NORDIC TSO/DSO ROLES & RESPONSIBILITIES ENERGY SERVICES, EFFICIENCY MEASURES, COMPETITIVE PARTICIPATION AND UNBUNDLING NordREG meeting, 8th April, Gardermoen Ole Lfsns CONTENTS 1. Energy services/Energy efficiency measures 2. Participation in competitive activities 3. Unbundling 4. Summary [email protected] 2 OVERVIEW CURRENT TSO/DSO ROLES AND RESPONSIBILITIES A holistic overview of what currently constitutes TSO/DSO activities Infrastructure Monopoly owners and operators of grid Ownership and responsibility for grid and connected devices Ensure a well-functioning, robust and reliable grid Energy deliveries (in Norway: delivery of mandatory supply) Facilitate comp. Neutral providers of grid access Non-discriminatory provider of grid access to concessioned suppliers of electricity Facilitate customer switching Unbundled operations from other parts of electricity supply chain Info. provision Providers of consumption data and grid tariffs Neutral provider of consumer information to customers and suppliers Grid tariff information presented to various stakeholders Other (technical) information COPYRIGHTPYRY 3 01/17/2020 DEFINITIONS OF ENERGY SERVICES & EFFICIENCY EUs defines the combination of energy services and energy efficiency in the Energy Effciency Directive EU Energy Efficiency Directive: Directive 2012/27/EU, art. 2 Energy services means the physical benefit, utility or good derived from a combination of energy with energy-efficient technology or with action, which may include the operations, maintenance and control necessary to deliver the service, which is delivered on the basis of a contract and in normal

circumstances has proven to result in verifiable and measurable or estimable energy efficiency or primary energy savings Energy Services Provision of technology or actions that promote energy efficiency Smart meters and ancilliary services Grid tariff adjustments Energy Efficiency Measures Information services that raise energy efficiency awareness and enable efficiency amongst consumers Provision of information Improved interface for consumer information Grid status information Direct advice to end-users COPYRIGHTPYRY 4 01/17/2020 LIST OF ENERGY SERVICES Includes the provision of technology and/or actions that promote energy efficiency R&R for DSOs/TSOs are described in EED and Electricity directives Directives also provide general (MS) requirements for energy services with no dedicated responsible party Energy services R&R in rolling out and operating smart meters Functional requirements/regulation for smart meters Opportunities for demand response and ancillary Smart meters (energy) services R&R as determinants and issuer of grid tariffs Time-differentiated contracts as facilitator for DR and EE Time-differentiated contracts/methodologies The EED states that network tariffs may support dynamic pricing for DR measures Grid tariffs

COPYRIGHTPYRY 5 01/17/2020 Grid tariff adjustmants Smart meters and ancillary services PROVISION OF ENERGY SERVICES ENERGY SERVICES SUMMARY TABLE Type of meter AMI AMI DSO responsible for installation, operation and maintenance Functional requirements Open standard requirements Regulation on tariff structure * Common timedifferentiated tariffs Fixed and energy charge tariff structure Remote reading and control (two-way communication) Day, week, seasonal (year) Remote reading and control (two-way communication)

NA AMS NA Remote reading and control (two-way Remote reading and comms.) for most control (two-way meters, not required but communication) needed in practice NA Day, week, seasonal (year) AMR/AMI NA ** NA Seasonal (year) Seasonal (year)

* In all Nordic countries grid tariffs have to be non-discriminatory and objective, in Denmark and Sweden the methodology has to be approved by regulator ** Have to be approved by NEA COPYRIGHTPYRY 6 01/17/2020 LIST OF ENERGY EFFICIENCY MEASURES Services that directly target or enable customers to Energy efficiency measures increase energy savings EED describes DSOs/TSOs roles in promoting EE Nordic EU members have started to incorporate EED in laws and regulation Provision of information The DSOs obligation to inform customers about energy efficiency measures EED outlines minimum information requirements for endusers with smart meters Communication platform(s) for grid tariffs and Improved user interface consumption data EED: customers should be equipped with a standardised interface providing visualised individual consumption data to the consumer R&R of informing customers about transmission interrupt. Grid status information and information to prevent unplanned interrupt. No EU regulation related to (ex-ante) information requirements to avoid unplanned interruptions Direct advice to end-users

R&R in provision of direct and individual advice on energy efficiency measures EED: customers should be given advice about the full potential of smart meters during installation, and have access to cost efficient energy controls COPYRIGHTPYRY 7 01/17/2020 ect advice Grid status information Improved user interface Provision of information ENERGY EFFICIENCY MEASURES EFFICIENCY MEASURES SUMMARY TABLE DSO information to customers on EE measures Consumption data and bencmarking In-home display monitoring if requested by customer Other communication platforms Information requirements on planned/unplanned interruptions Provided by DSO -benchmarking and hist. Provided by DSO -actual consumption data Provided by DSO -NA benchmarking and hist.

Provided by DSO -geographical benchmarking and hist. Datahub or web platform Web portal NA Web portal No regulatory requirements guidelines provided by Dansk Energi Ex-post obligation on impact and duration of interrupt. NA Provided by DSO -benchmarking and hist. Web portal

Min. 24 hours before Requirement to planned interrup., ex- inform about the right post on duration and for compensation of cause of interrupt. interrupt. 1. There are no information requirements for DSOs related to grid status (in Sweden DSOs are required to inform about security of supply) * Included in the Electricity Act in 2014 Security of energy use Potential of smart meters during or after COPYRIGHTPYRY 8 01/17/2020 * CONTENTS 1. Energy services/Energy efficiency measures 2. Participation in competitive activities 3. Unbundling 4. Summary [email protected] 9 PARTICIPATION IN COMPETITIVE ACTIVITIES DSO participation Grey area Non-DSO At present, grid companies are well-shielded from competitive activities. The Third Energy Package aims to strengthen this, though a one size fits all is acknowledged to not be realistic. Competitive activities that DSO are not (should not be) allowed to participate in Energy generation Energy supply

Competitive activities that could allow for DSO participation under special circumstances (in different countries) Areas that tangent competitiveness which involve DSO participation Income framework regulation Handling DSO datahub data Billing information COPYRIGHTPYRY 10 01/17/2020 HOW DO DSOS PARTAKE IN COMPETITIVE ACTIVITIES IN THE NORDICS? Competitive activity participation Limited incentive to participate in competitive activities due to regulated income All Nordic DSOs act as neutral facilitators of the market Shall not discriminate between system users according to the Third ED May use price information to influence consumer behavior DSOs not responsible for invoicing under mandatory combined billing regime Billing regime MCB will be introduced in Denmark, being reviewed in Norway and proposed in Sweden Possibility to specify tariff on bill depends on layout DSOs responsible for invoicing network service if not combined billing Indirect brand marketing on behalf of integrated supplier, but the effect is unclear Tariff may be specified on bill Income framework models Information exchange Designed to incentivise DSOs to be as efficient as possible

Different models in the Nordic countries The main difference is that the regulation scheme in some countries include benchmarking, i.e. measuring efficiency against a reference NordREG has recommended implementation of automatic meter reading (AMR) Increased data availability will in turn require introduction of efficient information exchange systems National decision on data resolution (e.g. hourly) COPYRIGHTPYRY 11 01/17/2020 COMPETITIVE ACTIVITIES INCOME FRAMEWORK MODELS Stronger promotion of competition between DSOs when benchmarking is used COMPETITIVE PARTICIPATION Regulated by revenue cap adjusted if income deviates Regulatory period Efficiency target Benchmarking 1 year 4 years 5 years 1 year 4 years Individual General & individual Individual

General COLS StoNED Aims to introduce DEA Annually Annually N/A Annually N/A Benchmarking basis Reviewed at least every four years Average 20052010 N/A Average of "front" for last five years N/A Cost excl. from benchmarking Energy saving activities N/A R&D costs for

approved efficiency projects N/A Benchmarking frequency COPYRIGHTPYRY 12 01/17/2020 COMPETITIVE ACTIVITIES INFORMATION EXCHANGE COMPETITIVE PARTICIPATION Possibility for DSOs to discriminate in favour of integrated parties Smart meters status and target Ca. 60% 100% by 2020 Min. 80% 80% by 2014 Ca. 7% 100% by 2019 100 % DSO meter data manager 100,000 kWh/yr Fuse 3 x 63 A 100 kW

100,000 kWh/yr Fuse 63 A Daily Daily Daily Daily when AMS (weekly today) Daily (may change to monthly) 3 times/year Every four years (annually from customer) Quarterly (small annually) Monthly 15 min Hour Hour (prepared for 15 min) Hour Data hub Data hub being reviewed Data hub from Feb 2017 Data hub proposed

N/A Hourly (prepared for 15 min) Threshold obligatory hourly metering Reading hourly registration Reading non-hourly registration Capability installed smart meters Information exchange system TSO neutral facilitator of data hub Time resolution in data hub Annually If introduced Hourly (prepared for 15 min) N/A If introduced N/A COPYRIGHTPYRY 13 01/17/2020 CONTENTS 1. Energy services/Energy efficiency measures 2. Participation in competitive activities 3. Unbundling 4. Summary

[email protected] 14 UNBUNDLING We distinguish between four types of unbundling Unbundling of accounts Requires separate financial accounts for different network activities Legal unbundling Requires that network activities are unbundled from generation and supply by separate legal entities May be exempted if the DSO has less than 100,000 customers or serves small isolated systems Functional unbundling Requires that the management of DSOs cannot be involved in the management of a generation or supply company within the same group of companies May be exempted if the DSO has less than 100,000 customers Unbundling of brands Requires that vertically integrated DSOs shall not cause confusion in their communication and branding in respect of company identity Source: Electricity Directive 2009/72/EC, article 31 (unbundling of accounts), article 26 (legal, functional and brand unbundling) COPYRIGHTPYRY 15 01/17/2020 UNBUNDLING UNBUNDLING Different unbundling rules between the Nordic countries Unbundling of accounts Legal unbundling

Legal threshold All Min distribution 200 GWh/yr for three latest years (at 0,4 kV level) All >100,000 customers or by NVE request All Share above threshold 100% 44% + 21% voluntary 100% 6% + 24% required 100% Functional unbundling >100,000 cust. >50,000 cust. N/A >100,000 cust.

>100,000 cust. 9% Who: Management employees/board members 23% N/A 6% 4% Who: Management employees/board members Functional threshold Share above threshold Requirements for functional unbundling Unbundling of brands Where: Operation or management of trading/generation Not create identity confusion Proposed to require different name and logo from competition entities Who: Management employees/board members Who: Management employees N/A Where: Management of trading/generation Where: Management of

trading/generation Where: Management of trading/generation Not create identity confusion Legally unbundled DSO must have different name and logo from competition entities Not create identity confusion COPYRIGHTPYRY 16 01/17/2020 CONTENTS 1. Energy services/Energy efficiency measures 2. Participation in competitive activities 3. Unbundling 4. Summary [email protected] 17 SUMMARY OF MOST IMPORTANT DIFFERENCES Differences Energy Services Two-way communication & open standard not a requirement Tariff structure regulated Different tariff timedifferentiation Energy Efficiency Measures Provide info on EE measures

Not required to provide IHD Report interruption ahead Competitive participation No efficiency target (Iceland) or benchmark model Hourly meter threshold fusedetermined 15 min capability of smart meters (1 hour for rest) Unbundling Functional unbundling not required No restriction on identity issues Different logos required for grid companies Must facilitate third party security checks Functional threshold of >50,000 cust. COPYRIGHTPYRY 18 01/17/2020 COPYRIGHTPYRY

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