties ............. 75 5.4.1 Introduction........................................................................... 75 5.4.2 Present situation in the Nordic countries .............................. 76 5.4.3 Identified differences .............................................................77 5.4.4 Conclusions and suggestions................................................77 5.5 Roles and responsibilities of the TSOs ..........................................77 6 5.5.1 Introduction............................................................................77 5.5.2 Present situation in the Nordic countries...............................78 5.5.3 Conclusions and suggestions................................................79 Processes.................................................................................... 80 6.1 Making and ending contracts .........................................................80 6.1.1 Introduction............................................................................80 6.1.2 Present situation in the Nordic countries...............................81 6.1.2.1 General obligations related to making and ending contracts
81 6.1.2.2 Making a contract ............................................................82 6.1.2.3 Information to be given before concluding a contract ......83 6.1.2.4 Publishing contractual terms and fairness of the terms ...84 6.1.2.5 Regret period...................................................................85 6.1.2.6 Amending the terms of contract.......................................86 6.1.2.7 Ending a contract.............................................................88 6.1.3 Identified differences .............................................................90 6.1.4 Conclusions and suggestions................................................92 6.2 Billing..............................................................................................93 6.2.1 Introduction............................................................................93 6.2.2 Present situation in the Nordic countries...............................93 6.2.2.1 Minimum content of a bill .................................................93 6.2.2.2 Invoicing periods and the number of bills ........................95 6.2.2.3 Combined bills .................................................................97 6.2.3 Identified differences .............................................................98 6.2.4 Conclusions and suggestions................................................98 6.3 Supplier switching ..........................................................................99 6.3.1 Introduction............................................................................99 6.3.2 Conclusions and suggestions................................................99 6.4 Moving ......................................................................................... 102 6.4.1 Introduction......................................................................... 102 6.4.2 Present situation in the Nordic countries ............................ 102 6.4.3 Identified differences .......................................................... 117 6.4.4 Conclusions and suggestions............................................. 118 6.5 Balance settlement ...................................................................... 121 6.5.1 Introduction......................................................................... 121 6.5.2 Present situation in the Nordic countries ............................ 122 6.5.3 Identified differences .......................................................... 132 6.5.4 Conclusions and suggestions............................................. 133 6.6 Meter reading .............................................................................. 134 6.6.1 Introduction......................................................................... 134 6.6.2 Present situation in the Nordic countries ............................ 135 6.6.3 Identified differences .......................................................... 141 6.6.4 Conclusions and suggestions............................................. 142 6.7 Information exchange during supply............................................ 143 6.7.1 Introduction......................................................................... 143 6.7.2 Present situation in the Nordic countries ............................ 143 6.7.3 Identified differences .......................................................... 146 6.7.4 Conclusions and suggestions............................................. 147 6.8 Access to customer data and transparency ................................ 148 7 6.8.1 Introduction......................................................................... 148 6.8.2 Present situation in the Nordic countries ............................ 148 6.8.3 Identified differences .......................................................... 150 6.8.4 Conclusions and suggestions............................................. 151 Marketing rules .........................................................................152 7.1 Present situation in the Nordic countries ..................................... 152 7.2 Identified differences ................................................................... 154 7.3 Conclusions and suggestions...................................................... 155 8 Pricing........................................................................................156 8.1 Present situation in the Nordic countries......................................156 8.1.1 Regulation of end user prices..............................................156 8.1.2 Suppliers’ obligation regarding price information ................158 8.2 Identified differences ....................................................................161 8.3 Conclusions and suggestions ......................................................162 9 Empowering customers ........................................................... 164 9.1 Complaints and dispute settlement ..............................................164 9.1.1 Present situation in the Nordic countries.............................164 9.1.2 Identified differences ...........................................................167 9.1.3 Conclusions and suggestions..............................................169 9.2 Obligation to supply and the supplier of last resort ......................169 9.2.1 Present situation in the Nordic countries.............................169 9.2.2 Identified differences ...........................................................172 9.2.3 Conclusions and suggestions..............................................173 9.3 Disconnection...............................................................................174 10 9.3.1 Present situation in the Nordic countries.............................174 9.3.2 Identified differences ...........................................................176 9.3.3 Conclusions and suggestions..............................................176 Other issues.......................................................................... 178 10.1 Present situation in the Nordic countries ....................................178 10.1.1 Taxation ...........................................................................178 10.1.2 Currency ..........................................................................181 10.2 Conclusions and suggestions.....................................................181 11 Summary of the responses to the consultation ................ 183 11.1 Stakeholders’ responses to the draft report................................183 11.2 NordREG’s comments on stakeholders’ views...........................186 List of abbreviations....................................................................... 187 Preface
According to NordREG’s vision all Nordic electricity customers will enjoy free choice of
supplier, efficient and competitive prices and reliable supply through the internal Nordic
and European electricity market. In line with this vision NordREG nominated in 2005 “a
truly common Nordic retail market with a free choice of suppliers” to be one of its
strategic priorities. Since then the Nordic energy regulators have pushed forward the
vision of a common Nordic end-user market.
1
The market design is the key issue for the integration of national electricity markets. It
defines the concept of the common electricity market. In the Nordic countries the enduser market models are today quite similar. There are, however, some issues that are
resolved in different ways between Denmark, Finland, Norway and Sweden. These
incompatibilities in the electricity retail market designs are one of the most critical
impediments to the development of a common Nordic retail market.
In this report NordREG has analyzed the present situation in the Nordic countries and
identified the issues that should be harmonised in order to establish a common Nordic
end-user market. In this report NordREG also suggests an indicative road map for the
implementation process.
To test and present the tentative proposals, and additionally, to offer to the electricity
market stakeholders an opportunity to express their views two workshops were organised
on the November 26th, 2008 and on January 28th, 2009. NordREG has also arranged a
public consultation of the draft report in March-April 2009. NordREG appreciates all the
comments and suggestions stakeholders have given during the preparation of the report,
and NordREG has taken them into consideration for the finalization of the report.
The report of Market Design of common Nordic end-user market has been prepared by
NordREG WG Retail and Distribution.
1
Market design is defined in this report as defining the roles and responsibilities of different
market actors, the processes between them and the framework for empowering customers.
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Summary
In this report NordREG has mapped the present end-user market models of the Nordic
countries (excluding Iceland) and identified the issues that should be harmonised in order
to establish a common Nordic end-user market.
Objective of the Nordic end-user market integration
NordREG has formulated its vision for development of electricity markets:
All Nordic electricity customers will enjoy a free choice of supplier, efficient and
competitive prices and reliable supply through the internal Nordic and European
electricity market.
To meet this vision NordREG has nominated “a truly common Nordic retail market with
free choice of supplier” to be one of its strategic priorities. Since year 2005 NordREG has
prepared studies on the feasibility and the costs and benefits of a common Nordic enduser market and suggestions for minimizing the identified obstacles.
In the NordREG report “The Integrated Nordic End-user electricity Market (2/2006)” it
has been stated that the main objective for the end-user market integration is “to minimize
the regulatory and technical obstacles for the suppliers willing to operate in the various
Nordic countries”. The idea is that the market models in the Nordic countries should be
harmonised enough to make it smooth and feasible for the suppliers to start operating also
in the other Nordic countries. The market integration would thus provide a harmonised
framework for the suppliers to make business in the whole Nordic region. In that way all
end-users are eligible to take part in the Nordic electricity market.
As a result, the objective of the Nordic end-user market integration could be formulated
in the following way:
The roles and responsibilities of different market actors and the processes between
them are adequately harmonised in the Nordic countries to make it smooth and feasible
for the suppliers to start operating also in the other Nordic countries. Also the
framework of customer empowerment should be adequately secured so that the
customer can buy electricity from any supplier with a confidence.
A common Nordic retail market without any significant regulatory or technical obstacles
for the suppliers to operate in various Nordic countries would lead to a larger electricity
market being available to the suppliers and a potential reduction in their unit costs. The
integrated Nordic retail market would also be more attractive for new entrants.
Furthermore, this would increase competition in the retail market and, as the most
important result, the customers would gain more benefits.
One prerequisite for achieving the common Nordic end-user market is that the suppliers
should be able to act smoothly in the whole Nordic region. This requires at least that the
most critical aspects of the market regulation and business processes have to be
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harmonised. There are other issues where the harmonisation might be useful, but
NordREG has not seen that the harmonisation of these issues is critical in order to
establish a common Nordic end-user market.
NordREG points out that the objective of the Nordic end-user market integration would
imply also that to sell electricity to the customers in other Nordic countries the suppliers
do not need to establish offices in each Nordic country.
The main principles of a common Nordic end user market
NordREG suggests that for the time being only the critical issues need to be
harmonised. There are a number of issues for which the present solutions are different
between the Nordic countries. To establish a common Nordic end-user market every issue
does not have to be harmonised. It is important that the differences are ranked and that the
ones most critical in preventing the proper implementation of the common Nordic enduser market are harmonised. There are also some other issues where the harmonisation
might be useful, but for the time being leaving these issues out does not form a significant
obstacle to the functioning of a common Nordic end-user market.
The objective of the Nordic end-user market integration would imply that the market
models including both the regulations and the business processes are sufficiently
harmonised between the Nordic countries to make it feasible for the suppliers to start
operating also in other Nordic countries. Thus the market integration would provide a
harmonised framework for the suppliers to operate in various Nordic countries.
However, the suppliers ultimately would decide for themselves whether they really are
interested in selling electricity to end-users also in the other Nordic countries. Therefore it
also depends on the suppliers’ willingness to operate in other Nordic countries.
NordREG finds it important that the common Nordic end-user market be open to all
customers.
NordREG finds that it should be safe for the customers to buy electricity from any
supplier. This requires that the framework of customer empowerment shall be taken into
account when the common Nordic end-user market is established. Therefore it is
important that customers are confident that their rights are secure and that customer
protection rules will be applied no matter with which supplier the customer makes a
supply contract.
The customer interface model
During the market design process there should be made decisions and definitions on
issues situating on different levels. NordREG finds that the market design has three main
layers:
1. Definition of the market model;
2. Definition of the processes; and
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3. Contracts between the market participants (including also customers).
The basis of the electricity market will be defined by choosing a certain market model.
The market model defines the roles and responsibilities of different stakeholders. For
example if the responsibility for the quality of supply lies on the DSO this implies that
any failure or accidents - relating to this responsibility - would make the DSO to be the
relevant stakeholder for the customer to turn to regarding questions on quality of supply.
From the customer perspective the market model can be based on a single contact point
model, a dual contact point model or a model which combines features from both models.
At the next level of the market design are the processes. In order to have well-functioning
electricity markets there have to be processes which define what each market actor should
do and when. Such processes are, for example, moving, supplier switching, meter reading
etc. The definitions of these processes are depending on what kind of market model has
been chosen. Thus, if the market model is based on a single point contact model, the
customers would face supplier oriented processes. Respectively, in a dual contact point
model the customer would face both the DSO and the supplier in the processes. Should
the market model be somewhere between these extremes, the customer would face the
supplier when this is considered the most efficient and the DSO when this is considered
the most efficient.
At the top of market design are contracts and products. Since the supplier acts on a
competitive market the supplier would need to find ways to gain new customers and to
keep the existing customers. There are a wide range of opportunities for the supplier to do
so, for example, through developing products and defining contracts which are appealing
to the customer. This could be done, for instance, in cooperation with the DSOs who are
providing necessary meter values to other market participants. Contracts and products are
not extensively regulated by the regulators but rather defined by marketing rules and the
contract law.
As a result, NordREG finds that the market design could cover the definition of the
market model and the processes, but only partially contracts and products.
NordREG states that as a customer interface model both the single and dual
contact models have pros and cons and there is no clear answer which model is the better
one.
NordREG finds that in order to establish a common Nordic end-user market the present
customer interface models in the Nordic countries are not needed to be changed.
Therefore, NordREG makes note that the customer interface of the common Nordic enduser market model could mainly be based on the present dual contact point model, in
which the division of supply and network activities is visible and transparent to the endusers.
However, NordREG finds that the single contact point model could also be an option.
NordREG suggests that the single point of contact point should be used as a primary
solution especially in processes where it brings many more benefits than a dual point of
contact point. For example, NordREG suggests that in supplier switching process the
customer should contact only the supplier to initiate the processes.
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It should be noted also, that if the supplier is willing to, the market model and the
processes should still leave enough room for the suppliers to offer different solutions for
the customers. This implies that the customer might have several possibilities for the
customer interface to choose from.
Roles and responsibilities of different market actors
Roles and responsibilities of the DSOs
Roles and responsibilities of the DSOs are related to the information exchange between
the market actors and performing these tasks in neutral and non-discriminatory way.
Metering issues play a vital role in a well-functioning end-user market. NordREG finds it
unnecessary to harmonise at a Nordic level which party should be the responsible for
providing metering data to the other market actors. However, NordREG finds very
important to harmonise the procedures involved with providing metering data to other
market actors (to suppliers, to balance responsible parties and to parties that are
responsible for the balance settlement). Therefore it is critical that these procedures are
regulated.
NordREG finds that each country should ensure that all DSOs act as neutral market
facilitators to ensure the equal conditions of competition. This requires that the regulators
in the Nordic countries have enough resources and powers to supervise in an efficient
way that the DSOs are neutral and non-discriminatory towards every market actor in
performing their tasks. Also national regulation should support that the DSOs are neutral
towards the market actors. For example, unbundling rules should not give to particular
suppliers any advantages. However, NordREG does not deem it necessary to harmonise
the unbundling rules completely.
Roles and responsibilities of the suppliers
NordREG finds it important that the same licensing-rules apply to both domestic and
foreign suppliers entering the market in any of the countries requiring a license. In order
to not create any market entry barriers it is also vital that costs and time related to
licensing are low. NordREG finds that the licensing of suppliers is not critical to
harmonisation as long as the licensing processes do not create any significant market
entry barriers.
Processes
To establish a well-functioning retail market the most important business processes are
the processes in which there exists information exchange between the customer, DSOs,
suppliers and balance responsible parties. NordREG has determined that the main
business processes in relation to the retail market are:
„
„
Making and ending contracts
Billing
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„
„
„
„
„
„
Supplier switching
Moving
Balance settlement
Metering
Information exchange during supply
Access to customer data
Making and ending contracts
NordREG suggests that in all Nordic countries the person making a supply contract
should be the same person that has the contract with the DSO. This solution would leave
less room for errors. It is important for the functioning of the market that the supplier
switching and moving processes are carried out without problems.
NordREG finds that information given by a supplier to a customer either before making
the contract, or stated in the actual contract, needs to be consistent. A customer buying
electricity from a supplier should receive the same information regardless of in which
country the supplier is from. NordREG suggests that the regulation related to this issue
should be harmonised.
NordREG finds that there is a need for Nordic solutions to regulate the publication of the
contractual terms, the amendment of the contractual terms and the ending of the contract
in order to facilitate for the suppliers actions on the Nordic market. Furthermore the
framework of customer empowerment and protection should be at the same level in all
Nordic countries.
NordREG suggests that the supplier should notify the customer of any impending on
expiration of a fixed-term contract. This could enhance customer activity in the market.
The timeframe for the notification needs to be harmonised. NordREG suggests that a
timeframe for the supplier to send the notification to the customer should be harmonised.
One suggestion is from 3 months to 6 weeks before the fixed-term contract expires.
Billing
NordREG finds that the dual contact point model itself implies that the customer will get
by default separate bills from the supplier and from the DSO. However, combined bills
will still be possible. NordREG does not find it critical for the common Nordic end-user
market to harmonise regulation regarding combined bills.
NordREG finds that it is not critical to harmonise the rules for the minimum information
given in the bill, but that harmonised rules would benefit the Nordic market. Since the
issue of minimum information in energy bills is also discussed at EU level, NordREG
suggests that the development at EU level should be taken into account before giving any
suggestions about a harmonised Nordic model.
13
Supplier switching
NordREG published already in 2008 a suggestion on a harmonised supplier switching
2
model .
NordREG has suggested that the timetable for the switching procedure should be as short
as possible and that the switch could take place any day of the week. NordREG also
believes that 14 days should be the maximum time from the making of a contract to the
switch actually taking place. To make the suggested timetable possible it would be
necessary to establish what kind of information would need to be given to the DSO when
initiating the switch. This information should be determined by regulation. To initiate the
switch the residential or small business customers would have to be in contact only with
the new chosen supplier.
NordREG has suggested that there should be only one data format in use, but it is initially
up to the market actors to decide upon the appropriate format. NordREG also
recommends that in order to ensure the compatibility of data systems and messages
testing systems for sending and receiving messages of common format need to be created,
preferably between the Nordic countries, or at least at the national level in the beginning.
NordREG has also suggested timeframes for different market actors for meter reading
and for sending the required information to other market actors.
Moving
NordREG believes that the processes and rules of moving should be harmonised between
Nordic countries at least to some extent. To make a procedure for moving as easy and
reliable as possible, NordREG finds that the timetable and the processes for sending
messages, as well as the content of the most important messages and meter reading
should be regulated. However, this does not mean that very detailed legislation is required
as long as the main issues related to message sending and meter reading are handled in a
coherent way in the Nordic countries.
NordREG finds that to start the moving out process the default situation is that the
customer will be in contact with the parties with whom he has a contract. Likewise, to
start the moving in process the default situation is that the customer will be in contact
with the party with whom he will have a contract. However, if the customer wants, there
should be also the possibility for the supplier to inform the DSO about the move on
behalf of the customer, and thus the customer would be in contact only with the supplier.
In spite of this, NordREG doesn’t see need for a harmonised regulation concerning that
issue.
To enable a smooth moving process, NordREG finds it necessary to harmonise the most
important messages as well as a timetable for sending them. To avoid many different
variations of processes for market participants especially the timetables could be as
similar as in supplier switching cases. There should be common messages for cases of
moving out or moving in.
2
NordREG: Harmonized supplier switching model; NordREG Report 2/2008 (2008)
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Balance settlement
3
NordREG has formulated its vision for a common balance settlement where the present
different systems for balance settlement would be replaced by a common Nordic balance
settlement. This vision means that:
„
„
It would be possible for a supplier to sell to the entire Nordic market from one
legal entity and using only one system for customer management and reporting.
The common Nordic balance settlement would be designed in such a way that it
contributes to a well functioning market. This means for example that it would be
attractive even for small suppliers and some end-users to be balance responsible
parties.
Already in 2009 the first step of balance management harmonisation is being
implemented. This first step contains substantial changes related to gate closure and a
model for imbalance pricing and fee structure. NordREG had already in its 2008 report
recommended that the first step of harmonisation should be evaluated after
implementation. This includes data collection regarding use of reserves and evaluation of
the fee structure. NordREG’s recommendation implies a stepwise approach towards
further harmonisation of balance settlement. The aim of this evaluation should be to
assess the possibility of further harmonisation of the balancing fees across the Nordic
market. NordREG suggests that the goal in the Nordic balance management should be
that one balance agreement could allow a supplier to supply in all of the Nordic countries.
The Nordic TSOs should develop a proposal for such an arrangement.
Increasing the amount of smart metering creates the possibility of hourly measurements at
consumption sites equipped with such meters. It should be investigated how these hourly
measurements can be used for balance settlement in an efficient way, taking into account
the increased amount of data involved. NordREG finds that in a few years smart metering
may create the possibility to simplify and in some cases replace load profiling in the
balance settlement. However, there will be still a need for load profiling in sites where it
is not cost efficient to install smart meters or where it is not cost efficient to implement
systems that use hourly meter values for balance settlement. Systems for load profiling
vary across the Nordic countries and these systems should be more consistent for a
common retail market. However, NordREG does not foresee that load profiling systems
would have to be alike in Nordic countries.
NordREG finds that it is essential to harmonise the process and the timeframes of the
balance settlement process for a common retail market. There is a need for for example.
„
„
„
defining the actors in the process, to whom DSO will deliver measurements
a timeframe for delivery of measurements, preliminary and final information for
invoicing
a process and timeframe for reconciliation
3
NordREG (3/2008): Towards Harmonised Nordic Balancing Services
NordREG (2006): Development of a common Nordic balance settlement
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Metering and meter reading
NordREG finds that good quality metering is required to ensure the operation of the
electricity market. Meter values are needed for billing and balance settlement. NordREG
also finds it important that the meter will be read in supplier switching and moving
situations. The metering can be performed automatically or manually, and the manual
reading can either be performed by the customers through self-reading, or by the
company responsible for metering (i.e. the DSO). The DSO may also outsource the actual
meter reading to a service provider, even if the responsibility of the metering remains
with the DSO.
4
NordREG finds that based on the proposals in EU directives there should be a
requirement according to which billing on the basis of the actual consumption would be
performed frequently enough to enable customers to monitor and adapt their own energy
consumption. NordREG thus recommends that other than hourly meters should be read
every third month.
The cost of large-scale smart meter installations is reduced compared to the costs of
individual installations, and the number of customers with smart meters is increasing
quite rapidly in different countries. Most Nordic countries have issued or are preparing
timetables for large-scale smart meter installations. After that medium- and even smallscale end-users might have hourly metering.
NordREG notes that smart meters could enable many benefits for the customers and
market participants, and could also reduce some of the obstacles related to business
processes. In that sense, NordREG suggests that smart meters should be introduced in the
Nordic region as extensively as possible, if it is determined that the socio-economic
benefits outweigh the costs. However, NordREG finds hourly metering with a smart
meter should not be seen as a prerequisite for being able to enter to the common Nordic
end-user market.
NordREG sees that neither the minimum functional requirements nor the timetable for the
rolling out of smart meters are not critical to harmonise. However, processes like balance
settlement and periodical financial settlement could be carried out more efficiently with
smart meters.
Information exchange during supply
There are regular information exchange between the DSO and other market participants
during supply. After a meter reading the DSO has to send metered data to the supplier so
that the suppler is able to invoice the customer. Also the balance settlement process
requires regular information exchange between the market actors.
4
Directive on energy end-use efficiency and energy services and repealing Council Directive
93/76/EEC (2006/32/EC) (so-called Energy Services Directive) and the Proposal for a Directive
amending Directive 2003/54/EC concerning common rules for the internal market in electricity
(so-called the 3rd package)
16
NordREG finds that the regulation regarding the information exchange during supply is
critical. Message sending from the DSO to the balance responsible and supplier should
thus be regulated and harmonised in the Nordic countries. NordREG suggests that
information exchange should be automated by electronic messages to ensure a fast
process.
NordREG suggests that message sending from the DSO to the balance responsible should
include the minimum regulation of when and to whom the messages should be sent and
what is the content of the messages. These details should be resolved in the context of
other balance settlement issues.
NordREG suggests also that there should be a harmonised timeframe for the DSO send a
message of meter reading to the supplier.
Access to customer data
To enable a well-functioning Nordic energy market it is important that the relevant
customer data is easily and in a cost-effective way available for suppliers. NordREG finds
that a prerequisite to the supplier receiving this customer data is that it has the contract
with the customer or that the customer has given a power of attorney for that purpose.
NordREG also finds that a key issue is that DSOs are obliged to give that information
regardless of the tool in use.
In many business processes it is required that the supplier notify the other market actors
by sending a certain message. The customer ID or the consumption point ID is the key ID
in this information exchange in order to bind the message to the correct customer or
consumption point. Therefore how well the processes are functioning depends on whether
the customer is identified correctly. To avoid misunderstandings, NordREG suggests that
all Nordic countries should have unique ID-codes for each consumption point. However,
NordREG does not suggest any harmonised tool for the DSOs to provide this information
to the suppliers.
Marketing rules
NordREG sees that the critical issue regarding marketing rules is that all the Nordic
countries have implemented the EU directives concerning marketing.
NordREG finds it very difficult to harmonise the marketing rules beyond the overall EU
level because the rules concerning marketing relates to all other sales and purchases of
goods and services in the Northern countries, and not just specific rules concerning
electricity. To harmonise that more in depth would be disproportional at this time in
achieving a well functioning common electricity market.
17
Pricing
Sweden and Finland do not have regulation on end-user energy prices. In Norway, prices
under obligation to supply are regulated for the first 6 weeks.
Regarding end-user price regulations on prices from the Danish default suppliers the
future regulation is hard to assess. However, the Danish Competition Authority has
recently in its yearly activity report (2008) made recommendations linked to possible
changes in price regulation set up. NordREG does not suggest any concrete actions on the
issue of price regulation.
However, NordREG finds it essential to create a competitive environment which allows
as less regulation of end-user prices as possible.
NordREG finds that the minimum timeframe for suppliers to inform customers on price
changes should be harmonised. The timeframe should not be too long in order to maintain
the close link between the market prices and the end-user prices. On the other hand, the
minimum timeframe should be long enough that the customers are able to make
conclusions and change their supplier after receiving the information on price changes.
NordREG finds also, that the minimum requirements for announcing price changes
should be harmonised. The harmonised routines should be cost effective, but they should
also ensure that the customers really do get the information. NordREG suggests that the
cost-effective methods like email and SMS should be preferred. These methods are also
5
preferable in that the customers receive the information directly. Keeping in mind that
not every customer will be able to receive price change announcement via SMS or email,
announcements in the relevant newspapers should also be used. Also, other methods
could be used if they are explicitly agreed upon with the customer.
NordREG doesn’t see it necessary to harmonise the regulation related to informing price
changes to the regulators or to other authorities.
Empowering customers
NordREG finds that processes linked to empowering customers are of great importance if
the customer is to feel confident when acting in the electricity market. Otherwise, they
may not be interested in participating in the market and switching suppliers, in which
case there is little benefit for suppliers to offer their products for foreign customers.
Dispute settlement and complaint handling
To empower customers NordREG finds it to be essential that all Nordic countries have
well-functioning processes for dispute settlement as well as established complaint boards.
NordREG sees that there is no critical need to harmonise the legal framework of
consumer protection as the processes are already fairly similar. When discussing
5
Annex A in the Electricity Market Directive (2003/54/EC) states that service providers shall
notify their subscribers directly of any increase in charges, at an appropriate time no later than one
normal billing period after the increase comes into effect.
18
complaints with regards to the competence of the regulators it should also be ensured that
foreign suppliers obey the legislation of the country in which they are offering their
services. This is the main basis presumed to be applied in each country already today.
However, disagreements arising from this have yet to occur and the issue may thus be
open for court interpretation. If then deemed necessary, explicit statements on the
applicability of law should be included in the legislation.
Obligation to supply and supplier of last resort
NordREG finds that the differences between the Nordic countries in how the obligation to
supply and the supplier of last resort schemes are implemented do not prevent
establishment of a common Nordic end-user market. Therefore NordREG does not
suggest any harmonisation relating to the obligation to supply or supplier of last resort.
NordREG finds that more important than the harmonisation of these schemes is that they
exist because it ensures that a consumer always will have access to electricity. However,
NordREG is familiar with the fact that these schemes may also have negative impact the
market’s functioning. These schemes may maintain the old market structures where
customers under these schemes remain passive and as such, such markets may not be
considered attractive to a non-incumbent or to a foreign-based supplier. Likewise, those
suppliers who are encompassed by these schemes may get competitive advantages
compared to other suppliers.
Disconnection
NordREG finds that the processes to disconnect customers are already to some extent
regulated in each country. From the customer’s point of view disconnection is a very
significant action as electricity is a necessity in the Nordic countries. However, NordREG
doesn’t find it critical to harmonise the disconnection processes in order to create a
common Nordic end-user market.
Implementation
For some issues NordREG has already proposed a harmonised solution, but for many
others suggestions of harmonised solutions have only been described at a very general
level. Therefore, these issues should be investigated more carefully before
implementation. For some issues the task of finding a harmonised solution could also be
given to the market actors.
Most of the issues that are critical to harmonise are related to business processes that
require an information exchange between the market actors. There should be harmonised
regulation of when and to whom the messages should be sent and what is the content of
the messages. Information exchange should be automated by electronic messages to
ensure fast processes. The systems of information exchange should be compatible with
each other. Thus, also the format of messages should be harmonised.
In order to have a harmonised Nordic end-user market more or fewer changes in
regulation in each country will be required. For market participants it mainly requires
changes in IT systems and business processes thus incurring costs that vary depending on
19
the market participant. It is important to the market participants that the harmonised
regulatory framework exists before they can make changes to their IT systems. This also
reduces the costs of implementation.
Before having a common Nordic end-user market certain actions should be taken. These
actions could be categorised as follows:
„
„
„
„
A political commitment to the process
Preparation of more detailed harmonised solutions
Preparation of necessary changes in regulation
Implementation of changes in IT systems and business processes
NordREG finds it to be very important that a political commitment to the Nordic end-user
market integration exists and that the Electricity Market Group under the Nordic Council
of Ministers should be very directly addressed on these issues in due time.
NordREG recommends that there should also be a regular follow-up that the
implementation process towards a common Nordic end-user market goes ahead in line
with the planned timetable and the stakeholders will perform the assignments that will be
given to them.
NordREG finds that a final goal for the implementation process to meet the requirements
of a common Nordic end-user market could be around years 2014 or 2015. By this
deadline it would be possible to take the necessary steps and to resolve the critical issues
mentioned above.
In accordance with this final goal NordREG has prepared an indicative timetable for
different tasks that should be done during the harmonisation process. NordREG suggests
also which stakeholders would be responsible for preparing the proposals for each
harmonised solution. Even if the responsibility is given to a certain party, other
stakeholders should also be consulted during the preparation work.
20
Table 1. An indicative timetable for different tasks that should be done during the harmonisation
process.
Objective
Timetable
Responsibility
7
The harmonised message
formats 6
Proposal by the end of 2011
Harmonised minimum content
of messages and timeframes for
message sending
Proposal by the mid of 2010
Harmonised rules for meter
reading
Harmonised agreements
between the TSOs and the
balance responsible parties
Harmonised processes for
balance settlement
The quality of metering and
reporting of balancing data
(smart metering with load
profiling)
In use by the end of 2013
In use by the end of 2013
In use by the end of 2013
In use by the end of 2013
Proposal by the end of 2010
In use by end of 2013
Proposal by the end of 2011
Market actors (Nordenergi and
TSOs) will prepare the proposal
Governments or relevant
authorities will prepare a
regulatory framework
NordREG will prepare the
proposal
Governments or relevant
authorities will prepare a
regulatory framework
Governments or relevant
authorities will prepare a
regulatory framework
TSOs will agree on common
agreements
Regulators should approve these
agreements
NordREG will prepare the
proposal
Governments or relevant
authorities will prepare a
regulatory framework
NordREG will prepare the
proposal
In use by the end of 2014
The governments or relevant
authorities will prepare a
regulatory framework
Necessary harmonised
regulation related to making
and ending contracts 8
In use by the end of 2011
Governments or relevant
authorities will prepare a
regulatory framework
Harmonised rules for the
minimum information given in
the bills
In use by the end of 2011
Governments or relevant
authorities will prepare a
regulatory framework 9
Harmonised rules for
announcing price changes
In use by the end of 2011
Governments or relevant
authorities will prepare a
regulatory framework
6
Messages here are referring to messages related to supplier switching, moving, information
exchange during supply and sending meter values.
7
The work on EU should be followed during the preparation process.
8
NordREG suggests that the same person who makes supply contracts should also be other one
making network contracts and that there should be harmonised regulations on giving information
to the customer before making contract.
9
Also any development at the EU-level should be taken into account.
21
The next figure shows the indicative timetable of the harmonisation process.
2010
2009
2011
2012
2013
2014
Political commitment and follow-up
Proposal on
content of
messages and
timeframes
Proposal on message formats
Changes in regulatory framework
and systems related to message
sending
Harmonized rules for meter reading
Harmonized agreements between TSOs and balance responsible parties
Proposal on harmonized
process for balance
settlement
Changes in regulatory framework and systems
related to balance settlement processes
Proposal on quality of metering and
reporting of balancing data
Changes in regulatory framework and systems related to
smart metering with load profiling
Harmonized regulation on making
and ending contracts
Harmonized rules on minimum
content of the bills
Harmonized regulation on
announcing price changes
Figure 1. Indicative implementation timetable for the harmonisation process.
22
2015
1 Introduction
1.1 The scope of this report
In this report NordREG has analyzed the present situation in the Nordic countries and
identified the issues that should be harmonised in order to establish a common Nordic
end-user market. In this report NordREG also suggests an indicative road map for the
implementation process.
The wholesale market has a vital impact on the retail market. To have proper price signals
for the end users a well-functioning wholesale market is essential. If there are problems
with the market design of the Nordic wholesale market, these problems have also
influence on the functioning of retail market.
During the preparation work of this report some stakeholders have especially raised the
question of price areas. These stakeholders have seen that the price areas in the Nordic
area increase risks and costs for the suppliers and therefore a large number of price areas
might form an obstacle for establishing a well-functioning end-user market.
NordREG has decided to limit the scope of this report only on the retail market issues and
despite of their importance to the end-user market the market design of the Nordic
wholesale market issues have not been discussed in this report. NordREG has seen that
the number of price areas in the Nordic region is more a political or a wholesale market
issue than a retail market issue. Also the questions related to the electricity exchange have
been excluded from the report, as well. These issues will be discussed in more detail in
other reports.
1.2 History of the Nordic market integration
Well functioning energy markets that ensure secure energy supply at competitive prices is
a key for improving consumer welfare and achieving sustainable economic growth.
In the 1990’s the Nordic countries opened their electricity markets to competition. During
the first stage this process was restricted to the opening of national markets, but soon it
was seen as desirable to enlarge the open electricity market to cover the whole Nordic
area. This development has mainly concerned the wholesale market.
The Nordic countries have long traditions of co-operation in the electricity market. The
oldest form of Nordic co-operation in the electricity market dates back to the 1960s when
the large Nordic power producers began cooperating on both a bilateral basis and in the
framework of the Nordel organisation. This co-operation has continued and taken new
forms with the separation of transmission network operations from competitive activities
like generation and supply.
There has also been inter-governmental co-operation regarding the development of the
electricity market in the Nordic area. This has been led by the Nordic energy ministers
assisted by the Committee of Senior Officials of Energy (Ämbetsmannakommittén) and
the Nordic Electricity Market Group (Elmarkedsgruppen) acting as the preparatory
bodies. The first landmark of this Nordic inter-governmental co-operation was the
23
Louisiana Declaration, which the Nordic energy ministers published in 1995. The vision
for the Nordic electricity market was stated to be “a borderless Nordic market with
10
efficient trade with the surrounding area.”
The following declarations – Bergen Declaration of 1997, Stavanger Declaration of 1998,
Helsinki Declaration of 1999 and Vilnius Declaration of 2002 – concentrated on the cooperation of Nordic and Baltic countries around the Baltic Sea with regards to energy and
environmental issues. In 2004 the Nordic energy ministers set in Akureyri the next
milestones for deeper integration of the Nordic electricity market. In the Akureyri
Declaration, the ministers stated that the borderless Nordic electricity market requires
further harmonisation of rules and methods for the use of infrastructure. The Nordic
energy ministers strengthened in the Bodø Declaration of 2006 the vision of the Nordic
electricity market as an efficient liberalised market. In the Helsinki Declaration of 2007
the ministers focused on the Transmission System Operators (TSOs) of the Nordic
Electricity Market. This declaration also underlined the importance of advancing the
harmonisation process – towards a borderless Nordic electricity market, and of increasing
Nordic grid investments. The advancement of the Nordic electricity market should also be
seen in the context of increased European harmonisation efforts. The Umeå Declaration
of 2008 stated that the speed of development towards a borderless Nordic energy market
was to be increased. Also in this declaration the Nordic energy ministers set in action a
plan in the ministers required that the work of improving conditions for the common enduser market is to be continued.
1.3 Objective of end-user market integration
Development of the Nordic electricity market has so far concentrated on the wholesale
market. It has resulted in a common Nordic wholesale market where relatively large
generators and buyers of electricity have been able to avail themselves of the
opportunities created by the integrated market. The Nordic wholesale electricity market
could be seen as one of the best examples of an international electricity market in the
world.
In spite of this the electricity end-user markets in the Nordic region have still remained
mainly national. Competition in the retail markets is essential to ensure high quality
services at the lowest prices and to maximise social welfare in the Nordic region.
Establishment of a common Nordic end-user market could be seen as a natural next step
of electricity market integration.
The Nordic energy regulators have pushed forward the vision of a common Nordic enduser market. NordREG has formulated its vision for the development of electricity
markets:
All Nordic electricity customers will enjoy free choice of supplier, efficient and
competitive prices, and reliable supply through the internal Nordic and European
electricity market.
To meet this vision NordREG has nominated “a truly common Nordic retail market with
free choice of supplier” to be one of the most strategic priorities. Since 2005, NordREG
10
”Et grenseløst nordisk marked med en effektiv handel med omverden”
24
has prepared studies on the feasibility as well as the costs and benefits of a common
Nordic end-user market and suggestions on minimizing the identified obstacles.
In the NordREG report “The Integrated Nordic End-user electricity Market (2/2006)” it
was stated that the main objective for end-user market integration was “to minimize the
regulatory and technical obstacles for the suppliers willing to operate in the various
Nordic countries”. The idea is that the market models in the Nordic countries should be
harmonised well enough to make it feasible for suppliers to start operating in each Nordic
country. Market integration would thus provide a harmonised framework for the suppliers
to do business in the entire Nordic region. In that way, all end-users are eligible to take
part in the Nordic electricity market.
As a result, the objective of Nordic end-user market integration could be formulated in
the following way:
The roles and responsibilities of the different market actors and processes between
them are adequately harmonised between the Nordic countries to make it smooth and
feasible for the suppliers to start operating also in other Nordic countries. Also the
framework of customer empowerment should be adequately secured so that the
customer can buy electricity from any supplier with confidence.
A common Nordic retail market without any significant regulatory or technical obstacles
to the suppliers’ operating in the various Nordic countries would lead to a larger
electricity market available for suppliers and a potential reduction in their unit costs. The
integrated Nordic retail market would also be more attractive to new entrants.
Furthermore, this would increase competition in the retail market and, as the most
important result, the customers would gain more benefits.
One prerequisite for achieving a common Nordic end-user market is that the suppliers be
able to act smoothly throughout the whole Nordic region. This requires that at least the
most critical aspects of market regulation and business processes are harmonised. There
are also issues where this harmonisation could be useful, but NordREG has not seen that
the harmonisation of these issues is critical in the establishment of a common Nordic enduser market.
NordREG points out that the objective of Nordic end-user market integration implies that
in order to sell electricity to customers in other Nordic countries the suppliers will not
need to establish offices in each Nordic country.
1.4 The role of the market design
11
Market design is the key issue in the integration of national electricity markets. It
defines the concept of the common electricity market. The integration of national
electricity end-user markets would cause some costs at the beginning as during the
implementation stage the market actors would need to modify their business process and
systems to fulfil the new requirements. Benefits from end-user market integration are not
easy to quantify compared to the costs of implementation. The market actors and
11
Market design is defined in this report as defining the roles and responsibilities of different
market actors, processes between them and the framework for empowering customers.
25
customers may achieve benefits from market integration in the longer run. To avoid
unnecessary costs and to establish an efficient common end-user market the market
design chosen should be implemented in a smooth way.
The solutions of market design affect the roles and responsibilities of various electricity
market operators and thus they have significance to market functioning.
So far the electricity retail market design in the Nordic area has been elaborated from
purely national perspective. The main driver has been national interests and needs, but
there have been also requirements coming from EU legislation. Even though European
electricity market regulation requires that the retail markets shall be opened for
competition in all member states, it still has been given a lot of room for national
solutions on many issues.
In the Nordic countries end-user market models are today quite similar. There are,
however, some issues that are solved in different ways between Denmark, Finland,
Norway and Sweden. These incompatibilities in the electricity retail market designs are
one of the most critical impediments to the development of a common Nordic retail
market.
Market design of the integrated Nordic retail market requires a deep analysis of the roles
and responsibilities of suppliers and DSOs and other market participants in each Nordic
country as well as suggestions on necessary steps towards a harmonised market model to
be taken according to a planned timetable.
In the objective of Nordic end-user market integration it was stated in chapter 1.3 that in a
common Nordic end-user market the roles and responsibilities of different market actors,
processes between them and the framework for empowering customers need to be
harmonised enough between the Nordic countries to make it feasible for the suppliers to
start operating also in other Nordic countries. Thus, electricity market integration is a
question of having a harmonised market design. The process towards harmonised market
design might need more or fewer changes in electricity market regulations and business
processes in each Nordic country. This process also gives a good opportunity to evaluate
present market models and the final goal could be an ideal market model designed
without any restrictions raised from the present market models.
During the market design process there should be made decisions and definitions on
issues situating on different levels. NordREG finds that market design has three main
layers:
1. Definition of the market model;
2. Definition of the processes; and
3. Contracts between the market participants (including also customers).
The basis of the electricity market will be defined by choosing a certain market model.
The market model defines the roles and responsibilities of different stakeholders. For
example if the responsibility for the quality of supply lies on the DSO this implies that
any failure or accidents - relating to this responsibility - would make the DSO to be the
relevant stakeholder for the customer to turn to regarding questions on quality of supply.
26
From the customer perspective the market model can be based on a single contact point
model, a dual contact point model or a model which combines features from both models.
At the next level of the market design are the processes. In order to have well-functioning
electricity markets there have to be processes which define what each market actor should
do and when. Such processes are, for example, moving, supplier switching, meter reading
etc. The definitions of these processes are depending on what kind of market model has
been chosen. Thus, if the market model is based on a single point contact model, the
customers would face supplier oriented processes. Respectively, in a dual contact point
model the customer would face both the DSO and the supplier in the processes. Should
the market model be somewhere between these extremes, the customer would face the
supplier when this is considered the most efficient and the DSO when this is considered
the most efficient.
At the top of market design are contracts and products. Since the supplier acts on a
competitive market the supplier would need to find ways to gain new customers and to
keep the existing customers. There are a wide range of opportunities for the supplier to do
so, for example, through developing products and defining contracts which are appealing
to the customer. This could be done, for instance, in cooperation with the DSOs who are
providing necessary meter values to other market participants. Contracts and products are
not extensively regulated by the regulators but rather defined by marketing rules and the
contract law.
As a result, NordREG finds that the market design could cover the definition of the
market model and the processes, but only partially contracts and products. The next figure
illustrates the relationship between the market model, processes and contracts.
27
Contracts
Processes
Market model
Figure 2. The relationship between market model, processes and contracts.
The wholesale market has a vital impact on the retail market. To have proper price signals
for end users in a well-functioning wholesale market is essential. In spite of its
importance to the end-user market the market design of the Nordic wholesale market has
not been discussed in this report. The scope of this report has been on the retail market
issues and therefore wholesale market issues have not been addressed.
The implementation of the common Nordic retail market needs more or fewer changes in
electricity market regulation in each Nordic country. It will, at least, require changes in
the business processes of the market participants.
28
2 The main principles of a
common Nordic end user market
The main objective for end-user market integration is “to minimize the regulatory and
technical obstacles for suppliers willing to operate in the various Nordic countries”. This
means that the suppliers should face harmonised sets of rules when they are operating in
the entire Nordic region. However, the overall guidance for market design is that for the
time being only the most critical issues need to be harmonised. There are a number of
issues for which the present solutions are different between the Nordic countries. To
establish a common Nordic end-user market every issue does not have to be harmonised.
It is important that the differences are ranked and that the ones most critical to the wellfunctioning of the common Nordic end-user market are harmonised. There are also some
other issues where the harmonisation might be useful, but for time being leaving these
issues out does not form a significant obstacle to the functioning of the common Nordic
end-user market.
At the beginning of market design some principles have to be decided upon. These
principles are also guidelines for suggestions on the roles and responsibilities of market
actors and further on harmonised business processes.
The first principle is that the market design of common Nordic end-user market
should provide a harmonised framework for the suppliers to operate in various
Nordic countries. However, it depends on the suppliers’ willingness to start operating
also in other Nordic countries. The main idea of a common Nordic end-user market is that
the market design (including both market model and business processes) is harmonised
enough to make it smooth, feasible and attractive for suppliers to start operating in other
Nordic countries. However, suppliers finally will need to decide for themselves whether
they really are interested in selling electricity to end users in other Nordic countries and
whether they see any profitable business in selling electricity to customers in other
countries. Even if the regulation and business processes are harmonised to a large extent,
operating in another country will cause some costs to the suppliers. Therefore, the market
should be commercially interesting enough for the supplier to sell electricity to customers
in that country profitably. There are no obligations to suppliers today to make offers of
electricity to every customer at the national level. In the same way there should not be
any obligations for suppliers to sell electricity to customers in other countries if the
suppliers are not willing to do so.
The second principle is that the common Nordic end-user market will be open to all
customers. There are no reasons to restrict the possibility of certain customer categories
to enter the common Nordic end-user market. The use of smart meters also with small
customers removes a number of technical obstacles and makes it easier to find common
harmonised solutions for business processes. Each Nordic country has opened their
national end-user markets to all customers and thus the national markets are open for
customers also without smart metering. Therefore, business processes are also required
for those customers. As in some cases it might depend on the DSOs’ choices of which
customers are equipped with smart meters, all Nordic end-users should be eligible to buy
29
electricity from a supplier coming from another country, regardless of whether they have
a smart meter or not. The rules and regulations shall make it possible for all customers to
buy electricity from any supplier. However, as mentioned as the first principle, in the end
it is the suppliers who choose which customers they are willing to sell to.
The third principle is that it shall be safe for the customers to buy electricity from
any supplier. One important aspect when designing the common Nordic end-user market
is to guaranteeing that the customer protection rules are taken into account. When there
are suppliers from other countries operating in the end-user market the customers might
be uncertain about their rights if they decide to make a supply contract with a supplier
coming from another country. Therefore it is important that the customers be confident
that their rights are secured and that customer protection rules are applied no matter with
which supplier the customer makes a supply contract. Thus the suppliers starting
operations in another country have to follow the customer protection rules and
regulations, and it is vital that the complaint handling procedures are in place in that
country.
Establishment of a common Nordic end-user market requires more or fewer changes in
the national regulatory decisions and/or market rules. It is also possible that new EU
legislation or national objectives might require changes to be made with the electricity
market rules in the future. To ensure that these changes do not create any national barriers
for a common Nordic retail market, it is important to have also national rules on legal
testing of regulatory decisions and market rules. The purpose of this testing is to check
that national regulatory decisions and market rules are compatible with the harmonised
Nordic end-user market.
30
3 The customer interface model
As mentioned on chapter 1.4 the market model chosen will form the basis for the market
design. The market model defines the roles and responsibilities of different stakeholders.
It includes also the definition of the customer interface. Therefore, one of the main issues
that shall be decided during the retail market design process is how the interface between
the customers and the market actors should be arranged.
There are two extremes; a single contact point model or a dual contact point model. In
this context the single contact point model is defined as the model where the customer
has to be in contact with only one market actor (usually the supplier) regardless of the
issue. In the dual contact point model the customer has to be in contact with either the
supplier or the DSO depending on the issue or in some issues both. The issues related to
the customer contacts cover for example contracts, customer service, invoicing etc.
The models described above are theoretical and in practise the market models have some
features from both models. For example in certain processes the customer would have to
be in contact with only one market actor to initiate the process even if in general the
market model is more like the dual contact point model.
The dual contact point model better describes the present retail market models in most of
the Nordic countries. In other European countries both models are applied at about the
12
same extent.
When discussing customer interface models, it should always be remembered, that the
basic structure of an open electricity market is that suppliers are acting under competitive
circumstances, whereas the DSOs are operating in a monopoly. Thus the suppliers and the
DSOs have different kinds of roles and responsibilities in the market. This should be
taken into account when looking at different options for organizing the customer
interface.
3.1 Evaluation of different customer interface
models
To evaluate the customer interface models the following table describes the pros and cons
of both the single and the dual contact point models.
12
Report: Electricity retail markets in Europe – division of duties between suppliers and DSOs.
Lappeenranta University of Technology 2008
31
Table 2. Comparison of the single and the dual contact point model.
Single contact point model
Dual contact point model
+ Less complex for the customers
+ Suppliers have a stronger interest to require
that DSOs perform their tasks in a nondiscriminatory manner
+ Enhances customers’ understanding of
market functioning
+ Less information exchange required between
the supplier and the DSO
+ Creates value for the suppliers’ customer
service
+ The supplier doesn’t have to know so much
about the local situation
+ One contact point for complaints
+ Easier for the new entrants and for the
existing independent suppliers (depends on
their willingness to provide specific
customer services)
+ Could provide new business possibilities to
the suppliers
+ Unbundling is transparent and visible
+ No “middle-men” in complaint handling
-
Customer might not understand the roles
and responsibilities of the market actors
- More complicated for customers to deal with
the market actors
-
Might be an obstacle for the entrants and for
the existing independent suppliers
-
Might be more favourable for incumbent
suppliers
- The customer has to know in which issues
they has to be in contact with the supplier or
the DSO
-
The supplier needs more information from
the DSOs (or access to the DSO’s customer
information system)
-
More regulation on information exchange
between the suppliers and the DSOs is
needed
-
The suppliers have to forward requests to
the DSOs on issues which are under the
responsibility of the DSOs as a monopoly
-
The supplier might not have knowledge of
the local situation (e.g. during interruptions)
- Might decrease the customers’ willingness to
switch suppliers, if they received only one
bill before
From the customers’ point of view the single contact point model would be easier to deal
with, because they will be in contact with only one market actor (the supplier). The model
is very much supplier oriented. In this model the customer has to make only one contract
with the supplier and the supplier takes care of the network contract. The dual contact
point model is more complicated for the customers to understand because they have to be
in contact with two parties and the customers also have to know for which issues they
have to be in contact with the supplier or the DSO.
32
The customers might also value getting only one bill. There are some experiences that the
customers have become confused after supplier switching when they started receiving
two bills. In the single contact point model the customer will always get only one bill
from the supplier. Thus with the single contact point model the problem of getting two
bills is not an obstacle for supplier switching.
Even if the two contact point model is more challenging for customers to understand, it is
more transparent. With this model the division of supply and network activities is visible
to the customers.
For the suppliers and DSOs the single contact point model is more challenging than the
dual contact point model. Because in the single contact point model the supplier will be
the only customer service contact point for the customer, the supplier has to understand
which issues actually belong to the DSOs and has to forward requests regarding these
issues from the customer to the DSOs promptly. When there are a lot of interruptions it is
very challenging to keep the customer service at an adequate level.
The single contact point model emphasizes local customer service and thus it might be
favourable to the incumbent suppliers – it depends on the service strategy and resources
of the new supplier. As the single contact point model requires that the customer service
has to have a good knowledge of the local situation, it might be very challenging for new
entrants and for independent suppliers. This might form an obstacle for new players in
entering the market, especially if the responsibility towards customers in some of the
DSO services is moved to the suppliers. On the other hand with the single contact point
model, good customer service would become a competitive advantage for a supplier. The
dual contact point model does not require as much knowledge of the local situation as the
single contact point model. Therefore it is possible that the supplier’s customer service
could be located far away from the customer. The dual contact point model thus gives
better possibilities to suppliers operating in the various Nordic countries to concentrate
customer services into one customer service centre. This could potentially lower the
suppliers’ costs, increase competition and accordingly increase the benefits for Nordic
customers.
Also from the competition point of view, the single contact point model might be
favourable to the incumbent suppliers as long as the DSOs are not fully unbundled from
the suppliers. When a supplier is a part of the same company group as a DSO and they
both use the same customer information system, the information exchange between the
supplier and the DSO is much easier than the information exchange between another
supplier and the DSO. The single contact point model requires that the protocols for
information exchange have to be harmonised and that all of the market actors shall use
these protocols. No matter which customer interface model is chosen or whether the
DSOs and the suppliers have common customer information systems, it is important to
ensure that the DSOs provide access to customer information to all suppliers under equal
terms and conditions. In this respect it is vital that the DSOs comply with the rules of
neutrality and do not give competitive advantages to any supplier.
The single contact point model may increase the level of information exchange between
suppliers and DSOs. When using the single contact point the DSOs have to give more
customer related information to the suppliers than with the dual contact point model. In
order to have this information exchange to go smoothly and non-discriminatorily there
33
should be clear rules for it. The single contact model also increases the risk of the DSO
discriminating against other suppliers than the incumbent one by giving them direct
access to the DSOs customer information system or even by using the same system and
thus offering better conditions for one supplier than for the others. If customers use the
quality of customer service as one criterion for choosing the supplier, then possible
discriminatory behaviour of the DSO gives the incumbent supplier an unjustified
competitive advantage against other suppliers. On the other hand, when suppliers are in
the single contact point model and are responsible for customer service, there is more
incentives for them to protest if the DSOs are not neutral in performing their tasks in a
non-discriminatory manner by giving the same level of information for all suppliers.
However, a similar kind of problems might also exist if the dual contact point is chosen.
For example it is much easier for the incumbent supplier to provide customers combined
bills by using common customer information systems. As mentioned before, the single
contact point model increases the level of information exchange between suppliers and
DSOs and these processes should be regulated. Therefore the single contact point model
might increase the need for supervision of the neutrality of the DSOs. To ensure neutral
behaviour of the DSOs, stricter rules for functional unbundling of DSOs and suppliers
might be required if the single contact model is chosen.
After comparing the single and dual contact point models, NordREG finds that both
models have pros and cons and that there is no clear answer as to which model is the best
one. However, the dual contact point model requires less from suppliers’ customer
service and therefore it is easier for new players to enter the market. On the other hand,
there might be also suppliers, whose strategy is to provide a comprehensive customer
service to the customers, and thus these suppliers might not see the single contact point
model as an obstacle for the market entry.
The single and dual contact point models described above are purely theoretical, and the
best customer interface model could be situated somewhere in between these two
extremes incorporating some features from both models.
It is necessary to look what are the present models in the Nordic countries and what are
the costs of changing them. NordREG has not made any cost-benefit analyses on
changing the present customer interface models. The present regulation in the Nordic
countries is based on the principle that the unbundling of competitive and monopolistic
activities should be transparent to the end-users. The dual contact point model describes
the present situation in the Nordic countries better. In Denmark, however, the customer
interface model is more supplier-oriented than in the other Nordic countries.
The present IT-systems and business processes in the Nordic countries are developed to
support the present customer interface models and they do not support the single contact
point model very well. Therefore the change from the present customer interface model to
a more supplier-oriented model in the Nordic countries would require changes in ITsystems and business processes, which would increase costs for the market actors.
However, NordREG has not tried to evaluate what could be the costs from changing to a
more supplier-oriented customer interface model.
34
3.2 Conclusions and suggestions
In conclusion NordREG states that both the single and dual contact models have pros and
cons and there is not any clear answer as to which model is the best one.
Recommendation from the regulators on a market model might have indications for
market competition. Thus giving a firm regulatory suggestion on whether to use only a
single point contact model or a dual contact point model is presently very difficult.
NordREG recognizes that the chosen market model will form the basis for the market
design. However, NordREG finds that it should also still give room for different business
solutions for the suppliers when they are acting at the Nordic end-user market.
Because the dual contact point model describes the present customer interface model in
the Nordic countries better, a change into a more supplier-oriented customer interface
model would require at least some changes to the IT-systems and business processes,
which would incur extra costs.
In the objective of the Nordic end-user market integration it was stated in chapter 1.3 that
in a common Nordic end-user market the roles and responsibilities of different market
actors, processes between them and the framework for empowering customers should be
adequately harmonised between the Nordic countries to make it feasible for the suppliers
to start operating in other Nordic countries. NordREG finds that changing into a more
supplier-oriented customer interface model is not necessary to establish a common Nordic
end-user market. Therefore, NordREG finds that the present customer interface models in
the Nordic countries are not needed to be changed in order to establish a common Nordic
end-user market.
NordREG suggests that by default the customer interface of the common Nordic end-user
market model could mainly be based on the present dual contact point model, in which
the division of supply and network activities is visible and transparent to the end-users.
However, NordREG finds that the single contact point model could also be an option.
NordREG suggests that the single contact point model should be used as a primary
solution especially in such processes where it brings more benefits than a dual contact
point model. For example, NordREG suggests that in supplier switching process the
customer should contact only the supplier to initiate the processes.
It should be noted also, that if the supplier is willing to, the market model and processes
should still leave enough room for the suppliers offering different solutions for customer
related services. This implies that customers could have several possibilities for the
customer interface to choose from.
35
4 An indicative road map
As mentioned in chapter 1.3, in common Nordic end-user market the roles and
responsibilities of different market actors, processes between them and the framework for
empowering customers should be adequately harmonised between the Nordic countries to
make it feasible for the suppliers to start operating also in the other Nordic countries.
According to this, NordREG has suggested which issues should be harmonised in order to
establish a common Nordic end-user market.
For some issues NordREG has already proposed a harmonised solution, but on many
other the suggestions for a harmonised solution have been described only at a very
general level. Therefore these issues should be investigated more carefully. For some
issues the task to find a harmonised solution could also be given to the market actors.
Most of the issues that are critical to harmonise are related to information exchange
between the market actors. There should be harmonised regulationa as to when and to
whom messages should be sent and what is the content of the messages. Information
exchange should be automated electronically to ensure fast processes. The systems of
information exchange should be compatible with each other. Thus also the format of
messages should be harmonised.
In order to have the harmonised Nordic end-user market, changes in regulation in each
country will be required. For market participants it mainly will require changes to IT
systems and business processes thus incurring costs that vary depending on the market
participant. It is important for market participants that the harmonised regulatory
framework exists before they can make changes to their IT systems. This also will reduce
the costs of implementation.
Before having a common Nordic end-user market certain actions should be taken. These
necessary actions could be divided as follows:
„
„
„
„
A political commitment to the process
Preparation of more detailed harmonised solutions
Preparation of necessary changes in regulation
Implementation of changes in IT systems and business processes
4.1 A political commitment to the process
NordREG finds it important that a political commitment to the end-user market
integration process exists. This requires that there is a common understanding on the
vision and timetable for establishing a common Nordic end-user market.
NordREG finds also that the Electricity Market Group under the Nordic Council of
Ministers has an important role to push forward this process toward a common Nordic
end-user market enabling a broad political commitment. To clarify for all parties the
political commitment to the process NordREG suggests that the Electricity Market Group
should be directly addressed on these issues.
36
NordREG suggests that there should be also a regular follow-up that the implementation
process towards a common Nordic end-user market goes ahead in line with the planned
timetable and the stakeholders will perform the assignments that will be given to them.
In this respect the Electricity Market Group could also assign certain tasks to different
stakeholders. The status of the Nordic end-user market integration process should be
reported to the Electricity Market Group annually.
4.2 Indicative timetable
NordREG finds that the final goal for the implementation process to meet the
requirements for a common Nordic end-user market could be around years 2014 or 2015.
In accordance with this final goal NordREG has prepared an indicative timetable for
different tasks that should be done during the harmonisation process. NordREG also
suggests which stakeholders would be responsible for preparing proposals for these
harmonised solutions. Even if the responsibility would be given to a certain party other
stakeholders should also be consulted during the preparation work.
In addition to this NordREG finds it to be very important that there is a regular follow-up
ensuring that the whole implementation process towards a common Nordic end-user
market goes ahead in line with the planned timetable.
37
Table 3. An indicative timetable for different tasks that should be done during the harmonisation
process.
Objective
Timetable
Responsibility
14
The harmonised message
formats 13
Proposal by the end of 2011
Harmonised minimum content
of messages and timeframes for
message sending
Proposal by the mid of 2010
Harmonised rules for meter
reading
Harmonised agreements
between the TSOs and the
balance responsible parties
Harmonised processes for
balance settlement
The quality of metering and
reporting of balancing data
(smart metering with load
profiling)
In use by the end of 2013
In use by the end of 2013
In use by the end of 2013
In use by the end of 2013
Proposal by the end of 2010
In use by end of 2013
Proposal by the end of 2011
Market actors (Nordenergi and
TSOs) will prepare the proposal
Governments or relevant
authorities will prepare a
regulatory framework
NordREG will prepare the
proposal
Governments or relevant
authorities will prepare a
regulatory framework
Governments or relevant
authorities will prepare the
regulatory framework
The TSOs will agree on common
agreements
The regulators should approve
these agreements
NordREG will prepare the
proposal
The governments or relevant
authorities will prepare the
regulatory framework
NordREG will prepare the
proposal
In use by the end of 2014
The governments or relevant
authorities will prepare the
regulatory framework
Necessary harmonised
regulation related to making
and ending contracts 15
In use by the end of 2011
Governments or relevant
authorities will prepare the
regulatory framework
Harmonised rules for the
minimum information given in
the bills
In use by the end of 2011
Governments or relevant
authorities will prepare the
regulatory framework 16
Harmonised rules for
announcing price changes
In use by the end of 2011
Governments or relevant
authorities will prepare the
regulatory framework
13
Messages here are referring to messages related to supplier switching, moving, information
exchange during supply and sending meter values.
14
The work on EU should be followed during the preparation process.
15
NordREG suggests that the same person who makes supply contracts should also be the one who
makes network contracts, and that there should be a harmonised regulation on giving information
to the customer before making the contract.
16
Also any development at the EU level should be taken into account
38
The first issue that should be resolved during the harmonisation process is that the
minimum content of the different messages and the harmonised message formats should
be agreed upon. In these processes market actors should have a significant role. Therefore
NordREG suggests that the EMG should give the task to market actors (for example to
Nordenergi and to TSOs) of preparing a suggestion on harmonised message formats that
could be put into use in the Nordic countries. However, it should be noted that there
might be different views among market actors as to which message formats should be
chosen.
NordREG has already listed some issues that should be included in the messages and
suggested certain timeframes for message sending. Therefore NordREG could continue
this work and finalize a proposal on the harmonised minimum content of messages and
timeframes for message sending.
In order to ensure smooth information exchange between the market actors NordREG
finds that the minimum content of the different messages and the harmonised message
formats should be regulated. The proposals on harmonised message formats as well as the
proposal on harmonised minimum message content and timeframes for message sending
are linked with each other. Therefore, a proposal for the harmonised minimum content of
messages and timeframes for message sending should be available already by mid-2010.
The proposal on harmonised message formats could then be available by the end of 2011.
After the market actors have agreed upon the harmonised message formats the
governments could then prepare the necessary regulations. After having the regulation in
place there should be enough time for implementation. Implementation might require
changes in IT systems. Thus the harmonised rules could be in use by the end of 2013.
The same timetable could be set also for establishing the necessary harmonised rules for
meter reading and other information exchange.
Another issue that needs addressing is the balance settlement process. NordREG has
suggested that the goal for Nordic balance management should be harmonised agreements
between the TSOs and the balance responsible parties, where the common standardized
balance agreement template should be developed by the Nordic TSOs. NordREG
suggests that these agreements between TSOs and the balance responsible parties should
be in use by the end of 2013. Before that the TSOs should agree on common agreements,
which the regulators would then need to approve.
NordREG has suggested that the balance settlement process and the timeframes for the
settlement process should be harmonised. NordREG believes that the harmonised process
should be in use by the end of 2013. This requires that NordREG prepares a proposal for
a common process and that the governments or other relevant authorities prepare a legal
framework for it. Market actors will be responsible for the implementation process.
The final issue related to the balance settlement process which requires actions is load
profiling. A consistent approach for load profiling should be developed and linked with
deployment of smart metering. NordREG believes that this consistent approach could be
in use by the end of 2014. This requires that NordREG will prepare a proposal for load
profiling and that the governments prepare a legal framework for it.
39
NordREG has suggested that there should be a harmonised regulation related to making
and ending contracts and for announcing price changes. NordREG has also found that the
harmonised rules for the minimum information given in the bill would give benefits even
if the harmonisation is not critical. NordREG believes that the harmonised regulations
could be in place by the end of 2011.
The next figure shows the indicative timetable of the harmonisation process.
2010
2009
2011
2012
2013
2014
Political commitment and follow-up
Proposal on
content of
messages and
timeframes
Proposal on message formats
Changes in regulatory framework
and systems related to message
sending
Harmonized rules for meter reading
Harmonized agreements between TSOs and balance responsible parties
Proposal on harmonized
process for balance
settlement
Changes in regulatory framework and systems
related to balance settlement processes
Proposal on quality of metering and
reporting of balancing data
Changes in regulatory framework and systems related to
smart metering with load profiling
Harmonized regulation on making
and ending contracts
Harmonized rules on minimum
content of the bills
Harmonized regulation on
announcing price changes
Figure 3. Indicative implementation timetable for the harmonisation process.
40
2015
5 Roles and responsibilities
The roles and responsibilities of the stakeholders in the electricity market are, to a large
extent, similar in Denmark, Finland, Norway and Sweden. There are however some
differences in the regulatory framework of the four Nordic countries. NordREG will here
describe the roles and responsibilities of TSOs, DSOs, suppliers and the balancing
responsibility. NordREG will also describe under which conditions these stakeholders act
on the four country’s electricity markets.
5.1 Regulations related to the roles and
responsibilities of different market actors
Denmark
TSO, DSOs, suppliers and balance responsible parties are active in the Danish energy
market. Their actions and interactions between market participants are covered by a range
17
of different rules. This begins with a regulation in law (Danish Electricity Supply Act )
with its various attached orders over to market rules and good practise guidelines agreed
upon within the industry.
Finland
18
In Finland, the electricity market is regulated by the Electricity Market Act and the
statutes issued by virtue of said Act. In the Electricity Market Act there are several
detailed requirements placed on the TSOs and DSOs, but the supplier’s responsibilities
are not that strictly regulated. Legislation is complemented by the standard terms
19
prepared by Finnish Energy Industries .
Norway
20
The Norwegian power market is governed mainly through the Energy Act and
regulations and concessions issued pursuant to said Act. The suppliers are subject to less
comprehensive regulations and have fewer obligations according to the Energy Act than
the TSO and the DSOs.
The Energy Act and the secondary regulation are in some respects complemented by
agreements. For instance, the Office of the Consumer Ombudsmann and the trade
organisation EBL have drawn up a standard contract regulating the relationship between
the household customer and the DSO, and the household customer and the supplier.
In addition to the above mentioned rules and regulations, the industry decides upon
detailed practises regarding, for instance, the Ediel-message procedure through the
“Systemstøtte for Ediel”. These practises are documented in instructions.
17
The Danish Electricity Supply Act, Law number 1115 of 08/11/2006.
Electricity Market Act (386/1995)
19
Terms of Electricity Sales, Yleiset sähkönmyyntiehdot SME 99
20
The Norwegian Energy Act, Law number 50 of 29/06/1990
18
41
The main stakeholders in the Norwegian electricity market are the transmission system
operator (TSO), distribution system operators (DSO), suppliers, the regulatory authority
and the customers. Their roles and responsibilities are described below.
Sweden
Sweden has a strong legislative tradition of so called framework legislation. This means
that laws provide the overall framework, and that the details are left to be regulated
through secondary regulation or through different types of mutual agreements.
There are different levels of rules applicable in the Swedish electricity market. The rules
governing market range from regulation in law to mutual agreements. The Electricity Act
21
contains the framework for the electricity market and regulations complement the
framework with a more detailed set of rules. The relationship between market participants
is thus not in detail regulated in the Electricity Act. The Electricity Act and the regulation
22
are in many respects complemented by an agreement between the industry and the
23
Swedish Consumer Agency, called General terms and conditions . This agreement is
24
considered common practise and applies to both DSOs and suppliers.
In addition to the above mentioned rules and regulations, the industry has decided upon
detailed practises regarding for instance the Ediel-message procedure. These practises are
documented in instructions called Elmarknadshandboken.
There are several stakeholders acting in the Swedish electricity market. The main
stakeholders are the transmission system operator (TSO), distribution system operators
(DSO), suppliers, the regulatory authority and of course the customers. Their roles and
responsibilities are described below.
5.2 Roles and responsibilities of the DSOs
The overall principle behind the market design of the electricity market in each Nordic
country is that the grid companies are local monopolies subject to regulation. According
to this, to become a DSO you need a license. A license for distribution network
operations is required in all four Nordic countries.
In the Nordic countries the DSOs have a general role to act as a neutral market facilitator.
This requires that the DSOs deliver the same level of service to all stakeholders and may
not discriminate against them. The neutrality of the DSOs towards the other electricity
market actors is a fundamental issue in order to achieve a competitive electricity retail
market. To ensure the neutrality of DSOs there are also requirements for unbundling
electricity network operations from the operations under competition.
In this chapter the roles and responsibilities of the DSOs are discussed, and how the
DSOs are supervised in relation to neutrality in the Nordic countries.
21
Föreskrifter
Represented by the trade organisation Swedenergy.
23
Allmänna avtalsvillkor.
24
Branschpraxis
22
42
5.2.1 General obligations of the DSOs
5.2.1.1 Introduction
The main tasks of DSOs at the electricity market are quite similar in the Nordic countries.
As it regards to the functioning of retail market the DSOs have a general role to act as a
neutral market facilitator. In this role the DSOs have a responsibility to gather necessary
data and provide it to other market actors. These responsibilities are related to metering
and balance settlement. The DSOs also have a responsibility to operate, maintain and
develop their network.
5.2.1.2 Present situation in the Nordic countries
Denmark
The DSO is regulated by the Danish Electricity Supply Act and secondary legislation.
The DSOs are responsible for running and maintaining the lower voltage infrastructure in
their own grid area according to the Danish Electricity Supply Act.
It is a general role for the DSO in the Danish electricity market to act as a neutral market
facilitator just like the TSO. The reason for this is that the DSO often is the binding link
between various stakeholders in the market. However, the DSO’s must deliver the same
level of service to all stakeholders, and they are regulated by DERA.
The basic responsibilities facing the presently 101 Danish DSOs are laid down in the
Danish Energy Supply Act, chapter 4. (The Consolidated Electricity Supply Act no 1115
of 08/11/2006). It is essential that stakeholders can rely on DSO-provided data for the
market to function as efficient as possible. In this regard, it is a clear role for the regulator
to ensure that the DSO’s do not have any incentives that potentially could hamper
competition in the electricity market. This implies that regulation of neutrality is
necessary.
Finland
Regional electricity companies are responsible for electricity distribution on distribution
networks. There are 88 such companies in Finland today.
The overall principle behind market design in the Finnish electricity retail market is that
the DSOs are local monopolies subject to regulation. The DSOs have a general role on
the electricity market as neutral market facilitators. They are the binding link between
various stakeholders on the electricity market. The DSOs are in contact with the TSO,
suppliers, balance responsible parties, consumers, etc. In this regard, the DSOs must
deliver the same level of service to all stakeholders and not discriminate between them.
There are several requirements placed on the DSO relating to public service issues. The
25
DSO shall maintain, operate and develop its electricity network and its connections to
other networks in accordance with its customers’ reasonable needs, and to secure, for its
part, the supply of sufficiently high-standard electricity to its customers (obligation to
26
develop the electricity network) . The DSO shall also connect to its network electricity
25
26
14 of these companies are transmission operators
Electricity Market Act Section 9 subsection 1
43
consumption sites and power generating installations meeting the required technical
27
specifications within its area of operation (obligation to connect) . The DSO shall sell
electricity transmission services against reasonable compensation to those that need them
28
within the limits of its network transmission capacity (obligation to transmit) . The DSO
and other parties to the electricity market are responsible for balance determination. The
DSOs shall offer the balance determination services on equitable and non-discriminatory
terms to other electricity market participants.
In Finland, DSOs are responsible for metering. This covers acquiring, owning, and
installing the measuring equipment needed in the retail sale and transmission of
electricity, inspecting and maintaining the measuring equipment, and reporting
measurement data to the parties to electricity trade. The DSOs shall make arrangements
for the metering that forms the basis of balance determination and invoicing, including
the reading of the meters, registration of the measurement data, and provision of these
data to the parties of the electricity market. The DSOs may offer these metering services
as their own work, or they may purchase the services from outside partners, including
other parties to electricity trade. In certain circumstances the customers are also entitled
to acquire and own the measuring equipment.
It is not specifically defined in the legislation which party is responsible for giving
guidance on efficient energy use to the customers. In the Electricity Market Act, it is only
generally mentioned in the objectives of the Act that undertakings operating in the
electricity market are responsible for providing their customers with services relating
to the procurement of electricity, and for promoting electricity efficiency and
29
conservation in their own business operations as well as in those of their customers.
The regulator has considered that the obligations derived from the Energy Services
Directive should be more the duty of the supplier than the DSO.
Norway
In Norway there are about 135 DSOs distributing electricity within a given area. Besides
being responsible for maintenance and development of the grid, the DSO is responsible
for all meter values from every metering point within its area. The DSO must send meter
data to the settlement responsible, Statnett SF, and to each balance responsible party.
Because the settlement is based on the network owner’s adjusted system load profile, the
DSO also has to carry out periodic financial settlements between the suppliers in its
network area.
The overall principle behind the market design in the Norwegian electricity retail market
is that the DSOs are local monopolies subject to regulation. The DSOs have a general role
in the electricity market as neutral market facilitators. The DSOs are in contact with the
TSO, suppliers, balance responsible parties, consumers, etc.
The DSO is obligated to connect electricity consumption sites to its network.
27
Electricity Market Act Section 9 subsection 2
Electricity Market Act Section 10
29
Electricity Market Act section 1
28
44
30
The DSO is responsible for all meter values from every metering point within its area .
The metering data forms the basis of balance settlement and invoicing of both
transportation and electricity supply. The DSO must send metering data to the settlement
responsible, Statnett SF, and to each balance responsible party. Because the settlement is
based on the network owner’s adjusted system load profile, the DSO also has to carry out
periodic financial settlements between the suppliers in its network area.
The DSO is also a facilitator of the supplier switching process and controller of data sent
by the supplier and customer. In addition, the DSOs are given the role as the supplier of
last resort, and are obliged to supply electricity to customers without an ordinary supplier.
The DSO is regulated in the Energy Act and regulations to the act. According to
31
regulations to the Energy Act, the DSOs are obliged to include a fee to Enova in their
network tariffs. Enova is a state enterprise whose mission is to contribute to
environmentally sound and rational use and production of energy. For the time being the
fee is 1 øre/kWh. Enova is also financed over the ordinary state budget.
Sweden
32
There are 175 DSOs in Sweden . The regional networks transport electricity from the
national grid to the local networks and, in some cases, direct to major electricity users.
The local networks are connected to the regional networks and transport electricity to
households and other end users.
There are several requirements placed on the DSOs. The regulation is found in the
33
Electricity Act and in subsidiary law issued by the Energy Markets Inspectorate. There
are also obligations placed on the DSO by the General terms and conditions.
The DSOs are local monopolies subject to regulation. The DSO has the role of a neutral
market facilitator in the electricity market.
All DSOs must apply for network concession from the Energy Markets Inspectorate in
order to distribute electricity within a given area. The DSO is responsible for operation
and maintenance and, when needed, improvements of its networks and, in applicable
cases, connection to other networks. The DSO is responsible for ensuring that its
networks are safe, reliable and efficient, and that they can fulfil the requirements of
secure distribution of electricity in the long-term. In Sweden, DSOs are responsible for
metering. The DSO owns the metering device and is responsible for its accuracy,
operation, and maintenance. The DSO should provide meter values to the market
participants in a non-discriminatory way.
5.2.1.3 Identified differences
The table below summarizes the present situation in the Nordic countries regarding the
roles and responsibilities of DSOs. In the column labelled Nordic, NordREG’s
30
Regulations number 301of 11.03.1999 on metering and settlement, § 3-3.
Regulations 2001-12-10 no 1377.
32
170 operate local networks and 5 operate regional networks.
33
Ellagen 1997:857.
31
45
suggestions are given on the need for harmonisation in order to establish a common
Nordic end-user market.
Table 4. The present situation in the Nordic countries regarding to the roles and responsibilities of the
DSOs.
Denmark
Finland
Norway
Sweden
Nordic
Who is
responsible
for metering
DSO
DSO
DSO
DSO
Not critical to
harmonise
Who owns the
meters
DSO 34
DSO or
customer
DSO or
customer
DSO
Not critical to
harmonise
Who is
responsible
for
maintenance
and operation
of meter
equipment
DSO
DSO
DSO
DSO
Not critical to
harmonise
TSO
Who is
responsible
for balance
settlement
TSO
DSO/other
market
actors/(TSO) 35
(Settlement of
regulating
power)
TSO
Critical to
harmonise the
procedures
Who is
responsible
for invoicing
customer
DSO and
supplier
DSO and
supplier
DSO and/ or
supplier
DSO and
supplier
Not critical to
harmonise
Who is
responsible
for giving
guidance on
efficient
energy use to
the customers
DSO
Not defined
ENOVA
Not defined
Not critical to
harmonise
5.2.1.4 Conclusions and suggestions
In each Nordic country, the DSOs are responsible for metering today. There are, however,
differences between the Nordic countries with regards to who owns the meters. Related to
the task of providing metering data to market actors, NordREG finds it unnecessary to
regulate who should be the responsible parties at the Nordic level. However, NordREG
finds it very important to harmonise the procedures for providing metering data to other
market actors (to suppliers, balance responsible parties and parties that are responsible for
the balance settlement). Therefore it is critical that these procedures are regulated.
Furthermore, procedures for balance settlement should be harmonised, but not necessarily
34
The meter is not always owned by the DSO – the meter can also be owned by the owner of a
apartment complex or the apartment complex collectively
35
In Finland the TSO is responsible for balance management regarding the whole country. The
actual balance settlement is under responsibility of the DSOs and other market participants.
46
which party that is responsible for balance settlement. Issues related to balance settlement
are more extensively discussed in chapter 6.5.
5.2.2 Licensing of DSOs
5.2.2.1 Identified differences
The stakeholders acting in the four national electricity markets have to follow existing
rules and act in accordance to the regulatory framework. One of these regulatory demands
for the DSOs is the need to apply for a license.
5.2.2.2 Present situation in the Nordic countries
Denmark
In order to operate in the distribution system in Denmark, the operator needs to be
licensed by the Minister of Climate and Energy. The license is granted for a period of a
minimum of 20 years according to the Electricity Supply Act § 19, 2. The license is
granted according to certain requirements and might also be issued on certain conditions.
According to the Electricity Supply Act, grid companies must secure an efficient and
sufficient supply of electricity by 1) up-keep and enlargement of existing networks and
establishing new networks, 2) connecting suppliers and consumers’ installations to the
network, 3) supplying the needed capacity, and 4) metering the supply and take outs from
the networks. A licensed grid company is obliged to be the owner of the regulated grid
assets (networks, etc.) necessary to operate the licensed grid activities.
The existing 112 DSOs are owned directly by local consumers (cooperatives), by the
36
municipalities, or by DONG .
In order to sustain technical quality and to measure transported electricity, grid companies
have to settle payment, conduct information activities, map energy consumption, plan and
secure energy savings in the supply area, and co-operate with the TSOs to provide the
users of the grid with necessary information about measurement of the electricity
transported.
Finland
To operate an electricity network, a license is required from the Energy Market Authority.
An electricity network license is granted if the applicant has the technical, economic, and
37
organizational capabilities needed to conduct its electricity network operations. The
same legal requirements apply both to DSOs and the TSO.
38
According to the Electricity Market Act , the DSO is obligated to develop the electricity
network, to connect to its network electricity consumption sites and power generating
installations, and to sell electricity transmission services against reasonable compensation
to those that need them.
36
DONG is an abbreviation for Danish Oil and Natural Gas. DONG is a state owned company.
Electricity Market Act Section 4 and 5
38
Electricity Market Act Section 9 subsections 1, 2 and 10.
37
47
Normally the network licenses are granted for the time being. On special grounds, the
network license could be granted for a specific period.
Norway
In order to distribute electricity within a given area, the DSOs must hold an area license
issued by NVE. According to the Energy Act, all DSOs holding an area license are
obliged to distribute electricity to all customers within this area.
Furthermore, the Energy Act states that any entity that engages in electricity
distribution/transmission, physical trading of electrical energy and/or power production,
is obligated to hold a trading concession issued by NVE. This means that all energy
suppliers, producers and DSOs need a trading concession. The concession ties the
concession holder to the Energy Act as well as the secondary legislation, and sets
conditions regarding organisation, employees within the company, behaviour in
conjunction with neutrality, etc. License holders carrying out services for consumers
covered by the law regarding consumer purchases must be a member of an industry
council (Elklagenemda).
Sweden
According to the Electricity Act, all DSOs must have a network license (concession)
issued by the Energy Markets Inspectorate in order to operate within a given area. The
legal entity (DSO) is responsible for operation and maintenance and, when needed,
extension of its networks and, in applicable cases, connection to other networks. The
DSO is also responsible for ensuring that its networks are safe, reliable and efficient, and
that they can fulfil the requirements of secure distribution of electricity in the long-term.
A concession is generally granted for 25 or 40 years. The DSO must apply for a renewal
of their concession at the latest two years before the concession expires.
5.2.2.3 Conclusions and suggestions
In all Nordic countries DSOs are subject to a license. Licenses are granted either for the
time being or for a fixed period. According to the regulation, there are some requirements
for a company to get a network license. NordREG finds that the possible differences
between the Nordic countries in licensing DSOs do not form a critical obstacle to
establishing a common Nordic end-user market. Therefore the regulation relating to
licensing of DSOs doesn’t need to be harmonised.
5.2.3 Regulation of neutrality of the DSOs
5.2.3.1 Introduction
It is important to secure that the DSOs act neutrally towards other market actors. This
requires both regulation and supervision. In this chapter the regulations are described
which ensure the neutrality of the DSOs.
Denmark
The majority of the Danish distribution network companies are part of a company-group
also carrying out competitive activities. This can entail competitive problems. The
neutrality of the network company, however, is secured in various ways according to the
48
5.2.3.2 Present situation in the Nordic countries
Electricity Supply Act, which implements the Electricity Directive 2003/54/EC. For
example, according to the Danish Electricity Supply Act § 84 the DSO has to treat certain
market information as confidential. § 47 states that the DSO has to be legally separated
from e.g. a supplier also with regards to accounts. § 46 states that the DSO has to make
agreements and contracts in writing and on market based terms. The minimum
requirements with respect to the neutrality of the network companies are specified in
executive Order number 635 of 27.06.2005.
Finland
Neutrality of the DSOs is regulated in Finland according to the Electricity Market Act
(386/1995) and decrees and decisions given on the basis of the Electricity Market Act.
The sale prices and terms of network services and the criteria according to which they are
39
determined shall be equitable and non-discriminatory to all network users . Likewise,
balance settlement services must be offered on equitable and non-discriminatory terms to
market participants. The balance settlement services offered may not include any
conditions or limitations that would be unfounded or that would obviously restrict
40
competition.
Norway
41
According to regulations to the Energy Act, the DSO is obligated to offer to all network
users non-discriminatory and unbiased tariffs and terms of network services.
Most Norwegian DSOs are vertically integrated or organized within a group of
companies also carrying out electricity supply and/or electricity production. Due to this,
regulations on neutrality are important.
Regulations on the DSOs’ neutrality in relation to electricity suppliers and end users are
given in the regulations to the Energy Act. In the Regulations on Metering and Settlement
it is stated that the DSO shall behave impartially to electricity providers and end users on
all occasions, including with regards to:
„
„
„
„
„
„
information about suppliers and the electricity market,
handling of supplier switches,
establishing new subscriptions,
transmission of meter data,
choice of invoicing routines,
mandatory settlement and invoicing requirements”
The overall principle is stated very clearly in the next subsection:
“The DSO shall handle information in a manner that gives no single supplier a
competitive advantage.”
39
The Electricity Market Act section 14
The Electricity Market Act section 16c
41
Regulations number 302 of 11.03.1999 on economical and technical reporting, pricing of
network services etc. § 13-1
40
49
Furthermore, both for DSOs within a vertically integrated company (supply and
distribution activities within the same legal entity) and DSOs organized as a separate
legal entity, one of the conditions in the trading license demands that the DSO draw up
routines to ensure that the company complies with the regulation on neutrality. Further, a
demand in the license issued to suppliers says that the concessionaire must not contribute
to a DSO’s violation of the regulation on neutrality.
Over the years NVE have published several directives giving guidance to the DSO on
how they should interpret the neutrality regulations.
Sweden
Regulations on the DSOs’ neutrality in relation to electricity suppliers and producers are
found in the Electricity Act and accompanying regulation.
42
The network tariffs shall be objective and non-discriminatory for all network users. The
DSO should provide meter values to the market participants in a non-discriminatory
43
way.
5.2.3.3 Identified differences
The table below summarizes the present situation regarding the regulation of the
neutrality of DSOs in the Nordic countries. In the column labelled Nordic are NordREG’s
suggestions with regards to the need for harmonisation in order to establish a common
Nordic end-user market.
Table 5. The present situation regarding the regulation of neutrality of DSOs in the Nordic countries.
Is there any
direct
regulation
guaranteeing
the neutrality
of DSOs?
For which
tasks is the
neutrality of
DSOs
required by
the
regulation?
42
43
Denmark
Finland
Norway
Yes
Yes
Yes
Yes
See the
description of
the present
situation in
Norway
Network tariffs
Network tariffs
Meter value
management
Information
Sales prices
and terms of
network
services,
including the
criteria for
them
Balance
settlement
services
Electricity Act (1997:857), 4:1.
STEMFS 2007:5, 1:4.
50
Sweden
Meter value
management
Information
Nordic
Should be
regulated, but
is not critical to
harmonise
Not critical to
harmonise
5.2.3.4 Conclusions and suggestions
Regarding the regulation of neutrality of DSOs, NordREG finds that it is unnecessary to
harmonise the regulations. However, it is important that all countries ensure that the
DSOs act as neutral market facilitators to ensure equal conditions of competition
5.2.4 Unbundling rules
5.2.4.1 Introduction
One important aspect to ensure the neutrality of DSOs is the unbundling of network
operations from operations in competition, such as from electricity generation and supply.
In this chapter will be discussed how distribution network operations are unbundled from
generation and supply operations in the Nordic countries.
There are different types of unbundling:
„
„
„
„
Unbundling of accounts
Legal unbundling
Ownership unbundling
Functional unbundling
The lowest level of unbundling is unbundling of accounts, where the network company
has to have separate financial accounts for different electricity network operations.
According to the Electricity Market Directive 2003/54/EC, it has been required that DSOs
keep in their internal accounting separate financial accounts for network operations and
44
draw up, submit to audit, and publish them annually . Unbundling of accounts does not
set any requirements for independence of the organisation or decision making rules of the
DSOs.
The next level of unbundling is legal unbundling, which means that network operations
are unbundled from generation and supply operations into separate legal entities. Thus it
is not allowed to have network operations and generation/supply operations as part of the
same legal entity. Legal unbundling could be seen as a method to ensure that DSOs are
separated in terms of their organisation and decision making from other activities not
relating to distribution. According to the Electricity Market Directive 2003/54/EC, it has
been required that member states require legal unbundling from the DSOs being a part of
45
a vertically integrated undertaking and having at least 100,000 customers . The
requirement of legal unbundling does not, however, set by itself any regulation on the
management and ownership of the network company. The legal unbundling requirements
could be amended by the ownership and functional unbundling rules.
An additional requirement for a legally unbundled network company is functional
unbundling. It requires that the management of the network company may not participate
in the management of a generation or supply company within the same group of
companies. This kind of requirement could be seen as a way to ensure that the network
company is independent in its decision making from generation and supply operations.
According to the Electricity Market Directive 2003/54/EC, member states shall demand
44
45
Electricity Market Directive 2003/54/EC article 19
Electricity Market Directive 2003/54/EC article 15
51
functional unbundling from integrated DSOs having at least 100,000 connected
46
customers .
Ownership unbundling is the highest level of unbundling. It requires that a legally
unbundled electricity network company may not be owned by a generation or a supply
company. The EU regulation does not set any requirements for the ownership unbundling
of the DSOs. The proposal from the European Commission for amending the Electricity
47
Market Directive (so-called third package) proposes that the TSOs should be ownership
unbundled from generation operations. This proposal does not include any changes to the
unbundling regulation of the DSOs.
The Electricity Market Directive 2003/54/EC sets the minimum requirements for
unbundling the distribution network operations from generation and supply. The Nordic
countries have implemented these requirements in various ways.
5.2.4.2 Present situation in the Nordic countries
Denmark
Unbundling of accounts
DSOs also need to have unbundling of accounts according to the Danish Energy Supply
Act § 47.
Legal unbundling
Licensed network activities must be legally unbundled from all other activities in
Denmark. This generally means that a network company cannot deal with other activities
not included in the license. This is stated in the Danish Electricity Act § 47.
It is, however, possible to have activities outside the license according to the Electricity
Supply Act. This only applies for DSO’s with less than 100,000 customers and may not
exceed more than 5 percent of the total turnover, according to Government Order number
358 of 20.05.2003.
Functional unbundling
The EU rules on functional unbundling are also implemented in the Electricity Supply
Act. It states that the rules do only apply for network companies with more than 100,000
customers. This means that neither employees nor board-members of a network company
can be active in any trading- or generation company. In the case of employees this
separation also covers holding companies.
Finland
In Finland a utility operating in the electricity market shall unbundle any electricity
network operations from other electricity business operations and the electricity business
operations from its other business operations unless the business operations are of minor
significance in terms of volume or the other business operations carried out by the utility.
46
Electricity Market Directive 2003/54/EC article 15
Proposal for a Directive of the European Parliament and of the Council amending Directive
2003/54/EC concerning common rules for the internal market in electricity (19.9.2007)
47
52
Unbundling of accounts
The Electricity Market Act requires that all network operators shall unbundle electricity
48
network operations from other electricity trade operations . This means that an income
statement and a balance sheet shall be drawn up for network operations for each financial
period. The income statement and the balance sheet, which shall be derivable from the
utilities’ accounts, shall be drawn up, mutatis mutandis, in accordance with the provisions
of the Accounting Act (1336/1997).
The auditors of the company shall audit the income statements, balance sheets and any
supplementary information as part of the statutory auditing of a body, municipality or an
establishment.
The unbundled financial statements of electricity network operations shall be made
public. The financial statements shall be attached to the official financial statements,
annual report published or other corresponding public document made available to the
stakeholders of a utility or group engaged in electricity trade or of a municipality, joint
municipal authority or state enterprise. The network system operators shall also send their
unbundled financial statements annually to the Energy Market Authority.
Legal unbundling
49
According to the Electricity Market Act , the network operations shall be unbundled
legally from other electricity business operations if the amount of electricity distributed
on the 0.4 kV network has been at least 200 GWh/year during the past three years. Legal
unbundling had to be done by January 1st, 2007. If the amount of electricity annually
distributed at the 0.4 kV level is below 200 GWh, legal unbundling is not necessary. In
such cases only the unbundling of accounts is required.
If the DSO passes the threshold of legal unbundling, the company has a transition period
of two years to unbundle network operations into separate legal entities.
48
49
The Electricity Market Act section 28
The Electricity Market Act section 34a
53
Amount of electrical energy distributed at 0,4 kV level
Less than 200
GWh/yr
Electr.
production
and
retail
Distribution
•May be one company
•Unbundled accounts
•59 DSOs
•13 % of customers
•15 % energy
At least 200 GWh/year
Number of customers
Less than 50.000
50.000-100.000
At least 100.000
Electr.
production
and
retail
Electr.
production and
retail
Electr.
production and
retail
Distribution
•Separate companies*
•May be same
management
•17 DSOs
•16 % customers
•16 % energy
Distribution
Distribution
•Separate
companies *
•Separate managem.
•Separate companies*
•Separate managem.
•Compliance program
•9 DSOs
•22 % customers
•22 % energy
•6 DSO
•49 % customers
•47 % energy
*No specia l le ga l for m for the separa te DSOs is re quire d
Figure 4. Unbundling requirements for the DSOs in Finland.
Functional unbundling
As it regards functional unbundling requirements, a person managing a network operator
engaged in legally unbundled electricity network operation with 50,000 customers or
more may not act as the managing director of a utility in charge of electricity generation
or electricity supply, or as a member of its board of directors or corresponding organ, if
50
the network operator and the utility are under the authority of the same party .
Further provisions on functional unbundling requirements imposed on a network operator
with 100,000 customers or more, and who is engaged in legally unbundled electricity
51
network operation have been given by a ministerial decree. These requirements relate to
decision-making on the prerequisites pertaining to ensuring the independence of the
persons managing the network operator, and to the DSO’s obligation to draw up a
compliance program ensuring that the DSO meets the obligations defined in the
Electricity Market Act regarding pricing principles of network operation, and the
settlement of electricity sales in a non-discriminatory manner.
Norway
Unbundling of accounts
According to the Energy Act, concessionaires are required to submit annual financial and
technical data to NVE and Statistics Norway through a standardized electronic reporting
system. Accounting must be kept in accordance with the Norwegian Accounting Act and
50
The Electricity Market Act section 34c
The decree of the Ministry of Trade and Industry on the functional unbundling requirements of
the electricity distribution system operator (922/2006)
51
54
generally accepted accounting principles. It is required that activities subject to
competition and monopoly activities are kept separate in the accounts.
The company’s CPA must validate the report, and the report must be in accordance with
the company’s annual report.
The concessionaires are required to provide separate information concerning the
monopoly activities in their annual reports. The purpose of this segment is to give the
public insight into where in the company results are generated, and to give a better
understanding of the distinction between network activities (monopoly) and other
activities.
Legal unbundling
The Energy Act states that vertically integrated companies with more than 100,000
connected customers must separate their network activities from power production and
power trade/supply in Norway. A company structure with separate legal entities must be
established, and the network company may not have the ownership of a production or
supply company and vice versa.
Furthermore, NVE is given the possibility to require restructuring of a company into
separate companies for monopoly activities (network) and activities subject to
competition (production and trade/supply) in the case of mergers and acquisitions if the
merger/acquisition triggers the obligation to acquire a license according to the Energy
Act. Establishment of activities that require a license, transfer of installations, or
acquisition of more than 90% of the shares in a company that holds a license triggers this
obligation. In administrative practise, companies with more than 8,000 – 10,000
connected customers must establish a company structure with separate legal entities. The
same rules regarding ownership as for companies with more than 100,000 connected
customers applies.
Functional unbundling
The Energy Act states that vertically integrated companies with more than 100,000
connected customers must comply with certain requirements regarding functional
unbundling. A person employed in the network company’s management may not
participate in the management of generation or supply within the same group of
companies. Given that the board only has superior control, board members of the holding
company or controlling owners are not included in the definition of DSO’s management.
Furthermore, a parent company or a controlling stakeholder may not give the network
company instructions regarding the daily management or decisions regarding network
extensions or upgrades that do not extend certain specified economic limits.
Furthermore, the trading license issued to DSOs organized within a group of companies
contains conditions regarding functional unbundling.
Sweden
The Electricity Act contains regulation regarding unbundling (legal, functional and
unbundling of accounts) and compliance programs.
55
Unbundling of accounts
All network companies are obliged to prepare an annual report, which consists of the
52
financially unbundled accounts of the network operations . The Board is to sign the
annual report which shall also be audited by an auditor. The report is public and is to be
sent to the Energy Markets Inspectorate annually.
Legal unbundling
A legal entity which undertakes a network operation is not allowed to take part in
53
activities like electricity generation or supply of electricity . However there are two
exceptions to this basic rule. Generation may be carried out within the same legal entity
which undertakes a network operation if the production:
„
„
is exclusively intended to cover network losses or,
takes place within a mobile reserve plant that is intended for temporary use in
connection with a power outage.
Functional unbundling
Functional unbundling is mandatory for those DSOs that are part of a corporation with
54
more than 100,000 grid customers . This implies that members of the board, managing
directors, or other persons authorised to sign for a company are not allowed to carry out
this role within both a distribution company and a generation and supply company.
Further changes regarding functional unbundling requirements in the Electricity Act are
currently subject to public consultation. The Electricity Act should state that a DSO that
is part of a corporation with more than 100,000 grid customers shall be independent in
terms of its organisation and decision making. Furthermore, the DSO shall have effective
decision-making rights, independent from the integrated electricity undertaking, with
respect to assets necessary to operate, maintain or develop the network. According to the
proposal, the salary of employees of the DSO must not be based on the supply/generation
company’s performance.
5.2.4.3 Identified differences
The table below summarizes the present requirements for legal, functional and ownership
unbundling of DSOs in the Nordic countries. In the column labelled Nordic are
NordREG’s suggestions on the need for harmonisation in order to establish a common
Nordic end-user market.
52
Electricity Act (1997:857) chapter 3 § 17.
Electricity Act (1997:857), chapter 3 § 1 a.
54
Electricity Act (1997:557), chapter 3 § 1 b.
53
56
Table 6. The present requirements for legal, functional and ownership unbundling of DSOs in the Nordic
countries.
Denmark
What is the
threshold for
legal
unbundling of
DSOs
What is the
threshold for
functional
unbundling of
DSOs
What are the
requirements
for functional
unbundling of
DSOs
What are the
requirements
for ownership
unbundling of
DSOs
All DSOs
More than
100,000
customers
Leading
employees or
board members
of DSOs may
not be active in
any trading or
generation
company
within the same
group of
companies
Finland
Norway
Sweden
Nordic
Amount of
electricity
delivered at 0.4
kV level has
been at least
200 GWh for
three years
DSOs with
more than
100 000
customers;
In cases of
mergers and
acquisitions,
DSOs with
more than
8,000-10,000
customers
All DSOs
Not critical to
harmonise
At least 50,000
customers
More than
100,000
customers
(certain
conditions
applies for all
DSOs within a
group of
companies)
More than
100,000
customer
Not critical to
harmonise
DSOs
management
may not
participate in
the
management of
generation or
supply within
the same group
of companies
Members of the
board,
managing
directors or
persons
authorised to
sign for a
company may
not carry out
this role within
both a DSO
and a
generation or a
supply
company 55
Not critical to
harmonise
Not in use
Not critical to
harmonise
Neither DSOs’
management
directors nor
members of
board may
participate in
the
management of
generation or
supply within
the same group
of companies
DSOs with
more than
100,000
customers; 56
Not in use
In cases of
mergers and
acquisitions
DSOs with
more than
8,000-10,000
customers
Not in use
55
Further changes regarding functional unbundling requirements in the Electricity Act are
currently subject to public consultation, see chapter 1.3.2.4.
56
The DSO may not have the ownership of a supplier or production utility and vice versa.
57
5.2.4.4 Conclusions and suggestions
Regarding unbundling rules, all Nordic countries have implemented the minimum
requirements from the directive. There are some minor differences between the countries
regarding how the requirements have been implemented. However, NordREG finds that it
is not critical to harmonise unbundling rules completely. What is important is that each
country ensures that every DSO acts as a neutral market facilitator to ensure equal
conditions of competition so that the unbundling rules doesn’t give advantages to
particular suppliers.
5.2.5 Compliance program
5.2.5.1 Introduction
The compliance programs are tools to ensure that the DSOs are independent and neutral
in their decision making and daily operations. This is based on the principle that DSOs
are obliged to check for themselves that discriminatory conduct is excluded from their
processes. To increase the trust of other market actors and stakeholders, these compliance
programs shall be public and observance of them shall be adequately monitored.
According to the Electricity Market Directive 2003/54/EC, member states shall demand
the establishment of a compliance program from the integrated DSOs having at least
57
100,000 connected customers .
In this chapter will be discussed the regulation of compliance programs in the Nordic
countries; whether there are any DSOs exempted from the establishment of a compliance
program, and which elements are required to be included in the programs.
5.2.5.2 Present situation in the Nordic countries
Denmark
In Electricity Directive 2003/54/EC it is also possible to exempt DSOs from the rules
concerning “compliance” if the network company has less than 100,000 customers.
Denmark has not chosen to implement this exception mainly because on the European
scale, the Danish DSO’s are rather small.
Danish secondary legislation defines the elements of the compliance programs to be
established. There are 9 elements that the network company needs to describe in the
compliance program to insure that the DSO does not behave in a discriminatory way.
These elements are:
1) Treatment of sensitive / confidential information.
„
57
This implies that the DSO shall describe how the company handles acquired
confidential information and how it is passed on in a non-discriminatory manner.
There is a special focus on how to prevent information from being shared
between the DSO and a group-connected commercial supplier in a discriminatory
way. This compliance program shall furthermore describe which kinds of
Electricity Market Directive 2003/54/EC article 15
58
information are confidential, and which procedures the DSO has for receiving
and handling this kind of information.
2) Treatment of sensitive / confidential information about the DSO’s own activities.
„
This implies that the DSO can describe which kinds of information are
considered to be confidential about the DSO’s own activities. It should
furthermore be described how the DSO passes on this kind of information in a
non-discriminatory way. This means for instance that everyone in the market
should have the information at the same time.
3) How to ensure that the DSO gives access to the grid on non-discriminatory terms.
„
This implies that there should be equal and fair access to the grid for all market
actors. In addition, it should be described how maintenance and development of
the grid is carried out in a non-discriminatory way.
4) How to ensure that the DSO does not favour certain companies in its contact with the
customers.
„
This implies among other things that the DSO should describe how it ensures that
its co-workers act neutral in their contact with distribution customers. This could
be guaranteed by implementing written declarations where the co-worker states
that they or she always will act in a neutral way towards actual or potential
customers. In addition the webpage of the DSO should be neutral.
5) How to ensure that activities are legally unbundled.
„
This implies that the DSO describes how it with its distribution activities is
legally unbundled from other activities in the group with other activities not
included in the distribution license. It also implies that the DSO describes the
measures it takes to appear fully independent when it in various ways has contact
with its customers. It should be very clear for the customer whether they or she is
in contact with the DSO or e.g. with the group-connected commercial electricity
supplier.
6) How to ensure unbundling of accounts.
„
This implies that the DSO shall take measures to ensure that the account of the
DSO is independent and separate from other company accounts in the group.
7) How to enforce the rules about competence to act.
„
This implies that the DSO shall take measures so that neither leading employees
nor board-members of a network company can be active in any trading or
generation company.
8) How to ensure that contracts made by the DSO with other companies are in written
form and based on market terms.
„
This implies that the DSO shall describe the tangible measures it has taken to
ensure that contracts are based on market terms. This could be explanations on
59
how large a mark-up the DSO pays or receives on top of the cost price when they
do business with other companies.
9) How to ensure that the stipulation of prices from the DSO is done in a nondiscriminatory way.
„
This implies that the DSO has to get its prices and tariffs approved by the Danish
Energy Regulatory Authority, who controls that prices are subject to a calculation
that is non-discriminatory.
Aside from the compliance program, the DSO shall compose an annual report containing
three main areas. First of all, the DSO shall make an overall description of the program.
Thereafter, the DSO shall make a description about the implementation of the program.
This contains, among other things, descriptions about how the program has been spread
out in the company, how the compliance officer was found, and how infringements of the
program in general are to be handled. Lastly, the annual report should contain a section
about the control of the program. This implies descriptions about e.g. if the
communication of the program has been done in a satisfying way, if the DSO has been
able to protect confidential data in its various IT-systems, and if there have been
infringements of the program and which corrections of its procedures this has led to.
Finland
The obligation to draw up a compliance program has been restricted in Finland to DSOs
58
having at least 100,000 customers . Today this obligation concerns six DSOs in Finland.
The main elements of the compliance program are set by the decree of the Ministry of
59
Trade and Industry . The Energy Market Authority has also drawn up a general
60
recommendation on the content of compliance programs . The aim of this
recommendation has been to standardize DSOs’ modes of operation with respect to the
scheme of measures, as well as the data to be provided to stakeholders and authorities in
reporting. The objective has also been to improve the comparability of network operators’
compliance programs and enhance confidence in the implementation of nondiscrimination in the electricity market.
According to this regulation, the DSO shall appoint a person who will be responsible for
drawing up and implementing a scheme of measures ensuring non-discrimination and
monitoring compliance with it (the compliance program). The responsible person shall
also annually draw up a public report on the implementation of it.
The public report to be drawn up by the DSO shall be based on an annual review of the
compliance program. In the public report, the DSO shall describe the measures taken to
ensure and improve non-discrimination in operations, as well as the measures to which
the DSO has committed itself in order to ensure and improve non-discrimination. The
compliance programs shall include the following elements:
58
The Electricity Market Act section 34c
The Decree of the Ministry of Trade and Industry on the functional unbundling requirements of
electricity distribution system operator (922/2006)
60
The Energy Market Authority’s recommendation for a scheme of measures ensuring electricity
system operators’ compliance with non-discrimination; December 21, 2006; Ref. 1352/53/2005
59
60
1) Functional unbundling
„
The DSO shall describe how functional unbundling requirements are fulfilled
within the company
2) Customer relations
„
„
The DSO shall ensure that they are acting in non-discriminatory manner in
customer contracts, providing network services to the customers, metering,
invoicing and switching supplier processes
The DSO shall ensure that they acquire energy for the losses and the reserve
power for the operation of its electricity system by following open, nondiscriminatory and market-based procedures
3) Balance responsibility and balance determination
„
The DSO shall ensure that they offer balance determination services to electricity
market parties on equitable and non-discriminatory terms
4) Data system management
„
„
The DSO shall ensure that the confidential data related to the DSO’s business
activities and customer relations are not wrongfully transferred to a third party
and will not inappropriately disappear, change, or be destroyed.
The DSO shall ensure that its data systems are arranged for the information
exchange required by the electricity market
5) Obligation to maintain secrecy
„
The DSO shall ensure that commercially sensitive information is not disclosed to
a third party
The managing director or board of directors of the DSO shall confirm the report by dating
and signing it. The report drawn up on the compliance program shall be public. The DSO
shall publish the report so that it is made available to stakeholders. The DSO may publish
the report as part of some other report aimed at stakeholders. The DSO must also submit
the compliance program to the Energy Market Authority annually by the end of May.
Norway
In accordance with EU directive 2003/54 article 15, paragraph 2d, the distribution system
operator must establish a compliance program that sets out measures taken to ensure that
discriminatory conduct is excluded, and to ensure that observance of it is adequately
monitored.
In Norway, DSOs with more than 100,000 connected customers must establish a
compliance program. The program should state the specific responsibilities of the
employees in order to assure neutrality. All employees within the DSO are committed to
neutral conduct towards all suppliers and customers. The same requirements go for
employees in entities conducting grid services on behalf of the DSO. All employees shall
sign a written agreement where they commit to comply with the neutrality rules given in
the Energy Act and regulations to the Act.
61
The program should state the DSO’s measures to fulfil the demands regarding functional
unbundling.
The DSO shall also describe which kinds of information are confidential and how the
company handles confidential information.
The management of the DSO shall actively and regularly promote the compliance
program, and training in compliance of neutrality regulations shall be given regularly.
Each year a report shall be issued describing which measures have been taken and the
results of these. This report shall be published no later than the end of March in such a
way that it is easy accessible. It shall also be sent to NVE.
According to Electricity Directive 2003/54/EC, it is possible to exempt DSO’s from the
rules concerning “compliance” if the network company has fewer than 100,000
customers. Norway has chosen to implement this exception, but according to the
conditions in the trading license all DSOs must establish certain written routines in order
to assure neutrality.
Sweden
A legal entity which undertakes a network operation shall establish a compliance
61
programme and ensure that it is followed .
62
The DSO is obliged to describe the following issues in the compliance programme .
1) Legal unbundling
„
The DSO shall describe how the network operation is organised
2) Functional unbundling
„
If functional unbundling is applied, the DSO is obliged to describe how this is
fulfilled within the company
3) Treatment of information
„
„
The DSO shall describe which information within the company might be
commercially sensitive
The DSO shall describe in which ways unauthorised access to commercially
sensitive information (for example, through IT-systems) is prevented within the
network operation
4) Training of employees on how to obstruct discriminatory behaviour
„
„
61
62
The DSO shall describe how employees receive training to obstruct
discriminatory behaviour towards other players in the electricity market
The DSO shall describe how actively, regularly, and visibly the DSO visualises
managerial support of the compliance programme and makes sure that employees
acknowledge and support the programme
Electricity Act (1997:857) chapter 3 § 17.
STEMFS 2006:5.
62
„
The DSO shall also describe which measures can be taken if a breach of the
compliance programme occurs
5) Responsibility to the compliance programme and routines on how to follow it up, etc.
„
The DSO shall describe which person or persons within the network operation are
responsible for the establishment of the compliance programme and who follow
up on those measures that have been taken in accordance with the compliance
programme
The DSO shall every year publish a report describing the measures that have been taken
and their results. The report shall be made public and reported to the Energy Market
Inspectorate.
5.2.5.3 Identified differences
The table below summarizes the present requirements of making compliance programs in
the Nordic countries. In the column labelled Nordic, NordREG’s suggestions are given on
the need for harmonisation in order to establish a common Nordic end-user market.
Table 7. The present requirements for making a compliance program.
Denmark
Finland
Norway
DSOs with
more than
100,000
customers
What is the
threshold for
making a
compliance
program
All DSOs are
required to
make a
compliance
program
DSOs with at
least 100,000
customers
(However, all
DSOs must
establish
written routines
in order to
assure
neutrality)
Which issues
shall be
included in the
compliance
program
See the
national
description in
chapter 4.2.5.2
See the
national
description in
chapter 4.2.5.2
See the
national
description in
chapter 4.2.5.2
What is the
required
approval
process for the
programs and
reports
Does the
compliance
program
and/or annual
report need to
be published
Managing
director
confirms the
program and
report and
DERA
approves the
report and
program.
Yes
Managing
director or
board of
directors shall
confirms the
report
Yes
A person
appointed as
responsible by
the DSO
confirms the
report
Yes
63
Sweden
Nordic
All DSOs are
required to
make a
compliance
program
Not critical to
harmonise
See the
national
description in
chapter 4.2.5.2
Not critical to
harmonise
Managing
director who
can delegate
the task
confirms the
report
Yes
Not critical to
harmonise
Not critical to
harmonise
5.2.5.4 Conclusions and suggestions
Regarding compliance programs, all of the Nordic countries have implemented the
requirements in the directive on electricity. There are some minor differences between the
countries in how the requirements have been implemented. For example, there are
differences in which DSOs making and publishing of a compliance program is required
and which information in detail has to be included in the compliance programs.
However, NordREG finds that requirements related to compliance programs are not
critical to harmonise. In order to establish a well-functioning common Nordic end-user
market, it is sufficient that all Nordic countries have implemented at least the minimum
requirements from the directive.
5.2.6 Supervision of DSOs
5.2.6.1 Introduction
As DSOs are local monopolies, they are also subject to supervision. According to
Electricity Market Directive 2003/54/EC, the member states shall designate one or more
63
competent bodies with the function of regulatory authority . They shall at least be
responsible for ensuring non-discrimination, effective competition, and the efficient
functioning of the market. One of their main tasks is to guarantee that the DSOs fulfil
their tasks in a transparent and non-discriminatory manner.
Each Nordic country has nominated an electricity market regulator, but there might be
some overlap in the powers of the electricity market regulators and some other
authorities.
In this chapter will be discussed how supervision of the DSOs is organized in the Nordic
countries, and what are the powers of the regulators.
5.2.6.2 Present situation in the Nordic countries
Denmark
There are three main players with certain powers in the Danish Energy market. First of all
there is the Danish Energy Regulatory Authority (DERA), which is separated from the
Ministry of Climate and Energy, and is therefore not under direct parliamentary control.
DERA has the power to fine companies that do not comply with energy regulations.
According to the Electricity Supply Act, DERA can issue an order to make sure that
illegal actions are adjusted. If these orders are not followed, DERA can fine the
organization in various ways unless the offender is liable to a higher penalty through
other legislation. DERA doesn’t have the power to reduce rates of return in response to
violations, but DERA does have the power to revise tarification methodology in cases of
non-compliance.
The Danish Energy Agency (DEA), a governmental body under parliamentary control,
has regulatory powers as well. This regards, for instance, generation and transmission
project licensing, oil/gas extraction, technical and high voltage transmission investment
63
Electricity Market Directive article 23.
64
regulations of Energinet.dk. The DEA can also revoke a license under more extreme
technical and economical circumstances.
The Danish TSO (Energinet.dk) is an authority in charge of market monitoring tasks and
has the responsibility to issue market rules on market access, etc.
Finland
The Energy Market Authority has the general responsibility in Finland of ensuring that
DSOs and other market actors are following the rules and provisions set in the Electricity
Market Act, as well as decrees and decisions given on the basis of the Electricity Market
Act. However, there is also some overlap in the powers of other authorities. In the view of
consumer protection, the Consumer Ombudsman supervises the legality of the terms of
contracts referred to in chapter 6a of the Electricity Market Act, which includes
provisions concerning electricity market contracts. The Consumer Ombudsman also has
powers of supervising electricity market actors according to consumer protection
legislation, like for marketing issues. The Competition Authority has the power to
supervise DSOs on the basis of the competition legislation.
When anyone infringes upon or neglects their obligations laid down in the Electricity
Market Act or any provisions issued under it, the Energy Market Authority obliges them
to correct their mistake or omission. It may be ordered in the obliging decision how the
mistake or omission should be rectified. The obliging decision may also order a refund to
a customer of a fee incorrectly charged to them. The Energy Market Authority may also
impose a conditional fine to make a decision effective.
Norway
NVE ensures that network companies comply with the Energy Act and regulations to the
Act.
As it regards market related areas, NVE finds that the supervision of the neutrality of
DSOs is an important issue. NVE conducts about 15 control visits every year, and has
been focusing on this aspect. Before a visit, NVE examines the DSO’s web pages, and a
wide range of documentation is also provided to NVE by the company. At the actual
visit, NVE staff interview several key personnel within the DSO, and always only one or
two at a time. This is to avoid any coordination of statements.
NVE carries out examinations of the DSOs’ web-pages to reveal breaches of neutrality
rules.NVE also conducts inquires based on requests or complaints from customers or
other market participants.
NVE has the power to fine a DSO or other market participant when certain regulations in
the act or in regulations to the act are violated.
Sweden
The Energy Market Inspectorate ensures that network companies comply with the
Electricity Act and other regulations to which are bound. The Energy Market Inspectorate
audits, for example, how the DSO handles the supplier switching process, including
meter reading and the collection and delivery of meter values. This audit follows rules
from the Electricity act and accompanying regulations. If a DSO does not comply with
65
the existing rules, the Energy Market Inspectorate can issue injunctions. An injunction is
a decision requiring the DSO to comply with an existing regulation. If the DSO does not
comply with the injunction, the Energy Markets Inspectorate has the ability to impose a
64
fine.
A customer that has a complaint against a DSO can always turn to the Energy Markets
Inspectorate with issues covered by the Electricity Act and secondary regulations. The
regulator does not, however, make any decisions regarding matters on contracts or
marketing issues.
5.2.6.3 Identified differences
The table below summarizes the present situation in the Nordic countries regarding the
supervision of DSOs. In the column labelled Nordic, NordREG’s suggestions are given
on the need for harmonisation in order to establish a common Nordic end-user market.
Table 8. The present situation in the Nordic countries regarding to the supervision of DSOs.
Denmark
What are the
powers of the
regulator?
To whom may
the DSOs
appeal the
decisions of
the regulator?
Are there any
other
authorities
supervising
DSOs
Ensure
compliance
with electricity
market
legislation
Finland
- Ensure
compliance
with electricity
market
legislation
Issue orders
and fines
- Issue obliging
decisions,
ordering
refunds,
impose
conditional
fines
Energy
Complaint
Board and the
court system
Supervisory
decisions to the
Market Court
and other
decisions to the
Administrative
Courts in the
first instance,
after that to the
Supreme
Administrative
Court
Consumer
Ombudsman
Danish Energy
Agency
Competition
Authority
TSO
Safety
Technology
Authority
64
Norway
Sweden
Nordic
Issue
injunctions and
impose fines
Issue
injunctions and
impose fines
Not critical to
harmonise
The DSO may
complain to the
Ministry of Oil
and Energy.
To the court
Not critical to
harmonise
The Directorate
for Civil
Protection and
Emergency
Planning
Elklagenemda 65
(Not regarded as
authority)
The Swedish
Electrical
Safety Board
Consumer
Agency
Not critical to
harmonise
Competition
Authority
Electricity Act (1997:857), chapter 12 § 3
A council which consists of two representatives appointed by the Consumer Council and two
representatives appointed by the electricity utilities
65
66
5.2.6.4 Conclusions and suggestions
There are a few minor differences between the Nordic countries with regards to the
supervision of DSOs and to the powers of the regulators.
Regarding the supervision of DSOs, NordREG finds that it is not necessary to harmonise
regulations in order to establish a well-functioning common Nordic end-user market.
However, it is important that all countries ensure that DSOs act as neutral market
facilitators to guarantee equal conditions of competition. This requires, for example, that
the regulators in the Nordic countries have enough resources and power especially to
ensure efficiently that DSOs are neutral and non-discriminating towards every market
rd
66
actor in performing their tasks. In the 3 package it has been proposed that regulators
should have the power to impose effective, appropriate, and dissuasive sanctions to
electricity undertakings not complying with their obligations under the Directive, or any
decisions of the regulatory authority.
5.3 Roles and responsibilities of the suppliers
5.3.1 Introduction
Electricity supply is competitive in each of the Nordic countries. Therefore, there are
fewer obligations set for the suppliers than for the DSOs. However, it is important for a
supplier planning to start operations in another country to know which obligations are set
in that country.
5.3.2 Present situation in the Nordic countries
5.3.2.1 General obligations to the suppliers
Denmark
The general role for suppliers is to supply electricity to the various end users. These range
from small household customers up to very large industrial consumers. In Denmark, the
suppliers can be active under the obligation to supply scheme where a specific supplier
operates as the default supplier of a certain grid area. There are also suppliers who are
only active in the competitive commercial market. Lastly, there are suppliers who are
both active under obligation to supply and also on the free commercial market.
Suppliers acting only on the free commercial market are not regulated by DERA due to
the fact that they are only active on the free market where competition should be the
driving force. In this case, the Danish Competition Authority is empowered to intervene
against market abuse. Presently, 77 suppliers in total are operating in the Danish
electricity market. 32 are commercial suppliers without the obligation to supply. The
suppliers acting under the obligations to supply scheme are on the other hand obligated to
send their prices to DERA (See the section “End price user regulation).
Furthermore the suppliers, if acting under the obligation to supply scheme have to be
licensed by the Danish Energy Agency (DEA). Lastly, the suppliers need to have
66
A proposal for a Directive of the European Parliament and of the Council amending Directive
2003/54/EC concerning common rules for the internal market in electricity (19.9.2007)
67
st
contracts with their balance responsible parties and of course their customers. The 1 of
February 2008, 45 suppliers have been assigned a concession area covering Denmark.
Finland
Foreign trade, wholesale supply, and in principle the entire retail supply of electricity are
carried out in the competitive market. There are currently about 70 electricity retailers in
Finland. Many of the electricity retailers are part of companies involved in the network
business.
For every licensed distribution network area there is one electricity supplier who is
responsible for supplying electricity to a restricted group of customers at reasonable
67
prices (obligation to supply).
Norway
The general role for suppliers is to supply electricity to the various end users. These range
from small household customers up to very large industrial consumers. There are about
170 end-user suppliers in Norway, including purchasing cooperatives (between
municipalities, etc.). Currently 17 suppliers are operating throughout the whole country,
but the number of suppliers operating in several network areas is bigger.
The Energy Act states that an energy supplier needs a license to engage in the physical
trade of electrical energy in Norway. Furthermore, to gain access to the market for
electrical power in Norway, the supplier becomes the balance responsible, and needs an
agreement with Statnett. The supplier may act as a balance responsible itself or in some
cases outsource the responsibility to a third party. Every balance responsible market
player shall provide security for financial settlements.
In the Norwegian electricity market, suppliers are subject to a less comprehensive
regulation and have fewer obligations than DSOs, according to the Energy Act and its
accompanying regulations. However, the energy supplier is subject to regulations in the
general legal framework, such as the Marketing Practises Act, the law regarding
consumer purchases and contract law.
However, changes made to the supplier switching process in 2008 have given the energy
supplier an extended responsibility.
When electricity and transport is invoiced on the same bill, the supplier has to follow
68
certain rules for billing . The suppliers shall also give a reference to NVEs’ websites,
where the contribution of each energy source to the overall fuel mix in the preceding year
is specified. Such information shall be given in all promotional materials and with bills
according to directive 2003/54/ EC on electricity.
Sweden
The Swedish consumer currently has 123 electricity suppliers to choose from, of which
20 are active only locally. The role of the supplier in the Swedish electricity market is not
regulated very extensively in the Electricity Act. A supplier does not need to apply for a
67
68
Electricity Market Act Section 21
Regulations number 301of 11.03.1999 on metering and settlement
68
license or register at the Energy Markets Inspectorate (EI) before entering the market.
However, there are a few obligations placed on the supplier in the Act. For example, the
supplier is required by law to the report prices and conditions of certain specified
contracts to the EI. There are also obligations placed on the supplier in the General terms
and conditions.
5.3.2.2 Licensing
Denmark
Suppliers acting under the obligation to supply scheme need to be licensed. Presently, 45
are licensed. The license is granted to one company in each grid area for a period of 5
years by the Minister of Climate and Energy, according to the Electricity Supply Act §
33, 2. Suppliers only active in the competitive market do not need a license, but only the
below mentioned agreement with the branch organisation.
Suppliers in the Danish electricity market have to fulfil a few obligations. The potential
supplier must make a contract with the branch organization Danish Energy – Net. Danish
Energy – Net is the agent for all network companies in Denmark with a license, according
to the Danish Electricity Supply Act. It is a standard contract which establishes the
minimum requirements to be able to act in the market as a supplier. The contract thereby
ensures several important things. First of all, economical security has to be guaranteed in
the case that the DSO covers potential losses with regards to the settlement of accounts.
Secondly, there needs to be confirmation that the supplier will handle the balance
responsibility, either by acting as a balance responsible themselves, or by outsourcing the
responsibility to a third party. Furthermore, the supplier confirms that they will always
act on behalf of the end-user when asking the DSO for basic data and when applying for a
69
supplier switch. Lastly, basic data necessary to the Market Actor Register is secured
with regards to supplier switching. This means that the data can be exchanged with the
DSO either directly or through another Ediel operator.
Finland
A supplier does not need a license or to register with the Energy Market Authority to start
a retail supply business in Finland.
Norway
The Energy Act states that any entity that engages in electricity distribution/transmission,
physical trading of electrical energy, and/or power production, is obligated to hold a
trading concession issued by NVE. This means that all energy suppliers, producers, and
DSOs need a trading concession. The concession ties the concession holder to the Energy
Act and its secondary legislation, and sets conditions regarding organisation, employees
within the company, behaviour in conjunction with neutrality, etc. A licence holder
carrying out services for consumers covered by the law regarding consumer purchases
must be a member of an industry council (Elklagenemda).
69
The Market Actor Register is a common web-based system where information about the market
actors is registered. It can be found on: www.ediel.dk
69
NVE has been delegated the power to issue market place concessions for organising and
operating a market place for physical trade of electricity. Although there is no legal
monopoly, only one market place concession will be given for the time being. This is due
to the connection between the market place and system operations. The holder of the
concession, Nord Pool Spot AS, has the disposal of the transmission capacity.
Companies engaging in foreign trade (importing or exporting electrical energy) must hold
a concession issued by the Ministry of Oil and Energy.
Sweden
A supplier in Sweden is not required to have a license issued by the EI or any other
agency, in order to act in the electricity market.
5.3.2.3 Stakeholders a supplier has to deal with
Denmark
DSOs and balance responsible
The supplier must contact the DSO in several cases, for example in cases of moving,
supplier switching etc. Furthermore, the supplier receives metering data from the DSO.
The supplier also needs to have a contact with its balance responsible, so that it is
possible for the balance responsible to report to the TSO what has been put in or taken
out of the system in order to settle imbalances. The supplier can also act as a balance
responsible themselves.
Danish Energy Regulatory Authority
Suppliers with the obligation to supply have to report their prices to DERA. DERA also
approves regulated end user prices.
Tax Authority
A supplier is obliged to register for VAT liability in Denmark, if their electricity users in
Denmark are private individuals. The DSO is responsible for collecting all energy taxes.
Finland
Balance responsible
To operate in the Finnish electricity market a supplier has to appoint a balance
70
responsible for the supply. It has to have an agreement with a balance responsible in
Finland if not operating itself as a balance responsible.
Fingrid Oyj
Before starting to operate, a supplier must contact Fingrid Oyj in order to declare its
balance responsible, or to sign an agreement with Fingrid Oyj if wishing to act as a
balance responsible itself.
70
The Government Decree on balance settlement and metering (66/2009) Chapter 2 Section 1
70
DSOs and balance settlers
71
A supplier is required to give information on the start and end of open supply to the unit
72
responsible for determining the electricity balance for the receiving party. In addition,
this information shall be given to the network operator of any party connected to the
distribution network, if the network operator does not serve as the unit determining the
party’s electricity balance. If the open supplier has not supplied electricity to this
distribution network before, the information must also be given to the supplier’s own unit
73
responsible for balance determination.
74
According to general terms of electricity sales the start and continuation of the sale of
electricity to the customer requires also that there is a valid connection contract and a
valid network contract for the place of electricity use.
Energy Market Authority
Suppliers are responsible for notifying the Energy Market Authority of their terms of
retail sale and prices of electricity. The responsibilities are more comprehensive when the
supplier in question is the one with the obligation to supply. Other suppliers are
responsible for announcing only the terms and prices they apply when supplying
75
electricity to restricted group of customers.
76
According to the regulation to fulfil the obligation to notify the Energy Market
Authority of the prices of electricity, suppliers have to enter price offers of certain types
of contracts to the online price service www.sahkonhinta.fi, maintained by the Energy
Market Authority. The price offers shall be notified before they come into force.
Before getting access to the regulator’s reporting system, the supplier has to register with
the Energy Market Authority as a user of the system and nominate one or more persons
77
who have the right to enter the supplier’s price offers into the system.
Tax Authority
A supplier is obliged to register for VAT liability in Finland, if their electricity users in
Finland are private individuals.
71
Open supply means electricity supply in which the electricity vendor provides the customer with
all the electricity needed, and electricity supply in which the electricity vendor balances the
difference between the customer’s electricity production and acquisition, on the one hand, and use
and supply, on the other, by supplying the missing amount of electricity or by receiving the surplus
during each hour. (The Government Decree on balance settlement and metering (66/2009) Chapter
1 Section 1)
72
This party is called a balance settler. It takes part in the settling of the power balance by
calculating the electricity deliveries of a supplier and forwarding the data to market participants.
The network operator may also act as a balance settler.
73
The Government Decree on balance settlement and metering (66/2009) Chapter 3 Section 1
74
Terms of Electricity Sales (SME 99), standard terms prepared by Finnish Energy Industries
75
Electricity Market Act Section 22
76
Degree from the Energy Market Authority (62/01/2006) Sections 3 and 4
77
Degree from the Energy Market Authority (62/01/2006) Section 4
71
Norway
Balance responsible
When operating in the Norwegian electricity market, a supplier becomes a balance
responsible. The supplier may act as a balance responsible themselves or outsource the
responsibility.
Statnett SF
When acting as a balance responsible, the supplier must maintain an agreement with
Statnett SF as responsible for settlements in the Regulated Power Market.
DSO
The supplier relates to the DSO in cases of supplier switching. Furthermore, the supplier
receives meter values from the DSO, who also calculates the periodical financial
settlement between different suppliers in its network area. In cases of moving, the
supplier may enter into a network contract on behalf of the customer if holding a power
of attorney.
The Competition Authority
78
According to regulations issued pursuant to competition laws , a supplier that delivers
electricity to a household customer shall report price information to the Norwegian
Competition Authority. The supplier has to report prices on certain specified
products/contracts.
Tax Authority
The DSOs in Norway are obligated to collect energy tax.
Statistics Norway
All entities obliged to hold a trading concession must submit annual financial and
technical data to NVE and Statistics Norway through a standardized electronic reporting
system.
Sweden
TSO
79
According to meter instructions , all communications between actors in the electricity
market, except communications with customers, must go through an EDI system,
(Electronic Data Interchange) called Ediel. To meet this requirement, the supplier has to
sign an Ediel-agreement with Svenska Kraftnät (or enter into an agreement with a
reporting service company which provides this service).
DSOs
The first contact a supplier has with a DSO is when a customer wants to make a new
contract with the supplier. The supplier then has to check that the customer has a contract
78
79
FOR 1997-12-12 nr 1392: Forskrift om meldeplikt for kraftpriser
STEMSF 2007:5 (chapter 1 §4).
72
with the DSO. Only a customer with a valid network contract is allowed to sign an
electricity supply contract, which means that the same person in each household must be
80
responsible for both contracts.
81
Before a supplier is allowed to start the delivery of electricity to a customer, they must
inform the DSO of the starting date of delivery. It is only possible to change suppliers on
the 1st day of the month, and the message from the new supplier to the DSO has to be
sent by the 15th of the month prior to the switch. The supplier also needs to inform the
DSO who is undertaking the balancing responsibility for the delivery of electricity to the
customer.
The customer shall give information about the metering point ID to the new supplier. If
the customer is unable to provide this information, the DSO is obligated to provide it to
the new supplier free of charge.
The DSO is required to report to the supplier the estimated values of the system load
profile for each customer. The DSO is responsible for reporting gathered meter values to
st
the supplier. From the 1 of July, 2007, the DSO should send information to the supplier
every month on the date of the meter reading, metering ID, ID for consumer profile
consumption area, the actual meter value and the previous meter value, and the
82
consumption between the actual and previous meter reading .
Energy Markets Inspectorate
83
The supplier is, according to regulation , obligated to report changes in prices and
delivery conditions of certain specified contracts to the regulatory authority. Any changes
in the prices and/or conditions must be reported to the EI before 00.00, at the latest, the
day of the change. To fulfil this obligation, the supplier has to possess an electronic
84
identification to access the regulator’s report system.
Tax Agency
85
The suppliers in Sweden are, according to energy tax law , obligated to collect energy
tax. A new supplier has to register for an account at the Tax Agency at least two weeks
before their first delivery of electricity. The supplier has to declare the delivered quantity
of electricity power monthly to the Tax Agency.
There is currently a proposition about changes regarding the obligations on energy taxes.
The Energy Markets Inspectorate has suggested to the Swedish government that the DSO,
rather than the supplier, should be responsible for collecting the energy tax. This would
make it easier for customers to compare prices between suppliers as well as facilitate the
development of a common Nordic retail market.
80
Electricity Act (chapter 8 §4).
Electricity Act (chapter 8 §6).
82
Until the 1st of July, 2007 the DSO shall send this information at the latest one month after the
annual reading.
83
STEMFS 2007:8.
84
E-legitimation.
85
Lagen (1994:1 776) om skatt på energi.
81
73
Statistics Sweden
Electricity suppliers are obligated to report information such as pricing, the number of
customers per type of contract, and the number of customers that have renegotiated their
86
supply contract, to Statistics Sweden.
5.3.3 Identified differences
The table below summarizes the present situation in the Nordic countries regarding the
roles and responsibilities of suppliers. In the column labelled Nordic are NordREG’s
suggestions on the need for harmonisation in order to establish a common Nordic enduser market.
Table 9. The present situation in the Nordic countries regarding the roles and responsibilities of
suppliers.
Denmark
Finland
Norway
Sweden
Nordic
77
About 70
170
124
-
Number of
suppliers
active outside
the concession
area
Not available
34 (also
includes those
suppliers which
don’t operate a
certain
concession
area)
34 87 ( also
includes
suppliers not
organized
within a group
of companies
including a
DSO)
97
-
Number of
suppliers
active in the
whole country
Not available
24
17
97
-
Does the
supplier need
a license
Yes, under
obligation to
the supply
scheme
No
Yes
No
Not critical to
harmonise
Which party
issues the
license to a
supplier
DEA
-
NVE
-
-
-
Organisation,
employees
within the
company,
registration in
the Norwegian
register of
Business
Enterprises, etc.
-
-
Number of
suppliers
Which
demands are
put on the
supplier to be
able to get a
license
(financial,
technical
systems,
organisation,
etc.)
86
87
Financial and
technical
demands
STEMFS 2005:1, Statens energimyndighets föreskrifter om uppgifter till energistatistik.
Depends on area – number refers to Oslo
74
With which
stakeholder
should the
supplier be in
contact
regarding:
- price
information
- taxes
- meter value
exchange
Not critical to
harmonise
DERA
EMV
Norwegian
Competition
Authority
EI
Tax Agency
Tax Agency
Tax authorities
Tax Agency
DSO
DSO
DSO
DSO
5.3.4 Conclusions and suggestions
A supplier is not required to have a license in Sweden or in Finland. In Denmark a license
is required only when it is related to the obligation to the supply scheme. In Norway a
supplier is required to have a license, and a foreign supplier must be registered in the
Central Coordinating Register for Legal Entities to get a license. In order to not
discriminate against new players, NordREG finds it to be important that the same
licensing rules apply to both domestic and foreign suppliers entering the market in any of
the countries requiring a license. In order to not create any market entry barriers, it is also
vital that the costs and time related to licensing are low. NordREG finds that this issue is
not critical for harmonisation as long as the licensing processes do not create any
significant market entry barriers.
To which authority the supplier has to report price information for publication differs in
the Nordic countries. NordREG finds that this is not critical for harmonisation. However,
it might cause practical inconvenience to a supplier if the supplier is operating in another
country, and that in that country it is required that suppliers have to inform their prices to
the relevant authorities. NordREG has not found this to be a critical obstacle for a
common Nordic end-user market.
5.4 Roles and responsibilities of balance
responsible parties
5.4.1 Introduction
Storing electricity is not possible, therefore the supply and demand of electricity has to
meet all the time. Electricity market actors may make forecasts about electricity
consumption in the coming future, but the actual consumption of customers is known
only afterwards when the meters have been read.
To operate in the electricity market, each company needs to have an agreement with a
balance responsible party to create a balance between the supply and the consumption of
energy.
75
5.4.2 Present situation in the Nordic countries
Denmark
The balance responsible could also be a supplier, but not necessarily. All suppliers need
to have at least one balance responsible. The balance responsible has the responsibility to
ensure that their customers (the suppliers) are always balanced. This means that purchases
and consumption of electricity are balanced in the overall power system. All balance
responsible actors have to make agreements with the branch organisation Danish Energy
regarding balancing. Furthermore, it is stated in market regulations issued by the TSO
Energinet.dk how conditions for balancing are in Denmark. There are about 44 balance
88
responsible parties in Denmark .
Finland
Each party operating in the electricity market (e.g. DSOs, suppliers) must balance their
forecasts with the actual supply and demand. An electricity market participant shall be
responsible for ensuring that electricity generation and acquisition contracts of said
participant cover the participant’s electricity use and supplies for each hour (balance
89
responsibility).
A balance responsible is an electricity market participant which has a valid balance
service agreement with the TSO and whose open supplier is the TSO. There are currently
24 balance responsible parties in Finland.
Norway
All trading concession holders for whom regulating power is settled in the network
owner's power network are defined as balance responsible market participants. This
means that suppliers and power producers are both balance responsible. End users and
network owners who are responsible in regulating the power market are also regarded as
entities with balance responsibility.
The balance responsible may act as a balance responsible or outsource the responsibility.
The balance responsible must hold an agreement with Statnett as responsible for
settlements in the Regulated Power Market, and shall provide security for financial
settlements. There are about 140 parties handling the balance responsibility.
Sweden
A supplier can only supply electricity to exit points where someone has undertaken the
90
balance responsibility. A supplier can either act as a balance responsible party (BRP)
itself by signing an agreement with the Swedish TSO, Svenska Kraftnät, or secure this
service from a third party.
A BRP is responsible for maintaining the balance between the supply and withdrawal of
electricity at all exit points included in the BRP’s Balance Obligation. Only production
and consumption within Sweden may be calculated within the framework for Balance
Obligation. Prior to each delivery hour, the BRP shall plan and execute any possible
88
According to the Danish TSO Energinet.dk
Electricity Market Act Section 16 b
90
Electricity Act (1997:857), chapter 8 § 4.
89
76
measures in order to maintain the balance, measured as the average for the hour, between
supply and withdrawal pursuant to the above. There are about 30 balance responsible
parties in Sweden.
5.4.3 Identified differences
In every Nordic country, a supplier balances the energy needs for every hour for their
customers. The table below summarizes the present situation in the Nordic countries
related to how the suppliers can fulfil this responsibility. It can be noted that from the
view of the supplier, the differences are small. On the other hand, there are many
differences related to the concept of balance responsibility. In the column labelled Nordic
are NordREG’s suggestions on the need for harmonisation in order to establish a common
Nordic end-user market.
Table 10. The present situation in the Nordic countries regarding the roles and responsibilities of
balance responsible parties.
Which party
can be a
balance
responsible
(supplier/third
party)
Number of
balance
responsible
parties
Denmark
Finland
Norway
Sweden
Nordic
Supplier or
third party
Supplier or
third party
Supplier or
third party
Supplier or
third party
Producers,
consumers,
suppliers,
traders
44
24
140
Approx. 30
-
5.4.4 Conclusions and suggestions
In the Nordic countries a supplier may assume the balance responsibility themselves, or
they can outsource this responsibility. Therefore there is no need to harmonise this issue.
Requirements of the balance responsible parties are discussed in more detail in chapter
6.5.
5.5 Roles and responsibilities of the TSOs
5.5.1 Introduction
In the electricity market, the transmission system operators (TSOs) have a key role.
Finland, Sweden, Norway, and Denmark form a single electricity market. The Nordic
TSOs have the key role of developing market-focused rules for the physical electricity
market. TSOs are also responsible for maintaining and operating the transmission
network and interconnectors to neighbouring countries.
The system operator is also responsible for continuous balance between power supply and
demand and its installations working together in an operationally reliable way.
77
5.5.2 Present situation in the Nordic countries
Denmark
The Danish transmission system operator, Energinet.dk, is responsible for running and
maintaining the high voltage infrastructure in Denmark according to chapter 5 of the
Danish Electricity Supply Act. The TSO has to enhance competition and to be a neutral
market facilitator without own interests. Energinet.dk is operated under a cost-plus
system according to Order number 965 of 21/09/2006. According to the Electricity
Supply Act § 27 a, the TSO shall maintain technical quality and balance within the
overall power system and make sure that there is enough production capacity in the
overall power system. The TSO is mainly regulated by the Danish Electricity Supply Act
and the Law of Energinet.dk, Law number 1384 of 20/12/2004.
Finland
Fingrid Oyj is the transmission system operator in Finland, responsible for the main
transmission grid. Fingrid’s owners are Fortum Plc and Pohjolan Voima Oy, who each
own about one fourth of the shares of the company, the State of Finland with about one
eighth of the shares, as well as a few institutional investors. Fingrid Oyj is liable for the
operational planning and operation of the main grid, and for grid maintenance and
development. Fingrid Oyj is also responsible for maintaining a continuous power balance
between electricity production and consumption in Finland (i.e. for balance management).
The Energy Market Authority has granted a license for Fingrid to operate as a system
responsible transmission system operator in Finland.
Norway
In Norway, Statnett SF, the major central grid owner, is the transmission system operator.
Statnett owns and operates large sections of the main Norwegian power grid and the
Norwegian sections of power lines and undersea cables to other countries. As a
transmission system operator, Statnett is responsible for the safety of the Norwegian
power system in the short and long terms, and to help ensure that the transmission grid is
developed in a manner that is efficient and beneficial to society. A trade concession
regulating these activities is issued by NVE.
Statnett is also given a concession to exercise system responsibility according to
guidelines established by NVE.
Statnett has been allocated the role as authority responsible for settlements in the
Regulated Power Market. Statnett puts together and combines all trade and exchange
activities in the wholesale market for electrical power in Norway and calculates the
Regulated Power. A concession with certain conditions regulating these activities is
issued by NVE.
Sweden
The TSO in Sweden, Svenska Kraftnät, is a state utility. Svenska Kraftnät administers
and operates the national electricity grid. As transmission system operator, Svenska
Kraftnät is also responsible for maintaining the short-term balance in the Swedish
electricity network system and is responsible for balance settlement.
78
Concessions regarding the national grid are prepared and decided by the EI. However, in
some cases the concessions for the national grid are decided by the government.
5.5.3 Conclusions and suggestions
Possible harmonisation of the roles and responsibilities of the Nordic TSOs and the
91
establishment of a Nordic system operator has been dealt with in other studies .
Therefore, NordREG is not dealing with this issue in this report.
91
For example: NordREG (Report 4/2006) A common definition of the system operators’ core
activities and NordREG (Report 7/2007) Regulation of the Nordic TSOs - with focus on Market
Efficiency and Harmonisation. (www.nordicenergyregulators.org),
EMG (2008). One Nordic System Operator - Investigating if and how a Nordic
system operator may be established
(http://www.norden.org/energi/el/sk/rapporter.asp?lang=&p_id=639)
79
6 Processes
In the objectives of Nordic end-user market integration, it was stated in chapter 1.3 that in
a common Nordic end-user market the roles and responsibilities of different market
actors, processes between them, and the framework for empowering customers should be
adequately harmonised among the Nordic countries to make it feasible for suppliers to
start operating in other Nordic countries. Therefore, the establishment of a truly common
end user market requires a deep analysis of the business processes.
One prerequisite for achieving a common Nordic retail market is that suppliers should be
able to act according to similar processes throughout the entire Nordic region, instead of
using different business processes in each of the four Nordic countries. Therefore,
harmonisation of these business processes is important at least to some extent.
Harmonisation makes it easier for suppliers entering new electricity markets, because
they do not have to adopt a different way of doing (maybe also including different
incentive structures) if they are willing to operate in another country. Reliable and
transparent business processes decrease costs to all suppliers and other market
participants. Electricity end-users should also benefit in the long run.
To establish a well-functioning retail market the most important business processes are
those where there is information exchange between the customer, DSOs, suppliers, and
balance responsible parties. NordREG has determined that the main business processes in
relation to the retail market are:
„
„
„
„
„
„
„
„
Making and ending contracts
Billing
Supplier switching
Moving
Balance settlement
Metering
Information exchange during supply
Access to customer data
These processes are analysed in detail in this chapter.
6.1 Making and ending contracts
6.1.1 Introduction
A customer may enter into a contract in different ways; a physical meeting with the
supplier, over the telephone, or over the internet for example. The way a customer makes
a contract can affect the entire switching process; for instance, it affects the right the
customer has to change their/her mind. Another important contractual issue is under
which circumstances a party can end a contract. The effect a termination of a contract by
the DSO or the supplier has on the customer is usually substantial. Here, NordREG will
describe the national regulatory frameworks which deal with making and ending contracts
in their respective electricity markets.
80
6.1.2 Present situation in the Nordic countries
6.1.2.1 General obligations related to making and ending contracts
Denmark
The legal requirements for establishing and ending an energy supply contract are
expressed in the Danish Electricity Supply Act and through secondary legislation.
In accordance with executive order number 380 of 25/05/2005 concerning consumer
protection, supply companies cannot supply electricity without entering into a contract
with its customers. Thus, consumers have the right to have a contract for the supply of
electricity.
The consumer does not get a network contract as well, but the consumer can find a
network user agreement normally on the internet. It is not a contract that needs to be
signed though, but an agreement that has to be followed.
Finland
Making and ending an energy supply contract is fairly extensively regulated by the
Electricity Market Act 92 . However, the general terms of electricity sales include even
more detailed provisions on the subject.
Norway
The Energy legislation contains few regulations regarding contractual issues between the
supplier and customer, but the Regulations on Metering and Settlement state that a
93
written contract between the supplier and consumer is compulsory , and there are also
94
certain requirements regarding the contents of the contract . Other contractual issues are
governed by general civil law and contract law.
Sweden
The Electricity Act contains little regulation regarding contractual issues. With the
exception of provisions regarding circumstances under which a supplier may end the
supply to a consumer, this area is not regulated in detail by the Electricity Act.
Contractual issues are governed by general civil law and contract law. This means that the
regulator does not have the possibility to audit or regulate, supported by primary or
secondary regulation, this specific area. This area of regulation is handled by the Swedish
Consumer Agency. The relationship between the supplier and the customer during supply
is governed by the actual terms of the contract. The terms of contract mirror in most cases
the General terms and conditions that the Consumer Agency and the trade organisation
Swedenergy have agreed upon. The General terms and conditions contain rules about
how and when information about prices should be presented to the customer.
There are, apart from those previously stated, other rules that govern this area, for
example marketing laws. These rules are applicable to all consumers regardless of which
area the complaint concerns.
92
Electricity Market Act Chapter 6a
Regulation number 301, 11.03.1999, § 2-2
94
Regulation number 301, 11.03.1999, § 2-3
93
81
6.1.2.2 Making a contract
Denmark
When choosing a contract with a supplier it has to be done in writing. If the contract has
been concluded over the internet, then the customer has a right to get a written contract
from the supplier afterwards.
In Denmark there are no separate network contracts between the customer and the DSO.
Finland
Electricity network and electricity supply contracts shall be drawn up in writing if the
95
contracting party so requires. If the electricity supply contract has not been concluded in
writing, a supplier must provide the user of electricity with information on the contract
and on the prices and other terms applied to the contract (confirmation). The confirmation
96
must be sent not later than two weeks after the contract has been concluded.
According to the Electricity Market Act Section 25 d Subsection 3, users of electricity
encompassed by the obligation to supply shall have the opportunity to agree with the
supplier that the contract includes not only electricity supply but also the network service
required for electricity transmission. Typically in Finland, if a customer has not switched
suppliers, the electricity supply contract includes also network service. In case the
customer switches suppliers, they have to make two separate contracts: one with a new
supplier and another with the DSO. If the customer already had separated agreements,
they have to make only a new electricity supply contract. An electricity supply contract
can be made between the customer and a new supplier even if someone other than the
customer (for example a spouse) is a contracting party to an electricity network contract
at the same consumption site. However, in the recommendations given by the industry
organization Finnish Energy Industries, it is preferred to have the same person as a
contracting party to both contracts.
Norway
A customer/consumption point needs an agreement/contract both with the supplier and
with the DSO. It is not established by law or regulations that the person who concludes
the contract with the supplier must be the same person who also has concluded the
contract with the DSO. It’s preferable that the same person concludes both contracts, and
in practise this will often be the case. A written contract between the supplier and the
consumer is compulsory, and can be in an electronic format (internet, SMS).
Sweden
The person who concludes the contract with the supplier must be the same person who
also concluded the contract with the DSO. It is the supplier’s responsibility to make sure
that this is the case. This implies that a Swedish customer has a contract with the supplier
as well as a contract with the DSO. A contract can be oral or written.
95
96
Electricity Market Act Section 25 d Subsection 2
Electricity Market Act Section 25 e Subsection 1
82
6.1.2.3 Information to be given before concluding a contract
Denmark
Before the customer enters a contract, there is certain information that should be given to
the customer. According to Order number 380 of 25.05.2005 regarding consumer
protection, § 2 states that the following info should be included:
„
„
„
„
„
„
„
The name and address of the supplier
The nature and characteristics of the goods/services purchased
Time of supply start
Information on how tariffs and fee information can be accessed
The duration of the contract and the terms of renewal
Detailed information about the right of termination and how to terminate the
contract
The period of notice to be given by the consumer to the supply company if the
consumer wishes to end the supply contract
Finland
According to Section 25c of the Electricity Market Act, the distribution network operator
and the supplier shall provide the connecting party and the electricity user before
concluding the contract with information on the principal conditions to be applied to the
contract, as well as on alternatives available with respect to the contents of the contract,
such as pricing alternatives. At minimum, the following information shall be provided:
„
„
„
„
„
„
„
The name and contact information of the service provider
The performance or service offered and its quality, as well as the period of
delivery of the connection in the case of a connection contract
Possible maintenance services related to contract-based performance or services
Methods by which the connecting party or electricity user receives information on
the charges applied to the contract or the related maintenance services
The period of validity of the contract and the conditions to be applied to renewal
and termination of the contract
Damage compensation or other compensations to be applied if the quality of
performance or service does not correspond to the standard agreed upon
information on available procedures of settling disputes and their institution
No information on an electricity network contract or an electricity supply contract needs
to be given if the contract is concluded orally and the electricity user does not want this
information.
The above mentioned information shall be entered in its agreed form in the contract or
confirmation notification.
The information which an electricity user provides to the supplier before concluding a
contract is not regulated in the Electricity Market Act. Naturally, at least the compulsory
contact and billing information should be provided.
83
Norway
97
The regulations on Metering and Settlement state that a written contract between the
supplier and the consumer is compulsory, and that there are also certain requirements
regarding the contents of the contract. An electronic contract is also considered as a
written/signed contract.
In addition to a written contract, the new supplier is required to have certain information
about the customer before sending a message about the supplier switching to the DSO.
The supplier can get information about the metering point ID, metering equipment
number, name, address, and Business Register Number for business/industrial customers
on a web service called NUBIX. The DSOs are obliged, through regulation, to have
relevant customer data available for searches through this site.
Except for these requirements, contractual conditions are not regulated in the Energy Act,
but rather are governed by general civil and contract law. The Office of the Consumer
Ombudsmann and the trade organisation EBL have drawn up a standard contract for
household customers, but suppliers are not obliged to use this contract. Disputes
regarding contracts are settled by Elklagenemda, a council which consists of two
representatives appointed by the Consumer Council, and two representatives appointed by
the electricity utilities. The council is chaired by an independent lawyer.
Sweden
The customer signing a contract with a supplier must be the same person who has the
contract with the DSO; this is stated in the Electricity act. Necessary information about
the customer, such as their metering point ID, must be given to the supplier when signing
the contract.
The supplier has to give relevant information about the contract to the customer, though
which kind of information this should be is not regulated in detail. The price, the length
of the contract, and other important terms of contract should be made clear to the
customer. These stem from general contractual principles and are not regulated in any
detail.
There is extensive regulation regarding the kind of information the supplier should give
98
regarding the price of the product. This is found in marketing law , which is governed by
the Consumer Agency.
6.1.2.4 Publishing contractual terms and fairness of the terms
Denmark
According order number 380 § 2, contractual terms shall be fair and be known to the
consumer prior to their entering into a contract with a supply company.
97
98
Regulation number 301,11.03.1999
Marknadsföringslagen (1995:450).
84
Finland
According to the Section 21 subsection 3, an electricity supplier who has dominant
market power or the largest market share shall have terms of retail sale and prices, and the
criteria underlying these, publicly available to consumers and to the customers
encompassed by the supplier’s obligation to supply. They shall not include any
unreasonable conditions or limitations that would restrict competition in electricity trade.
Norway
99
According to regulations issued pursuant to competition laws , the supplier has to report
prices on certain specified products/contracts to the Norwegian Competition Authority.
The Norwegian Competition Authority then publishes this information on a website.
All contracts must be in writing. Standard contract for household customers drawn up the
Office of the Consumer Ombudsmann and the trade organisation EBL are published on
the websites of EBL and Elklagenemda. Suppliers and DSOs are not obliged to use this
contract.
Sweden
The supplier has to report prices and certain terms of contracts to the regulator. This is
stipulated in the Electricity Act and specified by secondary regulation. The regulator then
publishes this information on a website.
The General terms and conditions are made available to the customer on Swedenergy’s
website. DSOs and suppliers usually inform their customers about these terms by linking
to Swedenergy’s website. If a DSO or a supplier applies specific terms to a contract, these
are given to the customer separately by the DSO and the supplier.
6.1.2.5 Regret period
Denmark
According to the Danish Law of Consumer Agreements, law number 451 of 09/06/2004 §
18 the consumer has a regret period of 14 days when the consumer enters a contract
through distance selling. This is normally the case when a contract is made through the
internet.
Finland
A statutory cancellation period only applies to distance selling. In distance selling (selling
through the telephone, mail order, Internet, television and other devices that can be used
for the conclusion of contracts without the parties being simultaneously present) the
cancellation period is 14 days for the consumer clients. This period is calculated from the
moment the consumer received a contract confirmation. If no other account can be given
for the date the notice has been delivered, a notice sent by mail shall be deemed to have
been delivered to the recipient on the seventh day after the notice has been sent, and an
100
electronically sent notice on the day the notice was sent.
99
100
FOR 1997-12-12 nr 1392: Forskrift om meldeplikt for kraftpriser.
Consumer Protection Act (38/1978) Chapter 6 sections 4 and 15, Chapter 12 section 1 c
85
As stated in the Electricity Market Act, a notification period also applies to contracts that
have not been made in writing. A contract is considered to have been concluded on the
conditions specified in the confirmation, unless the user of electricity notifies the other
contracting party that they do not deem that the confirmation corresponds with the
contract. This notification must be given within the period specified in the confirmation,
101
which must be at least three weeks from the dispatch date of the confirmation. A
notification period is not a right to cancel the contract, but to inform the supplier or DSO
if the terms written in the confirmation do not correspond with what has been agreed
upon.
Norway
102
According to the Consumer Purchases Cancellation Act , when making a contract based
on distance selling (e.g. selling over the telephone and over the Internet), a consumer has
a 14 days regret period to tell the new supplier that they have changed their mind about
changing suppliers. This period is calculated from the moment the consumer has signed
the contract.
Sweden
103
According to the Swedish law on distance selling , a customer who has not made their
contract in person has the possibility to change their/her mind within two weeks of
making the oral contract. There is no regret period if the customer has signed a contract in
person, for example at the supplier’s office.
6.1.2.6 Amending the terms of contract
Denmark
If the supply company wishes to change its contract terms, the consumer must receive
"adequate notice" of the changes. Changes in the price on fixed contracts or changes in
the price calculation for variable prices are seen as changes in the contract terms. With
changed contract terms the consumer has the right to terminate the contract. The supply
company has to inform the consumer of this right when informing them of contract
change(s). The supplier has to give the consumer a personal notification of the total price
change. With a substantial price increase, the consumer has to be notified on the next
coming invoice at the latest.
Finland
The Electricity Market Act includes obligations for distribution network operators and
104
suppliers concerning changing prices and other contractual terms. This regulation is
mandatory for the good of consumers (i.e. households). The distribution network operator
and the supplier may change the prices and other terms of the contract in the following
cases only:
101
Electricity Market Act Section 25 e Subsection 2
LOV 2000-12-21 nr 105: Lov om opplysningsplikt og angrerett m.v. ved fjernsalg og salg
utenfor fast utsalgssted (angrerettloven).
103
Distans- och hemförsäljningslag (2005:59)
104
Electricity Market Act Section 26
102
86
„
„
„
On the grounds specified in the contract, provided that the content of the contract
does not change materially. However, a supplier may not on these grounds
change a fixed term electricity supply contract concluded outside the obligation
to supply
If the change is based on an amendment to legislation, or on a decision made by
the authorities which the distribution system operator or the supplier was not able
to take into account when concluding the contract, or
If there is a special reason for the change, owing to an essential change in the
circumstances, revision of outdated contractual or pricing arrangements, or
implementation of measures necessary for energy saving. However, a supplier
may not on these grounds change a contract concluded outside the obligation to
supply
In addition, the distribution network operator and the supplier shall be entitled to make
minor amendments to contractual terms, provided that these amendments do not affect the
principal content of the contract.
The distribution network operator and the supplier shall provide their contracting party
with information on how the prices or other contractual terms will change, when the
change will come into effect, and which will be the grounds for the change. The
contracting party must be informed whether they have the right to terminate the contract.
If the reason for the change is not a legislative amendment or a decision by the
authorities, the change may come into effect, at the earliest, one month after the
notification of the change has been given.
Norway
The relationship between the supplier and the customer during the supply period is
governed by the actual terms of the contract. The standard contract drawn up by the
Consumer Ombudsmann and EBL contains certain rules about how and when the
customer should be notified about price changes on standard changeable price contracts.
Sweden
There are some specified situations where a supplier may make changes to terms of an
existing contract. These situations are specified in the General terms and conditions.
Regarding changes in price, the supplier has to give the customer notice about changes in
price no later than two weeks before the actual change. This applies to contracts with the
default price.
If there are changes to the General terms and conditions, the customer has to be informed
about these changes. The supplier or the DSO may make changes to the contract if this is
stated in the terms of the contract.
There is no specific regulation regarding the possibility for a customer to end a contract
on the basis of a change in the contractual terms.
87
6.1.2.7 Ending a contract
Denmark
The Danish Electricity Supply Act stipulates that a consumer has the right to choose their
own supplier and to switch suppliers free of charge. If a consumer does not make use of
this choice, they will be supplied by a company with an obligation to supply. If this is the
case, there is no legal requirement for a contract, but the customer may ask for a contract
which shall then be provided by the supply company. This contract shall have the same
(minimum) content as mentioned in section 2.1.3.1.
If the customer has a fixed contract, then the customer is bound to the contract for as long
as is as stated in said contract. If the customer is in a running contract, then it is the
various market regulations that settle how fast it is possible to change to another contract.
Examples of market regulation are the timeframes concerning supplier switching or
moving, etc.
Finland
Electricity contracts may be concluded for an indefinite period or for a fixed term. A
contract that is valid indefinitely expires when it is revoked or terminated. A contract that
is valid for a fixed term expires at the end of the term. If the user of electricity is a
consumer, they may also terminate a fixed-term contract in the same way as an indefinite
contract. However, this does not apply to an electricity supply contract that has been
105
made outside the obligation to supply.
A retailer’s right to terminate the electricity supply contract has been partially limited in
case a retailer has an obligation to supply. A retailer may not terminate an electricity
supply contract when the user of electricity encompassed by the obligation to supply is a
consumer. A retailer may terminate another electricity supply contract encompassed by
the obligation to supply only if a legislative amendment or an essential change in the
106
circumstances makes it unreasonable for them to keep the contract in force.
The notice period for terminating an electricity supply contract is two weeks for the
electricity user and three months for the retailer. The notice period for terminating a
contract outside the obligation to supply is two weeks for the retailer.
If a fixed-term electricity supply contract has been concluded outside the obligation to
supply with a consumer for a period longer than two years, the consumer may terminate
the contract after the period of two years in the same way as they may terminate a
contract that is valid indefinitely.
According to Section 27 k of the Electricity Market Act, a retailer may revoke the
electricity supply contract only in restricted situations: 1) the user of electricity has
materially violated the obligations based on their respective contract, and that this breach
of contract has not been rectified within a reasonable period specified in writing by the
distribution system operator or the retailer, or 2) the supply of electricity to the place of
use referred to in the contract has been cut on the grounds laid down in section 27i (1),
and this power outage has continued for at least one month.
105
106
Electricity Market Act Section 25 f
Electricity Market Act Section 25 i
88
The retailer must send a written notification on the revocation of the contract to the
contracting party. This notification shall state the grounds for termination and the date
when the contract will expire.
There is no regulation on the various means of terminating an electricity contract. Written
or oral terminations may thus be applied depending on the supplier.
There is no specific regulation concerning the consequences or costs for ending electricity
contracts when breaking a fixed-time contract. According to the general terms of
electricity sales, if a fixed-term sale contract expires before the due date for a reason
attributable to the user, the supplier is entitled to collect a reasonable contractual penalty
from the user, as long as the penalty and its amount have separately been agreed upon in
an individual supply contract. Disputes will be dealt with according to applicable contract
laws.
If a fixed-time contract expires when there is no agreement on the continuation of the
contract and the customer will not make a new contract, the supply of electricity will be
disconnected. During the period when no agreement is in force due to passivity of a
customer, no supplier will automatically supply the customer.
Norway
Rules about ending the contract are defined by the contract itself and by contract law. If
the customer has a fixed term contract they/she may have to pay damages to the supplier.
It the supplier ends its supply and the customer has not yet chosen a new supplier, the
DSO as the default supplier/supplier of last resort will supply the customer.
Sweden
Rules about ending the contract are defined by the contract itself and by contract law. The
customer can end the contract at any time, but if the customer has a fixed term contract
the supplier usually has the right to pursue monetary compensation for the remaining
period of the contract. Rules regarding this are found in the General terms and conditions.
Apart from this, the Electricity act states that the customer may end the contract if the
supplier is in serious breach of the contract.
Before a fixed term contract expires, the supplier is obligated to give the customer
information concerning the consequences of the contract’s ending according to the
Electricity Act. This information must be given to the customer at the earliest 90 days and
at the latest 60 days prior to the expiration of the contract. This information should be
sent as a separate message to the customer.
107
According to the Electricity Act, the supplier may end the contract if the customer is in
serious breach of the contract. Lack of payment is considered to be such a serious breach.
The supplier then has to follow a process as defined in the Electricity Act and
complemented by the General terms and conditions. The supplier has to send a reminder
to the customer with the information that the electricity supply can be terminated. At the
same time the supplier has to send a message to the social services office in the county
107
Only customer who is a consumer.
89
where the customer lives with the same information. After having done this the supplier
may cut the supply if the bill remains unpaid.
6.1.3 Identified differences
The table below summarizes the present situation in the Nordic countries regarding
making and ending contracts. In the column labelled Nordic are NordREG’s suggestions
on the need for harmonisation in order to establish a common Nordic end-user market.
Table 11. The present situation in the Nordic countries regarding to making and ending contracts.
Denmark
Finland
Norway
Who can
make a supply
contract?
The customer
makes only a
supply
contract. There
are no separate
network
contacts (only
terms of
reference)
The customer
who has a
contract with
the DSO or
also another
party (e.g.
spouse)
The customer
who has a
contract with
the DSO or
also another
party (e.g.
spouse)
Only the
customer who
has a contract
with the DSO
How a
customer can
make a supply
contract
(oral/written/i
nternet)
Written and
internet but the
consumer has a
right to a
written
contract.
Oral/written/int
ernet
Written (also
internet, SMS)
Oral/written/int
ernet
Not critical to
harmonise
Are there
separate
contracts 108
between
customers and
DSOs/
suppliers?
No DSO
contract
Separate
contracts or
just one
contract which
includes supply
and network
service
Separate
Separate
Not critical to
harmonise.
Is the
information
given to the
customer
before making
a supply
contract
regulated?
Yes
Yes
Yes
No
Should be
harmonised
Is the
information
mentioned in
the supply
contract
regulated?
Yes.
Yes
Yes
No
Should be
harmonised
108
Sweden
Nordic
Not critical, but
should be
harmonised.
Only the
customer who
has a contract
with the DSO
As synonyms of “a contract” should be understood here also “terms of delivery” or “an
agreement”.
90
Minimum rules
from the
directive 110 are
already
harmonized.
How long is
the regret
period and
when it is
applied?
Two weeks
from receiving
a contract if
contract is not
made in person
Two weeks
from receiving
a contract
confirmation if
contract is not
made in person
Two weeks
when entering
a contract 109
through
distance selling
Two weeks
from receiving
a contract if
contract is not
made in person
How long is
the
notification
period 111 ?
Not applicable
Three weeks
Not applicable
Not applicable
Not critical to
harmonise
Is the
publishing of
contractual
terms
regulated?
No
Yes
The contract
must be in
writing
No
Should be
harmonised
Is amending
the terms of
contract
regulated?
Yes
Yes
Depends on the
terms of the
contract
No
Should be
harmonised
Is ending a
contract
regulated?
Yes
Yes
Depends on the
terms of the
contract
No
Should be
harmonised
When a
supply
contract
expires, is the
information
sent to the
consumer
regulated?
Adequate
notice
No
No
Yes, 60 -90
days before
contract ends
Should be
harmonised.
When ending
a supply
contract, is the
timeframe
regulated?
Yes (current
month plus
one month)
Yes
Depends on the
terms of the
contract
No
Not critical to
harmonise
What happens
if a fixed time
supply
contract
expires and
the customer
is passive?
The customer
will be
supplied by the
obligation to
supply
company in the
grid area
Not regulated
Not critical to
harmonise
Practical
national
solutions are
not critical to
harmonise
Not regulated.
The
continuation of
the contract
depends on
what has been
agreed. If no
contract is in
109
Not regulated
Depends on the
contract.
Calculated from the moment the consumer has signed the contract.
Directive 97/7/EC of May 20th, 1997
111
The supplier shall give the customer the possibility to remark whether the written confirmation
of the supply contract does not match up to what has been agreed on. The notification period is
applied only when the contract has been made orally.
110
91
force,
electricity will
be
disconnected.
Is the
maximum
length of a
fixed time
supply
contract with
a consumer
regulated?
If a consumer
wants to
terminate a
fixed time
supply
contract
before it
expires, is this
process
regulated?
No
No, but if a
contract period
is longer than
two years, a
consumer has a
right to
terminate the
contract after
two years
No
No
Not critical to
harmonise
No
No
No
No
Not critical to
harmonise
6.1.4 Conclusions and suggestions
NordREG believes that the person making the contract should be the same person who
has the contract with the DSO. This solution leaves less room for errors when making
supply contracts. It is important for the functioning of the market that the switching
process be carried out without problems, particularly when moving towards a larger
market with more customers to interact with in the future harmonised Nordic electricity
market. A well functioning switching process could also improve customers’ confidence
in the electricity market. It will be the supplier who has the responsibility to check that
the same person making the supply contract also has a valid network contract.
Information given by a supplier to a customer either before making the contract, or stated
in the actual contract, needs to be consistent. A customer buying electricity from a
supplier should receive the same information regardless of from which country the
supplier is. On the other hand the supplier should have to give the same information to a
customer regardless of in which Nordic country the customer lives. Thus this information
needs to be harmonised.
In some Nordic countries, the supplier’s publication of contractual terms, amending of the
contractual terms, and the ending of the contract is regulated. NordREG believes that
there is a need for Nordic solutions for these processes in order to facilitate the supplier’s
action on the Nordic market. Furthermore, customers should have the same level of
protection in each Nordic country.
Prior to the expiration of a fixed-term supply contract, it is important that the customer
gets information regarding the consequences of this. The customer needs to know how
and when to act, and who to contact. NordREG suggests that the supplier should notify
the customer on the expiration of the fixed-term contract. This could enhance customer
activity in the market. The timeframe for the notification needs to be harmonised.
92
NordREG suggests that the supplier has to send the notification to the customer at the
latest 6 weeks before the fixed-term contract expires. On the other hand, it is important to
the customer that they get this information close to the expiration date. Therefore
NordREG suggests that maximum time for sending the notification would be 3 months
before the expiration date of the fixed-term contract.
6.2 Billing
6.2.1 Introduction
Billing forms a key process in which the supplier and the DSO are in contact with the
customer. Electricity bills also give valuable information to end-users, and therefore
which information the suppliers and DSOs provide with the bills is important. Issues
which cause problems between the end users and the suppliers/DSOs are usually related
to the billing.
6.2.2 Present situation in the Nordic countries
6.2.2.1 Minimum content of a bill
Denmark
According to the Danish Electricity Supply Act and secondary legislation (executive
order number 486 of 29.05.2007), consumers are entitled to receive an annual invoice for
the transportation and supply of electricity.
Additionally, consumers are entitled to be invoiced annually for the supply of electricity
which should basically provide the same information as the transportation invoice with
the exception of the transportation costs and subscription fees.
All invoices accounting for the transportation/supply of electricity shall basically provide
the same information as indicated in section 2.2.1.1, with the exception of the actual
transportation costs and total consumption data. Normally, consumers pay for their
electricity three months in advance and thus receive quarterly invoices for the account.
There is no legal distinction between paper billing and electronic billing. Most electricity
companies warrant electronic billing through the Danish public e-boks platform for
electronic communication between public authorities/pension funds/employers/supply
companies, etc., and the Danish citizens.
Finland
In invoicing, the distribution system operator and the supplier must give their customers
an itemised account of how the price is formed. Regulation on invoicing is laid down in a
Regulation given by the Energy Market Authority (367/441/2006). This Regulation went
into effect on 1 January, 2008. DSOs and suppliers must have complied with it starting
from 1 January, 2009.
In Section 2 of the Regulation, three types of invoices are defined and described: readingbased invoice, estimated invoice, and balancing invoice.
93
According to Section 4 of the Regulation, at least the following items must be specified in
the electricity bill:
„
„
„
„
„
„
„
„
components of tariffs
number of units invoiced
unit price of various price components
sum charged for each price component
total sums of network services and energy price
various taxes and other governmental fees
total sum of the bill
estimated annual cost of electric energy and/or transmission of electricity and/or
average price per kWh
Additionally, there are separate, more detailed provisions for each of the above
mentioned invoice types, about which the customer must be informed (the Sections 5, 6
and 7 of the Regulation).
Suppliers must specify in or with the bills the contribution of each energy source to
supplier’s overall fuel mix over the preceding year. Bills must also include references to
existing reference sources where information on the environmental impact (in terms of
CO2 emissions and radioactive waste resulting from the electricity produced by the
112
supplier’s overall fuel mix of the preceding year) is publicly available. More precise
provisions are in the Governmental Decree concerning notification of the origin of
electricity (233/2005).
Norway
According to Regulations on Metering and Settlement, the DSO has to follow certain
rules when billing a household customer. When electricity and transport is invoiced on
the same bill, the same rules are imposed to the supplier. The DSO has the obligation to
bill household customers with a consumption above 8000 kWh/year at least four times a
year based on their actual consumption. Furthermore, the invoice must be easy to
understand and contain a graphical diagram showing the consumption this year compared
to the consumption last year for each billing period.
For all household customers, the information needed to change suppliers should be stated
on the invoice in a clear manner. Furthermore, the name of the supplier and the network
company must be stated on the invoice. The bill must also contain particulars about who
to call to get free information about energy savings.
For all customers, suppliers shall give a reference to NVE’s website, where the
contribution of each energy source to the overall fuel mix over the preceding year is
specified. Such information shall be given in all promotional materials and with bills
according to the regulations on metering and settlement. The decision is according to
demands in directive 2003/54/ EC on electricity.
In addition to the regulations in the energy legislation, the information on the energy bills
113
is regulated by secondary legislation to the Marketing Practises Act . The Regulations
112
113
Act concerning verification and notification of origin of electricity (1129/2003), Section 11
FOR 1996-06-07 nr 666: Forskrift om prisopplysning ved transport og salg av elektrisk kraft
94
on Price Information on the transport and sales of electrical energy state how
transportation, supply, and taxes should be specified on the invoice:
„
„
„
„
„
„
The grid tariff in øre/kWh taxes included
The energy price in øre/kWh taxes included
Fixed amount related to transportation, taxes included
Fixed amount related to electrical energy, taxes included
Prices paid by the consumer in the current period
In case of credit to the account, the supplier must inform the customer about the
yearly consumption upon which the bill is based
If the supplier is not using an adjusted system load profile when distributing the
consumption, the customer must be informed about the basis used for distribution
Sweden
According to the Electricity Act, a supplier must specify in or with the bill, as well as in
promotional materials made available to final customers, the contribution of each energy
source to the overall fuel mix of the electricity supplied the preceding year. The supplier
must also provide information about the environmental impact in terms of CO2 emissions
and the radioactive waste resulting from electricity production from different energy
114
sources.
Apart from the aforementioned, there is no regulation on which information should be
specified on an invoice.
The industry has agreed on recommendations regarding information on the invoice.
Swedenergy recommends that its members use a standardised bill. Among these
recommendations are:
„
„
„
metering point ID,
network area ID or profile settlement area
customer ID
From the first of July, 2009, the DSO has to give the customer the following information,
115
at the latest when sending a bill.
„
„
„
Meter value (kWh) for the actual month
Yearly consumption, according to chapter 3 § 5 STEMFS 2007:5
Consumption statistics per month expressed in kWh and as a percentage of the
yearly consumption for the last thirteen months
6.2.2.2 Invoicing periods and the number of bills
Denmark
According to the Danish Electricity Supply Act and secondary legislation (executive
order number 486 of 29.05.2007), consumers are entitled to receive an annual invoice for
the transportation and supply of electricity.
114
115
Electricity Act (1997:857), chapter 8 § 12.
Mätföreskrifter 2007:5, chapter 6 § 8
95
Additionally, consumers are entitled to be invoiced annually for the supply of electricity,
which should basically provide the same information as the transportation invoice with
the exception of the transportation costs and subscription fees.
All invoices accounting for the transportation/supply of electricity shall basically provide
the same information as indicated in section 2.2.1.1, with the exception of the actual
transportation costs and total consumption data. Normally, consumers will pay for their
electricity three months in advance, and thus receive invoices quarterly.
There is no legal distinction between paper billing and electronic billing. Most electricity
companies warrant electronic billing through the Danish public e-books platform for
electronic communication between public authorities/pension funds/employers/supply
companies, etc., and the Danish citizens.
Finland
There are no regulations in the electricity market legislation regarding the invoicing
period or the annual number of invoices. These issues can be agreed upon by contracting
parties. However, the general terms of electricity sales include a term concerning the
invoicing period:
Unless there are provisions to the contrary in the sales contract, invoicing shall be
based on the estimated electricity consumption of the user. Estimated invoicing
shall be balanced at least once a year on the basis of a meter reading that has been
either reported or acquired by means of a reading (reading-based or balancing
bill). Invoicing may also be based on an estimate of the customer’s previous
electricity consumption, if the distribution system operator or vendor is unable to
determine the meter reading. (According to the terms, this article is not applied to
the invoicing of fixed supply.)
The possible costs of the different types of bill are not regulated as such in the electricity
market legislation. However, there should be no extra charge for a paper bill, for
example.
Norway
Invoicing periods and the number of bills is only regulated when electricity is invoiced on
the same bill as transportation.
There is no legal distinction between paper billing and electronic billing. Normally,
consumers will get reduced fees when choosing electronic invoicing.
Sweden
According to the General Terms and conditions, the bill may be preliminary and based on
expected consumption. This consumption shall be based on the customer’s consumption
from the previous year. The DSO has to do a meter reading every year. This meter
reading is compared to the consumption that the customer has paid for. If there is a
difference between the expected consumption and the actual consumption, the customer
is either charged or compensated for the difference.
The customer has a wide range of payment methods. Most suppliers offer the customer
different alternatives of the number of bills as well as what kind of bills. Most commonly
96
116
the suppliers offer both traditional bills that are sent by mail and electronic billing . The
majority of suppliers do not charge extra for paper bills. There are no specific rules
regarding this in the Electricity Act.
6.2.2.3 Combined bills
Denmark
The above stated legal requirements for billing apply similarly where the supplier makes
use of their legal right to issue a single invoice covering both the transportation and
supply of electricity (co-billing). Every supplier has this right according to non-statutory
market guidelines. It takes more administrative resources to use co-billing, so very few
companies have used this right.
There is no legal distinction between paper billing and electronic billing. Most electricity
companies warrant electronic billing through the Danish public e-boks platform for
electronic communication between public authorities/pension funds/employers/supply
companies, etc., and the Danish citizens.
Finland
Network service and supply can be invoiced at the same time or with separate invoices.
The most usual situation is that customers who have not switched suppliers receive only
one bill including both network service and supply, and customers who have switched
suppliers receive separate bills. There are also some suppliers that voluntarily offer to
take care of billing as a whole, if this is accepted by the distribution system operator.
Typically bills are sent by the mail, which is free of charge for consumers. It is also
possible to agree upon electronic billing.
Norway
According to the neutrality rules given in the regulations on Metering and Settlement, the
DSO must act in a neutral manner. If the DSO is billing for both network services and
energy supply on the same invoice on behalf of one certain supplier, it has to offer the
same service to any other supplier. Equally, the DSO must let any supplier bill their
network services if one certain supplier is allowed to bill on their behalf. Except for a
few cases, there is in practise only the integrated supplier or the supplier within the same
group of companies who are invoicing together with the DSO.
Sweden
The consumer usually gets two different invoices, one from the supplier regarding energy
consumption and one from the DSO concerning distribution. The supplier and the DSO
can, however, send an integrated invoice; this usually occurs when the supplier and the
DSO have the same owner.
116
Autogiro and E-faktura.
97
6.2.3
Identified differences
The table below summarizes the present situation in the Nordic countries with regards to
billing. In the column labelled Nordic are NordREG’s suggestions on the need for
harmonisation in order to establish a common Nordic end-user market.
Table 12. The present situation in the Nordic countries regarding billing.
Denmark
Finland
Norway
Sweden
Nordic
Is the
minimum
information
given in the
bill regulated?
Yes
Yes
Yes
No
Not critical, but
should be
harmonised
Is the number
of bills
regulated?
Yes
No
Yes 117
No
Not critical to
harmonise
How often
does a
supplier/DSO
have to send a
bill to the
customer?
At least
annually
Not regulated.
DSO: Every
third month
Not regulated
Not critical to
harmonise
DSO: Every
third month to
household
customers
Not regulated 118
Not critical to
harmonise
How often
does the
supplier/DSO
have to send a
bill to the
customer
based on
actual
consumption?
At least
annually
At least once a
year (Terms of
Electricity
Sales, SME 99)
Are combined
bills 119
possible?
Yes
Yes
Yes
Yes
Not critical to
harmonise
Are the
combined bills
regulated?
Yes
No
Yes
No
Not critical to
harmonise
Which party
sends the
combined bill
to the
customer?
Supplier
Not regulated,
can be supplier
or DSO
Not regulated;
DSO or
supplier
Not regulated
but usually the
supplier
Not critical to
harmonise
6.2.4
Not regulated.
Conclusions and suggestions
For suppliers, it would be easier and more efficient if the minimum information given in
the bill required by the regulation were similar and harmonised in all Nordic countries.
NordREG finds that it is not critical to harmonise the rules for this, but that harmonised
117
Only for combined bills and bills for transportation.
In the General terms and conditions from 1st July 2009
119
The customer will get only one bill including both charges of the supplier and the DSO.
118
98
rules would benefit the Nordic market. Harmonised rules would lower the entry barriers
for suppliers who are active in a market where the minimum information in a bill is
regulated and then wants to enter another market that has different requirements on what
information should be provided in the bill. Harmonised billing rules would lower the
suppliers’ costs for making changes in invoicing systems, etc., when entering a new
market. However, since the issue of minimum information in energy bills is also
discussed at the EU level, NordREG suggests that the development at the EU level should
be taken into account before giving any suggestions for a harmonised Nordic model.
The dual contact point model itself implies that the customer will get by default separate
bills from the supplier and from the DSO. However, combined bills will still be possible.
NordREG does not find it critical for the common Nordic end-user market to harmonise
regulation regarding combined bills.
6.3 Supplier switching
6.3.1 Introduction
The differences in national rules and practises regarding supplier switching has been
120
identified as a significant regulatory obstacle for establishing a truly common Nordic
retail market with a free choice of supplier. Even if the supplier switching models of the
various Nordic countries do not vary a lot, some relevant differences still exist. These
differences may result in unnecessary delays in switching processes, and hamper the
suppliers entering other than domestic electricity markets.
Establishing a truly common Nordic retail market with a free choice of supplier requires
that the switching processes and rules should be harmonised between Nordic countries at
least to some extent.
6.3.2 Conclusions and suggestions
121
NordREG published in 2008 a suggestion on a harmonised supplier switching model .
In the report NordREG mapped the present supplier switching processes in the Nordic
countries (excluding Iceland) and, based on the detected differences, has proposed a
harmonised switching model for the countries. The focus has been on residential and
small business customers.
The following figure describes the suggested harmonised supplier switching model in
message sending.
120
NordREG: The integrated Nordic End-User Electricity Market – Feasibility and identified
obstacles; NordREG Report 2/2006 (2006)
121
NordREG: Harmonised supplier switching model; NordREG Report 2/2008 (2008)
99
New supplier
Message on a switch
DSO
MAX 3 WORKING DAYS AFTER NOTIFICATION
Possible cancellation of switch
Old supplier
WITHOUT DELAY AND MIN 14 DAYS BEFORE SWITCH
Confirmation of switch
MAX 3 WORKING DAYS BEFORE SWITCH
MIN 4 WORKING DAYS BEFORE SWITCH
MAX 10 WORKING DAYS AFTER SWITCH
Meter reading values
MAX 10 WORKING DAYS AFTER SWITCH
Figure 5. Harmonised switching model in message sending
Making a new contract and timeframe for supplier switching
In the report, NordREG suggests that the timetable for the switching procedure should be
as short as possible and that the switch could take place any day of the week. NordREG
also believes that 14 days should be the maximum time from making a contract to the
switch actually taking place. To make the suggested timetable possible, it is necessary to
establish which kinds of information should be given to the DSO when initiating the
switch. This information should be determined through regulation.
To initiate the switch, the residential or small business customers have to be in contact
only with the new chosen supplier. That the person making the supply contract be the
same person who has the contract with the DSO is not critical for harmonisation at this
point. NordREG recognizes, however, the advantage of this regulation, and recommends
that this should be harmonised at some point in the future.
It is important that each country has an arrangement for making relevant customer data
about their national customers available, and that this information is easily accessible to
every Nordic supplier inexpensively.
100
Data exchange between the market participants
NordREG suggests that there should be only one data format in use, but it is initially up
to the market actors to decide upon the appropriate format. NordREG also recommends
that to ensure the compatibility of data systems and messages there should be established
testing systems for sending and receiving messages in the common format preferably
between the Nordic countries, or at least at the national level at the beginning.
NordREG suggests that a new supplier should send the message about the supplier switch
to the DSO as soon as a new contract has been made and at minimum 14 days before the
planned start of supply. The DSO’s time limit for sending a confirmation message
containing customer data to the new supplier should be no more than three working days
allowing for, however, some national exceptions during a transition period. The time
limit should be calculated from the moment the DSO has received the message about the
supplier switch from the new supplier. With regards to the DSO’s message containing
customer data to the old supplier, it should be sent no later than three working days before
the announced switch date. NordREG also suggests that a cancellation message from the
new supplier to the DSO should be employed in all Nordic countries, and that it should be
sent no later than four working days before the announced switch date.
There should be a common minimum set of information points that the messages between
the suppliers and the DSO have to contain to be able to identify the customer, the
contract, and the installation address. There should be as little room for error as possible.
Metering issues
NordREG recommends that a common message format for sending meter reading data
should be decided upon within the industry. The meter reading itself should be done on
the day of the switch because it gives the most correct consumption information, but may
also, in some cases, be read ± 5 working days from the switch. Estimated metering values
should only be allowed in very limited situations. The deadline for sending meter reading
from the DSO to the old and new suppliers should be done, at the latest, 10 working days
after the switch.
There should be no financial obstacles when it comes to supplier switching and therefore
also meter reading. As a result, there should be no meter reading fees.
In most of the Nordic countries, installation of AMRs as well as the objective for more
accurate meter readings is encouraged.
Implementation
122
In order to implement the suggested harmonised supplier switching model, more or fewer
changes to regulations in each country will be required. For market participants, this
mainly requires changes to IT systems and procedures, thus the incurred costs will vary
depending on the market participant. The market actors should also agree on technical
issues such as data formats.
122
Since the publication of NordREG’s report on a harmonised supplier switching model (2/2008),
Finland has implemented some changes according to NordREG’s suggestions.
101
It is important for market participants that the harmonised regulatory framework exists
before they can make changes to their IT systems. This also will reduce the costs of
implementation.
6.4 Moving
6.4.1 Introduction
The next most important business process in the retail market is moving. A move could
be split into two separate business processes: a move out of a consumption place and a
move into a consumption place. Normally both business processes follow each other: first
a customer moves out of a consumption place and then they move into a new
consumption place. When a customer is moving out of a consumption place and moving
into another, they will either switch suppliers at the same time, or they keep the same
supplier.
Moving out and moving in requires an information exchange between the suppliers and
DSOs. It is also important to have clear rules as to which market actor the customer has to
be in contact with to initiate the moving process.
In this chapter will be discussed the regulation of moving in and moving out processes in
the Nordic countries. NordREG has analyzed these processes as separate basic processes,
and has not tried to put them into one process.
6.4.2 Present situation in the Nordic countries
Denmark
A move is either seen as moving out or moving in with regards to the same metering
point. In a normal move there are two parties – a party moving out and a party moving in.
A customer has the right to switch suppliers with regards to a move. This means that the
normal Danish supplier switching time frame (which is one month always to the first in a
month) is abandoned. A “move in” should be notified at least 3 working days before
taking over the metering point. A “move out” should be notified at least 3 working days
before moving out. A move can be seen as a supplier switch where there is at the same
time a change of ownership with regards to the metering point. A move can be carried out
in various ways; there are seven main situations.
The first three situations are when the person moving out declares their move:
„
„
„
Before the given deadline – The person moving out and the person moving in
have the same supplier.
Before the given deadline – The person moving out and the person moving in
have different suppliers.
After the given deadline.
The next three situations are when the person moving in declares their move:
„
Before the given deadline – The person moving out and the person moving in
have the same supplier.
102
„
„
Before the given deadline – The person moving out and the person moving in
have different suppliers.
After the given deadline.
The move is not notified by the person moving out or the person moving in.
„
After the given deadline.
These above mentioned seven situations are the main situations for a move in Denmark.
For each of these situations, there are some common rules:
„
„
„
With the opportunity to choose a new supplier, it follows that the chosen supplier
of the person moving in has to report a move with regards to the metering point at
least 3 working days before the deadline. It thereby follows that the person
moving out is liable for the consumption until 3 working days after the
notification of the move.
If the deadline for notification of the move is not kept (examples 3, 6 and 7), then
the new customer loses the right to the shorter deadlines that are valid with regard
to moving. Under these circumstances the customer can choose a new supplier
after the normal deadlines which are valid under the common supplier switching
scheme in Denmark.
If the DSO does not receive information about the newcomers supplier before the
deadline (3 working days) with regards to a move, then the DSO will pass on the
metering point to the local supplier under the obligation to supply scheme in that
given grid area. The alternative is to close the metering point because there no
longer is a legal person behind it. If the move is not notified before the deadline,
the move can under certain circumstances be approved anyway if:
„
The persons moving out and in agree about the time for the move and that the
supplier remains the same.
„
The persons moving out and in, the two suppliers and the DSO can agree on
the deadline.
From the seven situations mentioned above, a main model will be described more in
detail. This model can be divided into two processes.
„
„
The person moving out notifies the supplier about the move within the deadline.
The person moving in notifies the supplier about the move within the deadline.
Information exchange: moving out
The first process that will be described is when the person moving out notifies either the
DSO or the supplier about the move to within the deadlines. There have not been
introduced Ediel-messages as notifications of the move because the DSO manually has to
clarify who is taking over the metering point. This means that the customer or the
supplier of the customer has to notify the DSO. If the DSO does not receive this
notification before the three-day deadline, then the metering point will be sent to the
supplier under the obligation to supply scheme. If the DSO does not receive information
about the person who has moved in before the deadline, the DSO can do the following
things:
103
In rented residences the DSO inserts the owner of the residence as a new customer to the
supplier under the obligation to supply scheme.
In owned residences the DSO can shut down the metering point, if there is no new
customer inserted up till the deadline.
The DSO can insert itself as a temporarily customer until information about a newcomer
is received.
The first process where the person moving out notifies the appropriate authorities about
their move before the deadline is now shown in this figure, and is further described
below:
Old
customer
Old
supplier
DSO
New
supplier
New
customer
1: Information about
moving
2: Information about
moving
3: Confirmation,
choice of
supplier
4: Meter reading
4: Meter reading
5: Measured data
With the final
specification
6: Final specification
7: Final specification
Figure 6. Information exchange when a customer is moving out (Denmark).
The old customer or the customer’s supplier informs the DSO of when a move is
supposed to happen at a certain date.
„
The DSO sends a message to the old supplier telling them to stop the supply.
(Ediel-message 5b).
„
The DSO requests of the old customer to read the meter on the day of the move.
The old customer returns the metered values to the DSO. (Only template
customers).
„
The DSO then sends the consumption data to the old supplier so that the old
supplier can settle their accounts. (Only template customers). (Ediel-message 7).
The old customer receives their final bill from the DSO and the old supplier.
„
All these actions are made up by market rules which are mainly decided in cooperation
with the industry. The regulator (DERA) is notified of the rules by the TSO.
104
Information exchange: moving in
The second process where the person moving in notifies the appropriate authorities about
their move before the deadline is now shown in the next figure, and is further described
below:
Old
customer
Old
supplier
DSO
New
supplier
New
customer
1: Information about
moving
2: Request
concerning
supplier choice
5: Confirmation of
supplier choice
”moving in”
3: Contract about
supplier choice
3: Contract about
supplier choice
4: Announcement
concerning
supplier choice
”moving in”
6: Confirmation of
supplier choice
”moving out”
7: Notification about
the
supplier relationship
8: Contract about
grid utilization
9: Meter reading
9: Meter reading
11: Final specification
10: Measured data
with the final
specification
12: Final specification
Figure 7. Information exchange when a customer is moving in.
„
„
„
„
„
„
„
„
The new customer informs the DSO or the new supplier when there is supposed
to be a move regarding a metering point at a given date.
If there is no information from the new customer about their choice of supplier,
the DSO will ask the new customer to enter a contract with a supplier for the
future supply.
The new customer enters a contract with a chosen supplier for future supply for
the given metering point.
The new supplier informs the DSO of the supplier switch. The DSO replies with
an acceptance including customer data within two hours. (Ediel message 4a and
5a).
The DSO sends a notification to the old supplier to stop the supply. (Ediel
message 5b).
The new customer receives a message from the DSO about the choice of supplier
for the metering point after the move has been made.
The DSO makes an agreement with the new customer about the use of the grid
with regards to the new metering point.
The DSO requests that the old customer to read the meter on the moving date.
The old customer returns the metered values to the DSO (Only template
customers).
105
„
„
The DSO then sends the consumption data to the old supplier so that the old
supplier can settle their accounts (Only template customers) (Ediel-message 7).
The old customer receives their final bill from the DSO and the old supplier.
As read above there are not many fixed deadlines for the various actions taken regarding
a move. The only deadlines that are specified in the market regulation regarding moving
are that:
„
„
„
The person moving out has to notify the authorities of the move at least three
working days before the date of the move. (Or else they will be liable to pay the
electricity bill after the move.)
The person moving in has to notify the authorities of the move at least three
working days before they moving in (or else they will lose the right to change
suppliers during the move).
As in the supplier switching rules, there is also the common rule that the DSO has
5 weeks to send the final meter reading to the old suppler (only template
customers).
These market rules are not statutory in law as such, but are made mainly by the Danish
TSO Energinet.dk in cooperation with all the stakeholders of the Danish electricity
market. All DSO’s must follow these market rules. The rules are notified to the regulator
by the TSO.
All other deadlines are subject to the rules regarding moving which are decided by each
DSO.
Meter reading concerning moving
According to the recommendations made by the industry, meter reading is obligatory
during the moving process at the consumption place into which a customer is moving,
and at the consumption place out of which a customer is moving. It is not acceptable to
use estimated values in this situation.
Finland
In Finland there are no comprehensive legally binding rules or regulations for the
processes regarding situations where a customer moves from one consumption place to
another. However, there is a regulation for the timetable of the supplier’s notifications to
the unit that is responsible for balance determination (usually the network operator), as
well as the network operator pertaining to the start and end of supply.
The industry association has, however, made recommendations for information exchange
and meter reading during the moving process. These recommendations are not legally
binding, but they are still explained below as they describe the current practises widely
applied in Finland.
It has been recommended that the moving process should be performed by the DSOs and
suppliers without any delays after being notified about the move by the customer. It has
also been recommended that the customer needs to notify only the supplier to initiate the
moving process. The customer may, if they likes, notify the DSO in order to initiate the
moving process, but it is not recommended.
106
There are no specifications for customers as to how many days before moving in or out
they should notify the supplier. For example, a two week notification period required for
a normal suppler switching process is not required if there is a move at the same time.
However, the customer has to notify supplier about the move in advance, and such
notifications in which the customer wishes that the move should be registered
subsequently are not accepted. In addition, the customer has to take into account that if
they want to end their valid rolling contract before the move out, the normal notice period
of two weeks for terminating the contract (as stated in the Electricity Market Act) may be
applied.
Depending on the agreed upon contractual terms, the current supply contract may be
either terminated or continued when a customer moves from one consumption place to
another.
Information exchange: moving out
The general contractual terms and conditions have sections regarding moving out.
Contractual terms may, however, be agreed otherwise. A customer who moves out must
terminate both their agreement with the supplier and the DSO, otherwise the payment
liability will remain. According to the recommendations, it should is possible that the
customer notifies only the supplier about the move and the supplier puts the notification
forward to the DSO.
The next figure shows the information exchange when a customer is moving out of the
consumption place.
Old
customer
Old
Supplier
DSO
3b Receives the
notification
2a: Receives the
notification and puts
it forward
5: Receives a
termination
information
7: Receives a
notification about the
termination of the
delivery
New
customer
2b: Receives the
notification and
notifies the supplier
1b: Notifies about
the move out
1a: Notifies about
the move out
New
supplier
Z05
[14]
Z08
[14]
Z11
[3]
+10
3a: Receives the
notification
4:Notifies the meter
reading and
terminates the
network contract
6: Notifies the
customer about the
termination of the
electricity delivery
Figure 8. Information exchange when a customer is moving out. Time limitations in days; (-) before
beginning or termination of the delivery and (+) after the beginning or termination.
107
There is a two week notice period for a customer to terminate a rolling contract regulated
123
in the Electricity Market Act. Furthermore, according to the regulation , a supplier has
to notify the balance settler and the DSO at the earliest three months and at the latest 14
days in advance of the end of supply. This notification must include a consumption place
ID, a contract ID, and the information about the ending date of supply.
The process has the following steps that are based on the industry’s recommendations.
1. The customer announces their move out. It is recommended that the customer
notifies only their supplier about the move out their (1a), but the customer may
notify the DSO (1b).
2. (2a) The supplier receives the notification from the customer and puts it forward
to the DSO by sending message Z08 [14]. This message should be sent without
delay.
(2b) The DSO receives the notification from the customer. The DSO notifies the
supplier about the move out by sending a Z05 [14] message. This message should
be sent without delay.
3. (3a) The DSO receives the notification (Z08 [14] message) from the supplier.
(3b) The supplier receives the notification (Z05 [14] message) from the DSO.
4. The DSO informs the supplier about meter reading and the termination date by
sending a Z11 [3] message to the supplier and ends the network contract between
the DSO and the customer. This message should be sent within 10 days after the
move out.
5. The supplier receives termination information.
6. The supplier notifies the customer about the termination of the delivery to the
consumption place.
Information exchange: moving in
Moving in can take place at any time during the month and the customer will then have
the right to commence the electricity supply. The customer must have agreements with
both the electricity supplier and the DSO for the new consumption place.
The next figure shows the information exchange when a customer is moving into a new
consumption place.
123
The Ministry of Employment and the Economy’s decree on the information exchange in the
electricity sales
108
Old
customer
Old
supplier
DSO
(in the
consumption
point)
5: Receives a
notification
Z03
[14]
New
supplier
New
customer
2: Identifies
customer and
receives the
customer
information
1: Makes a contract
with a supplier for
the new
consumption point
3: Finds out the
consumption point
ID (from the
register)
4: Notifies the
beginning of the
supply
6: Confirms the
beginning of the
delivery and the
beginning date of it
Z04
[1]
7: Receives a
confirmation about
the beginning of the
delivery
8: Makes a new
network contract
and notifies it
10: Notifies meter
reading at the
beginning date and
the estimation of the
annual consumption
9: Receives a
confirmation about
the network contract
Z11
[1]
+10
11: Receives the
meter reading at the
beginning date and
the estimation of the
annual consumption
12: Receives a
notification about
the beginning of the
delivery
Figure 9. Information exchange when a customer is moving in. Time limitations in days; (-) before
beginning or termination of the delivery and (+) after the beginning or termination.
124
According to the regulation , a supplier has to notify the balance settler(s) and the DSO
at the earliest three months, and at the latest 14 days in advance of the start of supply.
This notification must include a consumption place ID, a contract ID, and the information
about the starting date of supply. These notifications must be made at the latest 30 days in
advance if the meter has to be changed. However, in the event of a customer moving to a
different house, the deadlines for notification may be deviated from in order to start the
supply more quickly.
The process has the following steps, which are based on the industry’s recommendations.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Before the move in the customer makes a supply contract with the supplier.
The supplier identifies the customer and receives the customer information.
The supplier finds the consumption point ID from the register.
The supplier notifies the DSO about the move in and the beginning of supply to
the consumption point by sending a Z03 [14] message to the DSO. This message
should be sent without delay.
The DSO receives the notification (Z03 [14] message) from the new supplier.
The DSO confirms the beginning of delivery as well as the starting date by
sending a Z04[1] message to the supplier
The supplier receives the confirmation.
The DSO makes a network contract with the customer (if the network contract
has not been included in the supply contract).
The customer receives the confirmation about the network contract.
124
The Ministry of Employment and the Economy’s decree on the information exchange in the
electricity sales
109
10. The DSO informs the new supplier about meter reading at the moving in date and
the estimation of the customer’s annual consumption by sending a Z11 [1]
message to the supplier. This message should be sent within 10 days after the
move in.
11. The supplier receives the meter reading from the moving in date and the
estimation of the customer’s annual consumption.
12. The supplier notifies the customer about the beginning of delivery.
In this process it is presumed, that the old customer at the consumption place had already
terminated their supply and network contracts. According to the recommendations by the
industry association, if there still are contracts between the old customer and the DSO and
the old supplier when the new customer declares their move in, the DSO notifies the old
supplier about this (by sending a Z05[14] message) and terminates the network contract
between the old customer and the DSO. After receiving a Z05 [14] message from the
DSO, the old supplier shall also terminate the supply contract with the old customer.
Moving in and supplier switching
A special case in the moving process is when a customer switches suppliers during the
move. According to the recommendations, in this situation a customer needs to contact
only the supplier of the consumption place into which they is moving (new supplier) for
making new supply and network contracts and terminating the present contracts made for
the consumption place from where they are moving out. In this process the new supplier
notifies the DSO of the consumption place from where the customer is moving out (old
DSO) about the termination of the present supply and network contracts by sending a Z08
[14] message. The old DSO notifies the present supplier (old supplier) about the
termination of the supply contract by sending a Z05 [14] message. The old DSO also
confirms the termination date and informs the old supplier of the meter reading by
sending a Z11 [3] message to the old supplier. Both the old DSO and the old supplier
terminate their contracts based on these notifications and send the final bills to the
125
customer. The detailed regulation on the information exchange in the event of supplier
switching applies also to moving situations.
Meter reading concerning moving
According to the recommendations, meter readings are obligatory during the moving
process at the consumption place from which a customer is moving and at the
consumption place into which a customer is moving. It is not acceptable to use estimated
values.
The DSO is responsible for acquiring the actual meter values. The customer may read
their meter by themselves if it is possible and this meter reading is recommended unless
there are doubts that it is not correct. If the meter reading delivered by the customer is not
to be used or if the customer is not able to read the meter by themselves, the DSO shall
read the meter within five working days of moving in/out. Even if the meter is not read on
the day when a customer is moving in/out, the actual reading should be used as the
125
The Ministry of Employment and the Economy’s decree on the information exchange in the
electricity sales
110
reading of the moving day. If the consumption place is equipped with a remotely readable
meter and the meter reading from the moving day is available, this value should be used.
If electricity has been switched off from the consumption place into which a customer is
moving, the DSO shall switch electricity on at the latest when the meter is read.
Norway
According to the regulations on Metering and Settlement, in cases of moving the supplier
can notify the DSO about a new consumer taking over a metering point on behalf of the
consumer. The supplier then sends an Ediel-message about the start of supply. To initiate
a moving process, a consumer only needs to contact the supplier they choose for the
consumption place they are moving into. When holding a power of attorney from the
consumer, the supplier may enter into a network contract on their behalf.
In cases of moving the DSO must accept the date for the supplier switch if the message is
sent within 15 working days after the consumer takes over the metering point/moves in.
If the consumer does not have a contract with a supplier within 15 days of taking over the
metering point/moving in, the consumer will be supplied by the DSO which has the
obligation to supply.
Whether the old supply contract made for the metering point/consumption place from
where a customer is moving could be terminated or not depends on the conditions in the
contract. This is not regulated within the energy legislation.
Information exchange: moving out
The next figure shows the information exchange when a customer is just moving out of
the consumption place.
Old
customer
Old
supplier
1: The customer
notifies the
DSO/terminates the
contract according to
the terms
1: The customer
terminates the
contract according
to the terms
DSO
2: Receives a
notification
4: Receives
termination
information and
meter reading.
3: Collects meter
reading if not
received from
customer or
supplier
2: Receives a
notification
(Receives a
notification)
Figure 10. Information exchange when a customer is moving out.
111
New
supplier
New
customer
This process is not regulated within the energy legislation, but is governed by general
civil and contractual law. Normally the process has the following steps:
1.
2.
3.
The customer terminates their contract with the supplier according to the
terms
Customer terminates their contract with the DSO according to the terms.
The customer notifies the DSO directly, or the supplier may notify the DSO
The DSO informs the supplier of the meter reading values and termination
date, and ends the network contract between the DSO and the customer. If a
meter reading is not received from the customer or the supplier, the DSO
must collect a meter reading. Meter reading when ending supply is
126
regulated.
Information exchange: moving in
The next main case is when a consumer is moving from one consumption point to
another. The next figure shows the information exchange when a customer is moving in.
The customer’s termination of their contracts with the supplier and the DSO will be the
same as in the previous case. The Regulations on Metering and Settlement regulates the
process with a customer moving in. If the customer wants to keep their former supplier,
the supplier must send an Ediel message regarding the commencement of supply,
analogous to when a customer chooses a new supplier. Whether the old supply contract
made for the metering point/consumption place from where a customer is moving could
be terminated or not depends on the conditions in the contract. This is not regulated
within the energy legislation.
Old
customer
Old
Supplier
DSO
New
supplier
New
customer
2. Identifies customer
and receives the
customer information
1: Makes a contract with
a new supplier or keeps
his former supplier.
(in the
consumption
point)
3: Customer
information from
NUBIX if needed
5. Receives a
message on a
switch
Receives a n EDIEL
message about end
of supply
6: Confirms/Notifies
(Sends an EDIELmessage)
4. Message on a
switch. If available,
meter reading is
submitted
Receives a
confirmation about
the beginning of
delivery
Receives meter
reading
7. Informs meter
reading at the
beginning and
confirms the
beginning date
Receives the meter
reading at the
beginning date and
the estimation of the
annual consumption
Figure 11. Information exchange when a customer is moving from one consumption point to another.
126
Regulations on metering and settlement, § 3-3.
112
This process has the following steps:
1.
2.
3.
4.
5.
6.
7.
The customer makes a new contract with a supplier or keeps their existing
contract with their former supplier if still current (Not regulated)
The supplier receives the customer information
If necessary, the supplier searches for customer information through NUBIX
The supplier notifies the DSO about beginning the supply of the
consumption point (sends PRODAT Z03 about the start of supply according
to the regulations on metering and settlement).
The DSO receives the notification from the new supplier. When holding a
power of attorney from the consumer, the supplier may enter into a network
contract with the DSO on their behalf (according to regulations on metering
and settlement)
The DSO notifies the old supplier at the consumption place about the
termination of supply by sending PRODAT Z05 (according to regulations on
metering and settlement)
The DSO confirms the beginning of delivery and the beginning date of it by
sending PRODAT Z04 [1] to the new supplier. An UTILITS-message
containing an estimation of the customer’s annual consumption is sent
(according to regulations on metering and settlement)
„
The DSO informs the old supplier about meter reading by sending a
message. If meter reading is not received from the customer or the
new supplier, the DSO must read the meter.
„
The DSO informs the new supplier about meter reading at the moving
in date by sending a MSCONS message to the new supplier.
Information exchange during the moving process is very similar to information exchange
during supplier switching. The main differences are:
„
„
In cases of supplier switching, a meter reading collected between 20 and 6 days
before the switching date is required, unless the switch will be cancelled. This is
not the case when moving.
There is a special code Z21 included into the PRODAT Z03 message from the
new supplier to the DSO which tells that it concerns moving.
Meter reading concerning moving
127
According to the regulations on metering and settlement , meter reading should be
carried out when a supplier terminates its supply to a metering point, but metering values
might be stipulated by the DSO if collection of the metering value causes unreasonable
costs or inconvenience for the DSO.
127
§3-3
113
Sweden
Regulations concerning moving are found in the secondary regulation, the General terms
and conditions, and the industry’s agreements of processes.
Moving can take place at any time of the month. A customer that moves has the
possibility of changing suppliers (from the default supplier).
Information exchange: moving out
Moving out is governed by the General contractual terms and conditions, if these are
applied. A customer who moves out must terminate both of their agreements with the
supplier and the DSO, otherwise the payment liability will remain. The supplier and the
DSO can demand that the customer confirms the termination of contract in writing. A
network agreement will remain in force until the customer terminates it or a new
customer notifies the network owner that they have moved in. In the latter case, the
network owner should contact the departing contractual party and provide them with the
opportunity to either confirm that the agreement is to be terminated or to maintain the
agreement.
According to the General contractual terms, the contract with the DSO has to be
terminated at least one month before the day the customer is moving if nothing else has
been agreed upon. When the customer reports the move, they have to give their customer
ID and the accurate metering point ID.
The next figure shows the information exchange when a customer is moving out of the
consumption place.
Figure 12. Information exchange when a customer is moving out.
114
1.
2.
3.
4.
5.
6.
The customer reports moving out to the DSO and to the old supplier
The DSO confirms to the old supplier which date has been registered as the
128
moving date using a Z05LK within three days of receiving the notice.
The DSO confirms to the customer which date has been registered as the
moving date.
The DSO sends a message to the old supplier (MSCONS) with the meter
value and termination of supply
Final specification from old supplier to customer
Final specification from DSO to customer
129
All received EDIEL messages should be confirmed within 30 minutes .
Information exchange: moving in
130
Moving in is governed by the Electricity Act and secondary regulation . The industry
131
has defined a standardised procedure with specified EDIEL messages for this process .
Moving in can take place at any time during the month and the customer will then have
the right to commence the electricity supply. The customer moving in must sign an
agreement with both the electricity supplier and the DSO. A network agreement will
remain in force until the electricity user terminates it or until a new customer moves in
and notifies the DSO.
Moving in and switching suppliers
When moving in the customer has the possibility of switching suppliers (from the default
supplier). The customer has to have a contract with the DSO before making a contract
with the supplier.
The customer is entitled to choose their electricity supplier from the moving in date
provided that a message requesting for supply to begin has been received by the network
owner (Z03LK/K) by the date of moving in at the latest. If the electricity supplier has not
submitted a message before the customer starts using electricity, it will be the default
supplier that supplies the electricity. In cases where a customer has used electricity
without having an electricity agreement, the customer must pay the default supplier for
132
the electricity used.
The next figure shows the information exchange when a customer is moving in and
makes a contract with both a DSO and a supplier.
128
STEMFS 2007:5
STEMFS 2007:5
130
STEMFS 2007:5
131
Elmarknadshandboken
132
Electricity Act (1997:857) chapter 8 § 8.
129
115
Figure 13. Information exchange when a customer is moving in and makes a contract with both a DSO
and a supplier.
These are the routines for when a customer is moving in and makes a contract with both a
DSO and a supplier:
1.
2.
3.
4.
5.
The new customer notifies the DSO and the new supplier about the move.
The new supplier notifies the DSO about beginning the supply using a Z03
(LK). This notification should be sent to the DSO by the day when the
133
customer moves in at the latest.
The DSO confirms the beginning of delivery with a Z04 (LK). The DSO
should confirm the beginning of delivery to the supplier within three
134
working days of receiving a Z03-message at the latest.
The new supplier confirms the beginning of delivery to the customer.
DSO informs the new supplier of the meter reading using MSCONSmessage.
135
All received EDIEL messages should be confirmed within 30 minutes .
Meter reading concerning moving
Meter reading in relation to supplier switching
The meter should be read by the third weekday after receiving a message about a switch
at the latest. If the customer does not have a smart meter the reading can be done
manually by the DSO or by the customer. Under specific conditions it is allowed to make
an estimation. This regulation is binding through subsidiary laws. There are no metering
fees for the customer related to the switch.
133
STEMFS 2007:5 chapter 9 §1.
STEMFS 2007:5
135
STEMFS 2007:5
134
116
6.4.3 Identified differences
The table below summarizes the present situation in the Nordic countries regarding the
moving process. In the column labelled Nordic are NordREG’s suggestions on the need
for harmonisation in order to establish a common Nordic end-user market.
Table 13. The present situation in the Nordic countries regarding to the moving process.
Denmark
Is the moving
process
regulated?
Who does the
customer
contact to
initiate the
moving in
process?
Who does the
customer
contact to
initiate the
moving out
process?
Yes (in the
TSO market
rules)
Norway
No
(Recommendat
ion by the
industry)
Yes – moving
in
Sweden
No (only
message
sending
regulated. The
process is
found in
recommendatio
ns)
Nordic
It should be
regulated at
least at some
level.
(The message
sending, the
meter reading
and the content
of the most
important
messages
should be
regulated.)
Not necessarily
have to be
regulated.
Supplier
Supplier
Supplier
Supplier and
DSO
The default
situation is that
the customer
will be in
contact with
the party with
whom he will
have a contract.
Not necessarily
have to be
regulated.
Supplier
Supplier and
DSO 136
Supplier
Supplier and
DSO
Moving in -not
defined.
How many
days before
the move does
the customer
have to
initiate the
process?
3 working days
before the
move
Will the fixed
term
Yes
136
Finland
Not defined
Not necessary
to give a notice
in advance
Moving out –
one month
before
(recommendati
ons)
Depends on the
terms of the
Depends on the
terms of the
Depends on the
terms of the
Not regulated today
117
The default
situation is that
the customer
will be in
contact with
the party with
whom he has a
contract.
Not critical to
regulate and
harmonise
(contractual
issue).
Not critical to
harmonise
contract
contracts be
terminated
when
customer is
moving out?
Are there
special
messages for
moving
processes?
Is the content
of messages
related to the
moving
processes
regulated?
Is meter
reading
obligatory
when
customer is
moving?
Yes
Yes
Yes
contract
Yes (specific
messages for
moving process
only)
Yes (specific
messages for
moving in)
contract
(contractual
issue).
Yes (industry
recommendatio
ns)
There should
be common
standard
messages for
the moving
process
Yes
At least the
most important
messages
should be
regulated and
harmonised
Yes
Timeframe for
meter reading
is critical to
harmonised
No
Yes
Yes
Yes, but can be
estimated if not
submitted
DSO
DSO should be
responsible for
the meter
reading
The meter has
to be read
within three
weekdays
Critical to
harmonise.
Who is
responsible
for the meter
reading when
customer is
moving?
DSO
DSO
If not
submitted by
the supplier or
customer, the
DSO must
collect
In which
timetable the
DSO has to
send
information
on meter
reading to
supplier
(regarding to
the moving
situation)?
As soon as
possible, but
within 5 weeks
after the move
at the latest.
Within 10 days
after the move
Within 3 weeks
after meter
reading
6.4.4 Conclusions and suggestions
The moving processes and rules should be harmonised between Nordic countries at least
to some extent. To make a procedure for moving as easy and reliable as possible, the
message sending, the content of the most important messages, and the meter reading
should be regulated. However, this does not mean that very detailed legislation is required
as long as the main issues related to message sending and meter reading are handled in a
coherent way in the Nordic countries.
Other things related to moving processes such as contractual issues are not important to
be harmonised. For example, the questions concerning the fixed term contracts’
termination when the customer is moving out and the timetable with which the customer
has to initiate the process are these kinds of contractual issues. These issues should be
settled between the customer and the supplier on the supply contract.
118
For starting the moving out process the default situation is that the customer will be in
contact with the parties with whom he has a contract. Likewise, for starting the moving in
process the default situation is that the customer will be in contact with the party with
whom he will have a contract. However, if the customer wants, there should also be a
possibility for the supplier on behalf of the customer to inform the DSO about the move
and thus the customer would be in contact only with the supplier. Despite of this,
NordREG doesn’t see any need for a harmonised regulation concerning this issue.
An important factor, to enable a smooth moving process, is to harmonise the most
important messages and the timetable for sending them. To avoid many different
variations of processes for market participants especially, the timetables could be as
similar as in supplier switching cases. There should be common messages for case of
moving in and moving out. Suggested messages are as follows:
Moving out messages:
„
„
„
The supplier/DSO sends a notification message about the move to the other party
(DSO or supplier) even if the customer has already informed the other party about
the move. The notification should be sent without delay after the party in question
has received the information about the move.
The DSO sends a confirmation message to the supplier within 3 working days
after receiving the notification from the supplier.
The DSO sends a message to the supplier which contains the final meter reading.
The meter should preferably be read on the day of the move, but it is also
possible that the meter be read +/- 5 working days from the move. If the DSO
gets the information about the move only after the move, then the meter should
be read within 5 working days of the DSO getting the information. The deadline
for sending the information to the supplier should be within 10 working days
after the date of the move. If the meter has not been read at the day of the move,
then meter reading sent should be an estimation of the value on the moving date.
The next figure shows the information exchange between the DSO and the supplier when
a customer is moving out.
119
DSO
Supplier
Customer
1: Informs about moving out and ends contracts 2a: Sends a notification about the move
3: Confirms the end of supply and the date of it
5: Notifies meter reading at the moving/ending date
WITHOUT DELAY AFTER RECEIVING INFORMATION ABOUT MOVE
WITHIN 3 WORKING DAYS FROM RECEIVING A NOTIFICATION ABOUT MOVE
WITHIN 10 WORKING DAYS FROM THE MOVING DATE
2b: Sends a notification about the move and end of supply
4: Receives a confirmation about the end of supply
6: Receives the meter reading at the moving/ending date
Figure 14. Information exchange when a customer is moving out.
Moving in -messages:
„
„
„
The supplier always sends a notification message about the move to the DSO
even if the customer has already informed the DSO about the move. The
notification should be sent without delay after the supplier has received the
information about the move.
The DSO sends a confirmation message to the supplier within 3 working days
after receiving the notification from the supplier.
The DSO sends a message to the supplier which contains meter reading at the
moving in date and the estimation of the customer’s annual consumption. The
meter should preferably be read on the day of the move, but it is also possible that
the meter be read +/- 5 working days from the move. If the DSO gets the
information about the move only after the move, then the meter should be read
within 5 working days of the DSO getting the information. The deadline for
sending the information to the supplier should be within 10 working days after
the date of the move. If the meter has not been read at the day of the move, then
meter reading sent should be an estimation of the value on the moving date.
The next figure shows the information exchange between the DSO and the supplier when
a customer is moving in and makes contracts with both the DSO and the supplier.
120
DSO
Supplier
Customer
1: Informs about moving in and makes contracts 3: Receives a notification about the move and start of supply
4: Confirms the start of supply and the date of it
6: Notifies meter reading at the moving/beginning date and the estimation of the annual consumption WITHOUT DELAY AFTER RECEIVING INFORMATION ABOUT MOVE
WITHIN 3 WORKING DAYS FROM RECEIVING A NOTIFICATION ABOUT MOVE
WITHIN 10 WORKING DAYS FROM THE MOVING DATE
2: Sends a notification about the move and start of supply
5: Receives a confirmation about the start of supply
7: Receives the meter reading at the moving/beginning date and the estimation of the annual consumption Figure 15. Information exchange when a customer is moving in and makes contracts with both the DSO
and the supplier.
The meters should be read when the customer is moving in or out. The DSO is, in the
end, responsible for reading the meter. The meter reading itself should be done as close to
the move date as possible because it gives the most correct consumption information.
6.5 Balance settlement
6.5.1 Introduction
The purpose of balance settlement is in all Nordic countries to settle the imbalances
between the supplier/end user’s power purchase responsibilities and the actual
consumption between the power producer’s sales responsibilities and actual power
production.
The first settlement is the balance between countries. Power balance between two
countries is priced and settled according to the Nordel System Operation Agreement.
Since September 2002, bids from market participants with available regulating capacity
are entered into a common price list in the common Nordic Operational Information
System (NOIS). There is now a common regulation market and the system operation
agreement results in a balance control and balance regulation of the interconnected power
system that is well harmonised.
121
Balance settling within each country is between the system operators and the balance
responsible parties. This settlement is governed by national balance agreements. The
balance agreements also describe how the balance responsible parties can participate in
the regulation power market.
st
In 2007, Nordel agreed on harmonising balance management starting from the 1 of
January 2009 regarding:
„
„
„
„
„
Common principles for cost allocation, where the common cost base should
include administrative costs for balance regulation and settlement, and in addition
costs of reserves. Since the allocation of the cost of the disturbance reserves
varies greatly between the countries, each TSO may decide which share of the
costs to apply during a transitional period (2 years).
Two balances should be introduced in the Nordic countries, one consumption
balance (planned production + actual trade + actual consumption) and one
production balance (actual production – planned production).
One price settlement for the consumption balance and two price settlements for
the production balance.
A common fee structure should include a monthly fixed fee, fixed fees for
measured consumption and production, and a volume fee for imbalances of the
consumption balance
Common gate closure of final plans for production and consumption
The description of the present situation in the Nordic countries assumes that all Nordic
TSOs have implemented this harmonised balance management.
6.5.2 Present situation in the Nordic countries 137
Denmark
Load profile
Grid area residual profiles are used in Denmark. There is one profile per each grid
company in Denmark. The grid companies in Denmark shall use a special profile for
network losses.
In Denmark there are no differences between the suppliers regarding the use of load
profile systems.
Management of measurement corrections from network operators
The main principle is that measurement values reported by the network operators are
obliging. The network operators are responsible for controlling the quality of
measurements and shall report the measurements to the TSO three working days after the
operational day. Corrections can be reported by the network operators until five working
days after the operational day. Thereafter a balance settlement for the operational day is
performed by Energinet.dk. A further and final balance settlement is made three months
later. For profile customers, preliminary profiles are used in the final settlement.
137
This chapter is mainly extract from NordREG previous reports ”Development of a common
Nordic balance settlement” (from year 2006) and ”Towards harmonised Nordic balancing services
– common principles for cost allocation and settlement” (from year 2008).
122
Corrections after final settlements (including profile settlement) are handled by the
network operators. Companies with “rolling” yearly reading (e.g. 1/12 of the meters every
month) shall make profile settlement within 15 months. Companies with simultaneous
reading of all meters shall make profile settlement within six months of the reading.
Invoicing and terms of payment
Invoicing of imbalances is done once a month. Invoices or credit notes are sent seven
working days after the end of the month. Invoices shall be paid into the account of
Energinet.dk no later than eight days after the invoice date.
Collateral and guarantees
The balance responsible party shall place needed securities as on-demand bank
guarantees or other corresponding securities for its commitments. The amount is decided
on an individual basis but shall at least be 2 MDKK (March 2009).
The common NordREG agreement on tarification methodology will be implemented in
Denmark in 2009
Organisational requirements on balance responsible parties
The principal basis in Denmark is that all parties with network access are balance
responsible. Balance responsibility can be transferred to another party. Changes in
balance responsibility shall be reported to the network owner. A balance responsible party
has to be approved by Energinet.dk and sign a balance agreement.
A balance responsible party has to be a registered company within an EU- or EEScountry. The business must be registered for value added tax in Denmark. The balance
responsible party shall maintain the necessary organisation in order to fulfil its balance
responsibility.
The number of balance responsible parties was 44 as of February 2009, and include Nord
Pool ASA, Nord Pool Spot, Energinet.dk, DSOs, generators and traders.
Legal framework and supervision
Energinet.dk is responsible for the overall balance regulation in Denmark. Energinet.dk is
an independent public authority owned by the Danish state under the authority of The
Ministry of Economic and Business Affairs. The objective of Energinet.dk is to ensure
the efficient operation and expansion of the overall electricity and gas infrastructure and
to ensure open and equal access for all users of the grids.
Governance of Energinet.dk is laid down in the provisions of the Danish Electricity
Supply Act, and special acts concerning economic regulation and the creation of
Energinet.dk as the merged Danish TSO responsible of both electricity and gas. (Lov om
elforsyning and Lov om Energinet.dk and Lov om naturgasforsyning).
Secondary legislation is set concerning system operation and cost recovery
(Bekendtgørelse om systemansvarlig virksomhed og anvendelse af eltransmissionsnettet
m.v. and Bekendtgørelse om økonomisk regulering af Energinet.dk).
123
Energinet.dk is obliged to engage in transmissions system operation activities as well as
electricity transmission and gas transmission activities. Furthermore, the TSO may
exercise the purchase obligation of the Danish state concerning transmission grids
between 100-200 kV and international connections exceeding 100 kV. They may engage
in the establishment of new transmission grids and material changes to existing grids
given the need for such expansion, taking into account security of supply, safeguard of
preparedness, creation of a well functioning competitive market, and the incorporation of
renewable energy.
The main provisions of the rules of balancing are found in section 27 (a, c) of the
Electricity Supply Act, stating that Energinet.dk is responsible for sustaining technical
quality and balance within the system and provide for adequate generation. Energinet.dk
has as a special task (according to the provisions in section 27) to provide for the
balancing of renewable electricity. Energinet.dk is as an authority entitled to set market
rules (markeds forskrifter) and has issued regulations concerning the connection of
generation and load to the transmission grid, regulations on the obligations of market
participants, and metering. Rules and obligations of balance providers are as well set by
regulations.
The Danish Energy Regulatory Authority in Denmark monitors the balance tarification
methodology as part of the approval of general cost recovery of Energinet.dk.
In May 2008, DERA approved the method of cost recovery agreed upon by Nordel. The
approval of cost recovery was for the year 2009 under the condition that further data on
the split of activating certain types of generation reserves was collected in 2008. The
approval of cost recovery by balancing services provided by the TSO is yearly.
Finland
Load profile
Customer segment profiles are used in Finland, where normally three customer segment
profiles are used (one profile for dwellings with less than 10 000 kWh in yearly
consumption, one profile for dwellings with more than 10 000 kWh in yearly
consumption, and one profile for other customers that are not metered hourly).
In Finland, load profiles are used for customers that purchase electricity from a supplier
other than the one with the obligation to supply in the network area. The supplier with the
obligation to supply is instead responsible for the balance between the feed-in and the
sum of hourly metered consumption, estimated profiled consumption, and estimated
losses.
Management of measurement corrections from network operators
Finland applies a hierarchical balance settlement procedure, which is carried out by
distribution network operators, balance providers, and Fingrid. There are definite
deadlines for the completion of the settlement. Fingrid carries out a preliminary balance
calculation within three working days of delivery, which is sent to the balance responsible
parties for information and control. The national monthly balance settlement is completed
no later than within one and a half months from delivery. If errors are noticed after the
completion of the national balance settlement, the balances shall not be changed.
124
However, errors can be settled through monetary compensation between the balance
responsible parties.
Invoicing and terms of payment
Fingrid carries out a preliminary balance calculation of purchased and sold energy and
volume fees within three working days of delivery. This calculation is sent to the balance
responsible parties for information. If the net sum of the preliminary balance calculation
for a calendar month exceeds the guarantees given by the balance responsible party, the
sums due on the basis of the preliminary calculations will be invoiced immediately.
The completion of the national balance settlement is done within two months after the
delivery. The invoicing period is one month, and invoices are sent within two weeks of
the completion. Payments related to possible preliminary invoices are taken into account
in the final invoice. The due date of the final invoice is 14 days from the date of the
invoice.
Collateral and guarantees
The balance responsible party shall make sure that their guarantee covers the total
guarantee requirement continuously. If the total guarantee requirement is going to exceed
the guarantee given, the balance responsible party shall increase the guarantee
immediately at its own initiative.
The guarantees are based on the size of balance, which shall be evaluated by the balance
responsible party to correspond to the highest monthly average (MWh/h) of the hourly
sums of consumption and deliverables. Fingrid has defined 11 classes of guarantees
ranging from 200 000 when the size of the balance is below 1 MWh/h, to 4 500 000 ,
when the size of the balance is above 4001 MWh/h.
Fingrid has the right to change the guarantees if the monthly average price of Elspot FIN
has exceeded 100 EUR/MWh, or if the price of any financial season product within the
agreement period exceeds 100 EUR/MWh.
Organisational requirements on balance responsible parties
Every party in the Finnish electricity market shall have an open supplier. An open supply
is defined as a supply where the supplier delivers all the electricity demands of the
customer, or a supply where the supplier balances the customer’s differences between
production and purchasing on one side, and consumption and sales on the other. An open
supplier shall for its open supply to a party decide upon a balance responsible party,
another open supplier that has a balance responsible party, or another open supplier for its
open supply. A balance responsible party has Fingrid as its open supplier, and shall have
a balance service agreement with Fingrid.
A balance responsible party shall be registered as a company liable to pay value added tax
in Finland. Fingrid must be able to reach the balance responsible party or its authorised
representative 24 hours a day, every day of the year. The persons or authorised
representative specified shall be entitled, in a manner that binds the balance responsible
party, to receive notifications given by Fingrid and to take any immediate action relating
to balance maintenance to which the agreement obliges the balance responsible party.
125
The balance responsible party shall arrange its balance management so that it can correct
a balance deviation extensive with respect to the volume of its balance, no later than
within four hours from the moment from which the balance deviation arose. Sufficient
arrangements in this respect include for instance electricity trade (such as Elbas) close to
the hour in question, or the possibility to regulate production or load included in the
balance.
The number of balance responsible parties was 24 as of December 2008.
Legal framework and supervision
The legal basis for balance responsibility and balance settlement is given in the Electricity
Market Act. The Act states that electricity network operation calls for a license issued by
the Energy Market Authority. In the license, the Energy Market Authority orders one grid
operator to be responsible for the technical operability and reliability of Finland’s
electricity system and to discharge the duties involved in national balance responsibility
in an appropriate manner that is equitable and non-discriminatory to all electricity market
participants (system responsibility). The Energy Market Authority has ordered Fingrid
Ltd. to be the system responsible grid operator in Finland.
According to the Electricity Market Act, the system responsible grid operator shall
upkeep and develop its activities and services within the system responsibly, and
maintain, operate, and develop its electricity system and other equipment needed for
fulfilling responsibility to the system and the connection to other systems, so that the
prerequisites for an efficiently functioning electricity market can be ensured. In order to
meet the responsibilities, the system responsible grid operator may impose terms and
conditions on the use of the power transmission system, as well as on the use of power
plants and loads connected to the power transmission system. These terms and conditions
shall be submitted to the Energy Market Authority for approval. In addition, the grid
operator under the system responsibility shall publish and make known to the Energy
Market Authority, the currently valid terms of services associated with the system
responsibility.
The national balance responsibility, the terms of acquisition for electricity needed for
maintaining national balance responsibility, and the terms of trade for balancing
electricity shall be equitable and non-discriminatory to all electricity market participants,
and they shall not contain any conditions or limitations that would be unfounded or that
would obviously restrict competition within electricity trade. However, these terms shall
take into account the conditions necessitated by the reliability and efficiency of the
electricity system. The pricing of balancing electricity shall be reasonable.
With regards to balance responsibility in the Electricity Market Act, an electricity market
participant shall be responsible for ensuring that the electricity generation and acquisition
contracts of the said participant cover the participant’s electricity use and supplies for
each hour. Further provisions on the contents of balance responsibility may be issued by
Government decree.
According to the Act, the system operator and other parties to the electricity market are
responsible for balance settlement. Balance settlement shall be based on electricity
metering, or on a combination of metering and type-loading curves, and on supply
126
reports, as provided in more detail by decree. Further provisions on the content of balance
settlement and on the methods to be applied in the balance settlement are given by
Government decree. Network operators must offer balance settlement services on
equitable and non-discriminatory terms to the electricity market participants. The balance
settlement services offered may not include any conditions or limitations that would be
unfounded or that would obviously restrict competition.
Electricity market participants are required to provide measurement data and other
information on electricity generation, use, and supply needed to fulfil the balance
responsibility and for balance determination. Further provisions on the notification
procedure may be given by ministerial decree.
The Electricity Market Act also includes general obligations regarding system operation
(i.e., that are applicable to all network operators whether operating on the distribution
network or the transmission network). The most essential general obligations are those to
develop the network, to connect, and to transmit. Network operators should also keep
their prices reasonable, and terms of the network services equitable and non
discriminatory to all users.
Certain provisions regarding the duties and obligation of the system responsible grid
operator are also included in Fingrid•s license. For example, it has been stated in the
conditions of the license that Fingrid must keep the unbundled accounts for balancing
services.
According to the Electricity Market Act, the task of the Energy Market Authority is to
ensure that the provisions of the Electricity Market Act and any rules and regulations
issued under it, as well as Regulation (EC) No 1228/2003 are complied with. However,
the construction of cross-border power lines and the import and export of electricity are
supervised by the Ministry of Trade and Industry.
By its decision, the Energy Market Authority shall confirm the following terms of
services and methods of service pricing before their take-up to be complied with by the
system operator and the grid operator under the systems responsibility:
„
„
„
„
methods to determine the system operator’s return on its system operations and
the fees charged for transmission service during the surveillance period;
terms of the system operator’s transmission service;
terms and methods of the system operator’s connection service to determine the
fees charged from the connection;
terms of the services under the systems responsibility of the grid operator
subjected to systems responsibility and methods to determine the fees charged for
the services.
Where anyone infringes against or neglects their obligations laid down in the Electricity
Market Act or any provisions issued under it, or in Regulation (EC) No 1228/2003, the
Energy Market Authority shall oblige them to correct their mistake or omission. The
Energy Market Authority may impose a conditional fine to enforce a decision.
127
Norway
Load profile
Grid area residual profiles (adjusted system load profile) are used in Norway. There is
one profile per a grid company in Norway, where there are no differences between the
suppliers regarding the use of load profile systems.
In Norway, profile shares are calculated per customer instead of by balance responsible
parties as in other countries. This calculation per customer facilitates the management of
switches in the settlement process.
Management of measurement corrections from network operators
A balance responsible party shall within three banking days from the date of invoice
complain about errors in the calculation. A correction settlement will be done by Statnett
if it is their error and if it is significant. If the error is made by a distribution company, the
distribution company must arrange corrections between balance responsible parties if
needed. Final profile settlement (periodic financial settlement) is handled by the
distribution companies.
Invoicing and terms of payment
Invoicing of balancing power is done once a week. Invoices or credit notes are sent in the
week after delivery week when the basis for the balance settlement is compiled and
controlled. The due date of an invoice is six banking days after the date of the invoice.
Statnett may due to credit risk assessment decide on a shorter payment period. Interest on
arrears is calculated in accordance with the current interest legislation. Statnett has
together with its customer forum organised a working group to study the issue of daily
settlement and daily invoicing.
Collateral and guarantees
Every balance responsible party shall place collateral for economic settlement. A basic
security of a minimum 200 000 NOK shall be placed. The demand for additional
securities is calculated by Statnett on the first working day of every week according to a
special formula taking into account the trade of the balance responsible party. Sufficient
collateral has to be reported by the banks by Tuesday, 10:00 or Wednesday, 10:00 at the
latest. Exemption from the requirement for collateral can be done for governmental or
municipal companies.
Balance responsible parties in Norway placed earlier common collateral for Nord Pool
and Statnett for trade in the Elspot and the regulation power market. That cooperation
ended in May 2004. Statnett administers now the collateral for imbalances and trade in
the regulation market.
Organisational requirements of balance responsible parties
Without a license from NVE, no one else than the state can trade or supply electricity.
Companies with a license to supply electricity as well as end-users and network
companies that take part in the regulation of the power market are balance responsible
parties. A balance responsible party shall have a balance agreement with Statnett. This
agreement gives access to the wholesale electricity market in Norway.
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The number of balance responsible parties is approximately 140.
Legal framework and supervision
Overall balance regulation is a major activity of the system operator, which is Statnett SF.
The set of rules for ensuring momentary balance are set out in the Regulations relating to
system responsibility in the power system, and in Statnett’s license for exercising the
power system operation, §4.
All the players that are buying or selling electricity in the wholesale market shall have a
trading license issued by NVE. In the regulations it is stated that licensees’ bids are to be
submitted in the respect of each individual in each elspot area. Furthermore, the licensees
shall ensure that they achieve the planned balance between their commitments and rights,
including their own production. For each elspot area, the licensees shall report to the
system operator, on a daily basis before 7 pm, their own hour-by-hour production
schedules for the day ahead. These production schedules shall be prepared in accordance
with the licensee’s commitments and rights. The licensees are obliged to adhere to the
submitted production schedules.
The system operator shall obtain information from the entity with settlement
responsibility in order to uncover any systematic violations contained in the
aforementioned paragraph, and report any non-compliance to NVE. Moreover, NVE is
responsible for the overall supervision of these regulations.
In accordance with the License for the Power System Operation, Statnett is obliged to
contribute to the aim of the Energy Act and the Regulations pursuant to it by ensuring
that the market players comply with the aim of efficient markets. To fulfil these
requirements, the System Operator shall arrange routines for the exchange of information
in cooperation with the Settlement Responsible Party in Statnett and the Market
Supervision Unit of Nord Pool.
The legal system of the settlement of the Regulating power is set out in the regulations
governing metering, settlement, and coordinated action in connection with electricity
trading and invoicing of network services. The purpose of these regulations is to ensure
the efficient settlement of regulating power, the exchange of information during a change
of suppliers, and transmission of settlement data to note a few examples. The rules
require that a grid company, acting as an impartial player, shall facilitate an efficient
exchange of information during changes of suppliers, metering, and settlement, so that
competition in the power market will be as efficient as possible.
In accordance with the trading license of Statnett, all of the balance responsible entities
must also sign a balance agreement with the settlement responsible entity, Statnett, in
order to gain access to the wholesale power market. The balance agreement states how
the guarantees for the settlement of power balance are calculated. It is also stated that if a
balance responsible party is not able to prove its planned balance of the day ahead to an
inquiry made by Statnett, it is considered in breach of the balance agreement.
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Sweden
Load profile
Grid area residual profiles are used in Sweden. There are two profiles per grid area (one
profile for customers with a time of use tariff and another for other customers that are not
metered hourly). In Sweden, there are no differences between the suppliers regarding the
use of load profile systems.
Management of measurement corrections from network operators
Svenska Kraftnät carries out the first balance settlement calculation on the day after
delivery. The results are distributed to the balance responsible parties who check the
results and report any errors as soon as possible. Within the period of five days after the
delivery, the balance settlement is repeated automatically once per day to take into
account any measurement corrections from the network operators. Ordinary invoicing is
normally carried out within twelve days after the end of the half-month period. If delays
occur in the reporting of measurement values, the ordinary invoicing can be delayed.
When measurement values are corrected after ordinary invoicing, Svenska Kraftnät
performs a further settlement. Corrective invoicing settles the difference between a
previously settled amount and the corrected amount for the half-month period. Normally
corrective invoicing is implemented within a month and a half after the end of the half
month period. In certain cases, an extra correction settlement can be carried through
during the tenth month after the end of the delivery period.
Final settlement concerns the calculation of the final power, i.e. the difference between
the final calculated profile supplies and the preliminary calculated profile supplies.
Svenska Kraftnät is thus the only Nordic TSO that executes the final profile settlement. In
the other Nordic countries, the final profile settlement is executed by the network
operators after the final balance settlement is executed by the TSOs. Final power is
calculated as monthly energy.
Final power is priced as a calculated average of the spot price (Sweden area), weighted
according to the sum of all consumption profiles in each constraint area. When the final
profile shares have been received for a profile calculation area, Svenska Kraftnät
communicates the shares so that the balance responsible parties can check them.
Svenska Kraftnät performs the final settlement during the third month after the delivery
month. The invoice or the credit note shows the bought or sold final power for the
delivery month.
Invoicing and terms of payment
Invoicing is done for a delivery period covering half a month. Ordinary invoicing is
normally carried out within 12 days of the end of the delivery period, while corrective
invoicing is normally implemented within three months of the end of the delivery period.
Final invoicing is done as a result of the final settlement. The due date of an invoice is 15
days after the invoice date. Each invoice and credit note shall under normal conditions be
treated separately (i.e. no netting except during abnormal circumstances). In the event of
late payment, penalty interest is calculated in accordance with the current interest act.
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Collateral and guarantees
The balance responsible party shall place collateral for the fulfilment of their obligations
according to the balance agreement. Svenska Kraftnät has the right to demand basic and
additional collateral based on an assessment of the credit worthiness and possible credit
exposure of the balance responsible party. When changes occur, Svenska Kraftnät has the
right to change its demand for collateral. The balance responsible party is liable to
comply with new collateral demands within 5 banking days for basic collateral and within
1 banking day for additional collateral.
Organisational requirements on balance responsible parties
A supplier of electricity can only supply to a withdrawal point on the electrical network if
there is a balance responsible party for that point. The balance responsible party has to
have a balance agreement with Svenska Kraftnät. The balance responsible party shall be
registered with the tax authority as liable for energy taxes.
The number of balance responsible parties is approximately 30.
Legal framework and supervision
The legal base for Svenska Kraftnät as a TSO is constituted by the framework given in
the Electricity Act, where chapter 8 deals with the system responsibility, the Electricity
Regulation of system responsibility, and the Instruction from the Government to Svenska
Kraftnät. Since Svenska Kraftnät is a state utility, it gets its instructions directly from the
Government in decrees and in special assignments. In general, ensuring that Svenska
Kraftnät carries out its tasks in an acceptable way is done in the same way as other
authorities are supervised.
The following parts of Svenska Kraftnät•s responsibility as a TSO are subject to
regulation by the regulator – the Energy Markets Inspectorate:
„
„
„
The transmission network tariffs have to be reasonable; the regulation is carried
out ex-post.
The connection fees and conditions have to be reasonable; the Energy Markets
Inspectorate has to examine cases brought to it by customers.
The conditions in the balancing agreements have to be objective and nondiscriminatory. Svenska Kraftnät cannot enter into balancing agreements until the
conditions have been approved by the regulator. If a balance responsible party
complains to the Energy Markets Inspectorate, the inspectorate has to determine
whether the company has been treated objectively and non-discriminatory.
In areas where the regulator has a role, it has also a role to examine the way Svenska
Kraftnät has dealt with specific questions raised by a customer connected to the main
grid, or a balance responsible part.
In a broader sense, the Energy Markets Inspectorate has the role of following the market
and of notifying the Government of problems regarding its functioning, including the
functioning of the system responsibility. The most important way this responsibility is
carried out, is by participating in the market design process. The Inspectorate also follows
the functioning of the market.
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6.5.3 Identified differences
The table below summarizes the present situation in the Nordic countries regarding
balancing. In the column labelled Nordic are NordREG’s suggestions on the need for
harmonisation in order to establish a common Nordic end-user market.
Table 14. The present situation in the Nordic countries regarding to balancing.
Denmark
Finland
Norway
Sweden
Nordic
Producers,
consumers,
suppliers,
traders, TSO
Producers,
consumers,
suppliers,
traders, balance
service
provider
Producers,
consumers,
suppliers,
traders, balance
service
provider, DSO
Producers,
consumers,
suppliers,
traders, balance
service
provider
Not so critical
but should
include
producers,
consumers,
suppliers,
traders
Load profiling
system
Grid area
residual, one
profile per grid
company,
special profile
for losses
Customer
segment model,
three customer
segments
Grid area
residual, one
profile per grid
company
Grid area
residual, two
profiles per
grid company
Should be
consistent
before common
market is
established
Role of the
DSOs in
balancing
Measuring and
reporting
Measuring and
reporting
Measuring and
reporting
Measuring and
reporting
Measuring and
reporting
Who is
responsible
for wind
power
balancing?
TSO
responsibility
No specific
arrangements
No specific
arrangements
No specific
arrangements
In a common
market balance
responsible
parties
Legislation for
balancing
exists?
Electricity
Supply Act
Electricity
Market Act,
Electricity
Market Decree,
Ministry
Decrees
Electricity
market act
(1990)
Electricity Act
and
competition
legislation
-
Secondary
legislation for
balancing
exists?
TSO market
rules
(forskrifterne)
Who can be
balance
responsible
How the
balancing
between TSO
and BRP 138
are arranged?
Are there
preconditions
to access
regulation
market?
Who is the
Regulation for
metering and
settlement
-
Agreement
Agreement
Agreement
Agreement
More
harmonised
common
agreement
needed
BRP
BRP, holders
of production
and load
having
agreement with
TSO
BRP
BRP 139
Not critical to
harmonise
TSO is
Not applicable
Not applicable
TSO assigns 140
138
Balance responsible party
Exception in the case of the peak load reserve. Players can bid capacity reserve without being
balance responsible.
139
132
default BRP?
responsible and
is empowered
to assign a
BRP
Balance
settlement
process 141
What is the
time schedule
for balance
settlement
Are there any
reconciliation
period?
Critical to have
a harmonised
approach
Monthly
1 year (5 years
in principle)
Final report
within 3
months
1 year
3 days after the
week
Final
settlement
during the 3rd
month after
delivery month.
Critical to have
a harmonised
approach
Running
settlement,
maximum
period 1 year
Final
settlement
during the 3rd
month after
delivery
month 142
Critical to have
a harmonised
approach
6.5.4 Conclusions and suggestions
143
NordREG has formulated its vision for a common balance settlement where different
systems for balance settlement at present shall be replaced by a common Nordic balance
settlement. This vision means that:
„
„
It will be possible for a supplier to sell to the whole Nordic market from one legal
entity and using only one system for customer management and reporting.
The common Nordic balance settlement will be designed in such a way that it
contributes to a well functioning market. This means for example that it will be
attractive even for small suppliers and some end-users to be balance responsible
parties.
Suggestions presented here should aim for the vision established.
Agreements between the TSO and the Balance Responsible Party (BRP)
The harmonisation on balance management between the Nordic TSOs requires still more
work and data collection before the second phase of Nordic harmonisation can be
introduced. Further statistic material concerning the activation of different types of
reserves is needed before the costs from the use of the reserves can be allocated
appropriately.
The goal of Nordic balance management should be the harmonised agreements between
the TSOs and the balance responsible parties, where the common standardised balance
agreement template should be developed by the Nordic TSOs. This implies that collateral
and guarantees for balance responsible parties have to be more consistent across the
Nordic market.
Balance settlement utilising smart metering
140
There is a proposal from the government to change this.
Substantial differences exist between Nordic countries, see NordREG report from year 2006
142
See above
143
NordREG reports from year 2008 and 2006
141
133
Increasing the amount of smart metering creates the possibility for hourly measurements
in consumption sites equipped with such meters. NordREG notes that hourly
measurements could be used for the balance settlement if the consumption site is
equipped with smart metering capable of delivering hourly values. It should be
investigated how these hourly measurements can be used for balance settlement in
an efficient way, taken into account the increased amount of data involved.
Load profiling
In a few years, smart metering may substitute most of load profiling in the balance
settlement. However, there will still be the need for load profiling in sites where it is not
cost efficient to install smart meters or to use hourly measurements.
Systems for load profiling vary across the Nordic countries and these systems should be
more standardised in order to enhance a common retail market. However, this may not
explicitly imply that load profiling systems should be alike in Nordic countries, because a
harmonised load profiling system may introduce high reconciliation costs between
suppliers in some DSO networks, and be reasoned by other differences as well.
Consistent systems for load profiling should be developed and linked with deployment of
smart metering. This may require legislative changes in the Nordic countries.
Balance settlement process
The balance settlement process differs in the Nordic countries. It is essential to harmonise
the process and the timeframes for the settlement process for a common retail market.
There is a need to harmonise
„
„
„
who are the actors in the process, to whom the DSO will deliver measurements
the timeframe for the delivery of measurements, preliminary and final
information for invoicing
the process and timeframe for reconciliation
6.6 Meter reading
6.6.1 Introduction
Good quality metering is required to ensure the functioning of the electricity market. On
the other hand, metering costs in replacing existing meters with more sophisticated ones
have been until now quite high. Metering can be performed automatically or manually,
and the manual reading can either be performed by the customers through self-reading, or
by the company responsible for metering (i.e. the DSO). The DSO may also outsource the
actual meter reading to a service provider, even if the responsibility of the metering
remains with the DSO.
Meters, the requirements of the meters, and the metering processes are of the highest
interest to the electricity distribution industry today. Large-scale customers in all the
Nordic countries have automatic meter reading systems installed (AMR), where the DSO
can automatically get signals from the metering point. In addition, some also have the
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potential for two-way communication, where the DSO sends different kinds of signals
directly to the terminal connected to the meter.
The costs of large-scale AMR installations are reduced compared to the costs of
individual installations, and the number of customers having an AMR meter is increasing
quite rapidly in different countries. The Nordic countries have issued or are preparing
timetables for the large-scale AMR installations. After that, medium- and even smallscale end users might also have hourly metering.
With the AMR systems, it could be possible to reduce some of the technical obstacles
related to the business processes described above. With the AMR system, end-users get
much more accurate metering, which may give them good incentives for reducing
electricity consumption. It is also very important to have good quality metering to secure
the well-functioning of the electricity market, especially if, for example, supplier
switching or moving processes are to be made quickly and efficiently. Also, balance
settlement processes become more accurate if the actual hourly consumption data is
available. It is of course very important to note, that if an AMR system is introduced, then
the quality of the data flow will be at least as good if not better than the data flow from
the present manual meters.
Hourly metering with an AMR system may not, however, be seen as a prerequisite for a
customer to be able to enter the common Nordic end-user market.
In this chapter will be discussed metering regulations in the Nordic countries and how
they are promoting AMR system.
6.6.2 Present situation in the Nordic countries
Denmark
In Denmark, the grid companies are responsible for the metering. This covers purchasing,
owning, installing, and replacing the metering equipment, as well as inspecting,
maintaining, and reporting measurement data to the parties within the electricity trading.
The metering points shall be read upon changing suppliers, moving situations, or if the
electricity supply is terminated. Regarding meter reading during supplier switching or
moving, see chapters 6.3 and 6.4. In Denmark there are no specific rules for how often a
meter shall be read during supply. It is up to the DSO, but in practise the market shows
that the meter is read once a year. In Denmark self metering is most common, and if that
is not possible then estimated metering is often used.
If the meter reading is incorrect, the value must be estimated. As of January 1st, 2003,
hourly metering was mandatory for metering points with an annual consumption
exceeding 200 000 kWh/year. As of January 1st, 2005, the limit was lowered to 100 000
kWh/year. This means that approx. 9,000 new customers (metering points) have been
equipped with hourly metering. At present, 30 000 customers have hourly metering. The
DSOs are allowed to further reduce the declared levels for hourly metering if the
company can offer the service to its entire grid area, and the service can still be handled
by an electronic switch in a simple and secure way. In the long term, all metering points
may be subject to hourly metering.
135
For the customers without hourly metering, the initial costs and the operation costs of the
metering system might for the time being be too high compared to the potential benefits
offered by hourly reading as it relates to market access. This could very likely change in
the future. Presently, plans for rolling out this technology covers 50% of consumption,
but no national plan has been composed. The Danish Energy Agency (DEA) has initiated
a new study to examine whether this is required.
However, it is important to note that access to hourly metering is an available service for
everybody. Any customer who is included in the common profile (template) at the
beginning can choose whether the metering point shall be changed to hourly based
settlement for a prorated charge to the grid company.
For customers without hourly metering one profile for each grid company is established.
The metering points of these customers are included in one common customer profile
(“template”). This template will be calculated for each grid company on an hourly basis
from the grid area’s residual hourly consumption.
The residual consumption is defined as the total consumption in the grid companies
minus the total of hourly measured/ settled end user consumption. Loss in the distribution
grid is also included in the residual consumption and is made up as an “ordinary”
settlement of load profile.
Based on this system load profile, each grid company must calculate the daily
consumption of every template customer. These consumption values for template
customers and the actual consumption for hourly metered customers form the basis for
distributing balancing costs among balancing responsible parties – mainly suppliers.
A centralised decision about rolling out AMR in Denmark has never been made. It is still
an ongoing process to calculate the pros and cons regarding AMR. Quite many of the
DSOs have already rolled-out the technology in their own grid area.
Finland
144
According to the regulation , the DSO is responsible in Finland for organising metering
used for billing and balance settlement and for reporting measurement data to the
electricity market actors. The DSOs may offer the metering services as their own work, or
they may purchase the services from outside partners, including other parties in the
electricity trade.
145
The DSOs shall provide certain minimum metering services to the customers :
1.
2.
3.
4.
144
145
Metering service by which electricity consumption is registered according to
a single time band
Metering service by which electricity consumption is registered separately
for day and nighttime
Metering service by which electricity consumption is registered separately
for working daytime in winter and other times
Metering service by which electricity consumption is registered hourly
The Government Decree on balance settlement and metering (66/2009) Chapter 6 Section 1
The Government Decree on balance settlement and metering (66/2009) Chapter 7
136
In the decree there are also recommendations for common definitions of day and
nighttimes. According to the definitions, daytime is all weekdays from 7am to 10pm
(nighttime is the time band on weekdays from 10pm to 7am). The working daytime in
winter is defined as a time band from the 1st of November to the 31st of March from
Monday to Saturday from 7am to 10pm. These definitions are only recommendations,
and the DSO may use other definitions for daytime and working daytime in winter for
metering services. The DSO may also provide other metering services than the required
minimum services.
A meter consumption place that is connected to a distribution network shall be read on
146
regular basis. According to the new regulation , the meter shall be read daily if the
consumption place has hourly metering. However, if such a consumption place is
equipped with main fuses at a maximum of 3x63 amperes and the customer doesn’t buy
electricity according to an hourly based supply product, then the DSO has the right to
delay this obligation until the end of 2011. According to the same regulation, in a
consumption place without hourly metering the meter shall be read at least three times per
year from January 1st, 2014, and at least one of these readings is under the DSO’s
responsibility.
If the load profile system does not apply to a consumption place and the place is not
hourly metered (meaning that a small user is buying electricity under obligation to supply
from their local supplier), the meter will be read at least once every two years. However,
if the consumption place is not in use year-round, the meter will be read at least once
147
every four years. The meter reading can be conducted either by the network operator,
the electricity supplier, or the customer.
148
According to the regulation , the DSO has a right to estimate the meter reading based on
the previous consumption in the consumption place concerned if the meter equipment is
located so that the DSO has no access there and the customer has not provided the meter
value to the DSO in a reasonable fixed time after the DSO has asked for it. Likewise, the
DSO has a right to estimate the meter value when a customer switches suppliers if the
customer has not provided the meter value or has no access to the meter. If the DSO
estimates energy consumption, then the DSO must publish the estimation methodology.
149
According to the general terms and conditions , upon the request of the other contracting
party, the party responsible for the metering devices shall have them inspected. If the
error percentage shown by the metering is higher than twice the accuracy class of the
meter for the loads that are decisive for invoicing, the contracting party responsible for
the metering devices shall be liable for inspection costs incurred. Otherwise, the party that
has requested an inspection shall be liable for the costs incurred.
150
According to the regulation , for consumption places that are equipped with main fuses
over 3 x 63, metering should be based on hourly metering from January 1st, 2011.
146
The Government Decree on balance settlement and metering (66/2009) Chapter 6 Section 6
Terms of network services (VPE05), standard terms prepared by Finnish Energy Industries
148
The Government Decree on balance settlement and metering (66/2009) Chapter 6 Section 6
149
Terms of network services (VPE05), standard terms prepared by Finnish Energy Industries
150
The Government Decree on balance settlement and metering (66/2009) Chapter 8 Section 3
147
137
In Finland the regulation requires that the DSOs organize a roll-out of smart meters also
for small electricity customers. Some DSOs have already voluntarily installed smart
151
meters for small customers. According to the regulation , by the beginning of 2014
metering of electricity consumption shall be based on remote reading and hourly
metering. However, the DSO may digress from this obligation for 20 percent of the
consumption places if the main fuse at the consumption place is a maximum 3x25
amperes, or if the main fuse at the consumption place is over 3x25 amperes and the
annual consumption is a maximum of 5000 kWh and the customer is buying electricity
according to the terms of obligation to supply. The regulation also sets some mandatory
technical features of the smart meters:
„
„
„
„
„
„
„
remote reading
requirement of registering and storing information on interruptions (outages)
lasting longer than 3 minutes
meter data storage for at least the last 6 years
interruption data storage for at least the last 2 years
remote demand response feature
security of data (meters and systems)
DSO shall offer a standardized connection for real-time energy measurement (for
extra cost)
Norway
Meter reading is regulated through the regulations on metering and settlement. The DSO
is responsible for all meter values from all metering points within its area. In most cases,
this implies that the DSO installs all meters, registers meter values (either remotely or
through self reading by the customer), and sends the meter data to the settlement
responsible, TSO Statnett SF, and to each balance responsible party. The settlement data
is derived from metered or calculated hourly values based on the DSO’s adjusted system
load profile.
Although the handling of both meters and meter data to some degree can be outsourced to
a third party, the DSO shall ensure the quality of all meter values and the handling of
these throughout the meter value chain. The DSO shall be able to document its routines to
assure quality. If a customer suspects that the meter reading is wrong, they can, according
to the standard contract (ref. customer part), require a test of the meter. If the test shows
that the meter is reading incorrectly, the DSO will bear the cost of the test. If, on the other
hand, the result of the test shows that there is nothing wrong with the meter, the customer
will have to pay the cost of testing the meter. The meter is given a margin of error of (+/-)
3 percent, depending on the type of measurement.
According to the existing regulations, all metering points shall be measured at least once
a year. For household customers with an annual consumption between 8 000 and 100 000
kWh/year, the meter shall be read periodically at least four times a year. The meter can be
read more frequently: many DSOs ask their customers to read the meter every second
month, for instance. The DSO shall accept all meter readings done by the customers
within reasonable limits. Meter reading can be done by oneself.
151
The Government Decree on balance settlement and metering (66/2009) Chapter 6 Section 4
138
For meters with manual reading, the DSO shall no later than three weeks after a reading
or stipulation, send a message with meter data to the supplier. With regards to a supplier
switch, the customer or the supplier must submit meter data to the DSO. The DSO
stipulates a value on the actual switching date based on this, and sends messages both to
the new and the old suppliers. The messages shall contain the metering point ID, the
meter number, the consumed volume at the metering point during the settlement period,
the volume in kWh/24h distributed according to the system load profile, the specification
of whether the settlement data are metered or stipulated, and the settlement period's
starting and closing date.
All metering points with an annual consumption above 100 000 kWh/year shall be
subject to hourly metering. The DSO shall cover all costs related to this. A customer can
require hourly metering for any metering point at the regulated maximum price of NOK
2,500. All metering points where electricity is fed into the grid shall be subject to hourly
metering, and the generator has to cover the costs.
Within three working days after the close of the settlement week, the DSO shall transmit
to the supplier the hourly consumption in kWh/h for the previous week for every single
meter.
To carry out the periodical settlement between the suppliers, the DSO uses an adjusted
system load profile to calculate the hourly consumption for customers without hourly
metering.
Smart metering will be introduced to all metering points in Norway. Functional
requirements for advanced metering and control systems will be introduced with at the
earliest 2014 as a deadline for implementation. The timeframe for implementation will
depend on the EU standardization process.
Sweden
The DSOs are responsible for the meter, for its accuracy, operation, and maintenance. In
Sweden, DSOs are also responsible for the meter reading. The DSO is allowed to
outsource the collection and reporting of meter values to a third party. However, the DSO
is still responsible for fulfilling the obligations according to the regulation of metering,
152
calculation, and reporting of transmitted electricity.
The DSO should report meter values to the TSO, balance responsible parties, and
suppliers. There are different processes of exchanging meter values depending on the type
of customer. These processes are regulated in part by the Electricity Act, and by the
Energy Markets Inspectorate through secondary regulation.
The Energy Markets Inspectorate is responsible for ensuring that regulations regarding
meter reading are followed. Another agency, SWEDAC, is responsible for the regulatory
issues concerning the actual meters in all markets, including meters in the electricity
market.
If a customer suspects that the meter reading is wrong they can, according to the General
terms and conditions, require a test of the meter. If the test shows that the meter is reading
152
STEMFS 2007:5.
139
incorrectly, the DSO will bear the cost of the test. If, on the other hand, the result of the
test shows that there is nothing wrong with the meter, the customer has to pay the cost of
testing. The meter is given a margin of error of (+/-) 2 or 5 percent, depending on the type
153
of measurement.
Hourly metered customers (>63 A)
In Sweden, the DSO is obliged to measure hourly all metering points with a fuse
exceeding 63 amperes.
The DSO shall, at 10 am the day after a measured period (24hours), send preliminary
collected meter values to the TSO and the balance responsible parties. The DSO shall also
five weekdays after a measured period (24 hours) send the final collected meter values to
the TSO, the balance responsible parties, and the suppliers. If an hourly meter value from
a permanent metering point is missing when the DSO sends the preliminary value, the
missing meter value will be replaced with a meter value from a control metering point or
through another trustworthy method. The replaced meter value should be marked that the
meter value has been corrected.
Metering of household customers (< 63 A)
The DSO is obligated to do one meter reading per year for those customers that are not
hourly measured, i.e. customers with a fuse below 63 Amperes. From July 1st, 2009, the
DSO is obliged to read the meter every month.
According to present regulations, the DSO shall send the yearly meter reading to the
supplier, at the latest, the fifth working day in the month after the actual reading. The
154
following information should be included in the message to the supplier :
„
„
„
„
„
the time of the meter reading
the consumption between the actual and the previous meter readings
the actual meter value and the previous meter value
metering point ID
network area ID
The DSO is also obliged to do meter reading on the first day of a new delivery and when
155
a meter is being replaced. If it is not possible to read the meter on the first day of a new
delivery, the reading must be done within the five days before or after the delivery starts.
If the DSO cannot fulfil the task because of circumstances outside of their control, the
DSO should then make an estimation of the meter value for the time the delivery starts.
New regulation concerning metering of household customers (< 63 A)
From July 1st, 2009, the DSO is obligated to read a household customer’s electricity
meter every month, according to the Electricity Act. The legislation contains no
functional demands regarding the electricity meters. The secondary legislation has been
amended according to this new demand so that the messages sent between the DSO and
other stakeholders are adapted to the new timeframe. The new legislation has lead to a
153
STEM 2001:3 chapter 2 §1
STEMFS 2007:5 chapter 6 §1 and 6 § 7.
155
STEMFS 2007:5, chapter 3 § 1.
154
140
massive roll-out of electricity meters that can be remotely read. The Energy Markets
Inspectorate has made a survey in 2007, and will make another one in 2008, to see how
many remotely read meters the DSOs have installed. According to previous interviews
made with the DSOs, close to 90 % of the installed meters will be able to be read every
hour. About 55 % of the meters that can be read every hour have systems that can deal
with a two-way communication.
6.6.3 Identified differences
The table below summarizes the present situation in the Nordic countries regarding meter
reading. In the column labelled Nordic are NordREG’s suggestions on the need for
harmonisation in order to establish a common Nordic end-user market.
Table 15. The present situation in the Nordic countries regarding to the meter reading.
What is the
threshold for
obligatory
hourly
metering?
How often the
obligatory
hourly meters
have to be
read?
Denmark
Finland
Norway
Sweden
Nordic
More than
100,000
kWh/year
Over 63 A
Yearly
consumption >
100 000 kWh
Over 63 A
Not critical to
harmonise.
Daily
No changes to
the present
situation are
required.
Daily
Daily
Daily
If the customer
buys electricity
from anyone
aside from a
local supplier:
annually
How often the
other meters
have to be
read?
Annually
Others: every
2nd year, if
permanent
household,
every 4th year if
non-permanent
household
Household
customers with
yearly
consumption
>8000 kWh:
Minimum
every third
month 156
Every year.
From the 1 of
July 2009,
monthly
Recommended
that meters are
read at least
quarterly 157 .
No but it is
regulated that
Not critical to
harmonise
st
Other: annually
From the 1st of
January 2014:
at least three
times per year
Is the
implementatio
No (under
consideration
Yes
Yes (will be)
156
Self-reading, might be estimated if the consumer does not submit meter reading
For example Directive on energy end-use efficiency and energy services and repealing Council
Directive 93/76/EEC (2006/32/EC) (Energy Services Directive) and the Proposal for a Directive of
the European Parliament and of the Council amending Directive 2003/54/EC concerning common
rules for the internal market in electricity (19.9.2007) (the 3rd package) are requiring that the
meters should be read frequently enough.
157
141
n of smart
meters 158 for
small
customers
regulated?
the meters
should be read
monthly form 1
July 2009,
which in
practice means
roll out of
smart meters
for most
customers
in the Danish
Energy
Agency)
Implementation
of smart meters
recommended.
What is the
timetable for
roll-out of
smart meters?
No regulated
timetable, but
half of the grid
companies are
preparing a
roll-out of
smart meters
By the
beginning of
2014 at least
80% of the
customers per
each DSO shall
have a smart
meter
At the earliest
by 2014 159
1 July 2009
Not critical to
harmonise
Are the
functional
requirements
for smart
meters
regulated?
No (under
consideration)
Yes
Yes (will be)
No
Not critical to
harmonise
No
Yes (hourly
metered points)
No
No
Not critical to
harmonise
Is the
customer’s
access to
meter
regulated?
Is the
customer’s
access to
meter values
regulated?
Not critical to
harmonise
No
Yes
Yes
Yes, from 1
July 2009
(However, it is
important to
the customers
to get meter
values).
6.6.4 Conclusions and suggestions
AMR systems could enable many benefits for the customers and market participants, and
could reduce some of the obstacles related to business processes. However, the costs
might in some national systems be considerable. Still, the introduction of this technology
in the Nordic system should be welcomed by regulators for different reasons stated
below. The national thresholds for obligatory hourly metering could thus be lower in the
future than today. When looking at the common Nordic end-user market in the scope of
this report it is not critical that a certain common threshold for obligatory hourly metering
158
Smart meter here refers to a type of advanced meter that is remotely read and identifies
consumption in more detail (hourly) than a conventional meter and communicates that information
back to the DSO for monitoring and billing purposes. Smart meters are used for automatic meter
reading (AMR), but they may have also other functionalities like power outage notification and
power quality monitoring.
159
The timeframe for implementation will depend on the EU standardization process
142
is defined. AMR systems could be seen as a useful tool for fulfilling the obligations that
are or will be put in place regarding transmission of meter values in certain timetables.
Reflecting the aforementioned view, NordREG sees the minimum functional
requirements or timetable for the roll-out of smart meters are not critical to harmonise.
However, processes like balance settlement and periodical financial settlement can be
carried out more efficient with AMR systems.
The amount of other meters than hourly meters will decrease in time. The question of
how often these meters should be read is critical also in the future. For the time being, and
160
based on the proposals in the EU directives however, there should be a requirement
according which the billing on the basis of actual consumption shall be performed
frequently enough to enable customers to regulate their own energy consumption.
NordREG thus recommends that other meters than hourly meters should be read at least
every third month.
It is important to the customer to get information about their own consumption, and that
should be ensured in some way. However, NordREG sees that a customer’s access to
meter values is not critical to harmonise. The customer’s access to the meter itself is not
that critical either
6.7 Information exchange during supply
6.7.1 Introduction
There is regular information exchange between the DSO and other market participants
during supply. After a meter reading, the DSO has to send metered data to the supplier so
that they are able to invoice the customer. Also, the balance settlement process requires
regular information exchange between the market actors.
There might also be special situations during supply which require information exchange
between the DSO and suppler, like when electricity delivery to the consumption place
will be switched off or switched on.
In this chapter will be discussed the rules about information exchange during supply in
the Nordic countries.
6.7.2 Present situation in the Nordic countries
Denmark
During supply, the only regular information exchange is when the DSO sends the metered
data to the supplier so that the supplier afterwards can invoice the customer according to
their consumption. There are defined Ediel message processes for this information
exchange. There will also be an information exchange if basic data like the consumption
profile, etc. is changed. There can also be an information exchange if the supplier has
160
Directive on energy end-use efficiency and energy services and repealing Council Directive
93/76/EEC (2006/32/EC) (so-called Energy Services Directive) and the Proposal for a Directive
amending Directive 2003/54/EC concerning common rules for the internal market in electricity
(so-called the 3rd package)
143
chosen to invoice both its own delivery of electricity and also the payment from the
transportation of electricity normally invoiced by the DSO. This is a choice all suppliers
have in Denmark, but very few use it.
It is the industry itself that has made guidelines about what kind of messages need to be
sent between the DSO and the other market participants.
Information on meter reading:
Meter values should be sent in an Ediel data format.
Electricity to the consumption place will be switched off/on
In the Danish Electricity Supply Act § 6, it is stated that anyone has the right – through
payment- to be supplied with energy from an obligation to supply company. Obviously a
supplier does not have an obligation to supply electricity to customers who do not pay.
There is a developed practise that it is possible to cut off power if e.g. the customer
several times has proven to be a bad payer, and if the supplier has tried to make
arrangements for how the customer could pay off their debts. Furthermore, the supplier
has to announce when the power will be cut off if the customer has not paid. If the
customer can pay in advance or in any other way guarantee future payment, then the
obligation to supply company cannot cut the power.
Finland
Information on meter reading
161
According to the regulation , the DSO is responsible for delivering the metered
consumption to the different market participants, i.e. to electricity suppliers for billing
and to balancing responsible parties for balancing purposes.
During supply, the DSO has to preliminarily notify the supplier of the calculated supply
the next working day after the supply or within another specified time frame agreed upon
st
with the supplier. Final notifications have to be made within one month (from the 1 of
162
January 2011, within 14 days) from the supply. For more than 3 x 63 A hourly metered
points, this data is the actual metering data. For other metering points, the data is the
estimated consumption based on load curves.
Regarding the form of the messages, the ministry decree states that the metering data has
to be sent as a MSCONS D.96A–message in a form that is approved by the Ediel Nordic
Forum. In practise, this applies to over 3 x 63 A hourly metered points.
According to the industry association’s recommendations, the DSO shall send suppliers
the actual meter reading regarding those under the 3 x 63 A hourly metered point within
21 days of reading the meter. According to the recommendations, the DSO shall send the
metering data to the supplier with a PRODAT Z11 message. If the consumption place is
equipped with a main fuse at a maximum of 3 x 63 A which is metered hourly, the meter
readings could be sent with MSCONS messages if the supplier and DSO agree on it.
161
Government Decree on balance settlement and metering (66/2009) Chapter 6 Section 1
The Ministry of Employment and the Economy’s decree on the information exchange in the
electricity sales (809/2008) Chapter 3 Section 11
162
144
Electricity delivery to the consumption place will be switched off/on
During supply there may be the need to switch off electricity delivery to the consumption
place for example due to unpaid bills. The following practises are based on the industry
association’s recommendations.
If a supplier requires that electricity be switched off, the supplier has to send an email to
the DSO about one week before the proposed day for switching off. If the supplier
informs the DSO about this by phone, the supplier also has to send a confirmation by
email, fax, or by sending a Z08 [9] message. After the DSO has switched electricity off at
the consumption place, they need to confirm it with the supplier by sending a Z11 [9]
message. This message also includes a meter reading. If the supplier later requests that
electricity should be switched on again, the supplier may inform the DSO about it by
phone, but they have to confirm it by sending an email, fax, or a Z08[2] message. The
DSO shall send a confirmation after they have switched electricity on again by sending a
Z11 [2] message.
If the shutoff is required by the DSO, the DSO notifies the supplier about it by sending a
Z11 [9] message to the supplier after the DSO has switched the electricity off. This
message also includes meter reading. After the DSO has switched the electricity on again,
they shall send a Z11 [2] message to the supplier.
Norway
Information on meter reading
The transmission of metering data is governed by the regulations on metering and
settlement.
The DSO must send meter values to the supplier for billing within three weeks after meter
reading or stipulation.
Metering values from metering points subject to hourly metering shall be transmitted to
the supplier as hourly consumption in kWh/h for the previous week for every single
meter. The DSO must send the values within three working days of the close of the
settlement week.
Furthermore, The DSO must send metering data for settlement to the settlement
responsible, Statnett SF, and to each balance responsible party. The DSO shall transmit
the metering data within three working days of the close of the settlement week.
In addition, the DSO shall send a message to each balance responsible party containing
information about the total consumption in its network area for the previous 24-hour
period.
There are defined Ediel message processes for this information exchange.
Electricity to the consumption place will be switched off/on
A supplier may end the contract if the customer is in serious breach of the contract. The
supplier then sends a message about the discontinuance of the power supply to the DSO.
According to the standard contract, the DSO may end the contract/switch off the power in
the case of a serious breach of the obligation to pay the network charges. When the DSO
145
is supplying electricity according to the obligation to supply, a serious breach concerning
the payment of the electricity supply may also lead to shutoff.
Sweden
During supply, the information exchanged on a regular basis is the actual meter values.
The DSO should send meter values to the different market participants. The meter values
are sent to the electricity supplier for billing and to the balance responsible party for
balancing purposes.
Information on meter reading
163
Meter values should be sent in an Ediel data format. The industry organisation has
defined an Ediel message process for this information exchange. The DSO has the
possibility of using other ways of communication, but Ediel messages should be used if
164
the electricity user or the energy producer demands it.
The DSO is obliged to send information about meter values for billing purposes to the
supplier once a year. From July 1st, 2009, the DSO will have to send the meter values to
the supplier every month, at the latest five working days from when the metering reading
has been done.
Electricity to the consumption place will be switched off/on
According to the Electricity Act, the supplier may end the contract if the customer is in
serious breach of the contract. Lack of payment is considered to be such a serious breach.
The supplier then has to follow a process as defined in the Electricity act and as
complemented by the General terms and conditions. The supplier has to send a reminder
to the customer with the information that their electricity supply can be terminated. At the
same time, the supplier has to send a message to the social services office in the
municipality where the customer lives with the same information. After having done this,
the supplier may switch off the electricity supply if the bill remains unpaid. If the
customer still has not paid the bill, or if social services have assumed responsibility for
the payment, the electricity can be cut off.
6.7.3 Identified differences
The table below summarizes the present situation in the Nordic countries regarding
information exchange during supply. In the column labelled Nordic are NordREG’s
suggestions on the need for harmonisation in order to establish a common Nordic enduser market.
163
164
STEMFS 2007:5, 1:4.
STEMFS 2007:5, 1:5
146
Table 16. The present situation in the Nordic countries regarding to the information exchange during
supply.
Denmark
Are there
regulations
regarding to
the
information
exchange
during
supply?
By which
timetable does
the DSO have
to send a
message of
meter reading
to supplier?
Are the
messages from
the DSO to
balance
responsible
parties
regulated?
Yes, in the
market rules
Hourly
metering:
Preliminary
values within 3
working days,
final values
within 5
working days.
Template (load
profile)
customers:
Within 5 weeks
Yes, in the
market rules
Finland
Norway
Yes
Yes
Preliminary
values the next
working day
after the supply
or within other
agreed time
frame, final
notifications
within one
month (from
the 1st of
January 2011
14 days) from
the supply
Industry
recommendatio
ns: Actual
meter values
for other than
over 3 x 63 A
hourly metered
points within
21 days after
the meter has
been read
Hourly
metering:
Within 3
working days
after the close
of the
settlement
week
Other: Within 3
weeks after
meter readings
or stipulation
Yes
Yes
Sweden
Nordic
Yes
There should
be regulation
regarding the
information
exchange
during supply
and it should
be harmonised
Within five
weekdays in
the month after
the meter has
been read
(<63A). Within
five weekdays
the meter has
been read
(>63A)
Critical to
harmonise
Yes
The message
sending should
be regulated
and
harmonised
6.7.4 Conclusions and suggestions
The regulation regarding information exchange during supply is critical. Message sending
from the DSO to the balance responsible and supplier should thus be regulated and
harmonised. Information exchange should be automated via electronic messages to ensure
fast processes.
The message sending from the DSO to the balance responsible should include the
minimum regulation of when and to whom the messages should be sent, and what is the
content of the messages. These details should be resolved in the context of other balance
settlement issues.
147
NordREG suggests that the DSO shall send a message of meter reading to the supplier
within 10 working days of the meter being read if the meter is not an hourly meter. If the
meter in question is hourly, then the timeframe for sending the meter reading to the
supplier is within 5 working days.
6.8 Access to customer data and transparency
6.8.1 Introduction
One important condition for a well-functioning retail market is the access to customer
data. In many business processes it is required that, to initiate the process, the customer
has to be in contact only with the supplier and after that the supplier notifies the other
market actors by sending a certain message. The customer ID or the consumption point
ID is the key ID in this information exchange in order to bind the message to the correct
customer or consumption point. Therefore, how well the processes function depends on if
the customer has been identified correctly. To have a smooth and quick information
exchange during which problems are avoided, the suppliers should have easy access to
customer data in order to get the correct consumer or consumption point ID.
As the DSOs’ customer data include also sensitive information, it is important to
determine which data are available to suppliers. It is crucial that the DSOs are neutral and
transparent in offering access to customer data to the suppliers. Therefore, there has to be
clear rules regarding to which data the suppliers have access, and for which purposes they
may use this data.
In this chapter will be discussed which kinds of customer data the DSOs are providing to
the suppliers and how this data is available in the Nordic countries.
6.8.2 Present situation in the Nordic countries
Denmark
A new supplier can make an inquiry about the consumption from a metering point and the
consumption profile to the DSO. All this data is to be received free of charge from the
DSO. There are no standard message formats for this inquiry. Telephone or E-mail is
used, but it is at the moment a bit unclear exactly how much information the supplier has
the right to get.
The supplier also has to prove that they are always acting in the interest of the customer
(for example by a contract or a power of attorney). Some DSO’s may accept an inquiry if
the supplier in question appears in the register of suppliers.
The Danish Minister of Climate and Energy has recently (April 2009) decided to create a
common data hub. The use of the data hub will presumably be obligatory. The Danish
TSO Energinet.dk will manage the data hub.
Finland
According to recommendations issued by the industry association, the supplier shall
identify the consumption point ID before sending messages. The new supplier can make
an inquiry about the consumption point ID to the DSO. The DSO shall answer the
148
inquiries free of charge. Since the 1st of September 2007, a national consumption place
register has been in use in Finland. Use of the national register decreases inquiries sent
directly to DSOs. However, it has been recommended that each DSO have an email
address reserved for inquiries if information on the consumption point is not available in
the register.
The register is maintained by a company owned by the industry association as a member
service (use of the register is free of charge for members of the branch organisation for
the first 24 months since the start of operations). After that, the service will be financed
by its users.
Use of the register is based on a recommendation of the industry association and storing
information in the register is voluntary for system operators. The DSOs have been
recommended to keep information on consumption places in the register up to date. At
the moment, information on slightly over 3 million consumption places has been stored in
the register (approximately the amount of electricity end-users in Finland).
Information in the register will be updated monthly.
The consumption place register is an Internet based system, and one can search for
information in the register through a web browser (password required) or with a special
program. The search query is a consumer address, and the search result will be a
consumption place ID. It is not allowed to use the register for mass searches.
The information that is stored in the register includes:
„
„
„
„
„
name of the distribution network operator
consumption point ID that individualises the consumption place
address of the consumption place
postal code of the consumption place (both postal number and the city)
latest updating date
This means that, for example, no customer related or other load profile information is
stored in the register.
The idea of a consumption place register is that it is used only to verify the correctness of
the information related to the consumption place when a customer is changing their
electricity supplier. It is forbidden to use the register for any other purposes, including
those for marketing.
The DSO shall inform the supplier about the load profile used for the customer. This
information (which load profile will be used) will be sent to the supplier when the DSO
confirms the beginning of supply. Also, any other information about a customer, for
example the estimation of annual energy consumption, the DSO will send to the supplier
of that customer when the DSO confirms the beginning of supply. The DSO may not
provide this information to suppliers who are not supplying electricity to the customer.
The data concerning the metering point ID of the consumption place register is available
to all suppliers. Other data, including customer data, is only obtained when the supplier
has a contract with the customer or has a power of attorney given by the customer.
149
Norway
A new supplier can obtain customer data through NUBIX. NUBIX is a web-service
routing inquiries from the supplier to the DSO’s customer information system. Thus it’s
the DSO who maintains the customer data. To make an inquiry, the supplier needs the
customer’s date of birth or Business Register Number for business/industrial customers
(neither is necessary from 2009), postal code and two additional particulars about the
customer. Accessible information in NUBIX is the metering point ID, the metering
equipment number, name, address, and name of the DSO in the customer’s network area.
Sweden
There is no data hub or common database from which suppliers can obtain customer data
in the Swedish electricity market. However, an initiative by individual suppliers and
DSOs called Emix has been launched. The aim is to create a common hub which is
intended to function as switchboard for messages sent by the different stakeholders and in
the long run it might provide also relevant customer data for the suppliers.
6.8.3 Identified differences
The table below summarizes the present situation in the Nordic countries regarding the
access to customer data. In the column labelled Nordic are NordREG’s suggestions on the
need for harmonisation in order to establish a common Nordic end-user market.
Table 17. The present situation in the Nordic countries regarding the access to customer data.
Does a
common
database or
hub for
getting
relevant
customer
information
exist?
Is the use of a
common
database or
hub
obligatory?
What
information is
available for a
supplier from
the database
or hub?
165
166
Denmark
Finland
Norway
Sweden
Nordic
No 165
Yes (database)
Yes – webservice routing
inquiries
No
Tools are not
critical to
harmonise.
No
The DSO is
obliged to
arrange for
access to
customer data
No
Not critical to
harmonise
No 166
Not applicable
Consumption
point ID
Consumption
point address
Metering Point
ID, metering
equipment
number, name,
and address
Regardless of
tool minimum
information:
Not applicable
Consumption
point ID
Consumption
point address
The Danish Minister of Climate and Energy has recently decided to create a Danish data hub.
The data hub will presumably be obligatory when implemented.
150
Which
prerequisites
are set for the
supplier to be
able to get
customer
data?
New
customers’
basic data
(supplier must
prove acting in
the interest of
the customer;
i.e. contract,
power of
attorney, or
supplier
appears in
register of
suppliers)
Consumption
point
ID/address for
all suppliers
from the
database, other
data when the
supplier has a
contract with a
customer or has
a customer’s
power of
attorney
When having a
contract with
the customer.
Needs postal
code and two
additional
particulars
Only when the
supplier has a
contract with a
customer or has
a power of
attorney
Contract or
customer’s
power of
attorney.
6.8.4 Conclusions and suggestions
To enable a well-functioning Nordic energy market it is important that relevant customer
data is easily and in a cost-effective way available to suppliers. The key issue is that
DSOs are obliged to give that information regardless of the tool in use. As an example,
this can happen through a national database or a hub (also a web service for routing
inquiries), which is an easy and quick way for the supplier to find out the consumption
point ID if the customer is unable to give this information. In any case, the minimum
information that should be made available to suppliers acting in the Nordic region needs
to contain the consumption point ID and address. Without a consumption point ID the
supplier cannot start energy supply for the customer even though the contract has been
made.
A prerequisite for the supplier to receive customer data is that they have a contract with
the customer or the customer has given a power of attorney for that purpose.
151
7 Marketing rules
When acting in the electricity market, stakeholders must comply with rules that are not
always part of the specific regulatory framework for electricity. Marketing rules may be
general and applicable regardless of sector. Marketing rules are very often a result of the
implementation of EU directives, but may still vary somewhat between the countries.
7.1 Present situation in the Nordic countries
Denmark
The providers of electricity transportation (DSOs) and suppliers of electricity are subject
to the general legislation on marketing which implies that the Danish Marketing Practises
Act applies to energy companies in full.
In consequence, energy companies shall exercise good marketing practise with regards to
consumers, other traders, and public interests (omnibus clause). In their market conduct,
energy companies may not issue incorrect, misleading, or unreasonably perfunctory
statements designed to influence demand for or supply of their products.
When electricity products are offered for sale to consumers, clear information shall be
provided by labelling, signing, or otherwise as to the overall price of the product,
including fees/costs/VAT and all other expenses.
A reasonable period of notice of change in fees, or the levying of new fees in an ongoing
supply relationship must always be given before such fees become binding to the
consumer. If the change in fee is substantial, or a new fee is to be levied, the consumer
shall receive individual notice of this before the change takes effect.
A trader may not approach a potential customer by means of electronic mail or through an
automated calling system with intent to sell electricity products unless the customer
concerned has requested them to do so according to the Law on consumer agreements §
6.
There are no specific rules for energy markets (electricity) in the Marketing Practises Act.
However, an executive order has been issued with reference to the Danish Electricity
Supply Act. The executive order covers electricity companies' obligations in terms of
publishing prices, tariffs, discounts, and general terms of business. Under this secondary
legislation, electricity companies shall publish valid prices and terms for using their
transport and energy services. This information shall be published at least on the
companies' homepages in a clear, coherent and accessible way. If a company does not
have a home page, the same information shall be published in an alternative way.
152
Finland
Marketing and information conveyed to consumers by marketing is regulated in the
167
Consumer Protection Act (Section 2). According to that Act, marketing must
clearly show its commercial purpose and on whose behalf the marketing is
implemented. False or misleading information shall not be conveyed in marketing.
Consumer authorities are responsible for monitoring the compliance of the law.
The obligations for suppliers regarding notifications of the origin of electricity in bills as
described in chapter 2.2.1 apply also to promotional materials made available to final
customers.
Norway
According to the regulations on metering and settlement, the suppliers shall refer to
NVE's website for all promotional materials. This Website specifies the contribution of
each energy source to the overall fuel mix of the preceding year.
168
The Regulations on price information on transport and sales of electrical energy state
that when offering energy based on variable prices, if not using the adjusted system load
profile, the supplier must inform the customer of the base used for distribution of
consumption. A supplier stating an average price on a variable price offer, must also
inform the customer of how this price is derived., If there is a fixed amount related to
electrical energy, the supplier must calculate average prices per kWh for 10 000, 20 000
and 30 000 kWh consumption in their information and marketing.
Furthermore, providers of electricity transportation (DSOs) and suppliers of electricity are
subject to the general legislation on marketing.
Sweden
The rules concerning marketing are the same for the energy market as for any other
169
market in Sweden. The area is governed by the Marketing Act , which is supervised by
the Swedish Consumer Agency.
The supplier has to clearly state the price of the product that is being marketed. There
170
should also be a so-called comparable price , an average price in öre/kWh, for the
product. This means that the price shown to the customer should be the total price
including fixed costs as well as all extra costs that the customer might incur when buying
the product. There are specific instructions regarding how this comparable price should
be calculated, and the Consumer Agency audits this area.
In addition, according to the Electricity Act suppliers must specify in or with bills, as well
as in promotional materials made available to final customers, the contribution of each
energy source to the overall fuel mix of the electricity supplied in the preceding year. The
supplier must also provide information about the environmental impact in terms of CO2
167
Consumer Protection Act (38/1978)
FOR 1996-06-07 nr 666: Forskrift om prisopplysning ved transport og salg av elektrisk kraft
169
Marknadsföringslagen (1995:450).
170
Jämförpris.
168
153
emissions and radioactive waste resulting from electricity production from different
171
energy sources.
7.2 Identified differences
The table below summarizes the present situation in the Nordic countries regarding
marketing rules. In the column labelled Nordic are NordREG’s suggestions on the need
for harmonisation in order to establish a common Nordic end-user market.
Table 18. The present situation in the Nordic countries regarding marketing rules.
Are there any
specific
marketing
rules
regarding the
electricity
market?
Denmark
Finland
Norway
Sweden
Nordic
No
No
Yes
No
Not critical to
harmonise
Are general
marketing
rules
applicable to
the electricity
market?
Yes
Yes
Yes
Yes
Not critical to
harmonise, but
it is important
that general
marketing rules
exist
Are marketing
methods
regulated?
Yes
No
No
No
Not critical to
harmonise
Yes
Yes, the overall
price of the
product,
exceptional
terms,
possibilities of
ending the
contract, and
the origin of
electricity
Does a
supplier have
to give any
specific
information
when
marketing?
Does a
supplier have
to give
information on
the origin of
electricity
when
marketing?
Does a
supplier have
to give
information
171
172
Not critical to
harmonise.
Yes, the origin
of the
electricity
supplied last
year
Yes, unit prices
and the origin
of electricity
This is
however, partly
also a question
coming from
the general
consumer
protection
legislation.
Not critical to
harmonise.
No
Yes
Yes
Yes
Yes, if
marketing is
not with a
specific price
No
No
Yes, unit
price 172
Electricity Act (1997:857), chapter 8 § 12.
Jämförpris
154
However,
information
about origin of
electricity
should be given
Not critical to
harmonise.
about average
prices when
marketing?
7.3 Conclusions and suggestions
The critical issue regarding marketing rules must be that all Nordic countries have
implemented the EU directives that concern marketing. In this way, it is certain that all
countries use the same framework regarding marketing rules. This implies, among others,
Directive 97/7/EC of the European Parliament, the Council of 20 May, 1997, on the
protection of consumers with respect to distance contracts, Directive 2005/29/EC of the
European Parliament, and the Council of 11 May 2005 concerning unfair business-toconsumer commercial practises in the internal market. It is crucial that all countries
implement these directives so that there are the same marketing rules in all countries. This
also means that customers more easily will be able to adapt to a single Northern
electricity market.
It would be very difficult to harmonise the marketing rules beyond an overall EU level
because the rules concerning marketing relate to all other sales and purchases of goods
and services in the Northern countries, rather than just specific rules concerning
electricity. To harmonise that further in depth would be disproportional at this time to
achieving a well functioning common electricity market.
There are differences between the countries regarding marketing rules, but it is
NordREG’s assessment that this is not critical to the Nordic market harmonisation.
155
8 Pricing
NordREG finds that pricing is a central process when acting as a supplier on the
electricity market. NordREG has divided this process into two parts, the first one dealing
with the regulation of end user prices, and the other part dealing with the suppliers’
obligations regarding price information. In the following section, the national regulatory
frameworks will be described concerning these two parts of pricing.
8.1 Present situation in the Nordic countries
8.1.1 Regulation of end user prices
Denmark
On January 1st, 2005, an amendment to the provisions in the Electricity Supply Act on
DERAs price regulation of supply obligated electricity entered into force. The prices for
supply obligation electricity apply for one quarter at a time, and suppliers of supply
obligation electricity must notify DERA of these before the prices enter into force.
Customers buying supply obligation electricity are primarily private households and
smaller enterprises. When companies report their prices, DERA is required to check that
the prices do not exceed the market price level for corresponding consumer segments and
terms of supply. Then DERA will set a max price for each supplier. In case the prices
reported are above the market price, the supplier must immediately reduce their prices.
The market for supply obligation electricity
In the opinion of DERA, prices notified for supply obligation electricity cannot be
considered as an expression of price levels for the whole market. There are several
reasons for this:
„
in reality, the individual suppliers of supply obligation electricity are
local/regional monopolies within their area
„
customers are not very mobile because the financial benefits from changing
suppliers are very small
„
taxes on electricity conceal the price signals from the market; it is difficult for
customers to obtain information about the market as it is difficult to compare
different electricity products, (i.e. products with different terms and supply times)
„
lack of knowledge about suppliers
„
considerable barriers to new suppliers entering the market, for example, it is
difficult to establish a profitable customer base. In order to conduct the price
control required of the Authority, DERA has therefore developed a method which
can provide a real expression of the price level in a competitive market
156
The DERA price model is based on prices offered by various suppliers across the areas.
These prices are made available to DERA through the website, www.elpristavlen.dk. On
the basis of prices on www.elpristavlen.dk, each quarter DERA identifies the supplement
(mark-up or gross margin) included in consumer prices displayed on the website, i.e. the
difference between the wholesale price for electricity and the prices on the
www.elpristavlen.dk website. If the prices notified by the supply obligation companies
contain a higher supplement, the Authority orders the companies to reduce the prices.
DERA has laid down rules on how electricity supply companies are to publish prices,
tariffs, discounts, and terms. These rules entered into force on September 1st, 2005.
The rules are to help consumers better understand the prices and terms of different
suppliers. Consumers are therefore better able to exploit their right to a free choice of
supplier. There are requirements that electricity supply companies publish their standard
prices and terms on their own websites. In the unlikely event that an electricity supply
company does not have a website, it can publish its prices and terms in another way.
Electricity supply companies must also report their prices to consumer portals on the
Internet designated by the Authority. The Association of Danish Energy Companies’
portal www.elpristavlen.dk is currently the only portal designated. On this portal
(primarily) private consumers can compare prices of different suppliers. The publication
rules should be considered in the perspective of the regulations concerning consumer
protection issued by the Danish Energy Agency. These contain requirements regarding
the content of contracts between electricity suppliers and consumers, requirements on
disclosing price increases, requirements on methods of payment, etc. DERA deals with
complaints about non-compliance with these regulations.
The future for the end user price regulation in Denmark
The Danish Competition Authority has recently analyzed the retail market for electricity
and carried out an investigation among household customers. The investigation shows
that only 2.3 % of household customers have switched suppliers since the opening of the
st,
market on January 1 2003. The investigation also shows that household customers know
about the possibility to switch, and that they are willing to switch if they can save some
money. However, household customers know very little about the market, the prices, nor
the fact that you have a distribution operator and an electricity supplier.
The investigation also showed that new entrants to the retail market with no connection to
a DSO consider the exchange of data to be very troublesome because such new entrants
are forced to communicate with various DSOs (up to 100), while companies in the market
have many customers in a small area and maybe only one DSO to communicate with.
Therefore, the Competition Authority also suggests that a data hub should be established,
whereby the barrier to market entrance is demolished. The end user price regulation
should only be abolished when consumers are more aware of the prices, and when the
data hub has been established.
All of the “obligation to supply” companies are connected to a grid operator. This causes
problems concerning data exchange for new entrants. It is also recommended to change
the supply-system from a “default supplier” system, to a supplier of last resort system.
The 35-40 minor companies holding a license with obligation to supply could be replaced
157
by only one company with an obligation to supply – but as a supplier of last resort. This
supplier could be appointed through a tender.
Finland
End user electricity prices are not regulated. Suppliers set their prices independently, and
are able to change them when they deem it necessary. Neither the Energy Market
Authority, nor any other authority, does approve or fix these prices ex-ante. However,
173
under the obligation to supply, prices have to be reasonable. The reasonableness of
these tariffs could be supervised ex-post by the Energy Market Authority, but so far it has
never made this kind of investigation.
Norway
174
The obligation to supply tariff is regulated for the first six weeks . The DSO can charge
no more than the Nord Pool Elspot area price, plus 5 øre/kWh the first six weeks.
There is no regulation on prices after the first six weeks, but it is stated that the DSO
should set the supply tariff in a manner that gives the customer an incentive to get an
ordinary supply contract. This implies that they should be higher than market based
tariffs.
The suppliers’ pricing is not regulated in Norway.
Sweden
End user prices are not regulated in Sweden. Suppliers set their prices independently, and
are able to change prices as often as they find it necessary. This also applies to default
prices.
8.1.2 Suppliers’ obligation regarding price information
Denmark
Notifications to authority
A supplier under the obligation to supply scheme has to report its prices and terms to
DERA.
There is also the online price service www.elpristavlen.dk, which helps consumers find
and compare prices and terms for electricity. All suppliers have to report prices and terms
regularly to the web service. It is maintained by the branch organisation Danish Energy.
Notifications to consumer
There are several consumer protection issues stated in the order regarding consumer
protection, order number 380.
173
174
Electricity Market Act 21 §
Regulation number 301 of 11.03.1999 on metering and settlement, § 2-1a
158
According to § 4, the consumer shall have appropriate warning if the supplier wants to
change prices. The consumer has the right to cancel the contract with the supplier if the
consumer doesn’t accept the new prices. The supplier also has the obligation to inform
the consumer about this right to cancel the contract.
According to § 5, the supplier shall give the consumer a personal notification about the
total price change.
According to § 6, the supplier must give the consumer a large number of ways to pay.
Any differences in terms and conditions regarding the various payment methods must
correspond to the actual costs for the supplier to offer the different payment methods.
Finland
Notifications to authority
A supplier who has the obligation to supply shall deliver public terms and the criteria
underlying these, to the Energy Market Authority prior to their introduction.
Any retail electricity supplier shall notify the Energy Market Authority of their terms of
retail sale, and the prices of electricity that they applie when supplying electricity to
consumers and other users with main fuses of 3 x 63 A at the maximum, or who purchase
175
a maximum of 100,000 kWh per year.
The Energy Market Authority has given further regulations on which information relating
to the terms of retail sale, prices, and pricing criteria should be delivered to it, how the
176
information should be itemized, and how the information should be delivered. The
Energy Market Authority maintains an online price service at www.sahkonhinta.fi. With
the help of this service, small-scale users are able to compare electricity suppliers’ offers.
Suppliers are responsible of notifying through this service whether their prices are valid
until further notice, for a fixed time, or if the price is variable following a specific index
(e.g. Spot price). A supplier shall notify the Energy Market Authority of changes to terms
and pricing before they enter into force, and they must specify the date when they will
enter into force. A supplier can also specify the origin of electricity they sell.
Notifications to customers
A supplier shall provide its contracting party with information on how the prices will
change, when the change will come into effect, and what the grounds for the change are.
The contracting party must be informed of whether they have the right to terminate the
contract. If the reason for the change is not a legislative amendment or a decision by the
authorities, the change may come into effect, at the earliest, one month after the
177
notification of the change has been given.
Notifications on price changes are to be sent to the customer in writing. They can be sent
to the invoicing address of the user or they can, for example, be included in an invoice
sent to the customer. This aforementioned regulation is mandatory for the good of
consumers (households).
175
Electricity Market Act Section 22
Regulation by the Energy Market Authority 62/01/2006
177
Electricity Market Act Section 26
176
159
In standard terms of electricity contracts, it is specified that for electricity users other than
consumers the change may come into effect, at the earliest, two weeks after a notification
of the change has been given.
Norway
Notifications to customers
The supplier’s obligation to inform their customers about changes in pricing depends on
the type of contract. The standard contract drawn up by the Consumer Ombudsmann and
EBL contains certain rules about how and when the customer should be notified about
price changes on standard variable price contracts.
According to the contract, a supplier has the obligation to announce a change in their
standard changeable prices at least 14 days ahead. The supplier can inform the customer
directly or publish the price change in the local newspaper. When there is a substantial
price change, i.e. 2.5 øre/kWh or more ,since the customer last received price information
directly, the supplier must inform the customer by letter, by message on the meter reading
card, or electronically.
Notifications to authority
178
According to regulations issued pursuant to the competition laws , a supplier that
delivers electricity to a household customer shall report information on prices to the
Norwegian Competition Authority. The supplier has to report prices on certain specified
products/contracts:
„
Fixed rate contracts for periods of 1 to 5 years
„
Standard changeable price contracts
„
Contracts based on spot price
The supplier is obligated to report to the Norwegian Competition Authority at least 14
days ahead of when they change prices. The Norwegian Competition Authority maintains
a price comparison page on their website,
http://www.konkurransetilsynet.no/no/Kraftpriser/.
Sweden
According to the General terms and Conditions, a supplier has the obligation of
announcing a change in the default price at least 15 days ahead. The announcement
should be sent to the customer, or be published in the local newspaper and on the
supplier’s website.
In addition, according to the Electricity Act, a supplier is obligated to inform customers
with fixed term contracts of the consequences when the contract expires. This information
must be given to the customer at the earliest 90 days and at the latest 60 days prior to the
expiration of the contract. This information should be sent as a separate message to the
customer.
178
FOR 1997-12-12 nr 1392: Forskrift om meldeplikt for kraftpriser.
160
179
According to subsidiary law , a supplier that sells electricity to a household customer is
required to report information on pricing and supply conditions to the Energy Markets
Inspectorate. The supplier is required to report prices and supply conditions that apply to
electricity consumers for the following contracts:
„
Fixed rate contracts for the periods of 6 months, or 1, 2, 3, 4, and 5 years
„
Variable rate contracts’ (spot price) rates for periods of 3 months, 1 year, or
continuing
„
Open-ended contracts (default price). Customers who have neither switched
suppliers nor renegotiated their contract have open-ended contracts
„
Electricity from renewable energy sources in the contracts stated above
Changes in prices or supply conditions shall be reported to the Inspectorate electronically
at the latest 24:00, on the day the changes take place. The Energy Markets Inspectorate
maintains a price comparison website, www.elpriskollen.se.
8.2 Identified differences
The table below summarizes the present situation in the Nordic countries regarding
pricing issues. In the column labelled Nordic are NordREG’s suggestions on the need for
harmonisation in order to establish a common Nordic end-user market.
Table 19. The present situation in the Nordic countries regarding pricing issues.
Denmark
Are the enduser prices
regulated?
Are the default
prices
(obligation to
supply prices)
regulated?
Is the
information on
price changes
to the
customers
regulated?
179
180
Yes
180
Yes
Yes
Finland
Norway
No
No
No, but the
prices should
be reasonable
Regulated for
the first six
weeks
Yes
Yes, if using
the standard
contract
Sweden
Nordic
No
It is critical for
suppliers that
the end-user
prices are not
regulated
No
It is critical for
suppliers that
the regulation
may not
hamper
incentives for
consumers or
competition
among retailers
Yes for default
prices
It is important
to be regulated,
but not critical
to be
harmonised
STEMFS 2007:8
Obligation to supply prices are regulated and other contracts are not regulated.
161
When does a
supplier have
to inform
customers on
price changes?
With
reasonable
warning
One month
ahead
14 days ahead
15 days ahead
for changes in
default price
The minimum
timeframe
should be
harmonised.
Sent to the
customer or
published in the
local
newspaper and
on the
supplier’s
website
The minimum
requirements
for announcing
about the
changes should
be harmonised.
How should
the
information
about price
changes be
given to the
customers?
E.g. on the
coming invoice
In writing
In the local
newspaper or
directly to the
customer,
depending on
the change
Are there any
obligations for
suppliers to
inform the
regulator or
other
authorities on
prices?
Yes, suppliers
in the
obligation to
supply scheme
Yes
Yes
Yes
Not critical to
harmonise
DERA
EMV
The Norwegian
Competition
Authority
EI
Not critical to
harmonise
Which
information do
the suppliers
have to report
to the
authorities?
Prices and
terms of
contract
Prices and
terms of
contract
Prices on
certain
specified
products/contra
cts
Prices and
terms of
contract
Not critical to
harmonise
When does the
supplier have
to inform
prices/ price
changes to the
regulator or to
another
authority?
Every quarter
Before they
will come into
force
14 days ahead
At the same
day
Not critical to
harmonise
To which
authorities?
8.3 Conclusions and suggestions
Sweden and Finland do not have regulation on end-user energy prices. In Finland,
however, the legislation requires that prices under the obligation to supply have to be
reasonable even though they are not in practise supervised. In Norway, prices under the
obligation to supply are regulated for the first 6 weeks. Regarding end-user price
regulation for default prices in Denmark, the future’s regulation is hard to assess.
However, the Danish Competition Authority has recently in its yearly activity reporting
from 2008 made some statements and recommendations linked to price regulation. Given
consumers’ improved awareness of price formation through the installation of smart
meters and the establishment of a data hub - thus decreasing the barriers of entry - end
user price regulation could be suspended. Furthermore, to improve competition, it could
be considered to replace the current licensing of a default supplier with a system of a
supplier of last resort. This issue is critical for a common Nordic electricity market to
162
function, because for example customers in Denmark are reluctant to switch products
because, as regulated prices are very close to the commercial prices they can get in the
market, there is little money to be saved by switching suppliers. Obviously other factors
are also important, but it is a fact that approximately 95 % of small consumers are under
the regulated price scheme.
Based on the aforementioned reasons, NordREG does not suggest any concrete action on
the issue of price regulation.
NordREG finds that the minimum timeframe for suppliers to inform customers on price
changes should be harmonised. The timeframe must not be too long in order to maintain
the close link between market prices and end-user prices. On the other hand, the
minimum timeframe should be long enough that the customers are able to make
conclusions and change suppliers after receiving the information on price changes.
NordREG suggests that the minimum timeframe for informing customers on price
changes should be at least 14 days before the price change.
NordREG finds also that the minimum requirements for announcing methods should be
harmonised. The harmonised routines should be cost effective, but they should also
ensure that the customers really get the information. NordREG suggests that costeffective methods like email and SMSes should be preferred. These methods are also
181
advisable, as customers receive the information directly. Keeping in mind that all
customers are not able to receive announcements of price changes via SMS or email,
announcements in relevant newspapers should also be used. Also other methods could be
used if explicitly agreed upon with the customer
In each country, suppliers have to report their prices to the regulator or other authorities.
All countries also have price comparison tools for customers to compare supply prices.
The information to be reported does not significantly vary, but there are some differences
in the notice times. As the practises are already quite similar, NordREG sees that small
differences do not form a real obstacle to suppliers for entering new markets. For that
reason, there is no need for harmonisation
181
Annex A in the Electricity Market Directive (2003/54/EC) states that service providers shall
notify their subscribers directly of any increase in charges, at an appropriate time no later than one
normal billing period after the increase comes into effect.
163
9 Empowering customers
NordREG finds that processes concerning customer empowerment are of great
importance if the customer is to feel confident when acting in the electricity market.
NordREG will in the following section describe the national processes regarding
complaints and dispute settlements, obligation to supply and the supplier of last resort
9.1 Complaints and dispute settlement
9.1.1 Present situation in the Nordic countries
Denmark
In 2005 an order (secondary legislation) regarding customer protection issues was made
with regards to electricity supply. This order describes a whole range of issues in which a
customer has statutory protection. It sets out among other things some minimum
requirements of what a contract between a customer and a supplier must entail. It also
describes that the customer must have a suitable notification period if the contract terms
are changed, and the customer shall have the right to cancel the contract after the changes
have been published. It is furthermore stated that the supplier must absorb any fees for
switching suppliers. There are also broader customer protection issues stated in the
Danish legislation. If a customer feels that they have been treated unfairly, they can file a
complaint.
In Denmark there is an Energy Supplies Complaint Board. The Energy Supplies
Complaint Board is established in cooperation between the Consumer Council and the
Association of Danish Energy Companies, DONG (Danish Oil and Natural Gas), Greater
Copenhagen Natural Gas/Natural Gas Middle-North, Natural Gas Funen, and the Danish
District Heating Association.
The Board is composed of a neutral chairperson and four members. The chairperson is a
city court judge. The Consumer Council appoints two members, and two members are
appointed to represent the respectively energy trade area. The Danish Energy Regulatory
Authority (DERA) under the Danish Competition Authority serves as secretariat to the
Board.
The Board has a mandate to handle disputes arising from the contractual relationship
between energy consumers and an electricity supply undertaking, natural gas supply
undertaking, and district heating supply undertaking. There are no thresholds with regards
to the value of the dispute. The Board does not take up disputes settled by court
judgement. On the other hand, shall a case that is being dealt with by a court of law be
postponed, it shall be transferred to the Board.
The Board shall reject the complaint if
„
the nature of the case implies that it cannot be adequately handled without oral
statements from the parties given under liability of punishment, or
„
the case implies questions of evidence that are not likely to be clarified during a
written procedure.
164
Before the dispute can be taken up, the plaintiff must have made a written complaint that
has not resulted in an amicable settlement. Cases shall be brought to the Complaint Board
in writing, and within a reasonable timeframe from which the consumer has received a
final reaction to their complaint from the counterpart. The further handling of the case is
in writing. The secretariat shall secure that all relevant information is presented, and that
the defendant is given the opportunity to comment on the case. The secretariat shall take a
neutral attitude; it may take an initiative to an amicable solution or present an opinion
based on previous decisions made by the Complaint Board.
In cases brought before the Complaint Board, the secretariat shall present a summary with
an adequate overview of the case and the comments of the parties. The Complaint Board
shall state the reasons for its decision and whether the decision is unanimous. If the
decision is split, it shall be indicated which representative(s) dissent(s), and the reason for
the dissent. The Complaint Board shall state the reasons for its decision as well as for
possible dissenting votes.
The Complaint Board may resume a concluded case if the consumer presents new
information or evidence, given that this information or evidence may have led to another
decision.
Handling of cases costs a fee of DKK 150. The fee is to be paid back if the Board upheld
the consumers’ contention. In this case, the energy company has to pay a fee of DKK
7,000 to the board. Decisions are not binding or enforceable. When the Board has made a
decision, either party can take the matter to court.
In 2007 there was an average of 7 inquiries per day to the Board, either by telephone or
by personal attendance. In 2007, the Board handled 195 cases where some where rejected
or referred to other authorities.
If the Board’s decision is not complied with, the secretariat can send the case to the
Danish Consumer Agency. The Agency will then take the matter to court at the request
and on behalf of the consumer. If the consumer does not want take bring the decision to
court, the Board shall publish the decision on its website on the section “Pillory” with
name and address of the energy company.
It is possible to file a complaint with a foreign company to the private complaint board
(ANE). The only prerequisite is that the company be liable for prosecution in Denmark.
Finland
Dispute settlement depends on the nature of the complaint. The Energy Market Authority
can solve complaints on issues within the competence of the regulator, but it cannot settle
individual contractual disputes between energy companies and customers. In the view of
consumer protection, the Consumer Ombudsman supervises the legality of the terms of
182
the contracts referred to in Electricity Market Act chapter 6. These contracts are
connection contracts, electricity network contracts, and electricity supply contracts.
The consumer advice service provides personal consumer advice and mediates in
individual disputes. This consumer advice service is free of charge for the consumer.
182
Electricity Market Act Section 25 b
165
In customer contracts, the most common dispute resolution bodies are general courts and
the Consumer Disputes Board. According to the standard terms of energy contracts, the
consumer has the right to bring any disputes arising from interpretation of the contract to
the Consumer Disputes Board for consideration. In addition, unless agreed upon
otherwise, any disputes arising from the contract must be settled by the general court of
first instance of the locality where the customer’s place of electricity use is situated.
However, the customer is always entitled to bring the case to the general court of first
instance of their place of domicile in Finland. The consumer dispute settlement system is based on the Act of Consumer Disputes Board
(8/2007). The Consumer Disputes Board is an impartial body of experts for solving
disputes between consumers and entrepreneurs.
The same regulations that are applied to the courts will also apply to the Board’s
international sphere of competence. The general rule is that the contract under dispute
must have connections to Finland. This is the case at least when an entrepreneur has
engaged in commercial activity in Finland, or when a consumer has signed a contract in
Finland. Thus, the Finnish Consumer Disputes Board is able to handle contractual
disputes between a Finnish consumer and a foreign entrepreneur if the contract has
sufficient connection points to Finland. The members of the Board represent consumers
and entrepreneurs in equal parts, all of them part-time. The members are appointed by the
Council of State for a term of four years. The Board cannot issue a recommendation on
how to resolve a dispute which has already been settled in court or is pending. The
Consumer Disputes Board does not charge any fees for handling disputes. The Board’s
written decision is a recommendation, and the parties are not obliged to follow it.
Although the decisions are not legally binding, they have been generally followed by
energy companies. A dispute handled by the Board can always be taken to a court of law.
In cases of business contracts, there are also other dispute settlement possibilities for
contractual parties, such as negotiation, mediation, and arbitration.
Norway
NVE settles complaints and disputes regarding issues within its scope of authority, for
instance complaints on network tariffs, DSO’s neutrality, obligation to supply, and
supplier switching. This means that the issue must be regulated within the energy
legislation to be handled by NVE. The parties may make a complaint against NVE’s
decision to the Ministry of Oil and Energy (OED). Thereafter the Court of law is the next
court of appeal.
Complaints regarding contractual issues between private consumers and suppliers or
DSOs are settled by Elklagenemda, a council which consists of two representatives
appointed by the Consumer Council and two representatives appointed by the electricity
utilities. The council is chaired by an independent lawyer.
Elklagenemda also handles complaints regarding power shutoffs, supplier switching,
calculation of electricity consumption and possible defects in the metering equipment,
billing, obligation to supply, network connections and placing of transformers, poles, and
power grids.
166
The Office of the Consumer Ombudsmann handles cases regarding misleading contracts,
improper billing, etc.
Apart from the remedies mentioned above, the customer can always turn to the civil court
system to have the complaint decided upon. This is, however, not common regarding
consumer complaints in the electricity sector.
Sweden
If the customer has a complaint, they should first turn to the company itself for some kind
of redress. If it is a complicated matter the kundombudsman of the company may help
and solve the matter. There are about 15 companies that have a kundombudsman,
including the three largest companies. The kundombudsman usually has the authority to
solve customer matters on their own, and can therefore change decisions made by other
departments of the company. In many cases the kundombudsman is part of the company
management.
If the matter is covered in the Electricity Act or secondary regulation, the customer can
turn to the Energy Markets Inspectorate. These issues range from matters of network
tariffs, to connection issues and general questions. The regulator does not, however, make
any decisions regarding matters on contracts or marketing issues, for example.
183
Elrådgivningsbyrån can give the customer advice and information on any question
regarding the electricity market. There are about 7 000 people a year who contact the
bureau.
The customer can also turn to the National Board for Consumer Complaints 184 . The
National Board for Consumer Complaints then has regular court proceedings without
costs for the consumer. The complaint must, however, concern a sum of2 000 SEK or
more if the board is to take on the case. The board is a forum for all consumer complaints,
regardless of the area. The decisions made by the National Board for Consumer
Complaints are not binding, but are generally followed. If the company does not comply
with the National Board for Consumer Complaints’ decision, the consumer can turn to the
civil court system
Apart from the remedies mentioned above, the customer can always turn to the civil court
system to have the complaint decided upon. This is, however, not common regarding
consumer complaints in the electricity sector.
9.1.2 Identified differences
The table below summarizes the present situation in the Nordic countries regarding
complaint handling and dispute settlement processes. In the column labelled Nordic are
NordREG’s suggestions on the need for harmonisation in order to establish a common
Nordic end-user market.
183
The work is funded by the Energy markets inspectorate, Swedenergy, and the Consumer
agency, who also are members of the board.
184
Allmänna Reklamationsnämnden, ARN.
167
Table 20. The present situation in the Nordic countries regarding to complaint handling and dispute
settlement processes.
Which party
takes care of
consumer
complaints
regarding the
electricity
market?
Are these
decisions
binding?
Which party
takes care of
consumer
complaints
regarding
contractual
issues?
Are these
decisions
binding?
Which party
takes care of
consumer
complaints
regarding
pricing?
Are the
decisions
binding?
Which party
takes care of
consumer
complaints
regarding
customer
service?
Are these
decisions
binding?
Denmark
Finland
Norway
Sweden
Nordic
Private
complaint
board or DERA
EMV if within
EMVs scope of
authority, else
The Consumer
Disputes Board
NVE if within
NVEs scope of
authority, else
Elklagenemda
EI, Consumer
Agency, The
National Board
of Consumer
complaints, 185
The Consumer
Advice Bureau
Not critical to
harmonise
NVE: Yes
Yes, but not
The National
Board of
Consumer
complaints and
the Bureaus
decisions
Not critical to
harmonise
The Consumer
Disputes Board
Elklagenemda,
The Office of
the Consumer
Ombudsmann
Consumer
Agency, The
National Board
of Consumer
complaints, The
Consumer
Advice Bureau
Not critical to
harmonise
No
The Office of
the Consumer
Ombudsmann
(Market
Council): Yes
Yes, but not
The National
Board of
Consumer
complaints and
the Bureaus
decisions
Not critical to
harmonise
EI, network
tariffs
Not critical to
harmonise
Yes
Not critical to
harmonise
Consumer
Agency, The
Consumer
Advice Bureau
Not critical to
harmonise
No
Not critical to
harmonise
Private
complaint
board: No
DERA: Yes
Private
complaint
board
No
EMV: Yes
The Consumer
Disputes
Board: No
Private
complaint
board
EMV
No
Yes
DSO/network
tariffs: NVE
Elklagenemda
186
NVE: Yes
Private
complaint
board
The Consumer
Ombudsman
/Consumer
Agency
No
Yes
NVE if within
NVEs scope of
authority
The Office of
the Consumer
Ombudsmann 187
NVE: Yes
185
ARN
186
Elklagenemda is not handling cases only concerning the electricity price. For instance, you can complain
only if you don’t think you are getting the agreed price, not just because you think the price is too high,.
187
The Office of the Consumer Ombudsmann is handling cases regarding misleading contracts, improper
billing etc.
168
Are there any
costs for a
consumer to
complain?
Yes, 150 DKK
but nullified if
won.
No
No
No
Not critical to
harmonise
9.1.3 Conclusions and suggestions
It is very important that the customer feels secure when acting in the future Nordic
market. Otherwise they may not be interested in participating in the market and switching
suppliers, in which case there is little benefit for suppliers to offer their products to
foreign customers. Regarding customer protection issues it is thus essential that all
Nordic countries have well-functioning processes for dispute settlement and have
established complaint boards. This is already put into practise in the Nordic countries.
The biggest difference in these countries is that some decisions are binding and some are
not.
NordREG sees that there is no critical need to harmonise the legal framework of
consumer protection, as these processes are already fairly similar. In that regard, the
suppliers do not need to know many different procedures. One challenge is also that
harmonisation would influence national legal traditions regarding when and from whom
decisions are legally binding. From a customer’s point of view, disadvantages are also to
a large extent limited. The main reason is that Denmark, Finland and Sweden are parties
to the EC Convention on the Law Applicable to Contractual Obligations (Rome I). Under
that convention (Article 5), consumers contracting with foreign traders cannot be
deprived of the protection stemming from the non-derogable rules of their home country.
Thus, in contractual disputes they are treated at least according to the minimum
requirements applied in their national legislations.
When discussing complaints belonging to the competence of the regulators, it should also
be ensured that foreign suppliers have to obey the legislation of the country in which they
are offering their services. This is the main basis presumed to be applied in each country
already today. However, disagreements arising from this have yet to occur, and the issue
may thus be open to court interpretation. If then deemed necessary, explicit statements on
the applicability of the law should be included in the legislation.
9.2 Obligation to supply and the supplier of last
resort
9.2.1 Present situation in the Nordic countries
Denmark
All Danish electricity customers have access to private contracts for supply on the retail
market at regulated end-user market prices. However, customers must actively choose a
supplier and accept a supply contract in order to enter the competitive energy retail
market.
“Passive” customers (excluding electricity customers with annual consumptions of more
than 100,000 kWh), i.e. customers who do not actively choose a supplier, are
169
automatically supplied by the supply company holding a license for “obligation to
supply” for that geographical region (“default supply”). A customer having actively
chosen another supplier can return to the supply company holding the license for
“obligation to supply” on normal “obligation to supply” terms, if they do not renew their
supply contract or do not engage in a contract with another supplier on the competitive
market when their supply contract expires.
Any customer having lost their supplier, i.e. due to bankruptcy of the supplier, will also
be supplied by the supply company holding the license for “obligation to supply” for that
geographical region (“supplier of last resort”) on normal “obligation to supply” terms
until they actively choose another supplier.
Energy retailers apply for a license of “obligation to supply” for a certain geographical
area over a fixed period - generally 5 years. The entire geographical area of Denmark is
covered by such licenses. In practise only incumbent retailers in each grid area applied for
and were granted such licenses when the present Electricity Supply Acts came into force.
Thus, the retail market for households and small business customers is dominated by
incumbent suppliers.
The political motivation for issuing licenses for “obligation to supply” and for regulating
supply prices was the wish to protect customers in the case that competition on the retail
market did not function satisfactorily. In order to minimise any negative impact on the
competitive market, price regulation is linked to the wholesale market price in accordance
with Danish legislation.
Finland
Obligation to supply means that for each distribution network area, the electricity supplier
which has the most significant market power or the largest market share in the area
concerned has the obligation to supply electricity at reasonable prices to those
188
consumers or other users having main fuses of 3 x 63 A at the maximum, or who
purchase no more than 100,000 kWh of electricity per year. An electricity supplier with
significant market power shall have their terms of retail sale and prices, and the criteria
underlying them, publicly available to consumers and to the customers encompassed by
189
the supplier’s obligation to supply. The obligation to supply is not the same as being a
default supplier. It only means that the supplier has to supply electricity if a given
customer requires so. Thus, the supply does not start automatically, because there always
has to be a contract between the supplier and the customer.
The obligation to supply scheme applies mainly to customers that have not yet actively
changed their supplier. However, these customers also have the right to return to that
supplier at any time, and to make a contract at its public prices after being a customer of
another supplier. The objective of the scheme is to safeguard the interests of small
electricity users and to guarantee that these customers always have at least one supplier
available.
188
In the Electricity Market Act a consumer is defined based on the Customer Protection Act as
being a natural person who acquires consumer goods and services primarily for a use other than
business or trade.
189
Electricity Market Act Section 21 subsection 1 and 2
170
The obligation to supply scheme has not been seen as totally equitable, as not all
suppliers are in the same position in the electricity market with regards to customer
acquisition or price setting. Some doubts have also been expressed that these suppliers,
often being a part of the same legal entity or belonging to the same group company as the
DSO, are not always treated by the DSO in the same way as other suppliers.
A supplier of last resort scheme applies to those customers whose electricity supply is in
danger of being interrupted due to the retail supplier (e.g. bankruptcy).
The DSO may not interrupt electricity supply for a reason attributable to the retailer until
the DSO has notified the electricity user of the interruption in electricity supply and of the
reason for this. The DSO shall see to it that the consumer is supplied with electricity for
at least three weeks after the dispatch of the notification. The DSO may not interrupt
electricity supply to a user of electricity encompassed by the obligation to supply until the
Energy Market Authority has designated a new retailer to be the one having the
obligation to supply for that area. The Energy Market Authority designates the new
supplier according to the same requirements that apply to this kind of supplier under
normal situations (i.e. the supplier has significant market power or the largest market
share in the area concerned). The user of electricity must compensate the DSO for any
190
reasonable costs associated with this supply of electricity.
It does not necessarily have to be the DSO itself supplying an electricity user in these
situations. The DSO may agree with a supplier that this supplier takes care of the
electricity supply to the customers.
Norway
In Norway the supplier of last resort and the obligation to supply is not separated.
According to the Energy Act, DSOs are given the role as the supplier of last resort within
their network area, and are obliged to supply electricity to all customers without an
ordinary supplier
Both customers who are not able to get an ordinary supply contract (for instance due to
insolvency) and customers who are temporarily without a supply contract (for instance if
they have just moved to a new address or their former supplier has gone bankrupt) are
included under the DSO’s obligation to supply.
The DSO has the duty of informing end users supplied by the obligation to supply
scheme about available suppliers within the grid area(s) of the DSO. If an end user has
not chosen a supplier and is on an obligation to supply tariff, the DSO shall without delay
inform the customer of the terms and conditions for this particular tariff, and at the same
time give an overview of all available suppliers. If the end user for some reason remains
on the obligation to supply contract, they shall receive the same type of information. At
the start of delivery in an obligation to supply situation, the DSO shall also send the
customer a standard information letter from NVE on the obligation to supply.
The obligation to supply tariff is regulated for the first six weeks. The DSO can charge no
more than the Nord Pool Elspot area price plus 5 øre/kWh for the first six weeks. After
190
Electricity Market Act, Section 27 h
171
those first six weeks the obligation to supply tariff should give the customer an incentive
to get an ordinary supply contract (implying that it should be higher than market based
tariffs). Any profit from customers on an obligation to supply tariff is regulated within the
yardstick income regulation, so the DSO has no incentive to set a very high price.
Sweden
A supplier of last resort is a supplier who provides electricity to customers who have not
191
actively chosen their supplier or contract. According to the Electricity Act, this
customer should be appointed a supplier (a default supplier) by the local DSO. The most
common situation where the arrangement of a default supplier is used is when the
customer has moved and has not actively chosen a supplier. Often the appointed supplier
is the local incumbent supplier.
The default supplier shall immediately inform the customer of the terms and conditions
that the default supplier uses as well as the starting date for delivery. For the consumption
of electricity that has not been delivered according to a supplier’s contract, the customer
shall pay the default supplier in accordance with those terms and conditions that apply.
There is no regulation regarding the default price in Sweden. The design of a default
contract must follow those rules governed by the Electricity Act, general contract terms,
and contract laws.
In Sweden the supplier of last resort and the obligation to supply is not separated. For
example, in cases of supplier withdrawal the supplier of last resort is obligated to
temporarily provide electricity to the customer.
9.2.2 Identified differences
The table below summarizes the present situation in the Nordic countries regarding the
obligation to supply and supplier of last resort schemes. In the column Nordic are
NordREG’s suggestions on the need for harmonisation in order to establish a common
Nordic end-user market.
Table 21. The present situation in the Nordic countries regarding the obligation to supply and supplier
of last resort schemes.
Denmark
Is the
obligation to
supply
regulated?
Yes
Finland
Norway
Nordic
Yes
Not critical to
harmonise, but
there should be
national
regulation
Yes
Yes
The default
supplier
Not critical to
harmonise.
(national issue)
It could either a
supplier or a
DSO
Not available
Not critical to
harmonise
Which party
has the
obligation to
supply?
Suppliers with
a license
Supplier
The DSO has
the obligation
to supply
within its
network area
What are the
requirements
Financial and
technical
Supplier which
has significant
market power
DSO
191
Sweden
Electricity Act (1997:857), chapter 8 § 8.
172
in each
distribution
network area
for a party to
have the
obligation to
supply?
Obligation to
supply
electricity at
reasonable
prices to
consumers and
other small
users
Supply
electricity to all
customers
without a
ordinary
supplier
Not available
Not critical to
harmonise
Yes
If not choosing
a supplier, they
will be supplied
by the DSO
under the
obligation to
supply
Contact the
DSO
Not critical to
harmonise
Same as the
obligation to
supply
Yes
Same as the
obligation to
supply
Yes, the DSO
has to have one
Not critical to
harmonise, but
there should be
national
regulation
Which party is
the supplier of
last resort?
Same as the
obligation to
supply
DSO in the first
place, and then
the supplier
with the
obligation to
supply
Same as the
obligation to
supply
Default
supplier
Not critical to
harmonise
What are the
requirements
for a party to
be a supplier
of last resort?
Same as the
obligation to
supply
No specific
requirements
Same as the
obligation to
supply
Not applicable
Not critical to
harmonise
What are the
responsibilities
for a party
being a
supplier of last
resort?
Same as the
obligation to
supply
Take care that
customers will
be supplied
with energy for
a certain period
Same as the
obligation to
supply
Obligation to
supply
electricity to
customers
Not critical to
harmonise
What are the
responsibilities
included in the
obligation to
supply?
Supply all
passive
customers in
the concession
area
Does a
customer have
to take any
actions to get
electricity?
(e.g. while
moving in)
No, they will be
supplied under
the obligation
to supply
scheme
Is the supplier
of last resort
regulated?
9.2.3 Conclusions and suggestions
All of the countries have regulated obligation to supply schemes. This issue may also be
for some parts a political decision, so full harmonisation could be hard to carry out in the
near future. The differences between Nordic countries with regards to how the obligation
to supply and the supplier of last resort schemes are implemented do not, however,
prevent the establishment of a common Nordic end user market. For suppliers selling
electricity across borders, these schemes do not create any direct obligations, e.g. the
obligation to supply in the target country. Also in Sweden, where the DSO may appoint a
supplier to a customer, the appointed supplier is often the local incumbent supplier.
Therefore NordREG does not suggest any harmonisation relating to the obligation to
supply or supplier of last resort.
173
NordREG finds that more important than the harmonisation of the schemes is that these
schemes exist, because it ensures that a consumer always will have access to electricity.
However, NordREG is familiar with the fact that these schemes may also have negative
impacts on the market functioning. These schemes may maintain the old market
structures where customers under these schemes stay passive, and such markets may not
be considered attractive to a non-incumbent or a foreign-based supplier. Likewise, those
suppliers who are encompassed by these schemes may gain competitive advantages
compared to other suppliers.
9.3 Disconnection
9.3.1 Present situation in the Nordic countries
Denmark
The rules concerning disconnection are not statutory in law, but are laid down in industry
guidelines. These guidelines state that the consumer should receive an announcement in
due time that the power will be cut off if the payment is not made.
Before this announcement, the supplier must have sent two reminders. The announcement
could then be stated on the second reminder which would normally be the bill for
collection. Also in cases where a repayment arrangement has been made and the
consumer does not comply can the supplier then disconnect. A last example is when a
money guarantee is required from the consumer but the consumer cannot make the money
guarantee; then disconnection is possible. In these above situations, the missing payments
need to be collected by the supplier through the court system.
It would normally be the grid company in the area who disconnects the consumer. They
would also, in most of these situations, not be paid for their transportation services.
If there are children in the household the social authorities should always be informed.
Likewise, the supplier should take into consideration special situations where electricity
is extra important for the consumer, e.g. a farm with animals. In these situations, the
police shall be informed first.
Finland
According to the Electricity Market Act, the supply of electricity can be interrupted if the
user of electricity has materially defaulted on payments to be made to the supplier or to
the DSO, or has otherwise materially infringed against their obligations based on the
192
contract. The DSO implements the interruption of electricity supply by order of the
supplier.
Before interrupting the supply of electricity, the user of electricity must be sent a written
notification of the default on payment or of the breach of contract. If, in spite of the
reminder, the user does not rectify the breach of contract within the period granted, the
supplier shall send an electricity supply disconnection warning. This separate warning
can be sent two weeks after sending the notification at the earliest.
192
Electricity Market Act Section 27 i
174
The supply of electricity may be cut at the earliest five weeks after the payment has fallen
due or after the electricity user has been informed of some other breach of contract for the
first time, and the breach of contract has not been rectified before cutting the electricity
supply.
However, the electricity supply may not be cut due to payment default between the
beginning of October and the end of April, in a building or part of a building used as a
permanent residence, if the building is heated by means of electricity, until four months
have elapsed since the due date of the outstanding payment. In addition according to the
standard terms of electricity sales prepared by Finnish Energy Industries, the electricity
supply to the consumer or residential property may not be interrupted if the outstanding
invoice of such a user does not amount to at least EUR 168.19, or if less than three
193
months have elapsed since the due date of the oldest outstanding invoice.
If the default on payment is caused by financial difficulties due to serious illness,
unemployment, or some other special cause, principally through no fault of the user, the
electricity supply may be cut at the earliest two months after the due date of the payment.
There are no extra provisions in the Electricity Market Act with regards to vulnerable
customers. The social welfare system takes care of those people who are too poor to
support themselves. This encompasses the entire span of social services and benefits, as
well as last resort income support.
Norway
According to the standard contract, the DSO may end the contract/disconnect the
customer in case of serious breach of the obligation to pay the network charges.
A supplier may end the contract with the customer, but it's only the DSO who can
disconnect him. The supplier notifies (then sends a message) about discontinuance of
power supply to the DSO. If the customer doesn't have a new supplier, the DSO as the
supplier of last resort will supply the customer.
When the DSO is supplying electricity according to the obligation to supply, serious
breach concerning the payment of electricity supply may also lead to switch
off/disconnection.
The process is not directly regulated in law or secondary legislation. However, it follows
from practise and is anticipated in legal theory that the DSO on certain terms have the
right to disconnect the customer until network charges has been paid.
The standard contract drawn up by the Office of the Consumer Ombudsmann and the
trade organisation EBL regulating the relationship between the household customer and
the DSO sets certain conditions regarding disconnection.
Sweden
If the customer is a consumer or a household customer, the supplier and the DSO have to
follow rules set in the Electricity Act regarding disconnection. According to regulation, a
193
Terms of electricity sales (SME 99)
175
DSO may disconnect a customer if the customer is in serious breach of the contract. This
breach can be with the DSO or the supplier. Non payment is considered such a serious
breach of contract. The supplier/DSO must first remind the customer of the failure to pay,
and that the customer may be disconnected if the debt is not settled. If the customer still
has not settled the debt, the DSO/supplier has to send a final warning to the customer, and
at the same time send a message to the social services in the customer’s county. If social
services assumes responsibility for the debt, or if the debt is settled by the customer, there
can be no disconnection.
9.3.2 Identified differences
The table below summarizes the present situation in the Nordic countries regarding
disconnection issues. In the column labelled Nordic are NordREG’s suggestions on the
need for harmonisation in order to establish a common Nordic end-user market.
Table 22. The present situation in the Nordic countries regarding to the disconnection issues.
Denmark
Finland
Norway
Sweden
Nordic
Is it possible to
disconnect the
customer?
Yes
Yes
Yes
Yes
No changes to
the present
situation
Which
stakeholder
may require
that the
customer will
be
disconnected?
The DSO and
the supplier
The DSO and
the supplier
DSO
The DSO and
the supplier
Not critical to
harmonise
Is the process
regulated?
Market rules /
guidelines
Yes
Only in the
standard
contract
Yes
Not critical to
harmonise, but
should be
regulated
9.3.3 Conclusions and suggestions
NordREG finds that the processes of disconnecting customers should be regulated in each
country. From the customer’s point of view, disconnection is a very significant action, as
electricity is a necessity in the Nordic countries. Prerequisites for disconnection should
thus be binding and clearly defined by legislation.
Presently, processes and prerequisites regarding disconnection vary between the
countries. Although it is normally the DSO who physically disconnects the customer,
there are also obligations for suppliers in most of the countries. If the disconnection is
going to take place due to a breach of contract with the supplier, the supplier has to, for
their part, make sure that the required conditions in that country for disconnection are
fulfilled. Therefore, cross-border suppliers have to carefully find out what the
prerequisites are in each country, which naturally causes some extra work for them. In
spite of that, NordREG sees that this work and possible related costs belong to normal
unavoidable actions to be taken into account when starting any business abroad. For that
reason, disconnection processes are not seen as being critical to harmonise in order to
create a common Nordic end-user market. For the customers’ sake, however, it could be
176
useful and in some cases more secure to have similar procedures, as it lowers the risk of
suppliers acting in a wrong way, even if unintentionally so.
177
10 Other issues
NordREG recognises that there are also many other issues that influence the suppliers’
possibility to act in the electricity market. NordREG will describe two of these issues
below; taxation and currency
10.1 Present situation in the Nordic countries
10.1.1 Taxation
Denmark
The figure shows the components of the electricity price for a normal household in
Denmark. From the figure, one can see that only a small part of the total cost of each
kWh is the actual price of the energy itself (less than 25%). The rest is comprised of
taxes, surcharges, etc. Value added tax in Denmark is 25% and is recoverable by
industrial customers.
4%
25 %
20 %
Electricity price (25%)
Grid tarif f (17%)
Electricity tax (34%)
VAT (20%)
Other (4%)
34 %
17 %
Figure 16. The components of the electricity price for a normal household in Denmark. Source: Danish
Energy.
Finland
The electricity taxation system is based on the taxation of the consumption of electricity.
Taxation includes an electricity tax and a precautionary stock fee, both charged by DSOs
in connection with network tariffs. The system has two separate electricity tax levels:
178
industrial customers and greenhouses pay 0.25 cents/kWh, while others pay a higher rate
of 0.87 cents/kWh. The precautionary stock fee is 0.013 cents/kWh for all customers.
Value added tax on electricity has been in effect in Finland since August 1986. The
current rate is 22 % and is recoverable by industrial customers.
A following figure represents the composition of the electricity price for a typical
customer, meaning a household without electric heating who consumes 5 000 kWh per
year. This figure is based on open-ended contracts with obligation to supply prices. The
total share of electric energy comprises procurement and electricity sales (43%).
18 %
42 %
8%
Electricity price
(42%)
Grid tarif f (32%)
Electricity tax (8%)
VAT (18%)
32 %
Figure 1. The composition of electricity price for typical customer being a household without electric
heating consuming 5,000 kWh per year in Finland. Source EMV.
Norway
In Norway, DSOs are responsible for collecting the electricity tax (consumer tax) and for
paying a fee to Enova. At present, the Norwegian electricity tax is 10.23 øre/kWh
(approximately 1.3 cents). Consumers living in certain counties in Norway are exempt
from this electricity tax.
VAT is presently 25 %. Consumers living in certain counties in Norway are also exempt
from VAT.
DSOs are obliged to include a fee to Enova in their network tariffs. Enova is a state
enterprise whose mission is to contribute to environmentally sound and rational use and
production of energy. For the time being, the fee is 1 øre/kWh. Enova is also financed
through the ordinary state budget.
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The figure shows the breakdown of the total cost of electricity consumed by an average
household in Norway not located in a county exempted from VAT or electricity tax in
January 2008.
17 %
29 %
Electricity price
(29%)
Grid tarif f (37%)
17 %
Electricity tax (17%)
VAT (17%)
37 %
Figure 2. The breakdown of the total cost of the electricity consumed for an average household in
Norway not located in a county exempted from VAT or electricity tax. Source: NVE
Sweden
194
In Sweden suppliers are, according to energy tax law , obligated to collect energy tax. A
new supplier has to register for an account at the Tax Agency at least two weeks ahead of
their first delivery of electricity. The supplier has to declare the delivered quantity of
electricity power monthly to the Tax Agency.
The tax levied on the consumption of electricity in Sweden varies depending on who consumes the electricity, and where in the country it is consumed. The tax on electricity used
in manufacturing processes in industrial operations or in commercial greenhouse
cultivation amounts to 0.05 cents/kWh. 195 The electricity tax for household customers
living in municipalities with a standard rate of consumption tax amounts to 2,87
cents/kWh, while it is 1,89 cents/kWh for household customers living in municipalities
with a reduced tax rate. 196
194
Lagen (1994:1 776) om skatt på energi.
1 January 2008.
196
The following municipalities have a reduced rate of tax for the consumption of electricity: all
of the municipalities in the counties of Norrbotten, Västerbotten and Jämtland and Sollefteå, Ånge,
Örnsköldsvik, Ljusdal, Torsby, Malung, Mora and Älvdalen.
195
180
Figure 3 shows the breakdown of the total cost of electricity for an electrically-heated
197
detached house in Sweden.
20 %
43 %
Electricity price
(43%)
Grid tarif f (17%)
Electricity tax (20%)
20 %
VAT (20%)
17 %
Figure 3: The breakdown of the total electricity cost for an average household in Sweden. Source: EI
10.1.2 Currency
In all Nordic countries different currencies are in use. Euros are in use only in Finland,
while the other Nordic countries have a currency of their own.
10.2 Conclusions and suggestions
Tax levels are a national political issue where the energy regulators have no influence.
The same applies to currency. The share of taxes in the total electricity cost varies
between the Nordic countries, Denmark being the highest with a share of over 50%. This
also affects the share of the electricity price subject to competition, which is rather small
due to the fact that some customers may not be motivated to act in the market. This may
reduce cross-border suppliers’ interest in the market. However, decisions on tax levels are
fully political. NordREG sees that the harmonisation of tax levels is not critical for
establishing a truly common well-functioning retail electricity market.
In Sweden, suppliers are responsible for collecting energy taxes. In other Nordic
countries the same obligation has been set for DSOs. NordREG finds that it would be
easier for the suppliers if the responsibilities for collecting taxes are similar in the Nordic
197
Prices for customers with an electricity-heated detached house with an annual consumption of
20 000 kWh, January 2008. The electricity retail price relate to a 3-year contract. Standard tax rate.
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countries. This would also make it easier for customers to compare prices between
suppliers as well as facilitate the development of a common Nordic retail market.
With regards to currency, for some energy companies it might be a bigger challenge than
for some others, but in principle all companies should be capable of handling different
currencies just like any other company acting outside of its domestic market with services
and goods. Different currencies may lead to a currency risk, which suppliers must take
into account and hedge against if necessary. NordREG sees that having different
currencies is not critical to establishing a truly common, well-functioning retail electricity
market.
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11 Summary of the responses to
the consultation
NordREG arranged a public consultation on the draft report on market design of common
Nordic end-user market in March-April, 2009. Together 9 responses were received from
the following stakeholders: Fingrid, Energinet.dk, Dong Energy, Fortum, Oberoende
Elhandlare, Nordenergi, Finnish Consumer Agency, Svenska Kraftnät and Statnett.
11.1 Stakeholders’ responses to the draft report
In general, all respondents supported NordREG’s work towards a common Nordic retail
market for electricity and saw that this report could provide a very useful basis for the
further work. There was a unanimous view among the respondents that a political
commitment will be needed. All stakeholders expressed also their willingness to
participate in the follow-up work. However, there were different views on which
stakeholders should take the lead in this process. The respondents found the suggested
indicative timetable challenging. Some of the respondents saw the suggested timetable
reasonable, but the others were more worried about the complexity and uncertainties
involved in the process and therefore they believed that the proposed timetable for
common Nordic electricity market might be too optimistic.
Fingrid welcomes the further harmonisation and integration of Nordic electricity market
toward end-users. As the harmonisation would require major efforts from many
stakeholders, the report could have been clearer on the benefits aimed at with the
implementation of the end-user market. Fingrid is concerned that demand response and
related two-way communication technology are neglected in the report. The introduction
of hourly recording end-user meters with hourly settlement of energy has to be justified
by the benefits from the customers’ reaction on the market prices.
Energinet.dk supports working towards a common Nordic retail market for electricity. In
Energinet.dk's perspective suggested harmonisation timeline sounds reasonable.
Concerning supplier switching Energinet.dk states that there shall be at least e.g. 14 days
between a switch of supplier on any metering point. In addition, Energinet.dk made
comments related to the timetable for switching supplier and rules for metering related to
supplier switching and moving. Energinet.dk would like to emphasize that it is important
that the obligation to supply regulation in each of the Nordic countries is made in such a
way that the competition is affected as little as possible.
Dong Energy welcomes harmonisation capable of enhancing a well functioning
liberalized marked given that benefits exceeds costs. Regulators should take the lead in
this process and Dong Energy recommends that the Nordic legal framework, the
regulatory rules and the customer interface are introduced before market participants are
invited to take part in the process in order to secure the correct investments in the
harmonised Nordic retail market. Presently, Danish suppliers have foreign customers and
vice versa. However, cross border customers are rare and Dong Energy finds that it is
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important to know why and finds this as tasks for NordREG. NordREG should also
provide suggestions on how the Danish price regulation of the final customers could be
abolished and how rules of supply of a last resort should be introduced. Finally, Dong
Energy states that it is quite hard to imagine a common Nordic retail market without a
standardised metering process.
Fortum welcomes NordREG’s draft report. The vision and overall objective presented in
the report are fully supported. Fortum also agrees on the necessity of political
commitment to the issue. Fortum sees that a higher level of harmonisation needs to the
final goal, to further lower the threshold for the players. According to Fortum, the report
lacks a clear description of the desired market. Such description, including the
preferences from the customer angle regarding market functionalities and features, would
facilitate the common understanding of the coals and the evaluation of the proposed
measures. In addition, more analysis needs to be done in several complicated areas such
as the customer interface design, the data storage/ exchange and settlement. Concerning
the price areas, even though the issue is excluded from the report, it would have been
beneficial to highlight the important issues from the retail market functionality angle.
Oberoende Elhandlare (OE) is positive to the creation of a common Nordic end-user
market and sees it necessary that such a market is established as soon as possible in order
to facilitate conditions for efficient competition in the electricity market. OE sees
advantages for the suppliers to be the interface towards customers in many issues.
However, OE is questioning the suppliers’ ability to handle issues which have more
network technical nature, like interruptions. OE sees that a central hub (such as EMIX)
for handling processes like supplier switching would be very good for the efficiency and
quality of a common Nordic market. OE also raises concerns about the possible future
division of Sweden into several price areas. According to OE such a development would
undoubtedly have a very negative effect on the competition in the market and OE instead
suggests that the long-term goal for the Nordic electricity market should be to have only
one price area.
Nordenergi supports the principle targets and ambitions as outlined in the report, and
believes that a well-functioning model for the Nordic retail market could strengthen the
Nordic countries’ position in, and their ability to influence the development of a larger
European market. The report is focused primarily on expected impact on retailers.
Nordenergi believes that in addition, the issue of DSOs needs to be explored to assure
that their operations are significantly and adequately explored to reach a level playing
field in a common market. More analysis, detailed design and planning work need to be
done also in several complicated areas such as the customer interface design, the data
storage/ exchange and settlement. In addition the report lacks a clear analyse what the
customers would benefit from the harmonization. The discussion on the future European
market model is part of an ongoing discussion on the EU third energy market package.
Therefore, Nordenergi feels that it might be premature to determine which market model
is the best, and more research and discussion is needed. Concerning metering Nordenergi
believes that smart metering should be a prerequisite for a common Nordic retail market.
Harmonization of load profile systems is complicated and expensive. Different national
load profile systems make suppliers’ actions more complicated, and may diminish
supplier’s willingness to operate in other Nordic countries. Also, the need for two-way
communication and load control must be analysed. Nordenergi saw, that the effects of
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price areas and other wholesale market issues on the functioning of the retail market and
suppliers’ willingness to act on certain areas should also be carefully analyzed during this
process. Nordenergi believes that the proposed timetable for common Nordic electricity
market is too optimistic, taking into account the complexity and uncertainties involved.
Nordenergi supports NordREG’s position that market actors (Nordenergi) will prepare a
proposal for the harmonised message formats. However, Nordenergi believes that such a
proposal must be based on clear decisions concerning the market model and the business
procedures. In addition, Nordenergi would like to point out that message formats is only
one part of the needed decisions related to harmonisation of data exchange. In addition to
data formats, also data exchange protocol (FTP, SMTP or otherwise) need to be decided
upon.
Finnish Consumer Agency highlights consumers’ confidence on the Nordic end user
market and sees that customer protection rules should be applied no matter with which
supplier the customer makes a supply contract. Finnish Consumer Agency supports
NordREG’s suggestion concerning the supplier’s obligation to send the notification to the
customer at the latest 6 weeks before the fixed-term contract expires. Finnish Consumer
Agency states that the time in which the supplier must inform the customer how the
prices or other contractual terms will be changed should be long enough, so that the
customer has enough time to change the supplier. The Finnish Consumer Agency
supports an idea to use for example text messages or emails to give such notice to the
customer, if that is what has been agreed between contracting parties.
Svenska Kraftnät supports the objective to create a Nordic end-user market and finds
NordREG’s approach, to identify the critical issues and harmonise them, feasible and
pragmatic. However, Svenska Kraftnät sees that it is unclear how different parts relating
to balance agreements, balance settlement and load profiling interconnect in the proposed
timetable. In addition, it should be mentioned in the report that a joint project between
Svenska Kraftnät and Statnett has been initiated to examine the pre-requisites and
possibilities for harmonising the Swedish and Norwegian balance settlement.
Statnett welcomes a common Nordic End User Market as they see it as a natural
development in the continuous development of more competition and better consumer
choice. In general Statnett supports the suggestions of the draft report. However, the
NordREG’s ambition should be higher and more forward looking. The objective should
not be to have a common Nordic market, but that a common Nordic market shall be the
best and most effective market in the world. Also the development of a common Nordic
end user market should be more firmly organised including independent actors formally
committed to their agreed tasks and time schedule. As to the specific suggestions in the
draft report, Statnett states that single point of contact should be preferred because dual
contact is confusing for the customer. The minimum requirements for the moving process
should be 100 % harmonised. Otherwise suppliers will have to implement different
procedures and systems to facilitate different countries. Concerning timetable Statnett
remarks that changes and amendments to regulatory framework normally take longer time
than NordREG has suggested.
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11.2 NordREG’s comments on stakeholders’ views
NordREG appreciates all comments that have been received. The comments give
valuable input for developing a common Nordic end-user market model. Therefore,
NordREG sees that the comments from the stakeholders should be taken into account
during the further steps of this process.
NordREG agrees with that a political commitment is vital and therefore the Electricity
Market Group under the Nordic Council of Ministers (EMG) should have a coordinative
role in this process. In this respect the EMG could assign certain tasks to different
stakeholders and check that the process is going on in line with the proposed timetable.
NordREG agrees with that the proposed timetable is ambitious and therefore it is
important to have regular checkpoints to ensure that the process is on track. These
checkpoints could be annual. This gives also possibilities to adjust the timetable if
needed.
NordREG sees that the question of price areas is more a political or a wholesale market
issue than a retail market issue. Therefore, the effects of price areas on retail market are
out of scope of this report. The question of hedging against the risks related to price areas
could be a part of analysis of the functioning of the Nordic financial electricity markets.
Some stakeholders have had different opinions on the preferred customer interface model.
However, NordREG does not suggest any changes to the present situation and sees that
the customer interface model could mainly be based on the present dual contact point
model, but a single contact point process could also be an option if the supplier wants to.
The price regulation in Denmark is based on the regulation. However, a report from the
Danish Competition Authority recognizes that the present set-up of price regulation could
be reconsidered given that a data hub has been introduced and the awareness of price
formation among customers will increase.
Regarding comments on data storage and data exchange NordREG sees that data
exchange could be supported by data hubs and/or common data formats and protocols.
However, NordREG recognises the importance of defining messages, harmonised
timeframes for sending messages and the minimum content of each message.
NordREG finds it essential that the common Nordic end-user market will be open for all
customers. Even though NordREG is in favour of the introduction of smart meters,
NordREG does not see smart metering as a prerequisite for a common Nordic retail
rd
market. However, as a result of the 3 package a new regulation in Member States will
require smart metering at least to some extent.
Regarding comments related to the level of harmonisation NordREG finds the suggested
level of harmonisation feasible and sufficient within the proposed timeframe. NordREG
finds it important to continue the harmonisation process also after the suggested level of
harmonisation has been implemented.
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List of abbreviations
AMR
Automatic meter reading
BRP
Balance responsible party
DEA
Danish Energy Agency
DERA
Danish Energy Regulatory Authority
DSO
Distribution system operator
EI
Energy Market Inspectorate (Sweden)
EMG
Electricity Market Group under the Nordic Council of Ministers
EMIX
Energy Market Information eXchange
EMV
Energy Market Authority (Finland)
NUBIX
Nordic Utilities Business Information Exchange
NVE
Norwegian Water Resources and Energy Directorate
OED
Ministry of Oil and Energy (Norway)
PSO
Public service obligation
TSO
Transmission system operator
VAT
Value added tax
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NordREG
c/o Norwegian Water Resources
and Energy Directorate
P.O. Box 5091, Majorstua
N-0301 Oslo
Norway
Telephone: +47 22 95 95 95
Telefax: +47 22 95 90 00
E-mail: [email protected]
Internet: www.nordicenergyregulators.org
May 2009
Market Design
Common Nordic end-user market
Report 3/2009