COMMISSION FOR ELECTRICITY AND GAS REGULATION

Transcription

1 COMMISSION FOR ELECTRICITY AND GAS REGULATION ANNUAL REPORT 2010

2 TABLE OF CONTENTS 1. Foreword Main developments on the electricity and natural gas markets Wholesale market Developments with regard to market concentration Regional integration of the market development of electricity and gas exchange platforms CREG activities aimed at promoting competition on the wholesale market Retail Market Public service obligations and consumer protection Putting in place the federal mediation service for energy CREG duties relating to disputes settlement Infrastructure Price trends in Investments in the transmission system Capacity allocation Security of supply Powers of the CREG in terms of security of supply Development of investment Development of supply/demand balance Diversification of sources and routes Regulation/Unbundling Powers of the CREG Role of TSOs on the markets Development of unbundling of TSOs Transposition of the third legislative package General conclusions regarding the legal framework Regulation and functioning of the electricity market Regulation Management and allocation of interconnection capacities and congestion mechanisms A. Regional and bilateral developments B. Market results on interconnections C. Infringement proceedings against Belgium Regulation of transmission and distribution A. Transmission and distribution tariffs B. Maximum prices C. Ancillary services and balancing D. General terms and conditions of Access Responsible Party contracts Effective unbundling Competition aspects Description of the wholesale market A. Electrical power demand B. Electricity supply C. Wholesale generation market D. Energy exchange E. Mergers and acquisitions F. Price trends Measures aimed at preventing abuse of a dominant position regulation and functioning of the natural gas market Regulation Management and allocation of the interconnection capacity and congestion mechanisms Regulation of transmission and distribution A. Transmission and distribution tariffs B. Maximum prices C. Code of conduct D. Transmission model E. Indicative transmission programme F. Standard connection contract Effective unbundling

3 Competition aspects Description of the wholesale market A. Natural gas supplies B. Holders of a natural gas supply permit C. Natural gas transmission permits D. Exchange platforms E. Integration with intra-european regions and neighbouring member states F. Integration between gas producers/importers and suppliers long-term gas supply contracts G. Access to natural gas storage facilities H. Developments in terms of market concentration I. Mergers and acquisitions J. Price trends Measures aimed at preventing any abuse of a dominant position Security of supply Electricity Demand Generation Transmission grid infrastructures Gas Demand Supply Measures in emergency situations Investment Security of supply standards The CREG The assignments of the CREG The Bodies of the CREG The General Council The Management Board General policy plan and comparative report on the objectives and achievements of the CREG Cooperation with other bodies The CREG and the European Commission The CREG and ACER The Madrid Forum The Florence Forum The London Forum The CREG within CEER and ERGEG The CREG and the regional regulators Handling questions and complaints Participation of CREG members as speakers at seminars The CREG finances The federal contribution A. The federal contribution for gas B. The federal contribution for electricity The funds The accounts for The company auditor s report on the financial year closed on 31 December List of acts of the CREG during the year

4 LisT of tables Average import/export capacity and average nomination per year (MW) Annual revenues from capacities offered for auction (in millions of euros) 18 3 Congestion rents on coupled electricity exchanges per type of player (in millions of euros) Trend in the cost price for the transmission of electricity depending on the voltage, excluding surcharges and VAT 20 5 Tariffs for the use of the distribution network in 2008, 2009 and 2010 (in /kwh), excluding VAT (Unweighted) average price of imbalances during the period Net supplies to customers connected to the federal transmission system for the years 2007 to Wholesale market shares in electricity generation capacity Wholesale market shares in power generated Energy exchanged and average price on the Intraday exchange Breakdown of exchanges on the Day-ahead hub Breakdown of exchanges on the Intraday hub Tariffs for the use of the distribution network in 2008, 2009 and 2010 (in /kwh), excluding VAT Companies operating in the supply of natural gas on the Belgian market in Market shares on the transmission system from 2007 to Power demand and peak capacity demand in Belgium during the period Breakdown of the installed capacity per type of power station connected to Elia s grid, per type of power station, as at 31 December Breakdown of power generated per type of primary energy Breakdown per sector of the Belgian demand for natural gas between 2001 and 2010 (in TWh) Existing tools in the event of an emergency situation Members of the General Council as at 31 December Directorates and staff of the CREG as at 31 December Overview of presentations given by the CREG in Shortfalls recorded in the funds in 2010 ( ) Income statement as at 31 December 2010 ( ) Balance sheet as at 31 December 2010 ( ) 96 List of figures Availability and use of interconnection capacity from 2007 to Average composition of distribution cost in Flanders in Average composition of distribution cost in Wallonia in Average composition of distribution cost in Brussels in Structure of Eandis in on the basis of the shares per DSO in Eandis Structure of Infrax in on the basis of the shares per DSO in Infrax 25 7 Structure of Ores in on the basis of the shares per DSO in Ores 25 8 (Unweighted) average price of imbalances and Belpex DAM price during the period (in /MWh) 29 9 Shareholding body of Elia as at 31 December Average consumption on a monthly basis in the Elia control area for the 2007 to 2010 period (in MWh/h) Average price on the Belpex, APX and EPEX FR exchanges between 2007 and 2010 (in /MWh) Average monthly resilience of the Belpex market in Trend in average all-in price for electricity in (in /MW) Shares of the various components of the electricity price for Gaselwest-Electrabel household customers in Trend in total electricity price household customers (Dc) Trend in the price of energy per supplier household customers (Dc) Trend in the energy price per supplier business customers, average voltage (Ic1) Breakdown of the price of electricity in Brussels, Paris, Berlin, Amsterdam and London June 2010 ( ) Average composition of distribution cost in Flanders in Average composition of distribution cost in Wallonia in Average composition of distribution cost in Brussels in Shareholding body of Fluxys as at 31 December Breakdown of supply per entry zone in Composition of aggregated supply portfolio of suppliers operating in Belgium in Natural gas supplies by type and length of contract IGH-Electrabel household customer Trend in total natural gas price household customers (T2) Trend in energy price per supplier household customers (T2) Energy price trend per supplier business customers (T4) Development of the natural gas consumption per sector during the period (1990=100), corrected for climate changes Breakdown per sector of the Belgian demand for H-gas and L-gas in 2009 and Forecasts demand for natural gas in Belgium until 2020 (GWh, normalised t, H+L) Market shares on the transmission grid in

5 COMMISSION FOR ELECTRICITY AND GAS REGULATION ANNUAL REPORT 2010

6 1. Foreword The year 2010 was marked by a number of significant developments both as regards the electricity and natural gas markets and as regards the CREG. At European level, last year saw the drafting by the European Commission of interpretative notes on the third legislative package so as to guide member states when transposing this package into their national legislation. The CREG took a proactive approach to this matter, by providing the Belgian authorities, in complete transparency, with draft texts so as to apply the provisions of the third package into Belgian law as well as possible. The main objectives of the two directives and three regulations that make up this third package are identical to those of the CREG: to improve the operation of the electricity and natural gas markets by increasing transparency in network and supply activities, reinforcing the rights of consumers, and vulnerable consumers in particular, supporting cooperation and coordination at European level between network operators, regulators and member states, and finally, by strengthening the independence and powers of the national regulators. This transposition into Belgian law must be undertaken in accordance with European rules, in the general interest and in particular in the interest of consumers. It is a matter of avoiding a situation in which Belgium, as has happened in the past, becomes the subject of infringement proceedings owing to the incorrect or insufficient transposition of European legislation in the field of electricity and natural gas. One of the main thrusts of the third legislative package also concerns the separation of energy production and supply activities on the one hand from network activities on the other, also known as unbundling. In this area, Belgium ranks among the leaders in Europe. Over the past year GDF SUEZ, via Electrabel, sold its stake in the electricity and gas TSOs, Elia and Fluxys. With regard to the distribution of electricity and gas, Electrabel has confirmed its intention to reduce or even ultimately sell its stake in the mixed network operators. In Belgium, the CREG fulfilled the assignments it has been entrusted with by federal and European law, on the one hand to advise the public authorities on matters concerning the organisation and operation of the electricity and natural gas markets and on the other hand to supervise the market and monitor the implementation of applicable laws and regulations. Last November, one of the highest courts in Belgium, the Constitutional Court, confirmed the independence and autonomy of the CREG. It also stated that this autonomy is not compatible with the submission of the federal regulator to hierarchical control or administrative supervision. However, the CREG has a duty to be transparent in the action it takes and must be able to justify its decisions before Parliament, which exercises democratic control over each federal body in the country, however independent it may be. The efforts made by the CREG over a number of years were rewarded by the adoption at the start of 2011 of its proposal for a Royal Decree on the code of conduct governing access to 3

7 1. Foreword the gas transmission system, the storage facilities and the LNG facilities. This code will make a substantial contribution towards reinforcing competition and improving the operation of the gas market in Belgium, as it provides for the abolition of the distinction between transit from border to border and transmission for Belgian consumption, the implementation of new rules on congestion and the secondary capacity market, as well as the improvement of transparency on the gas market. The CREG has also adopted a proactive attitude with regard to the government and federal Parliament in the debate on the calculation of the profit generated by the operation of Belgian nuclear power stations. On the basis of data provided by the electricity producers, the CREG has delivered an estimate of this profit which is the most accurate established to date in Belgium by an authority. Numerous reports, studies, opinions, proposals and decisions were drawn up by the CREG in The most important of these concern the opinion on the ten-year development plan for Elia s grid, the comparison of electricity prices in Brussels and in neighbouring capital cities, the analysis of the quality of the electricity price indexation parameters, the examination of the fixed price and variable price contracts offered by suppliers to household consumers, the analysis of the contracts concluded between electricity suppliers and major industrial consumers, and the monitoring of the relationship between the costs and the selling prices of the gas supplied to Belgian consumers. Some of these acts may be compared to a spotlight trained on a particular aspect of the electricity and gas markets to reveal a dysfunction hitherto little known or unknown to most of the market players and public authorities. This confirms that it is vitally important for Belgium to have a strong and independent regulator on a liberalised electricity and gas market. Reading this 2010 annual report, readers will note that the structure of the table of contents differs significantly from that used in previous years. The new structure, based on the report which the CREG sends to the European Commission in July every year, already partly anticipates the reporting obligations imposed by the third package on European regulatory authorities. Chapter 2 of this report reviews the main developments that occurred on the electricity and natural gas markets. Readers will find a summary of the main elements that occurred in 2010 here, while the following chapters cover each element in more detail. François Possemiers Chairman of the Management Board April

8 2. Main developments on the electricity and natural gas markets 5

9 2. Main developments on the electricity and natural gas markets This chapter provides an overview of the main developments that have occurred on the Belgian electricity and gas markets. Some of the items are covered in greater detail in Chapter 3 with regard to electricity and Chapter 4 with regard to natural gas Wholesale market Developments with regard to market concentration Electricity As regards supplies to major customers connected to the federal transmission system 1, the market share of Electrabel was estimated at around 88.7%, up approximately 1.1 percent compared with The total volume of energy taken up by end customers from the federal transmission system rose by almost 11% in 2010, increasing from 12,332.8 GWh in 2009 to 13,714.0 GWh in Two access points on the federal transmission system changed supplier in As regards the production market, the dominant position of Electrabel clearly declined during the course of 2010, although it still remains very strong. The HHI 3 of the production market amounted to approximately 5,380 in Natural gas In 2010, a total of fourteen supply companies operated on the Belgian market. Total natural gas consumption rose to TWh, an increase of 10.9% compared with consumption in 2009 (194.2 TWh). The merger between GDF and SUEZ and the fulfilment of the conditions imposed by the European Commission further to the approval of the merger in 2008 had a significant impact on the development of the market in 2010 and in particular on the market shares of Distrigas and GDF SUEZ on the gas transmission market. With a 52.1% market share however, Distrigas still remained the dominant player in Regional integration of the market Electricity Having exported electrical power on an annual basis in 2009 for the first time since the liberalisation of the market, Belgium again imported electricity on an annual basis in 2010, albeit only on a very small scale. Until 8 November 2010, the markets were coupled via Trilateral Market Coupling (TLC), involving Belgium, France and The Netherlands. On 9 November 2010, the market coupling was extended to cover the Central West Europe region (CWE), which means that the Belgian daily market is now coupled, on the basis of implicit auctions, with France, Germany, Luxembourg and The Netherlands. Via Interim Tight Volume Coupling (ITVC), also launched on 9 November 2010, the CWE region is also coupled with the Scandinavian market by means of a mechanism based on volumes (Volume Coupling). Natural gas Belgium occupies a strategic position as a hub in the natural gas systems of the North West region. This position is reflected in the large number of interconnections with adjacent networks and the volumes of gas brought in for international transit and local supplies. Whereas in previous years, congestion with regard to the supply of entry capacity at the Eynatten and s Gravenvoeren interconnection points remained an issue, this was overcome in 2010 thanks to the additional investments made. In this respect, the introduction of the two-directional flow at the Zelzate entry point and the reinforcement of the eastwest axis by means of the rtr2/vtn2 project rank among the most striking achievements. In doing so, the main requirements were of course taken into account, but the market is not yet fully integrated. Further investments will be required to be able to integrate the Belgian grid into the process of European harmonisation. Cooperation with neighbouring countries in investment projects had already become a common practice through coordinated investment projects (Open Seasons). In 2010, all these projects gave rise to a final decision on a coordinated cross-border investment. Plans for implementation have been put in place. Amongst other things, this success has led to regional cooperation becoming an obligation in accordance with the new European regulations. In the future, cooperation within the north-west regional initiative will therefore have to take on coordination and intensive follow-up duties Moreover, a new European survey has shown that - as with the Belgian experience - the mechanisms for capacity allocation and the principles governing the management of 6 1 Grids with voltage in excess of 70 kv. 2 Source Elia (provisional data, January 2011). 3 The HHI index (Herfindahl-Hirschmann Index) is a commonly accepted measurement of the market concentration. It is calculated by squaring the market share of each company competing on a market and adding up the figures obtained.

10 2. Main developments on the electricity and natural gas markets congestion at grid connection points are, on the whole, not at all harmonised. Local and/or national markets continue to be unduly organised along their own lines. This is why it was recognised in 2010 that better structured cooperation was needed to achieve market integration, at the very least with regard to the form to be taken on by a unified, integrated market. This entire process requires a clear framework within which progress can be made stage by stage towards a final model. To define this target model, a discussion forum was set up at the initiative of ERGEG at the end of The position of all stakeholders will be heard and analysed by conducting workshops and external studies. Final conclusions are expected in Development of electricity and gas exchange platforms Electricity In 2010, the coupling of the Day-Ahead markets between Belgium (Belpex), The Netherlands (APX) and France (EPEX FR) once again proved successful: in fact, the three markets seldom operated in total isolation from one another. Belpex and EPEX FR were coupled 87% of the time, Belpex and APX 73% of the time. Belgium was isolated from the other two markets for just 1.2% of the time. The daily congestion rents amounted to a total of 33.3 million in Natural gas At national level, activity on the APX Gas ZEE gas exchange remains very limited: 75 transactions were recorded there in This observation also means that the OTC trade (over the counter) at the Zeebrugge hub remains the central element of the trade in Belgium. Even though in 2010 the total volume traded at this hub reached a similar level to that of 2009, a significant increase in liquidity was observed. Moreover, new developments in the field of the regulations governing hubs and exchanges are gathering speed at European level. In this context, the CREG has taken on a leading role in the drafting of the ERGEG 2010 report on the monitoring of natural gas hubs 4. It has also been closely following the proposal from the European Commission for a new European regulation on the integrity and transparency of the energy market (REMIT) 5. The wholesale markets such as the exchanges and hubs, on which gas and electricity are traded among producers and traders, are playing an increasingly important role in determining the prices paid by end customers. Cross-border issues therefore also require cross-border surveillance. In this respect, the Agency for the Cooperation of Energy Regulators (ACER) is to work closely with the national regulators, who are also responsible for investigating any anomalies observed and for imposing penalties, if and when required CREG activities aimed at promoting competition on the wholesale market In 2010, the CREG continued to undertake permanent monitoring of technical aspects and tariffs on the electricity and natural gas markets. In this context, as regards electricity, the Management Board specifically focused on the regional integration of the markets, the operation of the Belpex Day-Ahead Market, the nuclear issue and the prices charged to end customers. As regards natural gas, the Management Board concentrated mainly on the regional integration of markets, promoting liquidity on the wholesale market (by means of additional investments and a plea for better support for the Zeebrugge hub), the development of a competitive regional market for low-calorific natural gas and the issue of costs and prices. In addition, the CREG worked with the Competition Council. Several members of staff from the CREG contributed to a number of Competition Council dossiers as experts Retail Market Price trends Electricity Prices billed to end users continued to rise in This increase may be attributed to the way in which supply price parameters developed. In addition, as regards the Flemish Region, the unit price of the free kwh fell, with the result that the discount for Flemish customers was smaller. Moreover, the increase in the quotas to be supplied with regard to the green certificates is resulting in a bigger contribution for renewable energy and cogeneration. Finally, the federal electricity contribution has increased. 4 Monitoring Report 2010 on the regulatory oversight of natural gas hubs ( GMM-11-03%20Gas%20Hub%20Monitoring%20Report%202010_final.pdf). 5 Proposal COM(2010)726 final for a Regulation of the European Parliament and the Council on energy market integrity and transparency, 8 December

11 2. Main developments on the electricity and natural gas markets Natural gas Prices billed to end users continued to rise in This increase may be attributed to the increase in the price of energy linked to the trend in commodity prices. This increase is partly offset by the reduction in transmission tariffs and the fall in the federal contribution and the protected customer surcharge Public service obligations and consumer protection Putting in place the federal mediation service for energy Although the procedure for appointing the French-speaking federal energy mediator is still ongoing, the energy mediation service 6 has been operational since 10 January This service is qualified to deal with any disputes between an end customer and an electricity or gas company and deal with requests and complaints concerning the operation of the electricity and gas market. In the context of the cooperation between this service and the energy regulators, the CREG has analysed a number of complaints received by the mediator from end customers CREG duties relating to disputes settlement To date, it has not been possible to take up the new duties assigned to the CREG in 2009 with regard to dispute settlement, which provide for the creation within the CREG of a Mediation and Arbitration Service and a Litigation Chamber (cf Annual Report, p. 57). In fact, as at 31 December 2010 the implementing decrees required for this purpose had not yet been promulgated Infrastructure Price trends in 2010 Trend in electricity transmission tariffs As the tariffs charged for the use of the transmission system and ancillary services are multi-annual tariffs which have been approved for the whole of the regulatory period, they remained unchanged compared with 2008 and Trend in electricity distribution tariffs The trend was considerably flatter than that between 2008 and 2009 and may be attributed mainly to the application of an indexation mechanism to the manageable costs and to a lesser extent to the trend in other elements, such as depreciation and non-manageable costs (public service obligations for instance). In 2010, imposed tariffs were billed for two Walloon DSOs (Tecto and Wavre) and for the «pure» (i.e. whose capital is held only by public sector authorities) Flemish sector (Infrax West, Inter-Energa, Iveg and PBE). These are based on the most recent corresponding total revenue elements approved, i.e. the tariffs for the 2008 operating year. Trend in all-in electricity price Prices charged to end users rose in August 2010 compared with December This rise is due mainly to the trend in supplier price parameters. A substantial increase in the federal contribution and renewable energy and cogeneration contributions is also seen. Trend in natural gas transmission tariffs The new multi-annual tariffs for the transmission, transit and storage of natural gas came into force in January These tariffs, which result from an agreement between the CREG and Fluxys, are valid until 31 December The agreement also provides for stable tariffs until Moreover tariff predictability has been integrated in the longer term 7. The entry/exit tariffs (transmission and transit) have been set in accordance with current European legislation, using a methodology underlying the calculation of the tariffs which is based on costs and applicable both to the transmission of natural gas intended for the Belgian market and transmission from border to border. Equivalent principles have been applied to determine storage tariffs. These new transmission tariffs for Belgian consumers resulted in a 28% drop in tariffs compared with The (indexed) tariffs for the use of the liquefied natural gas terminal remain unchanged. Trend in natural gas distribution tariffs The trend was considerably flatter than that between 2008 and 2009 and may be attributed mainly to the application of an indexation mechanism to the manageable costs and to a lesser extent to the trend in other elements, such as depreciation and non-manageable costs (for instance, public service obligations). The provisional tariffs 8 6 Energy mediation service, rue Royale 47, 1000 Brussels; Tel.: 02/ ; Fax: 02/ ; [email protected]; website 7 See 2009 Annual Report, p. 48.

12 2. Main developments on the electricity and natural gas markets applied by DSOs (Infrax West, Inter-Energa, Iveg and ALG) were not made to change since the provisional tariffs for are identical to the tariffs in force for the 2008 operating year. Trend in all-in natural gas price As was the case for electricity, which rose sharply in 2008 and fell again in 2009, the price of natural gas increased again in 2010, without reaching the level seen in 2008 however. In , natural gas prices did not follow the trend in oil prices Investments in the transmission system Electricity In 2010, Elia System Operator (hereinafter referred to as Elia) and RTE, the operator of the French transmission system, set up a second 225 kv three-phase circuit on an existing electricity line stretching 15 kilometres between Moulaine in France and Aubange in Belgium. A new type of electrical conductor has been used on the new three-phase circuit and on the existing circuit alike, making it possible to increase the capacity of the circuits by over 20%. According to Elia, thanks to this investment the exchange capacity between France and Belgium can be increased by around 10 to 15%. In addition, as part of the increase in the capacity of the transmission system between the coastal region and the interior of the country, a new 150 kv cable has been installed between the Blauwe Toren and Bruges sub-stations. Natural gas The investment programme of the TSO covers both the forward-looking reinforcements of the gird aimed at supplying the Belgian natural gas market and the investments to provide additional capacity for transmission from border to border on the basis of long-term reservations. In 2010, Fluxys, the TSO, allocated an investment budget of some 400 million to reinforce the grid Capacity allocation Electricity The overall volume of commercial capacity available at the borders during the course of 2010 did not undergo any significant changes compared with 2009, despite the increase in unidentified flows due to the huge injection of wind energy in northern Germany thanks to the use of phase-shifting transformers, amongst other things. Natural gas In terms of capacity allocation, in 2009, Fluxys launched a subscription period procedure in consultation with and under the supervision of the CREG so as to provide a solution to the problem of capacity congestion encountered at certain entry points on the transmission system. This procedure was included in the indicative transmission programme which constitutes a catalogue of the services offered by the TSO. The subscription period procedure was amended as part of the indicative transmission programme on the basis of feedback further to the subscription period 8. The feedback from the subscription period was used for the launch of the consultation process on the basic principles of an optimised transmission model, amongst other things. On 23 November 2010, Fluxys submitted a new proposed indicative transmission programme for the period in which the subscription period procedure has been abolished further to the assertion by Fluxys that no congestion was expected on the transmission system during this period. The proposal was approved by the Management Board on 8 December Security of supply Powers of the CREG in terms of security of supply Electricity The CREG continues to play a significant role in terms of security of supply. However, the CREG is not the only party to be involved in this issue, given the Belgian institutional context on the one hand and the distribution of powers of authority between the regulator and the energy administration on the other hand. While the regions have powers to settle the regional aspects of energy, the federal authority remains qualified to address matters whose technical and economic indivisibility requires uniform implementation at national level in the listed cases, i.e. the national plan for the equipment of the electricity sector, the nuclear fuel cycle, major storage infrastructures, the transmission and production of energy and the tariffs. In addition, the federal authority can settle everything that comes under the residual powers, which means that when a matter 8 Decisions (B) CDC-938 and (B) CDC Decision (B) CDC

13 2. Main developments on the electricity and natural gas markets cannot be linked to one of the powers attributed to the regions, this matter comes under the federal scope of authority. And so in principle new energy sources come under the regional scope of authority. However, the federal authority remains qualified in the North Sea and for the wind farms constructed in this zone in particular, owing to the limitation of the territorial powers of the regions to the territory of the region. The powers of the federal authority are assumed either at the level of the federal administration, which is the Directorate General for Energy, or at the level of the regulator, the CREG. The construction of new power generation units is subject to the prior granting of an individual permit issued by the Minister for Energy at the proposal of the CREG, which is in charge of the examination of applications, amongst other things. The domain concessions with a view to the construction and operation of power generation units from water, currents or wind in marine areas (wind farms) are granted by the Minister for Energy after obtaining the opinion of the CREG. As regards the outlook for long-term supplies, the CREG is being consulted in the context of the drafting of a study on the outlook for electricity supplies known as the prospective study. The CREG also has the power to advise on the draft development plan for the transmission system put forward by Elia. The CREG also has the power to approve the methodology used to assess the primary, secondary and tertiary reserve capacity, which contributes towards ensuring the security, reliability and efficiency of the grid in the control area. Similarly, it has to approve the market operating rules intended to offset 15-minute imbalances. Natural gas The CREG plays a significant role in the field of security of supply. The Act of 12 April 1965 on the transmission of gaseous and other substances by pipeline (referred to here as the Gas Act) in fact stipulates that the CREG shall be consulted when drawing up the prospective study on the security of natural gas supplies. However, the most recent achievement of the CREG in this area dates back to the publication of the (F) CREG-874 study of 13 July 2009 on natural gas supply needs, security of supply and infrastructure development for the time frame. Moreover, European Regulation No 994/2010 which lays down measures aimed at guaranteeing the security of natural gas supplies came into force on 2 December This regulation lists the provisions aimed at maintaining the security of gas supplies by guaranteeing the proper and continuous operation of the internal natural gas market, by enabling the implementation of exceptional measures when the market is no longer able to provide the necessary gas supplies and by precisely defining and attributing responsibilities among natural gas companies, the member states and the European Union, both concerning preventive action and the reaction to concrete disruptions of supply. This regulation also provides for transparent mechanisms, in a spirit of solidarity, for the coordination of planning for, and response to an emergency at member state, and regional level and within the European Union. Certain provisions in this regulation shall be implemented in These include the publication of public service obligations with regard to security of supply, the appointment of the competent authority under the terms of this regulation, the definition of protected customers and the preparation of a risk analysis Development of investment Electricity n Investments in generating units With regard to prospective investments in onshore generating units known as at 31 December 2010, 946 MW are under construction, 3,455 MW have been authorised 11 and 2,502 MW are planned 12. With regard to prospective investments in offshore generating units known as at 31 December 2010, 460 MW are under construction and 1,112 MW have been authorised 13. n Investments in the electricity transmission system The main development in the transmission system for the future is the Stevin project planned by Elia. This consists of extending the 380 kv grid between Zomergem and Zeebrugge Regulation (EU) N 994/2010 of the European Parliament and of the Council of 20 October 2010 concerning measures to safeguard security of gas supply and repealing Council Directive 2004/67/ EC. 11 These 3,455 MW have been authorised but construction work has not yet begun. These are projects for which a generating permit has been granted (power plants of over 25 MW). 12 For which an application for authorisation is still being processed. 13 These 1,112 MW have been authorised but construction has not yet begun. These are projects for which a domain concession (offshore wind farm) has been granted.

14 2. Main developments on the electricity and natural gas markets This reinforcement of the grid is able to meet three needs: transporting the energy produced by wind farms at sea to the interior of the country; creating the conditions for a new interconnection with the Belgian grid by means of a submarine link with the United Kingdom; improving the security of the electricity supply in West Flanders and enabling the continued economic development of the port of Zeebrugge. n Open Season relating to the transmission capacity to the Grand Duchy of Luxembourg In the second quarter of 2009, Fluxys launched an Open Season for the capacity between Belgium and the Grand Duchy of Luxembourg. In this context, the capacities reserved as of 2015 are in line with expectations and will give rise to limited investments. The timing of the project depends largely on the length and progress of the various authorisation procedures needed for the construction of the project. These are scheduled to be completed by the end of In this case, the actual work could begin early in 2013 to be completed in Natural gas n Expansion of storage capacity In the context of the gradual expansion of the underground storage capacity in Loenhout, the useful storage volume increased from 650 million cubic metres of natural gas in 2009 to 675 million cubic metres in n Reinforcement of North Limburg In 2010, a major extension was undertaken of the existing H-gas pipeline from the Dilsen entry point to Lommel, in a region supplied mainly by Dutch L-gas. n rtr2/vtn2 The laying of the rtr2/vtn2 pipeline parallel to the existing bi-directional rtr1/vtn1 pipeline along a stretch covering almost 170 km between Eynatten and Opwijk was the main achievement in n Reinforcement of north/south axis With regard to the north/south project, the new capacity amounts to 10 billion m³ per year. The additional compression capacity needed for this north/south project is provided at Winksele and Berneau Development of supply/demand balance Electricity Belgium s position on the international market depends heavily on circumstances, and in particular on the economic situation. The sharp fall in Belgian electricity demand in 2009 compared to 2008 and the increase in installed capacity created margins in the generating activities that enabled the Belgian system to reposition itself on the international market. The recovery that began in 2010 caused these margins to narrow. Belgium therefore moved from being a net importer by 10,620 GWh in 2008 to being a net exporter by 1,835 GWh in 2009 and back to being a net importer by 600 GWh in 2010 (source: Synergrid, provisional data for 2010). Natural gas In 2010, total natural gas consumption amounted to TWh, which represents a considerable increase (10.6%) compared with consumption in 2009 (194.2 TWh). This increase is due entirely to the strong recovery in industrial demand for natural gas (+19.7%), which has almost returned to the 2008 level of consumption, and to a considerable increase in consumption on the distribution networks (+15.5%). Overall, the individual support portfolios of the various natural gas suppliers lead to differentiated supply depending on the type of contract. The share of long-term contracts concluded directly with the natural gas producers fell from 71.3% in 2009 to 60.3% in 2010, but still constitutes the main component, with 2010 seeing a shift towards supplies on the wholesale market. n Open Season relating the transmission capacity from France to Belgium The first non-binding phase of a market consultation process designed to gauge market interest in the transmission capacity from France to Belgium was completed in It will not be possible to begin the binding phase however until the initiator, EDF, has decided to build a new LNG tanker terminal in Dunkirk. As at 31 December 2010, after a number of postponements, a decision was still pending. The forecasts put forward by the CREG in 2009 with regard to the supply/demand balance still apply as a reference framework for investments in the transmission system and for security of supply. The growth in demand in Belgium is mainly covered at least contractually by the increasing imports of Russian natural gas, while the share of Norwegian natural gas contracts is stagnating and that of British natural gas continues to decline. 11

15 2. Main developments on the electricity and natural gas markets The role of LNG in covering demand is more difficult to estimate as it depends on additional investments in the LNG terminals. Nevertheless, the Zeebrugge LNG terminal already plays a major role in supplying Belgium, at least in the context of additional deliveries during peak consumption periods. Although the 2009 gas crisis between Russia and Ukraine did not disrupt the natural gas market in Belgium, it is recommended that Belgian energy policy follows this issue closely and develops appropriate regulations to ensure the security of supply Diversification of sources and routes Electricity In 2010, nuclear-generated electrical power accounted for 53% of the total electrical power generated in Belgium. The share of electrical power generated using natural gas as the primary fuel amounted to 30%. In terms of capacity, nuclear energy and the CCGT together with the gas turbines accounted for almost 35.7% and 27.2% respectively of the total installed capacity of the power stations connected to Elia s grid in Natural gas LNG supplies, mainly from Qatar, via the Zeebrugge terminal accounted for 6.2% of Belgian natural gas consumption in 2010, compared with 9.0% in With a share of 46.5%, Zeebrugge has once again confirmed its position as the gateway to the Belgian market. For the L-gas market, we observed fairly significant backhaul supplies from Blaregnies (4.9% in 2010 compared with 2.6% in 2009) on transit flows initially intended for the French market. The forecasts put out by the CREG in 2009 continue to apply. Natural gas suppliers operating on the Belgian market have a differentiated supply portfolio in which the long-term contracts concluded directly with natural gas producers constitute by far the biggest element. Obtaining supplies via the wholesale market is an option chosen mainly by the new natural gas suppliers who have few, if any, direct purchase contracts in place with natural gas producers. An analysis of the supply portfolios of importers (existing or new) points to an upward trend in supplies via Germany (through Eynatten) and The Netherlands (through s Gravenvoeren and the new physical entry point in Zelzate). In fact, there are bi-directional connections with The Netherlands, Germany (and the United Kingdom), but not with France. Physical imports from France are not possible at the moment. To enable such physical imports, the Blaregnies/ Taisnières interconnection point will have to become a physical entry point for the Belgian market and a deodorisation unit 14 will have to be built on the French side. The forecasts regarding the choice of entry points tally with the grid reinforcements planned by Even then, substantial entry capacity available in Eynatten and Zelzate should enable increased supplies via these points Regulation/Unbundling Powers of the CREG Over 2010, the chairman, three directors and sixteen members of staff of the CREG were appointed inspectors vested with the powers of authority of officers of the judicial police 15. They are charged with seeking out and establishing infractions of certain provisions of the Gas and Electricity Acts and of the relevant implementing decrees across the territory of Belgium. In addition, in a preliminary ruling (judgment No 130/2010 of 18 November 2010), the Constitutional Court stated that the lack of hierarchical control or administrative supervision over the CREG is not contrary to the Constitution in that the CREG is an administrative authority with a considerable degree of autonomy and in addition is subject to both jurisdictional and parliamentary control. The Court added that the fact that the CREG fulfils its assignments with a high level of autonomy results from the requirements of European Union law, which has become gradually more explicit in this area Role of TSOs on the markets Electricity On the electricity market, the operation of the power exchange is regulated by the Royal Decree of 20 October 2005 regarding the creation and organisation of a Belgian market for the exchange of energy blocks. Article 6 of this decree specifically outlines the behaviour and responsibilities of the market operator and the TSO if the market is coupled to similar markets. Pursuant to this article, the market operator may, in In Belgium, natural gas is odorised (injection of an odorising substance to enable the detection of leaks, as natural gas is odourless) as soon as it is injected into the distribution networks. In the transmission system, natural gas is not really odorised because this creates problems for the chemicals industries that uses natural gas as a raw material. In France, however, natural gas is odorised in the transmission system. Gas taken up by the chemicals sector is, if necessary, processed by an individual deodorisation plant. 15 Royal Decree of 25 June 2010 appointing the members of the Management Board and the members of staff of the Commission for Electricity and Gas Regulation, as officers of the judicial police (Belgian Official Journalof 23 July 2010).

16 2. Main developments on the electricity and natural gas markets this case, at the request of the TSO, implement the methods for the allocation of the available capacity to the market coupling for energy exchanges with foreign grids, provided that this is done transparently and without discrimination. In practice, Elia and Belpex use this Article 6. The Day-Ahead capacity on the interconnections with The Netherlands and France is implicitly auctioned on the Belpex Day-Ahead market. For annual and monthly capacities, the capacity on the interconnections concerned is auctioned explicitly. Natural gas On the natural gas market, the operation of the hub and the exchange is organised by Huberator and APX, which are not regulated. The TSO, which is regulated, does not have a specific role to play on these markets. It is a member of the markets, in the same way as other parties, to obtain natural gas supplies in line with its own needs Development of unbundling of TSOs The electricity TSO On 31 March 2010, the Elia Board of Directors approved the agreement concluded between Elia, Publi-T and Electrabel/ GDF/SUEZ on the terms and procedures for the withdrawal of Electrabel from the capital of Elia. Under the terms of this agreement, Electrabel is selling 12.5% of the capital of Elia to Publi-T, bringing Publi-T s stake in the capital of Elia to 45.37%. The natural gas TSO Further to an Act of 10 September 2009, in March 2010 GDF SUEZ and Publigaz concluded an agreement on the transfer of the entire stake of Electrabel in Fluxys (38.5%) to Publigaz. The transaction was effected on 5 May Further to this transaction, Publigaz s stake in Fluxys has increased to 89.97%, while the GDF SUEZ group has withdrawn entirely from the capital of Fluxys Transposition of the third legislative package Over the course of 2010, the CREG carried out a number of studies with a view to adapting the Gas and Electricity Acts to the new European rules of the third energy package promulgated in July 2009, the final deadline for the transposition of which was 3 March Other amendments to the Act were put forward at the same time so as to improve the functioning and follow-up of the market, resolve certain legislative difficulties and inconsistencies and establish a logical structure for the Acts in question. An initial study on the Act of 29 April 1999 relating to the organisation of the electricity market (hereafter: the Electricity Act) was published in April , followed by a second version on 5 November On the same date, a study on the Gas Act 18 was also presented. The amendments proposed are in line with the objectives of the third energy package, and specifically relate to: increasing the independence and powers of the energy regulators; separating production and supply activities on the one hand and grid activities on the other (unbundling); improving market transparency with a view to promoting equality of access to information, price transparency and consumer confidence in the market and avoiding market manipulation; strengthening consumers rights; ensuring cooperation between European energy regulators through the newly created Agency; promoting cooperation between the TSOs General conclusions regarding the legal framework At a time when the procedure begun by the European Commission with regard to Belgium s infringements of the second package is taking its course (see paragraph C below), the deadline for the transposition of the third European energy package is fast approaching. This will require numerous significant modifications to the Belgian legal framework, including to the Gas and Electricity Acts. The modifications to be brought will enable the CREG to carry out its general monitoring assignment in full. Examples of the biggest modifications to be brought include the determination by the CREG of the conditions for the connection and access to the grids and the rules on capacity allocation and congestion management, the certification of TSOs, the problems inherent to closed distribution networks, tariffs, grid development plans and the powers of the CREG as a regulator. 16 Study (F) CDC Study (F) CDC Study (F) CDC

17 3. Regulation and operation of the electricity market 15

18 3. Regulation and operation of the electricity market 3.1. Regulation Management and allocation of interconnection capacities and congestion mechanisms A. Regional and bilateral developments The growing importance of the regional integration of energy markets was pointed out in the third European legislative package which stresses that the regional level is an essential first step towards a single European energy market. The CREG is closely following the development of this issue in the context of the electricity regional initiatives (ERI). In 2010, the work on integrating the markets of the Central West Europe region (hereinafter CWE, which includes Belgium) carried out under the leadership of the CREG related mainly to daily market coupling, setting up a regional mechanism for Intraday exchanges, the auctioning rules for cross-border transmission capacity and calculating interconnection capacities. Generally speaking, substantial delays have built up with regard to these priority activities compared with the initial schedule. One key objective is the creation of a flow-based D-1 market coupling. To this end, the TSOs and regulators of the CWE region have held a series of meetings to prepare for the launch of CWE coupling, initially scheduled for May The main aim of these meetings was to reach a better understanding of the capacity calculation mechanism, the congestion management methods and the methods used to allocate the available daily capacity to the Access Responsible Party, as well as establishing a common position on these matters and discussing the regulatory process. Further to coordination with the volume coupling between Germany and the Scandinavian countries and implementation problems in the final phase of the market coupling process, the CWE market coupling was finally launched on 9 November This coupling means that the Belgian daily market is now coupled, on the basis of implicit auctions, with France, Germany, Luxembourg and The Netherlands. At the same time it also involves the coupling of the CWE region with the Scandinavian countries through Interim Tight Volume Coupling (ITVC). At the moment, the CWE coupling is based on the Available Transmission Capacity (ACT) and not on energy flows. The regulators of the CWE region also intend to set up a regional Intraday mechanism. On the basis of consultation with the market players in 2009 organised by the regulators, in November 2009 the latter asked the TSOs to submit a proposal based on an implicit (transmission capacity and energy) and continuous allocation mechanism. The system operators responded in February 2010 with an information study. An adapted version of this study was produced in June 2010 in response to specific requests from the regulators. These developments in the CWE region gave rise to coordination between the energy regulators, the TSOs and the electricity exchanges. The CREG took a number of decisions in this context relating to the long-term, daily and Intraday markets. On 7 October 2010, the Management Board approved the proposal put forward by Elia relating to the harmonised auctioning rules for the CWE region, with the exception of Article 4.01 (b) (i), the application of which was authorised nonetheless so as to avoid compromising the implementation of the improvements contained in the modified auctioning rules 19. Thanks to the harmonised auctioning rules, identical rules apply throughout the CWE region for the allocation of interconnection capacity, whichever the required interconnection for the capacity. Moreover, market players wishing to acquire annual and monthly interconnection capacity in the CWE region can now contact a common auctioning body, the CASC CWE. Furthermore, the launch on 9 November 2010 of daily market coupling based on prices has also given rise to a number of CREG decisions. In February 2010, the Management Board issued an opinion on the application for approval of the modifications proposed by Belpex concerning the market rules of the Belpex market 20. These modifications were introduced so as to enable the implementation of market coupling of the Belgian, Dutch and French hubs (Belpex, APX and EPEX Spot) to the German hub (EPEX Spot). Further to this opinion, the Minister for Energy authorised the proposed modifications 21. The methodology used to calculate interconnection capacity is based on existing methodologies to determine interconnection capacity. It is supplemented by coordinated monitoring of grid security by the TSOs of the CWE region, which may result in a coordinated reduction in capacity. On 26 October 2010, the Management Board issued its decision on the methodologies used to calculate daily capacities Decision (B) CDC Opinion (A) CDC Ministerial Decree of 19 February 2010 approving modifications to the regulations on the energy blocks exchange market (Belgian Official Journalof 4 March 2010). 22 Decision (B) CDC-997.

19 3. Regulation and operation of the electricity market In October 2010, the Management Board also took a decision on the proposal put forward by Elia on the congestion management methodologies and the methodologies used to allocate the available daily capacity on the Belgium/ France and Belgium/Netherlands interconnections 23. It refused to approve the methodologiess proposed as they failed to comply with Article 3.5 of the Guidelines on the management and allocation of available interconnection transfer capacity of interconnections between national systems annexed to Regulation (EC) 1228/2003 which aims to achieve flow-based coupling. The Management Board did however authorise the implementation of the proposed coupling in the interests of the Belgian electricity market. Finally, as regards the Intraday coupling mechanisms, the CREG and the Dutch regulator NMa followed the development of a temporary bilateral Intraday mechanism between Belgium and The Netherlands. This mechanism will be based on the Elbas system which is already in place in the Scandinavian countries. This will be a continuous and implicit system. To prepare for the adaptation of the market rules to the specific features of this new Intraday market, the Management Board issued an opinion in September 2010 on the modifications to the market rules 24 proposed by Belpex. Further to this opinion, the Minister for Energy authorised the proposed modifications 25. Moreover, in mid-2010 the TSOs of the CWE region, together with the British and Scandinavian TSOs, launched a new North-West Europe (NWE) Intraday initiative. A clear development plan will be prepared in 2011 to achieve implicit coupling on the Intraday markets in the CWE region, the Scandinavian countries and the United Kingdom. The regulators in these countries are involved in these discussions. the Belgian grid. For more details on this subject, see paragraph 5.1 of this report. Thanks to the Intraday mechanism for interconnection capacity introduced in May 2007 for the southern border, 469 GWh were imported from France and 392 GWh were exported to France in Thanks to the Intraday mechanism for interconnection capacity introduced in May 2009 for the northern border, 78 GWh were imported from The Netherlands and 100 GWh were exported to The Netherlands in Intraday connections were used slightly less than 65% of the time in 2010, compared with 58% in Figure 1 below shows the evolution of the import and export capacity made available on the market on a Day-Ahead basis (monthly average), as well as the related total net usage. This figure shows that no extreme developments occurred in 2010 in terms of the use (nomination) of interconnection capacity: the monthly maximum average use was always below 1,000 MW except in December (with average imports of 1,250 MW). This result contrasts with the results obtained for 2008, marked by high imports during the period from February to May, and for 2009, marked by high exports during the period from July to September. Furthermore it appears that the seasonal reduction in import capacity did not get underway until May 2010, whereas in 2009 this occurred as early as March. B. Market results on interconnections Having exported net electrical power on an annual basis in 2009 for the first time since the liberalisation of the market, Belgium again imported electricity on an annual basis in 2010, albeit only on a very small scale. Net physical imports amounted to around 0.55 TWh in 2010, whereas net exports amounted to 1.8 TWh in Gross physical imports in 2010 amounted to around 12.4 TWh, compared with 9.5 TWh in 2009, and gross physical exports were around 11.8 TWh, compared with 11.3 TWh in A substantial proportion of the physical energy flows comes from cross-border transiting of electricity passing through 23 Decision (B) CDC Opinion (A) CDC Ministerial Decree of 26 October 2010 approving modifications to the regulations on the energy blocks exchange market (Belgian Official Journalof 4 November 2010). 17

20 3. Regulation and operation of the electricity market Figure 1: Availability and use of interconnection capacity from 2007 to 2010 MW / / / / / / / / / / / / / / / / / / / / / / / /11 Average export capacity Average import capacity Average nomination Source : CREG The table below shows that average export and import capacity rose slightly in 2010 compared with previous years. As regards import capacity, this increased in 2010 compared with the previous years. The average nomination (use) was positive in both years (indicating commercial exports), compared with negative nominations in (indicating commercial imports). In 2010, the Belgian control area was a net exporter of energy. Table 1: Average import/export capacity and average nomination per year (MW) Year Average export capacity Average import capacity Average nomination ,317-3, ,242-3,882-1, ,460-3, ,558-4, Average 2,394-3, Source: Elia data, CREG calculations The following table shows the trend in annual revenues from (import and export) capacity acquired by market players in the context of explicit auctions, valid for the following year or the following month. This table shows that in comparison with the past, the market players were able to obtain annual and monthly capacity for a lesser amount in 2010 ( 33.6 million). So they anticipated the smaller price deviations in 2010 compared with previous years, indicating better convergence of the markets in Belgium, The Netherland and France. Table 2: Annual revenues from capacities offered for auction (in millions of euros) M Annual auctions Monthly auctions Total Source: Elia data, CREG calculations When market players buy capacity, they estimate in advance what they believe will be the price differences between the Day-Ahead exchanges of the three countries (Belgium, The Netherlands and France). These differences, which are expressed on the short-term Belpex DAM market, indicate that the interconnection capacity between two given markets is saturated. In principle, the resulting congestion rent is allocated to the TSOs. However, if a market player buys interconnection capacity at the explicit auction (annual and/ or monthly capacity) and fails to use it, this capacity is allocated to the implicit market coupling on the short-term exchanges. The initial owner who has not used this capacity subsequently receives the congestion rent if there is a price difference in the direction of his capacity. 18

21 3. Regulation and operation of the electricity market The trend in congestion rents, per type of player, over the 2007 to 2010 time period, as shown in the table below, reveals that in 2010 market players ( resale in the table below) received over half of the total congestion rents, i.e. a share approximately equal to that of previous years. In 2010, the total congestion rent also proved to be 4 million lower than that of 2009, and as much as 10 million lower than that of 2007 and 11 million lower than that of 2008, reflecting better convergence among exchange prices. However, it should be noted that 2009 and to a lesser extent 2010 were crisis years in economic terms, which could explain some of the price convergence. In practical terms, the main violations of the legislation noted by the Commission were as follows: the first violation concerned a lack of information from the electricity TSO, which hampers effective access to the energy suppliers network. Secondly, the Commission considered the grid capacity allocation systems to be inadequate, preventing the best possible use of the electricity transmission systems. Finally, the Commission criticised the lack of cross-border coordination and cooperation between electricity TSOs and national authorities in the CWE region. The Commission believes that this coordination and cooperation are necessary to allocate crossborder interconnection capacities more efficiently so as to optimise the use of the electricity grid. Table 3: Congestion rents on coupled electricity exchanges per type of player (in millions of euros) M TSOs Resale Total Source: Elia data, CREG calculations As regards the calculation of commercial interconnection capacities, a substantial proportion of the physical capacities is set aside as a security margin for loop flows through Belgium, given their volume and unpredictability. Finally, it should also be pointed out that as it has done every year since 2008, in February 2010 the Management Board conducted a study into Belpex, the Belgian shortterm market for electricity and the use of capacity on the interconnections with France and The Netherlands for 2009 (see also paragraph ). C. Infringement proceedings against Belgium In June 2010, the European Commission sent Belgium, along with twenty other European member states, requests to implement and apply in full various aspects of EU legislation intended to create a single gas and electricity market. As regards the electricity market, the infringements for Belgium, proceedings for which had been opened in June 2009, relate to the failure to comply with the legal obligation resulting from Regulation (EC) 1228/2003 on conditions for access to the network for cross-border exchanges in electricity (which came into force on 1 July 2004), as well as the annexe (amended by a decision of 9 November 2006 which came into force on 29 November 2006). In August 2010 the Management Board sent the Minister for Energy its report on the objections put forward by the European Commission as set out in its reasoned opinion of 24 June Regulation of transmission and distribution A. Transmission and distribution tariffs n The transmission system (Elia) a) Methodology used to calculate the tariffs The methodology used to calculate the multi-annual transmission tariffs of electricity (four-year regulatory period) introduced by the Royal Decree on tariffs of 8 June has remained unchanged since 1 January The system established by this Royal Decree is a normative secured revenue system in that it guarantees the TSO, during a regulatory period of four years, sufficient total revenue to undertake its duties as defined by law and provide a fair margin to remunerate the capital invested in the grid. The revenue of each year in the regulatory period is divided into manageable costs, that is costs over which the system operator exercises direct control, and non-manageable costs, which are listed in the Royal Decree of 8 June The total revenue is generated by the implementation of a number of rules on the development of tariffs applied to the revenue for the first year used as a benchmark to deduce the revenue for the second, third and fourth year. Dividing the total revenue for the four years by the total volumes to be transmitted gives constant unit tariffs valid for the entire regulatory period, except for exceptional circumstances or changes to the services provided. 26 Study (F) CDC Royal Decree of 8 June 2007 on the rules on determining and monitoring the total revenue and fair profit margin, the general tariffs structure, the balance between costs and receipts and the basic principles and procedures with regard to proposing and approving tariffs, reporting and cost control by the national electricity transmission system operator. 19

22 3. Regulation and operation of the electricity market The most striking difference of this methodology compared with the previous methodology based on a cost-plus regulation is the incentive for the TSO to stimulate its profitability by means of the balance of manageable costs: every year, the difference between the real manageable costs and the budgeted manageable costs is in fact granted to the operator. However, the cost reduction stored up by the system operator must ultimately (in the next regulatory period) also give rise to tariff reductions for the benefit of grid users. This incentive regulation system is also applied in other countries. The current tariffs system is also typified by: the implementation of a development rule applicable to the manageable costs based on an indexation mechanism that includes both an ex-ante and an ex-post calculation; the taking into account of an incentive to increase investments. In fact, since 1 January 2008, when tangible fixed assets were decommissioned, the portion of the capital gain relating to the assets concerned coming from the initial regulated assets can be imputed to the total revenue to be covered by the tariffs, provided that the amounts corresponding to this capital gain are booked as an investment reserve and consequently remain within the company and can be used as a source of self-financing; the taking into account of congestion revenues for the benefit of tariffs; the application of the CAPM (capital asset pricing model), recommended by the Management Board to determine the fair profit margin provided that a TSO does not demonstrate that another approach is more suitable. b) Tariff trends The historic trend followed by transmission tariffs over time since the start of regulation exercised by the CREG is illustrated below. As the tariffs for use of the transmission system and for ancillary services are multi-annual tariffs that have been approved for the entire regulatory period. They remain unchanged in 2010 compared with 2009 and c) 2009 balances The Management Board also expressed an opinion on the tariff balances relating to the 2009 operating year reported by Elia 28. On the basis of the results of its monitoring programme relating to the 2009 Annual Report, the Management Board decided: (i) not to approve the 2009 balances reported by Elia, rejecting certain elements of the total revenue of Elia (in particular the grossing up of the 2009 balance on the manageable costs) as well as the expenditure linked to the Black Start service provided by the Drogenbos power plant; Table 4: Trend in the cost price for the transmission of electricity depending on the voltage, excluding surcharges and VAT Offtake in the grids 380/220/150kV Offtake in transformation to 70/36/30 kv Offtake in the grids 70/36/30 kv Offtake for transformation to average voltage Utilisation period (h/year) 7,000 6,500 6,000 5,500 Cost in /MWh % compared with the previous period Cost in /MWh % compared with the previous period Cost in /MWh % compared with the previous period Cost in /MWh % compared with the previous period 2002 January-September (1) , October-December and 2003 January-March % % % ,91% 2003 April-December % % % ,70% % % % ,38% % % % ,78% % % % ,76% % % % ,11% 0verall fall 2007 compared with period (1) % % % -53,37% Start of multi-annual tariff regulatory period % % % ,79% % % % ,00% % % % ,00% 0verall fall 2010 compared with period (1) % % % -42,28% Source : CREG Decisions (B) CDC-658E/15 and (B) CDC-658E/16.

23 3. Regulation and operation of the electricity market (ii) to set the 2009 balance on the non-manageable costs at the sum of 7,921,062.24, which constitutes a regulatory claim in favour of Elia; (iii) to set the 2009 balance on sales volumes at the sum of 14,789,000, which also constitutes a regulatory claim in favour of Elia. d) Jurisprudence In July 2010 Elia lodged an appeal with the Brussels Court of Appeal for the annulment of the aforementioned decision by the Management Board on 25 June The appeal ruling is expected in the first half of 2011 and should be taken into consideration in the opinion on the allocation of accumulated balances from the past four operating years which the Management Board will pass on to the Minister for Energy during the course of spring e) Study on the comparison between the prices paid by Elia for the purchase of energy to offset active losses on its regional grids and the energy prices paid by major industrial customers in 2009 In this study conducted in December , the Management Board noted that for one of the thirteen batches of energy purchased by Elia, the purchase price was unreasonably high. The Board is considering following up this finding in the context of its decision on the operating balances for n The distribution networks a) Methodology used to calculate the tariffs As with the transmission activity, a new tariffs regulation methodology for distribution based on a guaranteed revenue for the DSO and supplemented by incentives aimed at promoting cost control came into force on 1 January This new system guarantees the DSO, for a regulatory period of four years, adequate total revenue to carry out its legal duties and receive a fair profit margin to remunerate the capital invested in the network. The previous methodology, which was applied until 1 January 2009, adopted the cost-plus method, whereby the costs incurred by the DSOs, monitoring by the CREG, were increased by a profit margin offering a fair remuneration for the capital invested in the distribution network. These tariffs were approved by the CREG for a period of one year or, if necessary, were imposed per quarter. Three methodologies underlying the calculation of the tariffs are now possible during the aforementioned four-year regulatory period: approval of the tariffs for the entire regulatory period if the tariffs proposal accompanied by the network operator s budget has been approved before the start of the regulatory period; approval of the tariffs for the remainder of the regulatory period if the aforementioned tariffs proposal has been approved during this period; the imposition of tariffs in all other cases. On 30 September 2008, all the DSOs bar one submitted a tariffs proposal accompanied by a budget for the regulatory period within the legal deadline. As none of the proposals submitted met the information requirements stipulated by the Royal Decree of 2 September , the Management Board decided to reject these proposals and impose provisional tariffs. The provisional tariffs imposed are based on the latest elements of the corresponding approved total revenue, that is the tariffs for the 2008 operating year. These provisional tariffs remain in force for the entire duration of the regulatory period or until all the arguments open to the DSO or the CREG have been exhausted or until an agreement has been reached between on the points of contention between the CREG and the DSO. Over the course of 2009, most of the DSOs submitted new tariffs proposals for the regulatory period on the basis of the new reporting model. The mixed DSOs (in which both the public sector and the private sector have capital holdings) whose operation was entrusted to the companies Eandis (Flanders) and Ores (Wallonia) obtained approved tariffs for the regulatory period as of 1 July and 1 October 2009 respectively. The mixed DSO for Brussels, Sibelga, and two «pure» Walloon DSOs, AIEG and AIESH (whose capital is held only by public sector authorities) also obtained approved tariffs as of 1 October At the end of 2010, the CREG concluded an agreement with four pure DSOs whose operation has been entrusted to the company Infrax (Infrax West, Iveg, Inter-Energa and PBE) on pending points of contention so that their respective tariffs have been approved as of 1 January When assessing the tariffs proposals and the annual report of the DSOs, the Management Board checked the separation between the network activities on the one hand and any other activities undertaken by the network operator on the other. It also checked the separation between regulated and non-regulated network activities. In this context, the Management Board issued a number of guidelines Study (F) CDC Royal Decree of 2 September 2008 on the rules on determining and monitoring the total revenue and fair profit margin, the general tariffs structure, the balance between costs and receipts and the basic principles and procedures with regard to proposing and approving tariffs, reporting and cost control by the national electricity transmission system operator. 31 Guidelines (R) CDC

24 3. Regulation and operation of the electricity market defining a general framework for the assessment and treatment of regulated and non-regulated network activities. The Management Board already pointed out on a number of occasions in previous reports that the new regulatory framework allows it few powers to assess the reasonable and real nature of the costs as presented by the DSOs. The Management Board is therefore of the opinion that the legislation on the distribution tariffs needs to be reviewed in accordance with the new European directive (Directive 2009/72/EC). The transposition of this directive will make it possible to correct the legislation applicable to tariffs and provide the regulator with the powers needed to guarantee correct distribution tariffs 32. b) Tariffs trends Table 5 provides an overview of tariff trends between 2008 and There are no changes for the DSOs upon whom provisional tariffs have been imposed for the period given that these are an extension of the tariffs applicable for the 2008 operating year. The trend was considerably flatter than that between 2008 and 2009 and may be attributed mainly to the application of an indexation mechanism to the manageable costs and to a lesser extent to the trend in other elements, such as depreciation and non-manageable costs (public service obligations, for instance). In 2010, imposed tariffs were billed for two Walloon DSOs (Tecto and Wavre) and for the «pure» Flemish sector (Infrax West, Inter-Energa, Iveg and PBE). These are based on the most recent corresponding total revenue elements approved, i.e. the tariffs for the 2008 operating year. These provisional tariffs remain in force for the entire duration of the regulatory period or until all arguments open to the DSO or the CREG have been exhausted or until an agreement has been reached between on the points of contention between the CREG and the DSO. During the last quarter of 2010, the «pure» Flemish sector submitted new tariffs proposals for the regulatory period. As these new tariffs proposals include all the information and justifications required by the Royal Decree of 2 September 2008, the Management Board approved the tariffs for 2011 and Significant differences in tariffs are seen to exist between the various DSOs. These may be explained on the one hand by topographical and technical factors specific to the areas supplied and on the other hand by the scope of the public service obligations and whether or not the fee for occupation of the public domain is taken into account in the tariffs. Other factors, such as the transfer of balances from the previous years (bonus/malus) also contribute towards these differences in tariffs. Figures 2, 3 and 4 give the average composition of the distribution network cost in Flanders, Wallonia and Brussels. 32 Study (F) CDC

25 3. Regulation and operation of the electricity market Table 5: Tariffs for the use of the distribution network in 2008, 2009 and 2010 (in /kwh), excluding VAT /kwh Tariffs: Approved: A Extended 2008: E Household low voltage 3,500 kwh/year Δ 2010/2009 GRD Industrial average voltage 30,000 kwh/year Industrial average voltage 1,250,000 kwh/year Δ 2010/ Δ 2010/ AGEM E % % % AIEG A (3) % (3) % (3) % AIESH A (3) % (3) % (3) % DNB BA E pas applicable (1) % % EV/GHA E % % % GASELWEST A (2) % (2) % (2) % GASELWEST WA A (2) % (2) % (2) % IDEG A (3) % (3) % (3) % IEH A (3) % (3) % (3) % IMEA A (2) % (2) % (2) % IMEWO A (2) % (2) % (2) % INTER-ENERGA E % % % INTEREST A (3) % (3) % (3) % INTERGEM A (2) % (2) % (2) % INTERLUX A (3) % (3) % (3) % INTERMOSANE A (3) % (3) % (3) % INTERMOSANE VL A (3) % (3) % (3) % IVEG E % % % IVEKA A (2) % (2) % (2) % IVERLEK A (2) % (2) % (2) % PBE E % % % PBE W E % % % SEDILEC A (3) % (3) % (3) % SIBELGA A (3) % (3) % (3) % SIBELGAS NOORD A (2) % (2) % (2) % SIMOGEL A % % % TECTEO E (4) 28.65% (4) 21.73% (4) 23.62% WAVRE E % % % WVEM E % % % Average % % % (1) DNB BA does not serve any household customers (2) Applicable as of 1 July 2009 (before this date the 2008 tariffs applied) (3) Applicable as of 1 October 2009 (before this date the 2008 tariffs applied) (4) Applicable as of 3 May 2010 at the earliest Source : CREG Figure 2: Average composition of distribution cost in Flanders in 2010 Figure 3: Average composition of distribution cost in Wallonia in % 5.62% 8.66% 2.24% 6.59% 1.33% Subscribed and additional capacity System management Measuring and metering activity Public service obligations Ancillary services Surcharges Meter hire 12.61% 6.96% 5.81% 3.33% 1.21% Subscribed and additional capacity System management Measuring and metering activity Public service obligations Ancillary services Surcharges Meter hire 6.14% 72.79% Source: CREG 63.95% Source: CREG 23

26 3. Regulation and operation of the electricity market Figure 4: Average composition of distribution cost in Brussels in % 7.57% 9.81% 4.20% 4.21% c) 2009 balances In 2010, the Management Board processed the balances of the DSOs relating to the 2009 operating year. For most of them, a bonus was recorded on manageable costs and a malus on non-manageable costs. The balance of manageable costs is included in the income statement of the DSO while the Minister for Energy decides on the allocation of the accumulated balances of non-manageable costs relating to the operating years 2008 to 2011 inclusive. When processing the 2009 balances, particular attention was paid to elements decommissioned by the DSOs and the Management Board used a monitoring programme to check whether the methodology proposed was observed and whether the elements reported as having been decommissioned were actually decommissioned both in the field and in administrative and accounting terms. d) Jurisprudence 55.86% Subscribed and additional capacity System management Measuring and metering activity Public service obligations Ancillary services Surcharges Source: CREG In 2010, the Court of Appeal in Brussels held a number of rulings further to the regulatory vacuum found with regard to its jurisprudence, under which the Royal Decrees of 2 September 2008 had been declared unlawful. In response thereto, the legislator had ratified the decrees in question (see 2009 Annual Report, pp. 28 and 51) but this did not alter the fact that the decrees had been drawn up contrary to European requirements in this field (more specifically the ban on arbitrary modification of the proposal put forward by the regulator). Given this situation, the Management Board concluded in a number of decisions that the CREG did not have a valid basis to take decisions on tariffs. In a number of rulings given on 29 June 2010, the Court of Appeal in Brussels rejected this point of view with respect to the rules on establishing the value of the regulated assets. The CREG was ordered to reach a new decision, in application of the relevant provisions of the Royal Decree on tariffs. These judgments were then extended in another series of rulings on tariffs decisions taken by the CREG, in which the Court had decided that the tariffs proposed by the DSOs were valid ipso jure. The Court did however decide that it was not impossible that the tariffs decisions had not been taken in accordance with the directives on certain points, but not to the extent that the Royal Decree had to be rendered unenforceable in its entirety. The Court specified that, moreover, there was no reason why the CREG should not apply some of the specific provisions concerned. In order to put an end to the constant uncertainty, Infrax and the CREG reached an agreement during the last quarter of 2010 concerning the tariffs to be applied during the last two years of the regulatory period. As a result, new approved tariffs have been valid for all Infrax members since 1 January The legal proceedings with Sibelga, the Brussels DSO, have also been brought to a close and the tariffs have been approved. e) Operating companies of DSOs The various operating companies fulfil all the assignments and duties resulting from the obligations of the DSOs in accordance with their articles of association. They have the administrative bodies necessary for this purpose (Board of Directors, Audit Committee, Human Resources Committee, Corporate Governance Committee, etc.). Eandis was incorporated on 30 March Seven Flemish mixed DSOs (Gaselwest, Imea, Imewo, Intergem, Iveka, Iverlek and Sibelgas) call upon Eandis to fulfil their operating assignments in their regions. Figure 5 shows the Eandis structure in 2009 and 2010 on the basis of the shares held by each DSO in Eandis. Infrax was incorporated on 7 July 2006 by the three «pure» sleeping partners of Interelectra (now known as Inter-Energa), Iveg and Wvem (now known as Infrax West) to bring together the operating activities in their region. PBE joined Infrax in the course of 2010 and the electricity supplies of the Havenbedrijf Antwerpen joined Iveg at the end of Figure 6 shows the structure of Infrax in 2009 and 2010 on the basis of the share held by each DSO in Infrax. Ores was incorporated on 6 February It is the operator responsible for the distribution networks for the eight mixed DSOs in Wallonia (IDEH, IEH, IGH, Interest, Interlux, Intermosane, Sedilec and Simogel). Figure 7 shows the structure of Ores in 2009 and 2010 on the basis of the shares of each DSO in Ores. BNO (Brussels Network Operations) performs duties at the instruction and on behalf of the mixed DSO for Brussels, Sibelga. 24

27 3. Regulation and operation of the electricity market Figure 5: Structure of Eandis in on the basis of the shares per DSO in Eandis 2.51% 19.43% 16.60% gaselwest imea imewo intergem 13.76% iveka iverlek sibelgas 14.34% 22.42% 10.95% Source: CREG f) Studies carried out by the Management Board in 2010 Studies on the purchase of energy to offset energy losses by DSOs In April 2010, the Management Board published a study on the purchase of energy to offset energy losses by DSOs between 2006 and This study analyses the energy purchase contracts to offset energy losses on the electricity distribution network. The purchase of this energy represents one of the costs of the DSOs that are included in their tariffs proposals and in their annual report, enabling the CREG to monitor tariffs. The CREG notes purchase prices that sometimes differ greatly from one tariff proposal to another. The competitive process should be more efficient for the supply of this energy given the substantial volumes and technical characteristics involved. Figure 6: Structure of Infrax in on the basis of the shares per DSO in Infrax 8.33% 22.00% 19.79% 59.38% Having analysed the various purchase contracts, the CREG noted that free competition for the allocation of the public contract for the purchase of energy to offset the network losses is limited in particular by the need for a regional supply permit and the power of the historic shareholder % 12.50% 64.00% inter-energa iveg infrax West PBE Source: CREG Figure 7: Structure of Ores in on the basis of the shares per DSO in Ores 5,61% 15,53% 26,10% Ieh Ideg Igh 4,92% Interest Interlux Intermosane 7,80% Sedilec 13,29% Simogel 2,85% 23,90% Source : CREG As of 2009, the first year of the regulatory period, the costs of network losses are moreover considered to be non-manageable, which takes away the incentive for the DSOs to scrupulously follow the market so as to obtain a more advantageous price. In December 2010, the Management Board carried out two studies on the comparison between, on the one hand, the prices paid by the mixed DSOs within Eandis and Ores to buy energy to offset active losses on their regional networks and, on the other hand, the energy prices paid by large industrial clients during the 2009 operating year. In its study on Eandis 34, the Management Board noted that the purchase prices paid by the DSOs were, generally speaking, in line with those charged by the main suppliers operating in Belgium during the 2009 operating year to their large industrial clients with comparable supply characteristics. In its study on Ores 35, the Management Board noted that the prices obtained for each of the batches subscribed individually by each of the DSOs are substantially higher than the commodity prices billed by the main suppliers operating in Belgium during the 2009 operating year to their large industrial clients with comparable supply characteristics. The excessive nature of the prices obtained is due partly to the adjudication procedure followed by Netmanagement and the need for potential suppliers to offer a fixed price by which they are bound for several weeks. 33 Study (F) CDC Study (F) CDC Study (F) CDC

28 3. Regulation and operation of the electricity market Studies on injection tariffs for high-quality renewable energy production and cogeneration plants In response to the request of the Minister for Energy, in April 2010 the Management Board conducted a study on the injection tariffs applied by certain DSOs, more specifically on the desirability of a possible exemption from or abolition of injection tariffs in favour of high-quality renewable energy production and cogeneration plants 36. The Minister also asked the CREG to examine the possible impact thereof on the costs for various types of standard customers. This study first of all stresses that any modifications made to the legal framework which would lead to (full or partial) exemption from or abolition of injection tariffs can only be applied as of the next regulatory period, that is The study then goes on to demonstrate that, although a certain degree of clarification of the existing legislation is desirable, there are no legal obstacles to billing injection tariffs. In addition, the Management Board worked out a number of scenarios on the basis of a selection of standard customers (Eurostat). The impact of a full and partial exemption from injection tariffs on standard customers is calculated on the basis of two scenarios. In view of the analyses carried out and given that the injection tariffs can play a significant role as a policy instrument in endeavouring to achieve an economic and social optimum in the context of the modernisation of the distribution networks, the Management Board argues in favour of maintaining injection tariffs in the legislation on tariffs. In July 2010, the Management Board conducted a followup study on the billing of injection tariffs for decentralised producers where tariffs reflect the connection costs and network use 37. As regards the connection tariffs, the study argues in favour of reflective costs. The obligation incumbent on decentralised producers to pay the connection tariffs they generate provides an incentive for localisation. The possible application of percentage reductions to connection tariffs may be considered. These reductions must, however, be objective and in accordance with the law. Connection tariffs that reflect the costs incurred imply adaptations to the regulations in Flanders, for example. As regards the use of the network itself (injection tariffs), the study suggests billing these costs to the decentralised producers who cause them. This means that the system management, measuring and metering and ancillary services network losses tariff components would still be billed, but the basic tariff for network services and levies and surcharges provided the connection tariffs actually reflect the costs should be abolished. This would require an adaptation of the Royal Decree of 2 September It should also be noted that in June 2010 Electrawind filed an appeal for annulment against the application of injection tariffs to the Constitutional Court. Finally, in December 2010 the Flemish Parliament adopted a decree with a view to avoiding injection tariffs for electricity generated using high-quality renewable energy sources and cogeneration 38. This decree stipulates that the local distribution network or TSO carries out free of charge all the duties needed for the injection of electricity generated using highquality renewable energy sources and cogeneration, with the exception of connection to the local distribution or transmission system. The costs borne by system operator in this case are considered to be costs resulting from the public service obligations of the system operator as such. Study on the development of the fixed term and/or capacity in the distribution network between 2003 and 2009 As regards electricity, the Management Board concluded in this study conducted in December that the kw term developed along virtually the same lines between 2003 and 2009, for both the tariff for the use of the network and for the total annual costs of the distribution network, and that consequently no notable change in the allocation of costs occurred between kwh and kw. The downward trend in costs attributed to kw compared with the total budget is accentuated by the fact that the DSOs budgets which are allocated to kwh have risen significantly over the past few years (effects of jurisprudence, the extension of public service obligations and multi-annual regulation), which has led to a continued decline in the relative share of the kw term. As regards natural gas, as for electricity, the study concludes that the kw term developed along virtually the same lines between 2006 and , for both the tariff for transfer by the network and the total annual costs of the distribution network and that consequently no notable change in the allocation of costs occurred between kwh and kw. The 36 Study (F) CDC Study (F) CDC Decree of 23 December 2010 amending the decree on Electricity of 17 July 2000 and the Decree of 8 May 2009 on energy, with a view to avoiding injection tariffs for electricity generated using renewable energy sources and high-quality cogeneration (Belgian Official Journalof 20 January 2011). 39 Study (F) CDC Given that the CREG only approved tariffs for natural gas as of 2004 and that examination has shown that the kw term was not used before 2006, the results given are limited to the period

29 3. Regulation and operation of the electricity market relative share attributed to the kw term compared with the total budget of a natural gas DSO is considerably higher than for electricity. This phenomenon can be explained by the fact that natural gas consumption depends far more on the outdoor temperature than electricity consumption. By maintaining the kw term, which is not linked to variations in atmospheric conditions and the resultant consumption, at a high level, the tariff fluctuations are lessened and this makes it possible to offer more stable tariffs. As regards the annual budget of the DSOs and the share allocated to kw, this share follows a relatively steady trend. g) Supplying information (tariffs, costs and connection conditions) All information is published on the websites of the network operators. This obligation is imposed by the regional and federal legislation. The tariffs approved or imposed by the CREG can be consulted on its website and on the sites of the network operators. At the request of the CREG, most of them have provided consumers with a calculation module that can be used to make a detailed estimate of their transmission and distribution tariffs. B. Maximum prices Readers are referred to paragraph B of this report. C. Ancillary services and balancing Reserve capacity Given that it was impossible to acquire the secondary reserves required for 2010 and 2011 at reasonable prices from the producers in 2009, the Minister for Energy imposed price and volume conditions for the supply of the secondary adjustment by various producers in 2010 and In accordance with the federal network code for the management of the electricity transmission system and access to this system (Royal Decree of 19 December 2002), Elia has to assess and determine the primary, secondary and tertiary reserve capacity that contributes towards ensuring the security, reliability and efficiency of the transmission system in the control area. It has an obligation to inform the CREG of its assessment methodology and the results obtained for approval. In August 2010, the Management Board approved the proposal put forward by Elia concerning the method used to assess the primary reserve capacity and the result of applying this method for 2011, but did not approve the proposal put forward by Elia concerning the method used to assess the secondary and tertiary reserve capacity and the result of applying this method for The Board asked Elia to submit another proposal for the secondary and tertiary reserve. Further to the additions and clarifications provided by Elia, the Management Board finally approved the new Elia proposal in December However, to its decisions the Management Board did add a number of considerations, amongst other things concerning the definition of a minimum tertiary reserve volume, the need for Elia to have volumes in line with the decisions taken by the CREG throughout the year, including in December, the impact of the increase in the share of production by wind farms in reserve volumes, the participation of industrial customers in the reserves and an extension of reserve monitoring. Prices and volumes for ancillary services offered by service providers On 2 July 2010, the Management Board received the Elia report on the bids for ancillary services for The ancillary services concerned include voltage adjustment and active losses in Elia s grids with a voltage of less than or equal to 70 kv. The other ancillary services will still be covered by multi-annual contracts in On the basis of this report, in August 2010 the Management Board approved a reasoned report 44 which it transmitted to to the Minister for Energy and to Elia, as required by law. In this report, the Management Board concluded that the bids for voltage adjustment are not blatantly unreasonable. The report also states that it is not possible to reach a conclusion on the prices for the entire volume which Elia estimates is necessary to cover the losses of its regional network in 2011, or to assert at the moment that all the prices resulting from the auction session organised by Elia to cover the losses of its regional network in 2011 are not blatantly unreasonable. It may also be observed that the law allows for the possibility of assessing this price ex post, when the operating balances for the current tariffs period are examined. 41 Ministerial Decree of 24 December 2009 imposing price and supply conditions for the supplying in 2010 and 2011 of secondary adjustment by various producers (Belgian Official Journalof 31 December 2009). 42 Decision (B) CDC Decision (B) CDC Report (RA) CDC

30 3. Regulation and operation of the electricity market This reasoned report from the CREG also contains a section on the assessment of prices for the secondary reserve for 2011 imposed by ministerial decree 45. This evaluation was undertaken in application of Article 4, 2 of the Royal Decree of 11 October 2002 on public service obligations on the electricity market. The results of this evaluation led to the conclusion that there was no need to review the prices imposed. A second evaluation was carried out at the end of December 2010 which resulted in similar conclusions. Balancing The TSO is responsible for monitoring, maintaining and, if need be, re-establishing the balance between supply and demand for electrical power in the control area, amongst other things further to any individual imbalances caused by the various Access Responsible Parties. In accordance with the network code, Elia has to submit a proposal for market operating rules intended to offset any 15-minute imbalances to the CREG for approval. In December 2010, the Management Board approved the proposal from Elia for The proposed mechanism came into force on 1 January Activated volumes and concentration 47 The HHI index relating to secondary and tertiary reserves on generating units amounted to 3,750 in 2010 compared with 5,800 in Activations relating to these resources accounted for 97.9% of the total energy activated in 2010 to offset imbalances in the control area, whereas in 2009 they accounted for 99.0%. The fall in the HHI index can be explained primarily by the entry onto the market in 2010 of production reserves from a third player, E.On. Price of energy to offset imbalances The imbalance tariff is based on a two-price system taking into account the direction of the imbalance of the Access Responsible Party and the direction of the imbalance in the control area. The table below provides an overview of the trend in the average price (unweighted) for positive imbalances (injection>offtake) and the average price (unweighted) for negative imbalances (injection<offtake) for the period from 2007 to Table 6: (Unweighted) average price of imbalances during the period In 2010, activations to offset imbalances in the control area rose by 26.6% compared with 2009 to reach 902 GWh. The share of the secondary reserve in these activations amounted to 76% in 2010, compared with 95.2% in 2009 and 98.5% in This fall is due in particular to a new reserve activation procedure that has been gradually put in place by Elia since October In 2010, the activation of reserves located abroad by the TSOs concerned accounted for 1.6% of Elia s activations to offset imbalances in the control area, compared with 0.7% in /MWh Injection > offtake Injection < offtake Source: Elia data Figure 8 below can be used to compare these average prices with the trend in average prices on the Belpex Day- Ahead market over the same period. It may be observed that in 2010, compared with 2009, the average imbalance tariffs rose more quickly than the average price of the Belpex DAM for both positive and negative imbalances. 45 Ministerial Decree of 24 December 2009 imposing price and supply conditions for the supplying in 2010 and 2011 of secondary adjustment by various producers (Belgian Official Journalof 31 December 2009). 46 Decision (B) CDC Source: Elia data. 28

31 3. Regulation and operation of the electricity market Figure 8: (Unweighted) average price of imbalances and Belpex DAM price during the period (in /MWh) Injection > offtake Injection < offtake Belpex Sources: Elia and Belpex data D. General terms and conditions of Access Responsible Party contracts As regards the Access Responsible Party contracts proposed by Elia to network users, in 2010 the Management Board issued five decisions approving a certain number of modifications to the general terms and condition of these contracts proposed by Elia, concerning respectively: the adaptation of definitions, the allocation of a balance perimeter, the harmonisation of deadlines in the appointment procedure with a view to coupling markets in the CWE region 48 ; the adaptation of the coefficient for offsetting active losses on the transmission system during the year and the adaptation of the balance perimeter should the buy/sell contract relating to the production deviations of the offshore wind farms be suspended 49 ; the harmonisation of deadlines in the nomination procedure 50 ; the introduction of continuous and implicit allocation organised by the Belpex and APX Intraday electricity exchanges on the Belgian-Dutch border 51 ; and the clarification of the principles for the determination of the balance perimeter of an Access Responsible Party whose portfolio includes an access point to the network from which a customer provides an interruptibility service in the presence of local generation operations at the same site 52. Moreover, the Management Board decided to withdraw decision (B) CDC-130 of 20 March 2003 on the general terms and conditions of the provisional agreement for the non-exclusive use of Elia s grid by eligible users connected to the distribution networks established in the Walloon Region or the Brussels Region 53. Appeals for annulment had been filed with the Council of State against this decision of 20 March 2003 and in its report the Council of State Auditor concluded that a number of the arguments developed by the applicants were legally valid, in particular the ratione temporis power of the CREG to adopt the decisions under attack, as the Act of 20 March 2003 amending the Act of 29 April 1999 had not yet entered into force at the time the decision was taken. Taking note of this point of view, and without any acknowledgement as to whether the other arguments raised by the claimants are legally valid or not, the CREG decided to withdraw the aforementioned decisions, in application of the general theory of the withdrawal of administrative acts Effective unbundling Unbundling of TSO At federal level (voltage above 70 kv), there is only one TSO, i.e. Elia System Operator, appointed on 13 September 2002 for a period of twenty years. Elia is also the TSO at local level (grids from 30 to 70 kv). 48 Decision (B) CDC Decision (B) CDC Decision (B) CDC Decision (B) CDC Decision (B) CDC Decision (B) CDC-658E/17. 29

32 3. Regulation and operation of the electricity market The TSO controls the physical assets of the transmission system, as it controls Elia Assets, which owns the physical assets. Current Belgian legislation provides for the legal, functional and accounting unbundling of the system operator but does not stipulate any obligation for total ownership unbundling. The main provisions with regard to unbundling for the system operator are laid down in the Electricity Act and the amendments brought by the Act of 1 June 2005, as well as the Royal Decree of 3 May 1999 on the management of the national electricity transmission system. The provisions in question relate to the legal structure, the composition of the bodies of the company and its activities. Belgian legislation forbids the TSO from taking out direct or indirect stake in the shareholding body of the producers, distributors, suppliers and intermediaries. In its capacity as a system operator, Elia is not permitted to engage in any power generation or sales activities other than those rendered necessary by its coordination activity as TSO. Nor is it allowed to engage in the activities of a DSO for voltages below 30kV. The system operator may undertake any activity on Belgian soil or abroad that is in line with its object. These activities may not, however, have a negative effect on its independence or on the accomplishment of the assignments it has been entrusted with. In 2010, no modifications were made to the unbundling rules that apply to the electricity grid TSO. The structure of the Elia shareholding body as at 31 December 2010 is shown in Figure 9. On 14 October 2010, Elia and TenneT transferred to APX-Endex their respective stake in the Belgian energy exchange Belpex, i.e. 60% for Elia and 10% for TenneT. At the same time Elia acquired a 20% holding in the capital of the APX group, in which TenneT is the main shareholder. Figure 9: Shareholding body of Elia as at 31 December 2010 Free float* 52.10% Publi-T 45.37% Publipart 2.53% Elia System Operator Elia Asset 99.99% Economic unit CASC-CWE 14.28% HGRT 24.50% Coreso 22.49% Elia Re** 100% Elia Engineering** 100% APX-Endex 20% Eurogrid Int. 60% * The Arco Group announced on 29 June 2010 that it holds 8.79% of the Elia shares. ** Elia System Operator owns one share in Elia Re and one share in Elia engineering. Source : site Internet Elia 30

33 3. Regulation and operation of the electricity market Developments in the first half of 2010 On 31 March 2010, the Elia Board of Directors approved the agreement concluded between Elia, Publi-T and Electrabel/ GDF/SUEZ on the terms and procedures for the withdrawal of Electrabel from the capital of Elia. Under the terms of this agreement, Electrabel is selling 12.5% of the Elia capital to Publi-T. This will bring Publi-T s stake in the capital of Elia to 45.37%. Independence of system operator Corporate Governance The CREG examined and commented on the activities report from the Elia corporate governance committee for 2009 (checking the application of Articles 9 and 9ter of the Electricity Act and assessing effectiveness with regard to the objectives of independence and impartiality of the transmission system management). In 2010, the Management Board issued a binding opinion on the appointment of an independent administrator within Elia to replace Ingrid Lieten 54. The report from the Compliance Office describing the measures taken by Elia during 2009 to ensure that all discriminatory practices are ruled out and ensuring appropriate monitoring of the programme of commitments provided for by Article 8, 2 of the Electricity Act was examined by the CREG, which did not have any observations to make on this matter Competition aspects Description of the wholesale market A. Electrical power demand According to the statistics passed on to the CREG 55, the electrical power demanded by Elia s grid excluding pumped storage, in other words the net consumption plus grid losses, was estimated at 84,733 GWh in 2010, compared with 80,194 GWh in 2009, which would mean an increase of approximately 5.66%. The demanded peak capacity was estimated at 13,585 MW 56, against 13,320 MW in Figure 10 provides an overview for the period 2007 to 2010 of the average consumption on a monthly basis in the Elia control area. After a sharp fall in electricity consumption in October 2008 as a result of the economic crisis, which continued in 2009, consumption rose again in early Although these figures are not adjusted to factor inthe temperature in the month in question, they do reflect the trend well. These consumption data do not entirely take into account local generation. It is presumed that this local generation is increasing year on year. For 2009, Synergrid estimates local generation at 7.9 TWh, or almost 10% of total consumption. The CREG does not have any more recent data at the moment. Figure 10: Average consumption on a monthly basis in the Elia control area for the 2007 to 2010 period (in MWh/h) Source: Elia data, CREG calculations 54 Opinion (A) CDC These statistics have been supplied by Elia and do not cover the total electrical power demand in Belgium as they do not take into account the small local generating units for which Elia does not take any measurements (<25 MW), or the generating units that are not connected to Elia s grid for which Elia does not have any measurements. 56 Source: Elia, provisional data, January

34 3. Regulation and operation of the electricity market B. Electricity supply Table 7 shows the market shares of Electrabel and the other suppliers as regards net electricity supplies 57 to major industrial customers connected to the federal transmission system (grids with voltage levels higher than 70 kv). According to an initial estimate, of Electrabel s market share amounted to approximately 88.7% in 2010, up approximately 1.1 percent compared with The total volume of energy offtake by end customers from the transmission system rose in 2010, increasing from 12,332 GWh in 2009 to 13,714 GWh in Two access points on the federal transmission system switched to a different supplier in the transmission system: Anode, Duferco Energia, Electrabel, Endesa Energia, E.On Belgium, E.On Energy Sales, Essent Energy Trading, Gaselys, Nuon Belgium, Pfalzwerke, RWE Energy Belgium, RWE Key Account and SPE. C. Wholesale generation market This paragraph deals with generating units connected to Elia s grid (voltage level equal to or above 30 kv). Table 7: Net supplies to customers connected to the federal transmission system for the years 2007 to 2010 Suppliers Consumption sites 1 January 2010 Consumption sites 31 Dec Power offtake in 2007 (GWh) Power offtake in 2008 (GWh) Power offtake in 2009 (GWh) Power offtake in 2010 (GWh) Electrabel S.A ,468.6 (87.7%) 1,742.7 (12.3%) 11,470.3 (84.0%) 2,183.3 (16.0%) 10,806.5 (87.6%) 1,526.3 (12.4%) 12,162.7 (88.7%) 1,551.2 (11.3%) Other suppliers Total 79* 81* 14, , , ,714.0 * Four consumption sites were supplied by two suppliers simultaneously. Source: ELIA (provisional data, January 2011) The federal supply permits for electricity are granted by the Minister for Energy at the proposal of the CREG for a five-year period. In 2010, the Management Board received four permit applications: two applications to renew a supply permit whose period of validity had expired (Essent Belgium and E.ON Energy Trading whose company name was previously E.ON Sales & Trading GmbH) and two new applications from Pfalzwerke and Enovos Luxembourg, who are not yet operating on the federal transmission system. The Management Board issued a total of three proposals over the course of In 2010, the Minister issued permits for Essent Energy Trading, RWE Supply & Trading and Pfalzewerke 59 and, at the request of the company, terminated the supply permit of RWE Key Account 60. As at 31 December 2010, no decision had yet been reached on the (positive) proposals for Essent Belgium and Enovos Luxembourg. As at 31 December 2010, thirteen suppliers held a federal permit to supply electricity to end customers connected to Whosale generation market shares Table 8 gives an estimate, in both absolute values (in GW) and in relative shares of the Belgian total (in %) of the market shares in the electricity generation capacity at the end of each year. The table shows that, although Electrabel saw its market share fall in 2009 and 2010, it still holds a very high market share (72%) of the total generation capacity. The second largest player is SPE/EDF, with a market share of 15% of the generation capacity. The third player in Belgium is the German company E.On, which has acquired 9% of the generation capacity through a swap with Electrabel in early November The HHI, a widely used concentration index, remained very high in 2010 at 5,500. By way of comparison, a market is considered highly concentrated if the HHI is equal to or above 2, These figures do not take into account the energy supplied directly by local generation. 58 Proposals (E) CDC-1009 (Essent Belgium), (E) CDC-1000 (Pfalzwerke) and (E) CDC-1022 (Enovos Luxembourg). 59 Ministerial Decrees of 1 February as regards RWE Supply & Trading (Belgian Official Journalof 10 February 2010), 22 February 2010 as regards Essent Energy Trading (Belgian Official Journalof 3 March 2010) and 22 December 2010 as regards Pfalzwerke (Belgian Official Journalof 29 December 2010). 60 Ministerial Decree of 20 January 2010 (Belgian Official Journalof 28 January 2010).

35 3. Regulation and operation of the electricity market Table 8: Wholesale market shares in electricity generation capacity GW Electrabel % 85% 75% 72% SPE % 10% 11% 2.4* EdF % 3% 3% 15%* E.On % 0% 9% 9% RWE/Essent % 2% 2% 2% Players < 2% % 0% 1% 2% Total % 100% 100% 100% HHI 7,460 7,350 5,770 5,500 * The shares of SPE and EDF have been combined for 2010 as SPE has been taken over by EDF. Source: Elia data, CREG calculations Table 9 gives the same estimate but in terms of the amount of power actually generated. This shows that, in terms of generated power, the Electrabel market share is equal to its market share in generation capacity. This means that its average utilisation rate of generating resources is more or less equal to that of the other producers. This is also true of the second player, SPE/EDF. The share of the third player, E.On, amounts to 11% of the power generated, which means that its utilisation rate of generating resources is higher than the average. The opposite is true for the small players who, even together, hold a market share of less than 1%. Although it remains very strong, the dominant position of Electrabel clearly declined in 2010, both in generation capacity and in generated power. The HHI 61 of the generation market stood at around 5,380 in By way of comparison, a market is considered highly concentrated if the HHI is equal to or above 2,000. Permits for new generating plants The construction of new power generation plants is subject to the prior granting of an individual permit issued by the Minister for Energy at the proposal of the CREG. In this context, in 2010 the Management Board made three proposals with regard to the granting of a generating permit 62. These related to applications from Dils Energie for the construction of two CCGT plants in Dilsen (Dilsen-Stokkem), Stora Enso Langerbrugge for the construction of a cogeneration plant in Langerbrugge (Ghent) and Electricité du Bois du Prince for the extension of a wind farm in Mettet/ Fosses-la-Ville. As at 31 December 2010, seven applications for individual generating permits were being processed by the CREG. Table 9: Wholesale market shares in power generated TWh Electrabel % 85% 81% 72% SPE % 7% 10% 12.1* EdF % 5% 5% 14%* E.On % 0% 2% 11% RWE/Essent % 3% 3% 3% Players < 2 % % 0% 0% 0% Total % 100% 100% 100% HHI * The shares of SPE and EDF have been combined for 2010 as SPE has been taken over by EDF. Source: Elia data, CREG calculations 61 The HHI index (Herfindahl-Hirschmann Index) is a commonly accepted measurement of the market concentration. It is calculated by squaring the market share of each company competing on a market and adding up the figures obtained. 62 Proposals (E) CDC-970, (E) CDC-1021 and (E) CDC

36 3. Regulation and operation of the electricity market In 2010, the Minister granted a permit for the construction of a coal-fired power plant in Antwerp by E.On Power Plants Belgium, for which the Management Board had issued a proposal 63 in 2009, as well as for the Dils Energie project, bringing the additional authorised generation capacity to around 2,000 MW 64. In addition to the applications for new generating permits, in 2010 the Management Board examined a notification of a change in control from SPE, which the CREG received in December The Management Board s proposal 65 was passed on to the Minister for Energy, who decided to accept it. The legal powers of the CREG in this area are detailed in paragraph of this report. Offshore wind power generation a) Domain concessions for offshore wind energy a.1. The regulatory framework In November 2010, at the request of the Minister for Energy, the Management Board again 66 published an opinion 67 on the draft amendment of the Royal Decree of 20 December 2000 which would bring into effect an adaptation of the zone intended for the location of offshore installations. In this opinion, amongst other things the Management Board arrived at the conclusion that the surface area of the zone G was being reduced by around 27 km² and that consequently it would be advisable to offset the surface area removed from this zone elsewhere. As at 31 December 2010, no Royal Decree amending the Royal Decree of 20 December 2000 had yet been published. While awaiting this amendment, the procedure relating to the granting of the domain concession situated above for the Blighbank zone (zone G) has been suspended (Belgian Official Journal of 26 February 2010). a.2. Applications submitted to the CREG Four of the five proposals relating to the granting or the modification and extension of domain concessions which the Management Board sent to the Minister for Energy in 2009 gave rise to two ministerial decrees in 2009 granting such concessions respectively to Rentel and Norther 68 and to three ministerial decrees in 2010 granting concessions to C-Power 69, Seastar 70 and Elepasco 71 respectively. The proposal from the Management Board concerning zone G gave rise to a negative decision from the Minister. The procedure relating to the granting of the above domain concession for zone G was subsequently suspended. b) Green certificates and guarantees of origin In 2009, the Management Board approved a proposal aimed at introducing a federal system of guarantees of origin for electricity generated by offshore wind farms 72. In May 2010, the Management Board approved a proposal 73 that extends and clarifies the method used to measure and calculate net green electricity generation. At the end of 2010, these proposals had not yet given rise to the adoption of a Royal Decree. In addition, in July 2010 the Management Board approved the proposed modification of the contract to be concluded between Elia and Belwind relating to the purchase of green certificates for electricity generated using offshore wind energy 74. The proposed modification concerned the method used to measure and calculate the net green electricity generated. Finally, in 2010 the Management Board took three decisions on the granting of green certificates for the Belwind offshore windturbines located on the Blighbank 75. These are decisions in principle setting the date as of which the windturbines fulfil the conditions for obtaining green certificates Proposal (E) CDC Ministerial Decrees of 23 June 2010 (Belgian Official Journalof 29 June 2010) as regards E.On Power Plants Belgium and 27 July 2010 as regards Dils Energie (Belgian Official Journalof 6 August 2010). 65 Proposal (E) CDC Annual Report paragraph , p Opinion (A) CDC Annual Report, paragraph , p Ministerial Decree of 3 February 2010 (Belgian Official Journalof 16 February 2010). 70 Ministerial Decree of 24 March 2010 (Belgian Official Journalof 6 April 2010). 71 Ministerial Decree of 24 March 2010 (Belgian Official Journalof 6 April 2010) Annual Report, paragraph , p Proposal (C) CDC Decision (B) CDC Decisions (B) CDC-1012, (B) CDC-1015 and (B) CDC-1030.

37 3. Regulation and operation of the electricity market At the end of 2010, the installed capacity in offshore wind turbines amounted to a total of MW for the six C- Power wind turbines that were constructed in 2009 and 165 MW for the 55 wind turbines constructed by Belwind in In 2010, 189,237 green certificates were granted for electricity generated by offshore wind turbines during the year c) Support measures in favour of green electricity At the request of the General Council, the Management Board conducted a study on the total costs of the three support measures granted to offshore wind farms 76. These measures, laid down in Article 7 of the Electricity Act, are: the sale of green certificates at a guaranteed minimum price; the contribution of the TSO to the submarine cable and the connection installations; and the production variance mechanism. The Management Board produced an objective and cautious estimate of the annual cost in /MWh for the normal operation of a single, complete farm of 300 MW. Its initial estimate of the surcharge amounted to 1,295/MWh, taken up on 84 TWh. This was to cover an annual cost of 108,250,000, with the purchase of green certificates alone accounting for 92%. The Management Board also conducted a study which sheds light on the various support mechanisms for green electricity in Belgium 77. The cost of support mechanisms is billed to the end customer via distribution tariffs (in Flanders only) and by a renewable energy and cogeneration contribution charged by the suppliers (in Flanders, Brussels and Wallonia). Over the past few years, the public service obligations in the Flemish distribution tariffs have risen sharply, amongst other things owing to the obligations to purchase green certificates. The CREG analysed the Flemish minimum prices (set by calculating the non-profitable proportion 78 ). A very high return on equity requirement is included in the calculation of the non-profitable portion, even though investments in renewable energy may be considered virtually risk-free owing to the guaranteed minimum price for the entire management period. The scenarios developed by the CREG result in a far lower non-profitable portion for photovoltaic cells and onshore wind energy. The green certificates market in Belgium does not work well due to the fact that the certificates cannot be exchanged between the Regions. Moreover, there is no transparency in the billing of the costs of green certificates to consumers. Given that the guaranteed minimum purchase price for photovoltaic installations is higher than the market price, the green certificates system means that the most efficient technology in terms of costs for the production of green energy has not been chosen. Finally, in December 2010 the Management Board drafted a proposal on the calculation of the surcharge intended to offset the net real costs borne by the TSO and resulting from the obligation to buy and sell green certificates in On the basis of the limited quantity of gross energy included in the tariffs proposal and revised by the structural fall in the offtake of DSOs, the Management Board proposed setting the surcharge at /MWh for 2011, i.e. a proposed amount six times higher than the amount of the surcharge for The main reason for this increase may be attributed to the actual start-up of the 55 Belwind offshore wind turbines in the North Sea. This amount was laid down in the Ministerial Decree of 21 December Cogeneration plants At the request of the Minister for Energy, the Management Board conducted a study on the advisability of extending federal measures relating to a guaranteed minimum price for green certificates as laid down in the Royal Decree of 16 July 2002 to include high-quality cogeneration plants connected to the transmission system 81. In this study, the Management Board notably reached the conclusion, that extending the aforementioned federal support mechanism to cover the concept of a cogeneration certificate would constitute an infringement of the sharing of powers between the Federal State and the Regions, as provided for in Article 6, 1, VII, paragraph one of the special Act of 8 August 1980 on institutional reforms. 76 Study (F) CDC Study (F) CDC The non-profitable portion of an investment is the balance (difference between the costs and the revenue) necessary to reach the minimum return put forward. 79 Proposal (C) CDC Ministerial Decree of 21 December 2010 setting the surcharge to be applied by the grid operator to offset the real net cost resulting from the obligation to buy and sell green certificates in 2011 (Belgian Official Journalof 27 December 2010). 81 Study (F) CDC

38 3. Regulation and operation of the electricity market Extending nuclear power plants The Act of 31 January 2003 on the gradual withdrawal from nuclear energy for the purpose of industrial electricity generation provides for the gradual deactivation of nuclear power plants as of In October 2009, the Belgian government concluded a memorandum of agreement with the GDF SUEZ group concerning the ten-year extension of the useful life of the three oldest nuclear plants. The CREG had already questioned the legal validity of this memorandum of agreement in a study dated 29 October The CREG notes that, whereas the signatories to the agreement had undertaken to carry out actions or undertake certain acts within eight months of its conclusion, i.e. by 21 June 2010 at the latest, some of these actions have not been taken. The question now also arises of whether or not this agreement has been unilaterally annulled by the failure to comply with the commitments made and even by decisions contrary to these commitments. As at 31 December 2010, the Act on the gradual withdrawal from nuclear energy had not yet been amended or repealed. As such, the first nuclear power point remains scheduled to be shut down in February D. Energy exchange The coupling of the Day-Ahead markets between Belgium (Belpex), The Netherlands (APX) and France (EPEX FR) trilateral coupling once again proved successful in 2010: the three markets only seldom operated in total isolation from one another. Belpex and EPEX FR were coupled 87% of the time, Belpex and APX 73% of the time. Belgium was isolated from the other two markets for just 1.2% of the time. Owing to this high level of market coupling, on average the prices are relatively similar. This may be seen from the figure below: since market coupling has been in effect, the average monthly prices on the short-term market in Belgium, The Netherlands and France have followed the same trend and stayed at the same level (with the exception of certain months in 2007 and the month of October 2009 when considerably higher levels were seen in France). Moreover, it may be observed that the average prices on the wholesale market are higher than in For example, the average annual price on Belpex amounted to 46.3/MWh in 2010, compared with 39.4/MWh in On 9 November 2010, the trilateral market (France, Belgium, The Netherlands) was coupled to the German electricity market. This coupling, known as the CWE coupling, was coupled to the Scandinavian market at the same time using another method. As a result, prices in the four countries of the CWE region converged in November and December. The total volume traded on the Belpex DAM stood at 11.8 TWh in 2010, with electrical power demanded by the Elia network excluding pumped storage amounting to 84.7 TWh (source: Elia, provisional data, January 2011). The volume traded on Belpex therefore represents approximately 14% of the Belgian market. The total volume purchased on Belpex in 2010 reached 9.6 TWh and the volume sold 8.9 TWh. This difference is explained by this very market coupling, imports from France and The Netherlands and exports to these countries. Figure 11: Average price on the Belpex, APX and EPEX FR exchanges between 2007 and 2010 (in /MWh) Prix moyen Belpex DAM , , , , / / / / / / / / / / / / / / / / / / / / / / / /11 Belgium Netherlands France Source: Belpex, Elia, CREG 36

39 3. Regulation and operation of the electricity market At the end of 2010, there were 35 players on the Belpex DAM. The sensitivity of the electricity price to additional volume (the market depth) is an important factor. A Belpex study of the year 2010 indicates that the average price reacted by around 3.6% to additional offer of 500 MW, compared with 4.8% in Market resilience therefore increased in 2010 compared with The average monthly market resilience however can fluctuate sharply, as can be seen from Figure 12 below. This figure shows the relative market resilience between 2007 and 2010: relative resilience can reach levels of up to 35% (May 2007). In 2010, on the other hand, market resilience remained below 10% throughout the year. Since March 2008, Belpex has also organised an Intraday exchange on which market players can exchange energy on an Intraday basis. The table below shows the total volumes exchanged in 2008, 2009 and 2010, as well as the prices. The figures show that volumes increased in 2010 compared with The Intraday prices are higher than the Day- Ahead prices, mainly owing to the fact that there are more Intraday transactions during peak hours, when prices are inevitably higher. To assess the market properly, it is interesting to know the physical volumes traded on the exchange between the market players and the volumes exchanged bilaterally (OTC). We also divided this trade into Intraday and Day-Ahead. Table 11 shows that in 2009 and 2010, the exchange accounted for over a quarter of exchanges on the Day-Ahead market 82. In 2010, OTC Day-Ahead exchanges were virtually identical to those in A large proportion of energy trading still takes place outside the exchange. This also applies for Intraday exchanges (Table 12), but to a lesser extent: 35% of Intraday exchanges took place through the exchange in 2010; the share of OTC exchanges fell sharply from 77% in 2009 to 68% in Table 11: Breakdown of exchanges on the Day-Ahead hub Day-Ahead Exchange 26% 27% OTC 74% 73% Total 100% 100% Source: Elia data, CREG calculation Table 12: Breakdown of exchanges on the Intraday hub Table 10: Energy exchanged and average price on the Intraday exchange Intraday Volumes (GWh) Price ( /MWh) Source: Belpex data, CREG calculations Intraday Exchange 23% 35% OTC 77% 65% Total 100% 100% Source: Elia data, CREG calculation Figure 12: Average monthly resilience of the Belpex market in % 20% 10% 0% -10% -20% -30% -40% 2007/ / / / / / / / / / / / / / / / / / / / / / / /11 Additional purchase of 500 MWh Additional sale of MWh Source: Belpex, CREG 82 For exchanges on Belpex, half the volume is taken into account as Belpex always acts as intermediary and otherwise the volume would be counted twice. 37

40 3. Regulation and operation of the electricity market E. Mergers and acquisitions GDF SUEZ/International Power On 29 November 2010, GDF SUEZ informed the European Commission that it was taking over of International Power. In response to a European Commission questionnaire received by the Management Board on 3 December 2010, the Board issued a series of critical thoughts on this merger. As at 31 December 2010, the European Commission had not yet expressed its opinion. Figure 13: Trend in average all-in price for electricity in (in /MW) 200, , ,00 F. Price trends 50,00 Price components The final price billed to consumers includes a number of components, namely: 1. the supplier s price (energy); 2. the renewable energy and cogeneration contributions; 3. transmission (excluding public offtake); 4. distribution (excluding public offtake); 5. public offtake; 6. VAT and the energy tax. The three tariff components that determine the main price trends are, in order of importance: 1. the supplier s price (energy); 2. the distribution tariffs; and 3. the energy tax and VAT (for household customers 83 ). The transmission tariffs, public offtake and the renewable energy and cogeneration contributions are relatively less important in the final price billed to the consumer. The relative weight of the various components may vary considerably between standard customers (consumer profile and connection voltage), the distribution zones, the regions and the suppliers. However, the distribution and supplier price components account for approximately 70% of all standard customers trend 0,00 Dc (3.500 kwh/year) Household customers lc ( kwh/year, BT) lc1 ( kwh/year, MT) Source: CREG In January and October 2010, the Management Board carried out two studies on the price components of electricity and natural gas assessing, amongst other things, the trend in the electricity price billed to the end customer since 2003, so as to establish the contribution made by the various components to the development of prices 84. The shares of each component for a household customer are shown in the following graph. Figure 14: Shares of the various components of the electricity price for Gaselwest-Electrabel household customers in % 19% 33% Energy Renewable energy and cogeneration contribution Transmission Distribution (excluding public offtake) Public offtake Energy tax and VAT The price billed to the end consumer increased in August 2010 compared with December This increase is mainly due to the development of the parameters that make up the supplier s price. Moreover, a significant rise has been seen in the federal contribution and the renewable energy and cogeneration contributions. 37% 4% 4% Source : CREG 83 The VAT is deductible for business customers. 84 Studies (F) CDC-934 and (F) CDC

41 3. Regulation and operation of the electricity market The graph below shows that the price for household end customers rose in 2010 compared with Figure 15: Trend in total electricity price household customers (Dc) /MWh Jan 07 Apr 07 Jun 07 Oct 07 Jan 08 Apr 08 Jun 08 Oct 08 Jan 09 Apr 09 Jun 09 Oct 09 Jan 10 Apr 10 Jun 10 Electrabel Luminus Lampiris Nuon Essent Source: CREG After the sharp rise in electricity prices in 2008 and the collapse that followed in 2009 (caused primarily by the economic crisis and its impact on the commodities markets), electricity prices rose again in This increase was due mainly to the development of supplier price indexes. The extent of the increase depends on the supplier. Moreover, the unit price for free kwh fell, representing a smaller discount for customers in Flanders. Figure 16: Trend in the price of energy per supplier household customers (Dc) /MWh Jan 07 Apr 07 Jun 07 Oct 07 Jan 08 Apr 08 Jun 08 Oct 08 Jan 09 Apr 09 Jun 09 Oct 09 Jan 10 Apr 10 Jun 10 Electrabel Luminus Lampiris Nuon Essent Source: CREG 39

42 3. Regulation and operation of the electricity market It may also be noted that the contribution for renewable energy and cogeneration is rising among all suppliers. This is due to the increased obligation in terms of certificate quotas to be issued. Finally, the federal contribution has risen by 1.6/MWh. Figure 17: Trend in the energy price per supplier business customers, average voltage (Ic1) /MWh Jan 07 Apr 07 Jun 07 Oct 07 Jan 08 Apr 08 Jun 08 Oct 08 Jan 09 Apr 09 Jun 09 Oct 09 Jan 10 Apr 10 Jun 10 Electrabel Luminus Lampiris Nuon Essent Source: CREG Business customers The development of the energy price billed for low voltage by a supplier is identical for business customers and household customers. For average voltage customers, Electrabel and Luminus base their prices on different indexation parameters than for low voltage. The trend in energy prices for average-voltage customers therefore varies along different lines to low voltage. Over the course of 2010, the Management Board also carried out a study into the supply of electricity to consumers with an offtake point in Belgium whose annual consumption is higher than 10 GWh, or who require power in excess of 5 MW 85. The purpose of this study was to identify the factors behind the energy price trend between 2008 and 2009 in this market segment. The Management Board noted that there are substantial differences between the unit prices billed to major industrial customers. These differences cannot be explained solely by the volume of consumption recorded. The Management Board noted that various price setting mechanisms existed side by side in 2009, which may shed light on the price differences observed. This situation may be attributed to the various dates on which the mechanisms came into force, as well as the different lengths of supply contracts. The price setting mechanisms used before the liberalisation of the sector also continue to exist alongside mechanisms introduced recently by the suppliers to correspond more closely to the risk profile of their customers. In the context of this analysis of energy price setting mechanisms, the Management Board was able to measure the growing importance of the use of the benchmark of the BP Power segment of the APX- ENDEX exchange. It was also able to note a tendency for the energy price setting mechanisms proposed to become more complex. Given mechanisms requiring an in-depth knowledge of the energy markets, industrial customers are obliged to surround themselves with external resources to manage their electricity supplies Study (B) CDC-1025.

43 3. Regulation and operation of the electricity market Measures aimed at preventing abuse of a dominant position The CREG is responsible for the constant monitoring of the electricity market, both in terms of market functionning and in terms of prices. In this context, in 2010 the Management Board conducted a number of studies. Study on the Belpex Day-Ahead Market and the use of capacity on interconnections with France and The Netherlands during the year 2009 In February 2010, the Management Board carried out a study on the Belpex Day-Ahead Market and the use of capacity on the interconnections with France and The Netherlands during This study provides information in a concise form on two important aspects of the Belgian electricity market which are closely interlinked: interconnections with other countries and the exchange of electricity on the Belpex DAM. This study covers prices and volumes on the three coupled markets (Belgium, The Netherlands and France) and market shares on the Belpex DAM. The results of explicit auctions of interconnection capacity, the use of this interconnection capacity and the congestion rents on the interconnections are also discussed in this study. The results of explicit auctions of monthly capacity show what the market players expect with regard to the way in which prices in Belgium, The Netherlands and France will develop by mutual comparison over the coming month. The differences in monthly prices expected by the market seem to have forecast the real price differences between the three countries in 2009 with a fair degree of accuracy. October 2009 is an important exception to this, when the market forecast a slight price difference (< 1/MWh) between France and Belgium, whereas in fact France was 23.7/MWh more expensive. Nevertheless, the analysis of the market shares and price setting of buyers reveals that no market player was able to forecast this huge difference in price. The study also shows the importance of market coupling for the Belgian electricity exchange. Over a nine-month period in 2009, 30 to 70% of the volume traded on the exchange was exported. One of the consequences was that Belgium exported net electricity in The electricity exchange and the market coupling have relatively substantial interconnection capacity due to the fact that monthly and annual capacity holders resell this capacity on the electricity exchange using the secondary market mechanism. At least 60% of the monthly and annual capacity is resold in this way. Finally, the Management Board study shows that the Belpex Intraday market clearly traded more volume in 2009 than in 2008 (mainly with an increase in the volume traded during the night). The prices on the Intraday market are on average slightly higher than the prices on the Day-Ahead market. Studies on the impact of the CO 2 emission quotas system on the electricity price In June 2010, the Management Board updated studies conducted in 2006, 2008 and 2009 on the impact of the system of CO 2 emission quotas on the electricity price in Belgium 87. Given the data available, and using a methodology based on the calculation of marginal costs, the Management Board noted that the selling price of electricity allowed the partial or full integration of the carbon opportunity cost of the marginal generating unit. On the wholesale market, the increase applied in this way to all the kwh generated for the Belgian market enabled electricity producers connected to the Belgian transmission system to make a windfall profit which may be estimated at 1,680 million over the period. On the other hand, the analysis of the price trend on the retail market shows that the opportunity cost of the emission quotas was not apportioned in the selling price applied on this market. Taking the Management Board study as a basis, the national Belgian railway operator brought an action against Electrabel for abuse of its dominant position. In its judgment of 20 September 2010, the Court of First Instance in Brussels did not call into question the objectivity of the study conducted by the Management Board, but did cast doubt on the reasoning of the Belgian Railway company. The court felt that the Belgian Railway company had not provided sufficient proof to substantiate this abuse of power and dismissed its claim. Studies on the nuclear issue n Study on the structure of the cost of generating electricity by the nuclear power plants in Belgium This study was conducted by the Management Board in May further to the twofold request from the Minister for Energy relating on the one hand to the examination of the structure of the costs of generating electricity at the nuclear power plants in Belgium and on the other hand to the estimate of the monopolistic profits the producers record on their nuclear activities. First of all, the study outlines the theoretical framework of the various concepts of costs, making a clear distinction between the concept of direct production costs (fixed costs and variable costs) and the concept of external costs linked to the production process. 86 Study (F) CDC Study (F) CDC Study (F) CDC

44 3. Regulation and operation of the electricity market The study subsequently goes on to present an analysis of the structure of the costs of the Belgian nuclear power plants, and an estimate of the average cost of generating electricity using a nuclear source ( /MWh), by first recalling the underlying working hypotheses. In this respect in particular, the analysis covers only the operating year, bearing in mind the reliable information available to the CREG when the study was produced. To do so, the average production cost was estimated and commented on, component by component, by means of a successive analysis of the cost of the fuel, the operating costs, the depreciation cost and the cost of provisions. The operating cost was also broken down and commented on, component by component: staff costs, insurance costs, maintenance costs and administrative costs. The analysis also shows that the estimated range obtained for the average production costs for the year 2007 tallies with results of international benchmarks. By comparing this range of values for the average production cost with the average forward wholesale price, it was also possible to calculate an estimated range for the margin and the profit recorded by the nuclear operator for the reference year. Apart from the question of direct costs, the study also looks at the issue of the external costs linked to nuclear power generation on the basis of a review of the literature on this matter. In this respect, particular attention was paid to the European Commission s draft on this issue, known as ExternE, so as to provide an estimate of this external cost. n Study on comments about the article Nuclear Market Power: Taxation or Liberalization? This article 89, one of the authors of which was Professor Stefan Proost (K.U. Leuven), concludes that the national social well-being would be better promoted by liberalising the generation of electricity using nuclear power rather than taxing it. The Management Board wanted to respond to this article by producing a study 90 developing three arguments that demonstrate that this conclusion does not apply to Belgium. The first argument concerns the modelling of the electricity market. This is based on the hypothesis that the market is characterised by a dominant operator with exclusive access to nuclear power generation, alongside of whom are competing producers with production capacities using sources other than nuclear fuel. This modelling does not apply to the Belgian market, however, in that the nuclear operator in Belgium has a diversified production portfolio which also includes thermal power plants, which in turn renders incorrect the issue of maximising the profit of the operator in the nuclear sector alone. The maximisation of the profit recorded by the operator should in fact concern the accumulated profit made on the various types of production assets. The second argument concerns the implementation of the investments required to prolong the useful life of nuclear power stations. In this article, this is considered to be a marginal cost, whereas in reality it should be considered as a fixed cost. Now, this distinction impacts on the quantities of electricity generated by nuclear power plants and hence the result of the maximisation of the profit recorded by the operator. The third argument concerns the analysis of the national well-being. This is incomplete in that it does not take account of the cost of installing new transmission capacities. Moreover, the calibration of the model to the Belgian market is open to discussion and the analysis does not take account of the feasibility of the various scenarios considered. As such, the aforesaid article cannot be used as a reference to conclude that the that the Belgian market for electricity of nuclear origin should be liberalised rather than taxed. n Study on the impact of shutting down nuclear power plants on the selling price of electricity to household end customers The Management Board also studied the impact of shutting down nuclear power plants on the final price of electricity 91. This impact was calculated in the context of the current system, assuming that indexation parameters (Ne and Nc) and the tariffs remain unchanged. Two scenarios were simulated: the shutdown of the three oldest nuclear power plants: Doel 1 and 2 and Tihange 1; the total shutdown of all nuclear power plants. In both cases, the shutdown is presumed to have taken place on 1 January 2010 and the calculations were made for a representative average Dc customer (1,600 kwh day, 1,900 kwh night) supplied at the ESC Energy+ tariff. This exercise indicated that the values of the parameter Nc and the price of the power 92, as well as the amount of the total annual bill ( /year, including VAT) vary as follows depending on the scenario considered: Nuclear Market Power: Taxation or Liberalization? by Pieter Himpens, Joris Morbee and Stefan Proost, available on 90 Study (F) CDC Study (F) CDC The variations reported for the parameter Nc and the price of the power compared with the values observed for these two variables in the month of June 2010.

45 3. Regulation and operation of the electricity market in the event of the shutdown of the Doel 1 and 2 and the Tihange 1 power plants: the Nc parameter would increase by around 20%, the cost of the energy by around 8%, and the total annual bill by around 23 or 4%; in the event of the total shutdown of nuclear power plants: the Nc parameter would increase by around 89%; the cost of the energy by around 38% and the total annual bill by around 103 or 19%. n Study on the nuclear agreement in Germany and its application in Belgium The Management Board also produced a study examining the nuclear agreement in Germany and its application in Belgium 93. It was noted that this nuclear agreement consists of two elements: on the one hand the launch of a legislative initiative aimed at introducing a tax on nuclear fuel and on the other hand the conclusion of a support fund contract between the German government and the energy suppliers/ nuclear operators. Under the terms of this agreement, the nuclear operators will pay a contribution of 15.19/MWh for the electricity generated from nuclear power plants for the time frame and 9/WMh as of In total, the agreement will bring in just over 30,039 million. If the German provisions were transposed in full to the Belgian nuclear park and applied in exactly the same way, they would generate a sum of 9,072 million. If they were only applied to the Doel 1, Doel 2 and Tihange 1 plants, they would bring in 2,247 million. A degree of caution is appropriate when making a comparison with the Belgian memorandum of agreement. The provisions differ substantially, particularly with regard to the number of plants whose useful life is extended and the duration of this extension. When comparing the two countries, it is also advisable to take account of the price of electricity on the two markets, the cost structure and the depreciation policy implemented. Study on fixed-price contracts on the household electricity and gas markets At the request of the Minister for Energy, the Management Board carried out a study that analyses the fixed tariffs available from suppliers operating on the Belgian electricity and gas markets 94. When the tariff is fixed, it remains unchanged throughout the period covered by the contract. It may, however, be higher than the indexed tariff, given that it has to cover the risk of cost fluctuations incurred by the supplier. Despite the growing range of fixed tariffs available, the share of active fixed-tariff contracts, although rising, remains very much a minority both on the electricity market and on the gas market. Two significant peak periods for two of the suppliers occurred on the electricity market with the signing of new fixed-tariff contracts: in November and December 2008 and between April and June For gas, a single peak period was observed for one of the suppliers, between April and June From July 2008 onwards, when electricity costs were very high, new fixed tariffs for electricity were proposed. These tariffs proved highly successful when they were first launched, with customers having been caught out by the sharp price rises wishing to lock in the price they would be paying in the foreseeable future. A large number of contracts took effect between September and December As energy prices fell sharply thereafter, these customers fared badly, facing a very high fixed price for the next two years. In October 2008, two other fixed tariffs were launched for green energy electricity contracts. For gas, the green tariffs are identical. For electricity, of these two tariffs, oddly enough the higher tariff proved extremely successful. Although this tariff offers additional advisory and technical information services on saving energy, it is still unusual for the more expensive tariff to prove the most successful, even if its green nature is a selling point. Study on the comparison of electricity prices for a household consuming 3,500 kwh of grey electricity (single tariff) in Brussels, Paris, Berlin, Amsterdam and London The aim of this study is to compare the electricity cost structure in June 2010 in Brussels with that of the capitals of various neighbouring countries 95. The customer in question is a household consumer with a single, rented meter, who uses 3,500 kwh of grey electricity a year, with a capacity of 6 to 12 kva. For each capital, the cost of the electricity is broken down into the cost of the energy, i.e. the share of the supplier, the cost of the transmission and distribution system, tax and VAT. Three electricity supply contracts per capital were chosen for the purpose of this breakdown. The first is that of the default supply (Electrabel being the basic option in Brussels), the second that of the most common commercial supply of the historic operator (Electrabel Energy+ in Brussels) and the third the most widely used competing supply (the Lampiris supply in Brussels). The weighted average of these supplies on the basis of market shares is 93 Study (F) CDC Study (F) CDC Study (F) CDC

46 3. Regulation and operation of the electricity market then calculated and this gives the price of electricity in the capital. As can be seen from the graph below, Brussels is the most expensive capital after Berlin, where the cost of environmental policies is considerable, but only slightly so ( /year for Brussels compared with /year for Berlin). There are three reasons for this phenomenon: a substantial energy cost the highest after London, a very high network cost and higher VAT than in the neighbouring countries (21%). It should be stressed that the lack of competition on the Brussels market does not encourage any fall in energy costs. Study on the quality of the Nc parameter In September 2010, the Management Board conducted a study that analyses the quality of the Nc parameter 96, the parameter for the indexation of the price of electricity on the household market. As the parameter was introduced in the context of a regulated market, the aim of this study was to determine whether the Nc is still representative of the development of fuel costs and to identify any modification to be made to guarantee its usefulness. The Nc parameter is a Belgian monthly price index intended to reflect the trend of fossil fuel (coal, gas and oil) and nuclear fuel prices used to generate Belgian electricity. It is currently used by three of the five suppliers who offer variable tariffs. Nc = Ifnu Icoal Ioil (1-Ifnu) Ispotgas This study showed that the majority of the reference values making up the parameter formula established in 2002, are no longer representative of reality. These values are: the composition of the generation park; the fuel costs; the reference values of the Infu, Iocal, Ioil and Ispotgas indexes; the indexation of gas (on oil and coal); the new excises and contributions on energy. The study subsequently goes on to establish that certain variables, which are essential if the parameter is to reflect the trend in fuel costs, are not included in the Nc formula, i.e.: generation using biomass the cost of CO 2 ; the costs of the Coo power plant; the substitution of nuclear power by coal and purchases on Belpex. Figure 18: Breakdown of the price of electricity in Brussels, Paris, Berlin, Amsterdam and London June 2010 ( ) ; 17% ; 16% ; 5% ; 16% ; 31% ; 11% ; 5% ; 5% ; 38% ; 14% ; 19 % ; 13 % ; 29% ; 34% ; 24% ; 40% ; 39% ; 29% ; 44% ; 71% 0 Brussels Paris Berlin Amsterdam London VAT Taxes Network Energy Source : CREG Study (F) CDC-948.

47 3. Regulation and operation of the electricity market Finally, new sources of supply are not taken into account when calculating the price of electricity. These sources are: purchases on the Belpex and Endex exchanges; imports; supplies from renewable energy sources. The study concludes that it may be a good idea to think about a new formula, similar to the current Nc, but that can be adapted by each supplier depending on their fuel mix and their supply strategy and therefore depending on their generation park, so as to enable each of them to use a parameter that reflects their cost structure while retaining a single formula structure. Having carried out this study on the quality of the Nc parameter and having analysed the answers from a supplier to its questions about indexation parameters, the Management Board concluded that the representative nature of the Nc, Ne and Iem indexation parameters was no longer ensured. The Management Board has therefore decided to cease publishing these parameters as of February Study on the feasibility of introducing progressive tarification of electricity in Belgium. The question at the root of this study 97, which was requested by the Minster for Energy was whether progressive tarification was feasible and applicable in Belgium, bearing in mind the legal aspects, the distribution of powers, the impact on the various categories of revenue and experiences in other countries, in particular those in Japan and California. From a legal perspective, whether or not the measure is acceptable under European law will depend on the motive of general economic interest put forward to justify the measure and the terms and procedures governing its implementation. As regards Belgian law, progressive tarification must be justified in terms of the rules on the division of powers. If, for instance, the aim put forward to justify the introduction of progressive tarification is social in nature, then the federal authorities will be competent. However, if the aim put forward is the rational use of energy, then the regions will be competent. From an economic perspective, progressive tarification is a second-choice solution. It must be accompanied by the regulation of the price components and may lead to a reduction in consumption which may, if appropriate, prompt a reduction in investments in the network, as is the case in Japan and in California. consumption level, drawn from major consumers. The Californian experience shows that the subsidy is, nevertheless, insignificant, i.e. it only covers part of lifeline consumption, owing to the inadequate elasticity of demand for electricity. From an environmental point of view, the objective is to reduce consumption, thereby bringing down CO2 emissions. However, this objective is conditioned by the elasticity of demand for electricity. As this is poor, the reduction would be limited. The proposal put forward by the Management Board is to establish twofold progressive tarification (with and without electrical heating) combined with management of consumption by means of a time of use system that could be achieved using smart meters. Specific assistance will also have to be provided for the implementation of progressive tarification, such as allowances for very low income households with high consumption. This allowance would enable them to renew their outdated, energy-guzzling electrical appliances. Study on the possible impact of the electric car on the Belgian electrical system The large-scale introduction of the electric car over the next ten years seems possible. The expectation is therefore that electricity prices will rise. A study conducted by the Management Board indicates, however, that the price of electricity on the wholesale market could fall compared with a scenario that does not include the electric car 98. The battery would, in fact, be far too big for the average daily distance travelled by car. Some of the battery capacity would therefore remain unused. This unused capacity can therefore be allocated to arbitrage on the wholesale market, i.e. the purchase of electrical power at a low price (often at night), the temporary storage of this power in the battery, and resale thereafter, at peak times, which would make it possible to shave peak prices. Electric cars could also be used to maintain a balance in real time between supply and demand for electricity. This would mean that intermittent energy sources, such as wind and sun, could be integrated more easily into the electricity grid thanks to the large-scale presence of the electric car, without reducing grid security. The battery is an important factor, however. If it is used more intensively, it could wear out quickly. The degree of wear of the battery depends largely on future technological progress in car batteries, a field fraught with a considerable element of uncertainty. From a social point of view, the aim of progressive tarification is to give everyone access to electricity. This would function by means of a subsidy, corresponding to the vital 97 Study (F) CDC Study (F) CDC

48 4. Regulation and operation of the natural gas market 47

49 4. Regulation and operation of the natural gas market 4.1. Regulation Management and allocation of the interconnection capacity and congestion mechanisms High-calorific gas (market share 72%) A number of cross-border interconnections face substantial contractual congestion that affects both the Belgian market and transit though Belgium. This is the case for the interconnection with the Dutch network in s Gravenvoeren and the Belgo-German interconnection in Eynatten. This contractual congestion will be largely resolved as soon as the rtr2/vtn2 pipeline comes into service, scheduled for early The commissioning of a new compression installation in Berneau (end of 2011) and in Winksele (end of 2012) will also provide sufficient capacity to meet Belgian and transit demand by early By then, thanks to these investments, the Belgian H-gas market will have a single balancing point (reduction in the number of balancing zones from three to one). Low-calorific gas (market share 28%) The import capacity for L-gas has been frozen at its current level since 2004 in accordance with the proposal in the indicative supply plan for natural gas drawn up by the CREG 99. This means that no investments are planned in Belgium with a view to increasing the import capacity for L-gas, but that the intention is rather to convert L-gas customers to H- gas as soon as the demand for L-gas exceeds the entry capacity available on the network. For this reason, the import capacity faces at least contractual congestion and there is a risk of physical congestion in the event of extremely wintry conditions. It is important to mention that on the one hand on the Dutch side of the interconnection at Hilvarenbeek there is a serious risk of congestion owing to the Dutch investment and capacity reservation policy which is based exclusively on at least ten-year reservations and that on the other hand, to date the reservation signs received from the market for this Dutch capacity are lower than estimated future consumption on the downstream networks. It is also important to mention that the Belgian L-gas market is, to a certain extent, supplied from France in backhaul at the Blaregnies/Taisnières cross-border point. Transparency of information relating to the transmission system On 10 November 2010, the European Commission adopted a decision amending the guidelines relating to the definition of the technical information necessary for network users to gain effective access to the network as established by Regulation (EC) 715/ This text, which comes into force on 3 March 2011, when all the provisions of the third European energy legislative package become applicable, contains detailed requirements of both form and content with regard to the information that TSOs will have to provide for network users so as to ensure effective access to the grid. The system operators shall ensure that information on availability and capacity use is published and updated daily. They shall also have to publish detailed and complete access regulations setting out the rights and responsibilities of all grid users, containing information about the various services provided and the different types of transportation contracts available depending on these services. In a liberalised and competitive market, effective access to the grid in terms of transparency is vitally important. Detailed information about availability and use of capacity on the grid will enable gas suppliers to identify and seize on market opportunities in the short and long term. The need to improve the transparency requirements became even clearer after the gas crisis in January These rules will contribute towards considerably optimising the use of available grid capacity and will stimulate cross-border exchanges between member states. Capacity calculation methodology The methodology used to calculate grid capacity is based mainly on a detailed grid model and on flow and grid configuration scenarios. The grid model as such is very technical and worked out on the basis of common practices. The grid scenarios are left to the discretion of the TSO. Generally speaking, peak scenarios are developed to simulate maximum technical capacity. The TSO is cautious and wishes to ensure that the capacity offered to the market can be guaranteed under all circumstances. This means that in given situations not covered by peak scenarios, this methodology could give rise to a situation in which the maximum technical capacity is underestimated most of the time owing to the stringent hypotheses adopted by the TSO. No European directives exist making it possible to determine relevant hypotheses for appropriate calculation of capacity. Furthermore, the system operators do not always coordinate the grid capacity simulations. This is reflected, for example, in the fact that the maximum technical capacities on either side of cross-border interconnection points do not match. Another point is the fact that the technical and available capacities published are indicative and not binding on the TSO. 99 Proposal (F) CREG-360 for the indicative supply plan for natural gas. 100 Decision 2010/685/EU from the European Commission of 10 November 2010 amending chapter 3 of Annex 1 to Regulation (EC)No 715/2009 of the European Parliament and the Council on the conditions for access to the natural gas transmission networks, OJ (L) 293/67. 48

50 4. Regulation and operation of the natural gas market The Management Board also produced a study on the possible connection between the Dunkirk LNG terminal and the Belgian natural gas transmission system. Details of this project are available under paragraph of this report Regulation of transmission and distribution A. Transmission and distribution tariffs n Transmission system (Fluxys) a) Methodology used to calculate the tariffs The Royal Decree of 15 January 2010 made a few modifications to the methodlogy used to calculate the transmission tariffs 101. In its ruling of 7 July 2010, the Constitutional Court, at the request of the CREG, repealed the Amendment Act of 10 March intended to include a specific tariffs system for transit in the Gas Act. According to the Court, the principle of non-discrimination as enshrined in European legislation, implies a ban on subjecting access to the natural gas transmission system to discriminatory terms. Consequently, no distinction may be introduced between the transmission of gas with a view to domestic consumption and transit. The Court concluded that a national legal system that laid down separated tariffs systems for transit and for the transmission of natural gas is not justified. As regards the exceptions for historic transit contracts, the Court considered that only the contracting parties specified in the list attached to the 1991 European directive on natural gas transit may possibly lay claim thereto, given that this list should be considered exhaustive, including the entities in charge of natural gas imports or exports. Prior to the aforementioned ruling, the legislator had adopted an Act aimed at repealing the specific tariffs system for transit on 2 March The CREG has also filed a complaint against this Act. b) Tariffs trend During the last quarter of 2009, the CREG and Fluxys concluded an agreement on the tariffs applicable to all transmission and storage activities for the years 2010 and This agreement results from the application of Article 17, 1 of the tariffs decree of 8 June The agreement sets the entry/exit tariffs in accordance with European legislation using a methodology underlying the calculation of the tariffs based on costs that is the same for both the transmission and transit of natural gas. The new tariffs came into force on 1 January 2010 and will cease to apply at the end of the current regulatory period, that is on 31 December The tariffs are among the most competitive in Europe, since the agreement introduces a reduction of 28% in favour of grid users serving Belgian natural gas consumers. Thanks to the new tariffs, Fluxys will be able to fund its huge investment programme (over 1.5 billion over the next five years), with a guaranteed fair return on the capital invested. n Distribution network a) Methodology used to calculate the tariffs During the previous regulatory period (prior to 2009), a costplus methodology was used. Under this system, the costs of the DSO were checked by the CREG and increased by a profit margin that enabled a fair return on capital invested in the distribution network. In this system, the tariffs were either approved by the CREG for the entire regulator period (one year), or imposed by the CREG for three months. On 1 January 2009, the former cost-plus regulation was replaced by a methodology based on a guaranteed income for the DSO, supplemented by cost-control incentives. This new system guaranteed the network operator a total income for a four-year regulatory period that is sufficient to perform its duties as defined by law and provide a fair profit margin in return for the capital invested in the network. During the aforementioned four-year regulatory period, the following tariffs systems are possible: tariffs approved for the entire regulatory period if the tariffs proposal accompanied by the network operator s budget is approved before the start of the regulatory period; tariffs approved for the remainder of the regulatory period if the tariffs are approved during this period; imposed tariffs in all other cases. On 30 September 2008, all the DSOs submitted a tariffs proposal with a budget for the regulatory period within the legal deadline. Since none of the proposals submitted was accompanied by the information requested, the Management Board decided to reject the proposals and 101 Royal Decree of 15 January 2010 amending the Royal Decree of 8 June 2007 on the methodology for determining the total revenue comprising a fair margin, the general tariffs structure, the basic principles on tariffs, procedures, the publication of tariffs, annual reports, accounting, cost control, revenue deviations of operators and the objective indexation formula referred to in the Act of 12 April 1965 on the transmission of gaseous and other substances by pipelines (Belgian Official Journal of 22 January 2010). 102 Act of 10 March 2009 amending the Act of 12 April 1965 on the transmission of gaseous and other substances by pipeline (Belgian Official Journalof 31 March 2009). 103 Act of 29 April 2010 amending the Act of 12 April 1965 on the transmission of gaseous and other substances by pipeline with regard to transit tariffs (Belgian Official Journalof 21 May 2010). 49

51 4. Regulation and operation of the natural gas market impose provisional tariffs. The provisional tariffs that were imposed are based on the latest corresponding portions of the total income approved by the Management Board, i.e. the tariffs for the 2008 operating year. These provisional tariffs remain in force for the entire regulatory period, until all the arguments open to the CREG or the DSO have been exhausted or until an agreement has been reached on the points of contention between the CREG and the DSO. In the course of 2009 most of the DSOs submitted new tariffs proposals for the regulatory period based on the new reporting model. The tariffs of the mixed DSOs (both the private and the public sectors have stakes in the capital) of the operating companies Eandis (Flanders) and Ores (Wallonia) have been approved for the period, respectively as of 1 July and 1 October Like Oers, the mixed DSO in Brussels, Sibelga, had its tariffs approved as of 1 October At the end of 2010, the CREG reached an agreement with the four «pure» DSOs of the Infrax operating company (Infrax West, Iveg, Inter-Energa and PBE) on the points yet to be settled, such that they also have approved tariffs as of 1 January b) Tariffs trend Table 13 provides an overview of tariffs trends from 2008 to The provisional tariffs applied by DSOs have not altered as the provisional tariffs for the period are identical to the tariffs in force for the 2008 operating year. The trend is considerably smoother than the trend and can be explained primarily by the application of the indexation mechanism to manageable costs and to a lesser extent to the development of other elements, such as depreciation and non-manageable costs (public service obligations, for instance). Between the various DSOs, significant differences in tariffs are seen to exist. These are explained on the one hand by topographical and technical factors specific to the areas supplied and on the other hand by the scope of the public service obligations. Other factors such as the transfer of balances from previous years (bonus/malus) also contribute towards these differences in tariffs. In its previous annual reports, the CREG already stressed that the new regulatory framework leaves it little leeway to assess the reasonable and real nature of the costs put forward by the DSOs. The CREG therefore remains convinced that the legislation applicable to distribution tariffs needs to be revised bearing in mind the third legislative package. The transposition of this European directive offers the possibility of adapting the current Belgian legislation on tariffs, amongst other things in order to give the regulator the powers needed to achieve more correct distribution tariffs. 50

52 4. Regulation and operation of the natural gas market Table 13: Tariffs for the use of the distribution network in 2008, 2009 and 2010 (in /kwh), excluding VAT /kwh Tariffs: Approved: A 2008 Extended: E Household customer 23,260 kwh/year GRD Δ 2010/2009 Business customer 2,300 MWh/year Δ 2010/2009 Industrial customer 36,000 MWh/year Δ 2010/2009 ALG E % % % GASELWEST A (2) % (2) % (2) % IDEG A (3) % (3) % (3) % IMEA (IGAO) A (2) % (2) % (2) % IGH A (3) % (3) % (3) % IMEWO A (2) % (2) % (2) % INTERGAS E % pas applicable (1) pas applicable (1) INTERGEM A (2) % (2) % (2) % INTERLUX A (3) % (3) % (3) % IVEG E % % % IVEKA A (2) % (2) % (2) % IVERLEK A (2) % (2) % (2) % INTER-ENERGA E % % % SEDILEC A (3) % (3) % (3) % SIBELGA A (3) % (3) % (3) % SIBELGAS N A (2) % (2) % (2) % SIMOGEL A (3) % (3) % (3) % WVEM E % % % Average % % % (1) Intergas does not have any business and industrial customers with over 1 GWh/year. (2) Applicable as of 1 July 2009 (before this date, the 2008 tariffs applied) (3) Applicable as of 1 October 2009 (before this date, the 2008 tariffs applied) Source: CREG Figure 19: Average composition of distribution cost in Flanders in 2010 Figure 21: Average composition of distribution cost in Brussels in ,20% 2,13% 5,58% Network routing Meter hire Public service obligations Surcharges 5,95% 18,66% Network routing Meter hire Public service obligations Surcharges 2,34% 89,08% Source: CREG 73,06% Source: CREG Figure 20: Average composition of distribution cost in Wallonia in ,45% 2,34% 13,77% Network routing Meter hire Public service obligations Surcharges 78,44% Source: CREG 51

53 4. Regulation and operation of the natural gas market c) 2009 balances In 2010, the Management Board processed balances relating to the 2009 operating year. It should be noted that most of the DSOs recorded a bonus on the management costs and a malus on the non-manageable costs. The balance of manageable costs is included in the income statement of the system operator, while the accumulated balances of the non-manageable costs relating to the 2008 to 2011 operating years are allocated by the Minister for Energy. When processing the 2009 balances, particular attention was made to go out to elements decommissioned by the DSOs and a monitoring programme was used to check whether the methodology proposed was observed and whether the reported as having been decommissioned were actually decommissioned both in the field and in administrative and accounting terms. d) Jurisprudence In 2010, the Court of Appeal in Brussels returned a number of rulings further to the regulatory vacuum found with regard to its jurisprudence, under which the Royal Decrees of 2 September 2008 had been declared unlawful. In response thereto, the legislator had, however, ratified the decrees in question (see 2009 Annual Report, pp. 28 and 51) but this did not alter the fact that the decrees had been drawn up contrary to European requirements in this field (more specifically the ban on arbitrary modification of the proposal put forward by the regulator). Given this situation, in a number of decisions the Management Board decided that the CREG did not have a valid basis on which to take decisions on tariffs. In a number of rulings handed down on 29 June 2010, the Court of Appeal in Brussels rejected this point of view with respect to the rules on establishing the value of the regulated assets. The CREG was ordered to reach a new decision, in application of the relevant provisions of the Royal Decree on tariffs. These judgements were then extended in another series of rulings on tariffs decisions taken by the CREG, in which the Court decided that the tariffs proposed by the DSOs were valid ipso jure. The Court did, however, decide that it was not impossible that the tariffs decisions had not been taken in accordance with the directives on certain points, but not to the extent that the Royal Decree had to be rendered unenforceable in its entirety. The Courts specified that moreover there was no reason why the CREG should not apply some of the specific provisions concerned. In order to put an end to the constant insecurity, Infrax and the CREG reached an agreement during the last quarter of 2010 concerning the tariffs to be applied during the last two years of the regulatory period. As a result, new approved tariffs have been in place for all Infrax members since 1 January The legal proceedings with Sibelga, the Brussels DSO, have also been brought to a close and the tariffs have been approved. e) Studies In 2010, the Management Board examined the development of the kw term during the time frame and in particular whether the importance of this term in the DSOs budgets (and consequently in the annual distribution costs for the various standard customers) has increase or declined 104. As is the case for electricity, it may be concluded for natural gas that the term kw developed along virtually the same lines between 2006 and , both in comparison with the tariff for transfer by the network and with regard to the trend in the total annual costs of the distribution network, and that consequently no notable alteration has occurred between kwh and kw. Moreover, the relative share allocated to the kw term compared with the total budget of a natural gas DSO has been found to be considerably higher than for electricity. This phenomenon is explained by the fact that natural gas consumption depends far more on the (outdoor) temperature than electricity consumption. By maintaining the kw term, which is not linked to variations in atmospheric conditions and the resultant consumption, at a high level, the tariff fluctuations are mitigated and this makes it possible to offer more stable tariffs. B. Maximum prices Price caps A system of maximum prices has been implemented in Belgium for two categories of customers: protected end customers and unprotected end customers whose supply has been terminated by the supplier. The DSO ensures supplies to unprotected end customers whose supply has been terminated by their supplier, at the maximum price set as follows (Ministerial Decree of 1 June 2004 for electricity and 15 February 2005 for gas): energy price + transmission tariff + distribution tariff + margin. The DSO uses the tariffs data from these suppliers, with a minimum share of 3%, operating in its distribution zone, to the extent that deliveries to household access points are in the distribution zone. All the calculations include the suppliers who deliver to at least 90% of the household access points. In cases where a major supplier is active, but does not provide 90% of the supplies for household customers, and 104 Study (F) CDC Given that the CREG only approved tariffs for natural gas as of 2004 and that examination has shown that the kw term was not used before 2006, the results indicated are limited to the time period. 52

54 4. Regulation and operation of the natural gas market where all the other suppliers have a share of less than 3%, it is consequently necessary to take account of the largest of these small suppliers until 90% of household customers are included in the calculation. The DSO and/or the supplier usually also take care of supplying protected end customers in accordance with federal legislation (Ministerial Decree of 30 March 2007) at a maximum price set by the CREG which is valid for a period of six months (cf. Articles 6 to 13). The supplier is compensated for the obligation to supply at regular tariffs. The margin is an amount which is added to the sum of the energy price, the transmission and distribution tariff, if this sum is lower than the average of the price announced for a category of similar customers of suppliers in the distribution zone of the DSO. In this case, this margin is equal to the difference between this average and the sum of the first three parts of the price capping mechanism. In all other cases the margin is zero. Maximum prices applicable to dropped unprotected customers The Management Board has decided to update, for both electricity and gas, the rules on the calculation of the maximum prices applicable to unprotected customers whose supply contract has been terminated 106. This replacement was justified by three elements: the adaptation of the period for the dropped customer tariff, the modification of standard customers and the standardisation of the method used to calculate dropped customer tariffs. With regard to the application period for the dropped customer tariff (reference tariff), there was a lapse of one month between the maximum dropped customer tariff and the social tariff, which would cause needless complications when calculating the claim. The decision taken by the Management Board overcomes this problem by ensuring that the two halfyear periods coincide. These now run from 1 February to 31 July and from 1 August to 31 January. As regards standard customers, the peak hour and off-peak hour consumption of Dc and De customers had to be modified further to the extension of the night tariff to include the weekend. The new annual consumption levels of these standard customers are now 1,600 kwh at peak times and 1,900 kwh at off-peak times for a Dc customer and 3,600 kwh at peak times, 3,900 kwh at off-peak times and 12,500 kwh at night only for De customers. The standardisation of the model and the calculation method became necessary owing to the significant disparity encountered until then in the presentation of reference tariffs and the calculation methods used by the DSOs. The decision taken by the Management Board means that a standardised Excel file has been set up to be used by all DSOs to determine the calculation of the reference tariffs. C. Code of conduct The Royal Decree of 23 December 2010 on the code of conduct with regard to access to the natural gas transmission system, the natural gas storage facility and the LNG terminal was published in the Belgian Official Journal on 5 January This new code of conduct, long awaited by players on the gas market, came into being at the proposal of the CREG and was drawn up in consultation with these players. It came into force on the tenth day following its publication in the Belgian Official Journal, that is on 15 January The new code of conduct applies not only to the transmission of gas intended for the Belgian market and to storage and LNG activities, but also to border to border transit activities. It aims to achieve transparent and non-discriminatory access to the transmission system, which should ultimately be beneficial for the operation of the gas market and competition on this market. D. Transmission model On 24 September 2010, the Minister for Energy took the initiative, in concert with Fluxys, to develop the role of Belgium as a natural gas hub for north-western Europe with a view to guaranteeing the country s security of supply. The CREG supports this vision and had previously taken the necessary initiatives proactively to put it into practice. For instance, on 13 August 2010 the CREG launched a public consultation process on the basic principles for a new transmission model. This model is one of the main elements included in the new code of conduct that has been in force since 15 January The new code of conduct stipulates that the natural gas TSO is to draw up a standard contract for the transmission of natural gas (Articles 77, 96 and 109), a standard connection contract (Article 96), access rules (Articles 29 and 111) and a natural gas transmission programme (Articles 81 and 112). The standard contracts constitute the access ticket to the transmission system, the transmission services and all the information platforms provided by the natural gas TSO, for shippers (standard natural gas transmission contract) and customers (standard connection contract) alike. The access rules include a detailed description of the transmission model used, all the operating rules and procedures 106 Decisions (B) CDC-964 (electricity) and (B) CDC-965 (gas). These decisions replace decisions (B) CDC-384 (electricity) and (B) CDC-490 (gas). 53

55 4. Regulation and operation of the natural gas market relating to access to the transmission services and subscription to these services, allocation rules, the nomination and renomination procedure, provisions applicable in the event of reductions and interruptions, the grid balance rules, congestion management procedures, provisions applicable in the event of maintenance, rules on pressure and quality, the procedures for measuring the quantities and characteristics of natural gas and all the rules on the operation of the secondary market and access to the hub. The natural gas transmission programme contains a clear description of the transmission model and serves first and foremost as the catalogue of the natural gas transmission services offered by the operator. Other than this, it describes the reservation mode of natural gas transmission services on the primary market and provides information on congestion management and the operation of the secondary market. Both the standard contracts and the access rules and natural gas transmission programme need to be submitted to the CREG for approval by the natural gas TSO. These key documents are drawn up after consultation with the market players concerned. To this end, the operator creates a consultation structure (Article 108) intended to ensure regular and structured consultation with grid users. The basis for drawing up the documents referred to above is of course the transmission model used by the operator. The current natural gas transmission model dates from It has certainly proved its worth, but is no longer in line with developments on the natural gas transmission market and the modified European and Belgian regulatory context. This transmission model has a number of specific characteristics which are now considered to be restrictive by many market players, both for transmission and for the exchange of natural gas. These restrictions need to be removed in order to stimulate the subsequent development of both the natural gas transmission services and the exchange market and thereby guaranteeing security of supply. Among these restrictions, with regard to the capacity allocation rules, it is worth mentioning: the coupling of entry and offtake points when reserving transmission services; a series of complex allocation rules with matching rules and allocation on the basis of priorities in the event of congestion; the inefficient use of certain entry points. In this context, the following in particular are submitted for consultation: the allocation of entry capacity with the aid of simple and transparent allocation rules; the independent reservation of entry and offtake capacities; the proactive congestion policy with the aid of transparent and non-discriminatory rules drawn up in advance. If the current restrictions of the existing transmission model are not eliminated in the near future, there is a risk that a number of market players will be tempted to abandon the Belgian natural gas market. Market players will turn their attention to neighbouring natural gas markets, which are more easily accessible and more liquid. A development like this would not benefit Fluxys or Belgian end customers, whether household or industrial. Moreover, these restrictions have direct consequences for the electricity market. The rapid development of decentralised electricity generation, the growing importance of solar and wind energy and the role of natural gas as a back-up make easy and fast access to the natural gas market (both transmission and trading) absolutely essential. If Belgium is keen to uphold its security of supply and its position as a major hub for the transmission and exchange of natural gas in north-western Europe on a lasting basis in the years to come, then reorienting the natural gas transmission market is definitely a priority. The new code of conduct adopted at the proposal of the CREG stipulates that the natural gas TSO devises a transmission model intended in particular for the independent reservation of entry or offtake capacity, the use of a single balancing zone, the stimulation of the operation of the secondary market for natural gas transmission services and the stimulation of liquidity on the natural gas market (Article 113). The operator is developing the natural gas transmission services needed to achieve this end. In the meantime, the CREG has analysed the results of this consultation on the transmission model and in January 2011 it published the consultation report on its website, together with a staged plan designed to lead to the introduction of a transmission model by the end of

56 4. Regulation and operation of the natural gas market E. Indicative transmission programme Routing In 2011, a new gas transmission programme (formerly known as the Indicative Transmission Programme or ITP) is to be drawn up to take account of the new code of conduct, the new services developed by Fluyxs and the feedback on the subscription period (capacity congestion management). While awaiting the new code of conduct, in 2009 Fluxys had already introduced an ITP for the period in accordance with the old one. The programme of services proposed for the transmission of gas comprises a detailed description of the gas transmission model used and the various transmission services offered by the TSO. Amongst other things, this includes a practical description of the allocation rules used, the balancing service, the means of subscribing for services, in particular via the Automatic Reservation System or ARS, the rules on congestion and the working of the secondary market via the Secondary Market Platform (SMP). In the first phase, the TSO devises the transmission model with a view to achieving maximum synergy between internal transmission and transit, the independent reservation of entry and offtake capacity and the promotion of the operation of the secondary market. In a second phase, once the investments being made by the TSO lead to a single balancing zone, the gas transmission programme will need to be amended by the TSO along these lines. This ITP was approved by the Management Board on 29 October 2009 for the period. On 14 January 2010, the Management Board approved an initial modification to this ITP with regard to the MBT category of customers (customers who benefit from a lower tariff). In fact, it was advisable to put an end to the existence of this service (and therefore the related tariff reductions) given the new tariffs for the Fluxys transmission activity and storage activity approved by the CREG on 22 December 2009 for the years 2010 and After this, on 1 April 107 and 1 June , the Management Board approved a second and third modification to the ITP so as to specify the description of the characteristics of the Fluxys entry-exit system (previously described as Enhanced), refine the allocation of flexibility services (HIT, DIT, CIT), and introduce the capacity supply point service. On 23 November 2010, Fluxys introduced a new ITP for the period. A major change has been made to the rules on congestion and allocation involving the scrapping of the subscription period. The new ITP was approved by the Management Board on 8 December Storage On 12 May 2010, the Management Board approved the indicative transmission programme for storage for the period 109. It contains a number of important new features with regard to allocation, flexibility and information. The main change relates to the introduction of new storage service allocation rules. The rules currently in force do not take account of subsequent changes in the market share of grid users. This is why the Management Board asked Fluxys to draw up new rules. The methodology adopted by Fluxys is based on the future market shares of storage users. For each storage user, a priority right is calculated and allocated to these users based on their capacity subscriptions on the gas receiving stations (GOS) for the following storage period. Each one is allocated a weighting factor per month that takes account of the total capacity subscription to the storage services by all the grid users for the month in question. The allocation is undertaken in two stages. An initial allocation begins on 15 April of the year in question on the basis of the priority rights calculated on 1 March. A second major modification relates to the offer of flexibility services. The Management Board has already voiced its concerns on repeated occasions about the limited supply of flexibility services for storage in general and the lack of short-term storage services in particular. In order to comply with its undertaking in this area, the transmission company has drawn up a proposal for short-term services based on the virtual storage concept. The formula used to calculate the allocated right takes account of the concern of the CREG to simplify access to the grid for smaller newcomers. A third major modification relates to the information that the transmission company has to provide for grid users. Further to the request from ERGEG, the CREG asked Fluxys if it was ready to move from the weekly publication of a number of relevant parameters relating to gas storage to the daily publication of these data, supplemented by some additional information as of 30 November Fluxys said it was prepared to publish the daily allocations requested concerning the injection, emission and quantity of gas in storage both at the Loenhoet storage facility and at the Dudzeel peak storage facility on a daily and aggregate basis. Moreover, it also considered the deadline to be realistic. In accordance with 107 Study (F) CDC Study (F) CDC Decision (B) CDC

57 4. Regulation and operation of the natural gas market the indicative transmission programme for storage services covering the period, the data in question will be published on a daily basis using the EASEE GAS standard. The new programme also states that the marketing of services linked to the transportation of LNG by tanker from the terminal to the Dudzele storage facility will be undertaken by Fluxys rather than by Fluxys LNG as of the season. The CREG asked Fluxys to submit a new proposal for the period by 30 June 2010 at the latest and to take address the comments made in the decision on the proposal in its new proposal. On 30 June 2010, Fluxys submitted an initial proposal for an indicative storage programme covering the period. As it had not yet received reservations for the virtual storage service, on 20 December 2010 Fluxys submitted a final proposal for the Indicative Storage Services Programme to the CREG on 20 December Terminalling A new LNG programme (formerly known as the LNG ITP) is to be drawn up to take account of the new code of conduct and the services developed and offered by Fluxys LNG. However, while awaiting this new code of conduct, on 30 June 2010 Fluxys LNG submitted an LNG ITP for the period in accordance with the old one. On 30 September 2010, the Management Board approved this LNG ITP from Fluxys LNG for the period 110. In this ITP, the loading capacities of the LNG road tankers are again marketed by Fluxys LNG given the decision taken by Fluxys to close the peak shaving plant in Dudzele further to the termination of capacity reservation at this facility by the only shipper involved. F. Standard connection contract On 21 January 2010, the Management Board approved the proposal, which had been reworked (again) and submitted by Fluxys for the standard contract for the connection of end customers to the natural gas transmission system 111. In its decision, the Management Board drew attention to the circumstances in which the standard connection contract will need to be reassessed and adapted where appropriate Effective unbundling Appointment of transmission system, storage facility and LNG terminal operators Since 2006 Fluxys, together with Fluxys LNG, has in fact undertaken the management of transmission on the natural gas transmission system, the storage facilities and the Zeebrugge LNG terminal. In February 2007, the Minister for Energy initiated legal proceedings aimed at appointing three system operators for a period of twenty years by means of a ministerial decree. On 17 December 2009, the CREG issued positive opinions for the appointment of Fluxys as operator of the natural gas transmission system and storage facility and the appointment of Fluxys LNG as operator of the LNG facility. On 23 February 2010, Fluxys was finally appointed by the Council of Ministers as the operator of the natural gas transmission system and storage facility and its subsidiary, Fluxys LNG, as the operator of the LNG facility. Unbundling of the TSO In fulfilment of the commitments offered in 2006 by GDF and SUEZ as part of their merger, an initial share transaction was undertaken in 2009 between GDF SUEZ and Publigaz (whereby Publigaz exercised its pre-emptive right). On 18 May 2009, the Competition Council approved the Publigaz/Fluxys merger. The actual merger went ahead on 27 May An Act that was published in the Belgian Official Journal on 8 December stipulated that the suppliers or their affiliated companies are permitted to hold no more than 24.99% of the capital or voting shares in a transmission infrastructure operator, by 31 December 2009 at the latest. Nor may the memorandums of association of the transmission infrastructure operator and the shareholders agreements grant special rights to producers, suppliers or their affiliated companies. This Act obliged Electrabel to transfer at least 13.51% of its stake in Fluxys. Further to this modification of the legal context, in March 2010 GDF SUEZ and Publigaz concluded an agreement concerning the transfer to Publigaz of the entire Electrabel stake in Fluxys (38.5%). The transaction was carried out on 5 May Further to this transaction, the Publigaz stake in Fluxys increased to 89.97%, while GDF SUEZ withdrew entirely from the Fluxys capital. 110 Decision (B) CDC Decision (B) CDC Act of 10 September 2009 amending the law of 12 April 1965 on the transmission of gaseous and other substances by pipeline (Belgian Official Journalof 8 December 2009). 56

58 4. Regulation and operation of the natural gas market This agreement also states that the GDF SUEZ group transfers to Fluxys its 6.8% stake in Fluxys. Since 5 May 2010, Fluxys LNG has therefore been a wholly-owned subsidiary of Fluxys. In fulfilment of the above, the memorandums of association of Fluxys have been modified (see publication in the annexes to the Belgian Official Journal of 30 April 2010). In a press release Fluxys announced that under the terms of the same agreement, the 5% stake of the GDF SUEZ group in Interconnector (UK) Ltd will also be transferred to Fluxys NL as soon as the formalities have been finalised with the shareholders of Interconnector (UK) Ltd. Further to this transaction, the share of the Fluxys group in Interconnector (UK) will rise to 15%. Figure 22: Shareholding body of Fluxys as at 31 December 2010 Independence of the system operator corporate Governance As it does every year, in 2010 the CREG examined and commented on the activity report of the Fluxys Corporate Governance Committee for the year 2009 (monitoring of the application of Article 8/3 of the Gas Act, assessing efficacy with regard to the requirements in terms of independence and impartiality of directors as stated in the code of conduct. It questioned Fluxys about the composition of the group of independent directors as regards their know-how. In fact, the latter are chosen partly for their know-how in the field of financial management, partly for their useful technical knowhow and mainly for their relevant know-how of the energy sector. At the end of 2010 the CREG had not yet completed this analysis. In 2010, the CREG did not issue any binding opinion about the appointment of independent directors at Fluxys. * Fluxys Finance holds 1,000 shares out of a total of 60,934,737 shares in Fluxys G % NYSE Euronext Brussels secondary market (+ 6.68% listed shares held by Publigaz) PUBLIGAZ 100% * Fluxys G 89.97% (6.68% of which are listed) 1 share Specific share of the Belgian state Source: Fluxys website 4.2. Competition aspects Description of the wholesale market A. Natural gas supplies Natural gas suppliers can choose from among a series of entry points on the natural gas transmission system to supply their Belgian customers with H-gas. Natural gas customers who use L-gas are supplied from The Netherlands or indirectly in backhaul via the Blaregnies interconnection point with France. LNG supplies, mainly from Qatar via the Zeebrugge terminal, accounted for a share of 6.2% of Belgian natural gas consumption in 2010, compared with 9% in With a share of 46.5%, Zeebrugge has once again consolidated its position as the gateway to the Belgian market. The sharp increase in the importance of Zeebrugge (in 2009 its share was considerably smaller, at 38.3%) is due to the rise in suppliers via shortterm transactions at the Zeebrugge hub, prompted by two factors: the relatively high price of natural gas contracted in the long term and the increase in the number of new, relatively small suppliers who prefer short-term supply contracts. For the L-gas market, we have observed fairly substantial supplies in backhaul from Blaregnies (4.9% in 2010 compared with 2.6% in 2009) on the transit flows initially intended for the French market. This observation reflects the issue of capacity availability and allocation at the Hilvarenbeek/Poppel interconnection point on both the Dutch and the Belgian side. 57

59 4. Regulation and operation of the natural gas market Figure 23 : Breakdown of supply per entry zone in 2010 North-east ( s Gravenvoeren, Dilsen) 10,7% Blaregnies* (H-gas) Blaregnies* (L-gas) 4,3% 4,9% East (Eynatten) 4,1% North (L-gas) 21,4% North (Zandvliet) 1,9% LNG terminal 6,2% West (Zeebrugge) 46,5% Overall, the individual supply portfolios of the various natural gas suppliers result in a differentiated supply depending on the type of contract. The share of long-term contracts concluded directly with natural gas producers has declined, falling from 71.3% in 2009 to 60.3% in 2010, but still constitutes the main component saw a shift towards supplies on the wholesale market. Spot transactions (especially on the Zeebrugge hub) rose sharply from 18.4% in 2009 to 24.7% in 2010, as did supplies via contracts of more than one year concluded on the wholesale market, which rose substantially from 5.2% to 9.4%. This may be attributed to the same reasons as those that explain the use of access points: relatively lower natural gas prices on the wholesale market compared with longterm contracts concluded with the producers, as well as the steady growth in suppliers starting out on the Belgian market. * The Blaregnies entry points are used in backhaul to the actual flows (reverse flow), making use of the predominating transit flows at these points. Source: CREG Figure 24: Composition of aggregated supply portfolio of suppliers operating in Belgium in 2010 Other contracts < 1 year 24.7% Contracts with producers > 5 years 60,3% Other contracts > 1 year 9.4% Contracts with producers < 5 years 5,7% Source: CREG 58

60 4. Regulation and operation of the natural gas market B. Holders of a natural gas supply permit The companies operating in the supply of natural gas on the Belgian market can be broken down as follows: Table 14: Companies operating in the supply of natural gas on the Belgian market in 2010 Volume routed in 2010 (TWh) Company Domestic market Date of permit Domestic market Belgium* Elsewhere Total Market share in Belgium** E.On Ruhrgas A.G. Germany % Distrigas S.A. Belgium n.d n.d. n.d % GdF Suez France n.d n.d. n.d % Total gas & Power North Europe Ltd. United Kingdom n.d. 0 % WINGAS GmbH & Co KG Germany % RWE Supply & Trading Netherlands B.V. Netherlands % Gaselys S.A.S. France % Nuon Belgium S.A. Belgium n.d. 0 0 n.d. 0 % Vattenfall Energy Trading Netherlands N.V. Netherlands % Electrabel Customer Solutions S.A. Belgium % SPE S.A. Belgium % Electrabel S.A. Belgium % EDF S.A. France n.d. 0 n.d. n.d. 0 % EDF Belgium S.A. Belgium n.d. 2,35 n.d. n.d. 1.1 % Essent Belgium S.A. Belgium n.d. 0 n.d. n.d. 0 % Merril Lynch Commodities (Europe) Ltd. United Kingdom n.d. 0 n.d. n.d. 0 % Statoil ASA Norway n.d n.d. 1.7 % Eneco België B.V. Netherlands n.d n.d. n.d. 0.5 % E.On Belgium S.A. Belgium % Delta Energy B.V. Netherlands n.d. 0 n.d. n.d. 0 % Air Liquide Technische Gassen B.V. Netherlands n.d. 0 n.d. n.d. 0 % ConocoPhillips Ltd. United Kingdom n.d. n.d. 0 % Gazprom Marketing & Trading Ltd. United Kingdom n.d. 0 % Lampiris S.A. Belgium % RWE Energy Belgium S.P.R.L. Belgium % E.On Energy Trading S.E. Germany n.d % Exxon Mobil Gas Marketing Europe Ltd. United Kingdom n.d. 0 % Energy Logistics and Services GmbH Austria n.d n.d. 0 % Gas Natural Europe SAS France n.d. 0 n.d. n.d. 0 % natgas A.G. Germany % Progress Energy Services S.P.R.L. Belgium n.d. 0 n.d. n.d. 0 % * These figures only bear on the transmission market: supplies to customers connected to the transmission system and to offtake points on the distribution networks. For separate statistics on supplies on the transmission and distribution markets, please consult the joint publication of the four energy regulators at ** Relates to the respective market shares of the holders of a supply permit for access to the transmission system, on the basis of the figures in the Belgium column. These market shares are average values for 2010 and do not necessarily reflect the situation on 31 December. Source: CREG In 2010, total natural gas consumption 113 rose to TWh, up 10.9% compared with consumption in 2009 (194.2 TWh). This increase was the result of a considerable rise in consumption by end customers connected to the distribution networks (+ 15.5%) and consumption by industrial customers (+ 19.7%) on the one hand and more or less stable consumption for the generation of electricity (and the production of heat) (-0.3%) on the other. 113 It should be noted in this respect that the evaluation is based on figures linked to shipping activities on the transmission system as provided by the transmission system operator. 59

61 4. Regulation and operation of the natural gas market In 2010, four new players, Electrabel, RWE Energy Nederland, whose activities were taken over by its sister subsidiary RWE Energy Belgium during the course of the year, Vattenfall Energy Trading Netherlands and E.On Energy Trading began to supply on the wholesale market for natural gas, which includes supplies to direct customers connected to the Fluxys grid as well as supplies to distribution networks. As a result, in 2010 a total of fourteen supply companies were operating on the Belgian market. The share held by Distrigas on the transmission market fell sharply in 2010 to 52.1% The reduction amounts to percent, which represents the biggest drop since the liberalisation of the market. GDF SUEZ has consolidated its position as the second largest shipper on the market (+ 5.9 percent), with a share of 18.3%. SPE continues to make progress and gaines 1.9 percent, taking its market share to 8.8% Despite its growth, SPE had to yield its third place to newcomer Electrabel. Electrabel attained a market share of 8.9% at a single stroke, thereby stepping up to become the third largest shipper thanks mainly to its share in the electricity generation sector. It is worth noting that as of the month of November parent company GDF SUEZ took over the Electrabel routing activities. The GDF SUEZ group holds a total of 27.2% on the transmission market. Wingas is the second largest loser after Distrigas (-1.1 percent) and has seen its market share fall to less than 5%. Statoil also lost ground in 2010 (-0.2 percent compared with 2009). Lampiris has a market share of 1.2%. Among the other newcomers in 2010, Vattenfall Energy Trading Netherlands, which operates only on the L-gas distribution network, has a market share of 0.7%, while RWE Energy Belgium has slightly less than 0.5%, again mainly on the L-gas distribution networks. E.On Energy Trading, which started routing in the middle of the year, has reached a market share of 0.7%. Among the players with a (temporarily) limited market share, that of EDF Belgium has risen by 0.2% to 1.1%, while that of Eneco België has fallen by 0.2% to 0.5%. EDF Belgium transferred its commercial activities to SPE on 1 October E.On Belgium has seen its market share fall to just 0.02%. Essent Energy Trading, whose name has been changed into RWE Supply & Trading Netherlands, maintains its market share at 0.6%. As expected, the consequences of the merger between GDF and SUEZ strongly impacted on developments on the transmission market as of This can be seen in the activities of Electrabel, which was taken over at the end of the year by its parent company GDF SUEZ. Given that the activities of Electrabel have provisionally been focused primarily on the generation of electricity, it may be deduced that mutual relations between the market players will undergo further significant changes in the future. It is expected that GDF SUEZ will partly take over the transmission of gas intended for marketing on the distribution networks by Electrabel Customer Solutions from Distrigas. As at 1 January 2011, twenty-nine network users held a routing supply permit. Fourteen of them had actually reserved capacity for the delivery of natural gas to the Belgian market on the Fluxys network, compared with six at the end of C. Natural gas transmission permits The CREG has the power to issue opinions on transmission permits with regard to the transmission system. To build and operate its natural gas facilities, Fluxys submits applications for transmission permits to the Energy Authority in place with the Federal Public Service of the Economy, SMEs, Self- Employed and Energy. The CREG issues an opinion on this. For applications that impact on the distribution networks, the CREG consults with the regional regulators concerned. In 2010, eleven Fluxys transmission permit applications were passed on to the CREG for an opinion. A favourable opinion was given in each case. The Management Board also returned three opinions on applications submitted in D. Exchange platforms Setting out from the work done in 2009, on 10 October 2010 ERGEG gave its final approval of the 2010 monitoring report drawn up by the CREG on the regulatory oversight of natural gas hubs 114. This report presents a series of conclusions drawn from the analysis of gas hubs in Europe. The main aim of this exercise was to compile a list of the various monitoring mechanisms on the European hubs. In addition, the document puts forward a few recommendations intended to improve surveillance and regulatory monitoring. Moreover, the European Commission has drawn up a proposal for a regulation on the integrity and transparency of the energy market (REMI). This proposal aims to introduce great transparency on the market by imposing clear market rules for energy traders. The wholesale markets such as the exchanges and hubs, where gas and electricity are exchanged between producers and traders, take on more importance in terms of the prices paid by end customers. The new rules proposed relate to the identification and use of privileged information on transactions that send out incorrect and misleading signals to the market and on the spreading of false rumours that give out misleading signals. The task of monitoring these rules is to be entrusted to ACER, the European Agency for the Cooperation of Energy _final.pdf. 60

62 4. Regulation and operation of the natural gas market Regulators. This agency is to work closely with the national regulators, who bear joint responsibility for examining suspicious cases and who will have to impose penalties where necessary. For Belgium, this mainly concerns trading on the Zeebrugge hub and the APX GAS ZEE gas exchange. While activity on the gas exchange may be considered rather minimal (only ten or so transactions in an entire year), Huberator, as the hub operator, noted growing interest in Eightytwo companies are currently registered as members. And while the total volume traded at the hub in 2010 remained constant compared with 2009 (62 bcm or 742 TWh), churn doubled in the last few months of The churn factor, which represents the number of times the gas is traded before being physically taken elsewhere, proved to be higher than 10 for the first time since the hub was created. Generally speaking, this is seen as a positive increase in liquidity in short-term trade. In any case, the Dow Jones Zeebrugge Index Gas (ZIG) reflects a price that is again moving closer to the level recorded in 2008, before the current crisis struck. It may therefore be said that the extremely low short-term price seen in 2009 is coming to an end. E. Integration with intra-european regions and neighbouring member states The third European legislative energy package makes regional cooperation between regulators compulsory. The question of how this cooperation was to be organised and/or whether the existing platforms or initiatives were able to participate in this was the subject of discussions in First of all, the gas regional initiative for the north-west region (GRI-NW) issued an initial proposal during the stakeholders group meeting on 26 November 2010 in Brussels. The bottom-up approach so much appreciated in the past through various projects remains an important pillar, but in future will need to be accompanied by monitoring and the top-down implementation of network codes which will result from the third legislative package. The cooperation cautiously introduced between the member states and the European Commission continues to be supported. On 7 December 2010, the European Commission published a communication 115 presenting other emphases or even an adaptation of a number of regional geographic zones (but which leaves the GRI NW region unchanged). A new Steering Committee, bringing together representatives of the Commission, the member states and the regulators, could play a central role here. Subject matters to be dealt with, which would be imposed on a top-down basis, relate to investments in infrastructure, regional balancing and security of supply. In addition, pilot projects are only possible on the basis of network codes and key guiding threads. The discussions on this Commission communication, which began in July 2010 during the fourth Regional Initiatives 116 conference, are to continue in The topics discussed at this conference also included the objective of a fully coupled market for electricity (by 2015) and natural gas. These discussions did not, however, prevent regional initiatives from recording results in their current form. The North/ North-West of Europe gas region (Belgium, The Netherlands, France, Germany, Great Britain, Ireland, Northern Ireland, Denmark and Sweden) focused its activities around three areas in 2010, i.e. investments, the secondary market and capacity (short-term primary market). In addition to the regional cooperation initiated by the regulators, the CREG participated in the gas platform that brings together the authorities, the regulators and the TSOs of five countries (The Netherlands, Luxembourg, France, Germany and Belgium). Again in the wake of the Ukraine-Russia crisis, the gas platform focused its work on the issue of the security of supply. The processes, models and interventions at European level were applied specifically to the five countries with a view to gaining a better understanding of the impact for each of the countries concerned. The last two meetings discussed the impact of the third legislative package on the rules in force in each of these five countries. The strategic discussions do not prevent the markets from functioning or continuing to develop. The hubs and exchanges in the region around Belgium, including the Zeebrugge hub in Belgium, posted similar sustained growth in 2010, as well as rising liquidity. The only noteworthy fact is the doubling of the churn factor at the Zeebrugge hub. This is an indication of the number of times gas is exchanged before being physically taken elsewhere. Since October 2010, which was the start of the new gas year, this has risen from 5 to 10. Analysis shows that this doubling is not due to an increase in the volume exchanged (this remains constant), but rather to the fact that the physical quantity going through the hub has fallen by half. 115 COM(2010)721 final: Communication from the Commission to the European Parliament and Council on the future role of regional initiatives

63 4. Regulation and operation of the natural gas market Figure 25: Natural gas supplies by type and length of contract 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% short-term supply (spot) and contracts of less than one year contracts of less than one year concluded with other suppliers contracts concluded with producers that end in five years contracts concluded with producers that last more than five years Source: CREG F. Integration between gas producers/importers and suppliers long-term gas supply contracts For the 2010 breakdown, readers are referred to paragraph A of this report and Figure 25 above. G. Access to natural gas storage facilities A systematic lack of gas storage capacity may be observed in Belgium. The Gas Act stipulates that access to the storage facilities is reserved as a priority for companies that supply end customers connected to the distribution networks. There is no freely available storage capacity. In 2007, Fluxys started an extension project intended to increase the underground storage capacity in Loenhout. In practical terms, the useful storage capacity will be gradually increased from 600 to 700 million cubic metres (i.e. by 15%), over a period of four years ( ). The extension work is on schedule, which means that storage users will benefit from a useful volume of around 700 million cubic metres by the storage season. Fluxys is also seeking to increase flexibility in the use of storage: the issue capacity of the Loenhout facility rose from 500,000 to 600,000 cubic metres an hour on 1 November 2010 and the injection capacity rose from 250,000 to 325,000 cubic metres an hour on 1 July In 2010, the transmission company continued to offer flexibility services for storage in the short term by using the virtual storage concept. At the request of the CREG, the formula used will contribute towards simplifying access to the network for newcomers and small players. Access to the storage facilities is set by the Gas Act on the basis of the market share on the distribution market. No congestion management principle or CMP is therefore necessary. In principle, the capacity can be traded on the secondary market, but there is no supply on the secondary market owing to the lack of available storage capacity. The capacity is offered in SBUs (Standard Bundled Units). Storages users are provided with information about the storage capacity, the injection and emission capacity and parameters relating to the availability of the storage facility. This information is available on a daily basis. 62

64 4. Regulation and operation of the natural gas market H. Developments in terms of market concentration In 2010, a total of fourteen supply companies were operating on the Belgian market. Total natural gas consumption rose to TWh, an increase of 10.6% compared with consumption in 2009 (194.2 TWh). establish the contribution made by the various components to the way in which prices have developed. The components and the relative share in the price charged to the end user are shown in the graph below. Figure 26: IGH-Electrabel household customer The merger between GDF and SUEZ and the fulfilment of the conditions imposed by the European Commission following approval of the merger in 2008 had a profound impact on the way the market developed in 2010 and in particular on the market shares of Distrigas and the GDF SUEZ group on the gas transmission market. With a market share of 52.2%, Distrigas remained the dominant player in ,96% 19,00% Energy Transmission Distribution (not including public offtake) Public offtake Energy tax and VAT The table below shows two major groups, ENI Distrigas and GDF SUEZ. The concentration is measured using the HHI index ,70% 2,37% 51,98% Source: CREG Table 15: Market shares on the transmission system from 2007 to 2010 Prices charged to household end users rose compared with % 2008 % 2009 % 2010 % ENI Distrigas GdF Suez Wingas EDF SPE Other (< 2%) HHI 6,400 5,500 5,200 3,600 I. Mergers and acquisitions Source: CREG The acquisition by Publigaz of all Electrabel shares in Fluxys, as provided for in the agreement concluded on 23 March 2010 between Publigaz and Electrabel and as developed in the buy-sell agreement of 30 April 2010, took place on 5 May Consequently, Publigaz owns a total stake of 89.97% in Fluxys. See also paragraph of this report. J. Price trends Household customers The study (F) CDC-1004 analyses the trend in the price of natural gas for end customers since 2004 so as to Like electricity, following the sharp increase in 2008 and the downturn in 2009 (caused mainly by the economic crisis and its impact on the commodities markets, further strengthened by the surplus supply of natural gas on international markets after the discovery of shale gas and the over-capacity of LNG), natural gas increased again in 2010, without however reaching the 2008 level. In , we also observed a decoupling of natural gas prices from the price of oil. This decoupling proved advantageous during the period for suppliers who buy their natural gas on the spot market, such as Lampiris. The trend in suppliers prices, which varies from one supplier to another, lies behind the increase seen in This increase is, however, partly offset by the fall in transmission tariffs and the reduction in levies. The transmission tariff is 15% lower than in 2009, which corresponds to a fall of 0.24/MWh. The federal contribution and protected customer surcharge levies have fallen by 0.06/MWh. At the request of the Minister for Energy, the Management Board analysed the range of fixed tariffs from suppliers active on the Belgian electricity and gas market 118. The conclusions of this study are set out in paragraph of this report, under the heading Study on the overview of fixed-price contracts on the household electricity and gas market. 117 The HHI index (Herfindahl-Hirschmann Index) is a commonly accepted measurement of the market concentration. It is calculated by squaring the market share of each company competing on a market and adding up the figures obtained. 118 Study (F) CDC

65 4. Regulation and operation of the natural gas market Figure 27: Trend in total natural gas price household customers (T2) /MWh Jan 07 Apr 07 Jun 07 Oct 07 Jan 08 Apr 08 Jun 08 Oct 08 Jan 09 Apr 09 Jun 09 Oct 09 Jan 10 Apr 10 Jun 10 Electrabel Luminus Lampiris Nuon Essent Source: CREG Figure 28: Trend in energy price per supplier household customers (T2) /MWh Jan 07 Apr 07 Jun 07 Oct 07 Jan 08 Apr 08 Jun 08 Oct 08 Jan 09 Apr 09 Jun 09 Oct 09 Jan 10 Apr 10 Jun 10 Electrabel Luminus Lampiris Nuon Essent Source: CREG 64

66 4. Regulation and operation of the natural gas market Moreover, the Management Board also examined the relationship between costs and the prices of importers, retailers and suppliers on the Belgian natural gas market during the time period 119. This study is in line with the studies on the price rises for natural gas and electricity announced by Electrabel and the relationship between the costs and the prices of importers and retailers on the Belgian household and business market for natural gas over the time frame 120. Nevertheless, it aims to be more exhaustive in that the prices and costs of all the players on the liberalised market have been analysed with regard to imports, retail and supplies to household and industrial customers. The study shows that the retail margins and supply margins increased over the time period compared with the period prior to liberalisation. It indicates that the only really competitive market segment seems to be the segment of supply to industrial customers, which is showing a gradual decline in market share of the historical operator in favour of various suppliers. As regards household customers, the study deplores the inertia of most consumers on the one hand, but also the lack of dynamism among most suppliers on the other. With one exception, these suppliers still used the indexation formulas from the captive market and based on oil contributions whereas indexation on the basis of the gas contributions has been more advantageous for customers since the start of Business customers Business customers are seen to experience the same development as household customers because the suppliers price is based on the same parameters Measures aimed at preventing any abuse of a dominant position The decline in the GDF SUEZ stake in the shareholding body of Fluxys and Fluxys LNG was crucial in the fight to avoid abuse of a dominant position in Belgium (cf. paragraph of this report). Liquidity on the wholesale market Given that the Belgian market is one of the markets most connected with its neighbouring countries in Europe, liquidity in Belgium is closely linked to the development of the markets in these countries. The efforts made by the CREG in terms of promoting liquidity are therefore mainly undertaken at a European regional level. Figure 29: Energy price trend per supplier business customer (T4) /MWh Jan 07 Apr 07 Jun 07 Oct 07 Jan 08 Apr 08 Jun 08 Oct 08 Jan 09 Apr 09 Jun 09 Oct 09 Jan 10 Apr 10 Jun 10 Electrabel Luminus Lampiris Nuon Essent Source: CREG 119 Study (F) CDC Studies (F) CDC-704 of 27 July 2007 and (F) CDC-921 of 1 October

67 4. Regulation and operation of the natural gas market Given that the Belgian market is one of the markets most connected with its neighbouring countries in Europe, liquidity in Belgium is closely linked to the development of the markets in these countries. The efforts made by the CREG in terms of promoting liquidity are therefore mainly undertaken at a European regional level. The infrastructure improvements to be brought into service over the next few years will underpin regional interaction. In addition, in 2010 the Management Board finalised the ERGEG study on better practices for gas hub monitoring started in Among other things, the study names the Zeebrugge hub as the only non-regulated hub in Europe. In this respect, Belgium therefore has a considerable amount of ground to make up. Further to the recommendations made in this ERGEG study, the CREG: will work on the installation of a single hub for the Belgian balancing zone. The fact that this situation has arisen is due not only to the de facto monopolistic situation of the hub, but also to the fact that the fragmentation of liquidity on the market must be avoided to promote competition; will continue to argue for the regulator to have an overall view of the hub, the main purpose being to be able to guarantee non-discrimination in terms of access conditions. It is important to take account of the fact that this overall view does not disrupt commercial activities; will endeavour to draw up new rules concerning the rights and responsibilities of each party so as to guarantee that the hub functions efficiently and constantly and that information is circulated as best as possible; will continue to stress the need to adapt the range of services on offer to the needs of the market to a better standard and and to adapt to the best practices that can be found in Europe; will argue in favour of guidelines in the field of transparency and the provision of information concerning the gas hub. The data should be accessible in the same way to all the members of hubs, whether or not they undertake any physical activities. The dependence on the monopolistic position of GasTerra for L-gas supplies is being curbed, which represents major progress in terms of competition. In addition to the initial problem of supply, the analysis conducted in this document revealed a problem of cost control with regard to the extension of conversion facilities and additional flexibility resources. The fewer production resources there are in the Groningen gas field, the more conversion and additional flexibility will be required in The Netherlands. It is difficult to assess the level of the conversion cost which remains acceptable owing to the fact that this cost is an intrinsic part of the transmission tariff in The Netherlands (less than 10% at the moment). In future, strict follow-up and coordination will be required. Finally, the CREG goes on to add that the availability of and access to cross-border capacity at the Hilvarenbeek/Poppel interconnection point are giving cause for concern. Long-term strategic choices will have to be made to ensure adequate firm capacity. In The Netherlands, it will not be possible to make adequate reservations in the long term to be able to maintain the required level of exit capacity for the downstream markets. The results provide a path towards a short-term solution. With this study, the Management Board undertook to demonstrate that owing to its monolithic structure, the L-gas market between The Netherlands, Belgium and France offers the most obvious opportunity to put this cooperation into practice. It will be difficult to continue to defend the inadequate processes resulting in a unilateral reduction in available capacity without taking account of the cross-border effects from a legal perspective once the underlying market requirements have been clearly demonstrated and no alternatives are available, even if these come under a different member state. With regard to the situation within Belgium, in its study (F) CDC936 on the development of a competitive regional market for low-calorific natural gas, the CREG published a new interim analysis of the priority questions linked to the Belgian L-gas market. This analysis shows that the reforms undertaken in The Netherlands seem to provide a response to the issue of the availability of L-gas, both at macroeconomic level (security of supply in Belgium) and as regards ease of availability with regard to newcomers and smaller players. 121 Monitoring Report 2010 on the regulatory oversight of natural gas hubs ( E10-GMM-11-03%20Gas%20Hub%20Monitoring%20Report%202010_final.pdf). 66

68 5. Security of supply 67

69 5. Security of supply 5.1. Electricity Demand Table 17: Breakdown of the installed capacity per type of power station connected to Elia s grid, per type of power station, as at 31 December 2010 The demand of electrical power, that is net consumption plus pumping power and grid losses, amounted to 90.1 TWh in 2007, 90.2 TWh in 2008, 85.9 TWh in 2009 and 90.2 TWh in 2010, i.e. an increase of 4.9% between 2009 and Peak demand remained almost unchanged between 2009 and The table below provides an overview of the power demand and the peak capacity demand on the grids of the TSO and the DSOs during the period Table 16: Power demand and peak capacity demand in Belgium during the period Power demand 122 (GWh) Peak capacity demand (MW) on the grids of the TSO and the DSOs Generation ,109 90,202 85,946 90,200 14,040 13,524 14,139 14,200 Source: Synergrid Electricity flows in Belgium (2010: provisional data) Installed capacity and generated power The composition of the Belgian generation park connected to Elia s grid underwent a number of changes in 2010: 545 MW of generation capacity were decommissioned and 704 MW of additional generation capacity were brought into service. In addition to a series of new cogeneration units as well as the launch of the Knippegroen power station, capacity was increased at two nuclear units in Doel. In addition, Belwind brought into service 55 offshore wind turbines in the second half of 2010, each of which provides a capacity of 3 MW, bringing the total installed offshore capacity to MW. Power station type Installed capacity MW % Nuclear 5, CCGT and gas turbines 4, Conventional power stations 2, including multi-fuel Cogeneration Incinerators Diesel engines Turbojets Hydro excluding pumped storage Pumped storage 1, Onshore wind turbines Offshore wind turbines Biomass Total 15, Source: Elia As regards the volumes of electricity generated, net electricity generation amounted to 85,800 GWh in 2010, compared with 84,724 GWh in The breakdown by type of primary energy of the electrical power generated from installations connected to Elia s grid (including an estimate of auto-generated power used locally) is given in the table below. Table 18: Breakdown of power generated per type of primary energy Primary energy Power generated MWh % Nuclear 2 45,723, Natural gas 2 25,816, Coal 2 5,350, Fuel 2 65, Other auto-generated power 5,073, autoconsumed 1 Hydro and pumped storage 2 1,635, Other 2 2,135, Total 1 85,800, Source: Synergrid, provisional data 2 Source: Elia, provisional data 122 Including estimated auto-generation consumed directly by charges connected to Elia s grid, pumping and losses. As estimated auto-generation consumed directly by charges connected to the distribution networks is not available for For each year, the table provides the amount of power demanded excluding this non-injected auto-generation. 68

70 5. Security of supply Investment projects in the centralised generation park As at 31 December 2010, the investment projects and in generation units were as follows: Planned projects (for which a permit or domain concession application is still under process): 2,502 MW (onshore only) Project authorised, but for which construction has not yet begun: 4,567 MW, including 1,112 MW in offshore wind farms; Projects under construction: 1,406 MW, including 460 MW in offshore wind farms. These projects are also mentioned in paragraph C of this report. Legal powers of authority and legislation development The CREG continues to play a significant role in the area of the security of supply. However, the CREG is not the only party to be involved in this issue, given the Belgian institutional context on the one hand and the distribution of powers of authority between the regulator and the energy administration on the other hand. While the regions have competence to settle the regional aspects of energy, the federal authority remains qualified to address matters whose technical and economic indivisibility requires uniform implementation at national level in the listed cases, i.e. the national plan for the equipment of the electricity sector, the nuclear fuel cycle, major storage infrastructures, the transmission and production of energy and the tariffs. In addition, the federal authority can settle everything that comes under the residual powers, which means that when a matter cannot be linked to one of the powers attributed to the regions, this matter comes under the federal scope of authority. And so in principle new energy sources fall in the regional scope of authority. However, the federal authority remains qualified in the North Sea and for the wind farms constructed in this zone in particular, owing to the limitation of the territorial powers of the regions to the territory of the region. The powers of the federal authority are assumed either at the level of the federal administration, which is the Directorate General for Energy, or at the level of the regulator, the CREG. The construction of new power generation facilities is subject to the prior granting of an individual permit issued by the Minister for Energy at the proposal of the CREG, which is responsible amongst other things for examining applications (see paragraph above). Irrespective of the type of generation unit, the criteria for granting the permits basically stem from technical and financial considerations. From a technical perspective, it consists in checking whether the project for which a permit is requested will contribute towards fulfilling public service obligations and compliance with the adopted guidelines concerning the choice of primary sources and the technology to promote. The project will also need to comply with a series of technical requirements and be environmentally friendly. The applicant will have to provide proof of the required technical capabilities with a view to the construction and operation of the generation unit, but also its dismantling. The applicant will also have to have sufficient economic and financial resources to successfully complete its project. All these criteria for the permit to be awarded are intended to enable the Minister for Energy to satisfy himself that the project is viable. Moreover, to date no prior permit or notification procedure is in place for decommissioning old generating units. However, there are many such units, and this is hampering the renewal of the generation park. Domain concessions with a view to the construction and operation of power generation facilities using water, currents or wind in marine environments (wind farms) are granted by the Minister for Energy after obtaining the opinion of the CREG. As regards the long-term supply perspectives, the CREG is consulted in the context of the study on the outlook for electricity supplies, the so-called prospective study. The CREG also has the power to advise on the draft plan to develop the transmission system put forward by Elia. This development plan covers a period of ten years and is revised every four years. If the CREG finds that the investments planned here do not allow the TSO to meet the capacity requirements adequately and efficiently, the Minister for Energy can require the latter to adapt the plan. The CREG also has the power to approve the method used to assess the primary, secondary and tertiary reserve capacity, which contributes towards ensuring the security, reliability and efficiency of the grid in the control area. Similarly, it is entrusted with the task of approving the market operating rules intended to offset 15-minute imbalances. Finally, the Electricity Act provides for several support measures, with a focus on the promotion of renewable energies. For instance, the King has put in place a mechanism of green certificates for green energy generated by wind farms in the North Sea. Elia has to purchase these green certificates at a minimum price. The same obligations apply to Elia for green certificates issued by the regional authorities, although these cannot be exchanged for those issued at federal level. In addition, the act stipulates that Elia is to finance one-third of the cost of the submarine cable intended for the wind farms in the North Sea, with a maximum amount of 25 million for a project involving 216 MW or more. This funding of 25 million is reduced proportionally when the project involves less than 216 MW. The Act also provides for a support mechanism in favour of 69

71 5. Security of supply holders of domain concessions, whose production gaps are greater given the uncertainties inherent to wind as a source of energy. Depending on the direction of the gap, Elia has to buy from or sell to these holders the proportion of energy corresponding to a percentage rate of the production gap. Finally, support measures are provided for in the event of the withdrawal of the domain concession for reasons other than negligence on the part of the concession holder Transmission grid infrastructures Investments a) Development plan The TSO has to draw up a new plan for the development of the electricity transmission grid in collaboration with the Directorate General for Energy and the Federal Planning Bureau. The draft development plan has to be submitted to the CREG for an opinion. This plan covers a ten-year period and has to be updated every four years. It contains a detailed estimate of the transmission capacity needs. In addition, the development plan defines the investment programme to be implemented by the TSO and takes into account the need for adequate reserve capacity and projects of common interest defined by the institutions of the European Union in the field of trans-european grids. In this context, the Management Board issued an opinion on Elia s draft development plan 123. In its opinion, the Board draws attention to a number of shortcomings in the plan, including the fact that it fails to cover replacement investments and makes virtually no mention of the estimated investment cost or alternatives. Also it fails to contain a concrete and quantified roadmap to create an offshore grid, nor does it contain sufficient investments to jointly connect all the known projects for new generation facilities at the same time. b) Main investments in the transmission grid In 2010, RTE, the French TSO, and Elia installed the second 225 kv aerial three-phase circuit on an existing 15 km electrical line linking Moulaine (France) and Aubange (Belgium). Thanks to the use of a new type of electrical conductor, the capacity transmitted per three-phase circuit can be increased by more than 20%. This new type of conductor was not only used for the new set of cables, but also for the existing one. According to Elia, this investment increases the exchange capacity between France and Belgium by 10% to 15%. In addition, a new underground 150 kv cable has been laid between the Blauwe Toren and Bruges substations as part of the measures to increase capacity between the coast and inland regions of the country. The main development of the transmission grid for the future is the Stevin project planned by Elia. This consists of extending the 380 kv grid between Zomergem and Zeebrugge. This grid reinforcement enables Elia to meet three needs: it carries the power generated by the offshore wind farms to the interior of the country; it creates the conditions for a new interconnection of the Belgian grid by a submarine link with the United Kingdom. This project is currently being studied. In the longer term, Elia is also considering expanding its interconnections via the North Sea to gain access to the sustainable (renewable) energy mix coming mainly from northern Europe; thanks to this extension of the 380 kv grid towards the coast, it improves the security of the electricity supply in western Flanders and enables the continued economic development of the port of Zeebrugge and the surrounding area, which constitutes a strategically important growth centre. The timing of this project depends largely on the length of the various permit procedures needed for the construction of the project and the way they progress. These are scheduled to be completed by the end of The actual work could then start in early 2013 to be completed by the end of Grid security A substantial proportion of the physical energy flows comes from cross-border transits of electricity crossing the Belgian grid. According to Elia, physical transits accounted for approximately 8.0 TWh in 2010, an increase of 1.8 TWh compared with As in previous years, the trend in non-nominated flows varies with the seasons. In 2010, these flows tended to run from North to South between January and May and between October and December. During the summer period (June-September) the trend shifted from South to North. At their peak, these flows reached approximately 2,442 MW from North to South and approximately 2,059 MW from South to North Opinion (A) CDC-994.

72 5. Security of supply Generally speaking, non-identified flows can now be limited by the phase-shifting transformers with which all the interconnections on the northern border have been equipped since the end of The peaks observed are usually due to the non-availability of a phase-shifting transformers or restrictions in the surrounding grids. For example, on 6 June 2010, the Zandvliet phase-shifting transformer was out of service as part of the BRABO project (development of the grid in the port of Antwerp). On that day, the non-nominated flows went from South to North, up to over 2,000 MW. These situations illustrate the fact that preventive solutions dealing with non-identified flows are increasingly complex and that the robustness of the grid is weakened in these cases. Certain possible incidents lead to potential problems which have not been encountered hitherto. The situations are constantly from one hour to the next and depend on a series of parameters that vary just as much: exchange programmes, non-identified flows linked among other things to wind-generated power, the generation park, etc. To cope with these situations, coordination with the neighbouring TSOs again appears to be essential. Only solutions that have been jointly examined and implemented make it possible to keep the grid security under control. Similarly, the modification of transmission capacities will have a real impact only if coordinated at international level (a Belgium- Netherlands modification has little impact if there is no Netherlands-Germany modification). Coreso, the first regional technical coordination centre common to several TSOs was created on 19 December 2008 by the French and Belgian TSOs, RTE and Elia. Its activities, which got underway in Brussels in early 2009, will contribute to reinforcing the electricity security in Europe. The National Grid (UK) became a member of Coreso in mid-2009 and Terna (Italy) and 50 Hertz (northern and eastern Germany) became members in late The territory monitored by Coreso has therefore expanded considerably Gas Demand In 2010, total natural gas consumption amounted to TWh, i.e. a considerable rise (+ 10.9%) compared with consumption in 2009 (194.2 TWh). This increase is due entirely to a strong recovery in industrial demand for natural gas (+ 19.7%), which almost reached the level of consumption in 2008, and to a considerable increase in consumption on DSOs (+ 15.5%). The explanation for the peak in natural gas consumption among small consumers is due to the very harsh winter which was felt both at the beginning and at the end of 2010, resulting in a 22% increase in estimated heating requirements. Table 19: Breakdown per sector of the Belgian demand for natural gas between 2001 and 2010 (in TWh) Sectors /2009 Distribution % Industry % (direct customers) Electricity generation % (centralised park) Total % Source: CREG 71

73 5. Security of supply Figure 30: Development of the natural gas consumption per sector during the period (1990 = 100), corrected for climate changes Household and equivalent Industry Electricity generation total Source: CREG In 2010, it appears that the share of H-gas expressed as a percentage has slightly fallen to 73.6% (73.8% in 2009), the balance (26.4%) being covered by L-gas. This is due to the development of the market segments, as illustrated in the graph below: a sharp rise in the distribution networks consumption (+ 15.5%) combined with the quasi-stable consumption of gas used for electricity generation (-0.3%). Figure 31: Breakdown per sector of the Belgian demand for H-gas and L-gas in 2009 and Offtake (TWh) Total H L Total H L Total H L Public distribution Industrial customers Electricity generation Source: CREG 72

74 5. Security of supply Forecasts for natural gas demand in Belgium are shown in Figure 32. These are obtained by establishing the sum of the final demand in the household sector, the tertiary sector, the industry and the demand for natural gas for the generation of electricity. As such, these figures relate to trends that have been normalised for temperature. Figure 32: Forecasts demand for natural gas in Belgium until 2020 (GWh, normalised t, H+L) 300, , ,000 GWh 150, ,000 50, H+L H L Source: CREG According to the scenario planning, natural gas demand in Belgium will rise to GWh in In the meantime, the forecasts show that demand for natural gas in Belgium will reach 213,180 GWh in The forecasts are based on the irrigation zones for H-gas and L-gas as they were in 2008, and without any intervention as regards the conversion of L-gas customers to H-gas. According to the scenario planning, natural gas demand in Belgium will rise to 183,516 GWh in 2020 for H-gas and 59,659 GWh for L-gas. In the meantime, the forecasts show that demand in Belgium will reach 158,972 GWh for H-gas and 54,208 GWh for L-gas in Supply In 2010, a total of fourteen supply companies were operating on the Belgian market. Total natural gas consumption rose to TWh, which represents an increase of 10.9% compared with consumption in 2009 (194.2 TWh). The GDF-SUEZ merger and the fulfilment of the conditions imposed by the European Commission further to the approval of the merger in 2008 had a profound impact on the development of the market in 2010 and in particular on the market shares of Distrigas and the GDF SUEZ group on the gas transmission market. With a 52.1% market share, Distrigas remained the dominant player in

75 5. Security of supply Figure 33: Market shares on the transmission grid in 2010 RWE Supply & Trading Netherlands B.V. 1% RWE Energy Belgium B.V.B.A. 1% Lampiris S.A. 1% GDF Suez 18% Eneco Energy Trade B.V. 0% Électricité de France 1% Measures in emergency situations n High-calorific natural gas market Natural gas reserve Vattenfall Energy Trading Netherlands N.V. 1% Statoil ASA 2% SPE 9% Electrabel S.A. 9% WINGAS GmbH & Co. KG 5% Distrigas S.A. 52% E.On Energy Trading SE 0% E.On Ruhrgas AG 0% Source: CREG Under the TSO s investments plan, part of the creation of capacity of the rtr2/vtn2 pipeline (see paragraph below) is taken over by the increase in the reserve linepack for the management of incidents from 1,150 k.m³(n) to 1,750 k.m³(n). The reserve linepack makes it possible to overcome the biggest fall in supply flows, for example a technical shutdown of 2 to 2.5 hours in extreme peak periods. This is a minimum period in which it is presumed that all the flexibility resources for the normal network balancing have already been used which means they are no longer available to be used for incident management. Outside peak periods, the transition period increases and part of the normal flexibility resources can be dedicated to incident management. From an incident management perspective it should ideally be made possible that an incident (starting from the worstcase scenario, that is the largest supply flow) is dealt with for a minimum of six hours to give the market a minimum amount of time to reorganise its own supply portfolios and deliveries. It is difficult for the market to be reorganised in a shorter period of time owing to the minimum delays for new nominations and renominations. This means that the TSO should make provision for incident resources for a minimum volume of 4,800 k.m³(n). In this respect, the TSO should ideally take into account an additional linepack (gas in pipeline) in its investments plan. Specific European legislation for incident management is now in force and will have to be taken into account in the investment plans. This European Regulation No 994/ includes a major modification in as much as specific standards are imposed both as regards the availability of natural gas and as regards the infrastructure. Reserve capacity As of 2010, the entry capacity will be sufficient in accordance with the n-1 precautionary principle. In 2012, the planned entry capacity will amount to 5,810 k.m³(n) whereas the total entry capacity for H-gas, including supplies to L/H conversion facilities) will amount to 4,067 k.m³(n)/h. The difference of 1,743 k.m³(n) /h is more than sufficient to deal with a shutdown of the most important entry point, the LNG terminal. It is recommended that the application of the infrastructure standards imposed by European Regulation 994/2010 should be clearly identifiable in the investment plan. n Low-calorific natural gas market Incident management on the natural L-gas market is problematic due to the fact that gas is supplied via a single route, the limited buffer possibilities in pipelines, the limited possibilities for the conversion of H-gas to L-gas by the injection of nitrogen, and the lack of L-gas storage facilities on the Belgian territory. A form of incident management is necessary however, given the size and nature of the Belgian L-gas market. The Brussels-Capital Region and the city of Antwerp are entirely dependent on L-gas for instance. It is recommended that a specific incident policy is developed for the L-gas market. Once again, the terms and procedures governing the use of L-gas underground storage capacity in France have to be examined more closely in consultation with all the stakeholders involved. The following table provides a general assessment of the existing resources in case of an emergency situation European Parliament and Council Regulation 994/2010 of 20 October 2010 concerning measures to safeguard security of the natural gas supply and repealing Council Directive 2004/67/EC (Official Journalof the European Union of 12 November 2010).

76 5. Security of supply Table 20: Existing tools in the event of an emergency situation Incident management High-calorific natural gas market Insufficient reserve capacity in accordance with the n-1 principle until the end of As of 2012, sufficient reserve capacity. Reserve natural gas of the transmission grid operator insufficient to overcome a major incident for six hours. An alternative is to rely on assistance via transit / Zeebrugge hub. Need for an operational procedure and regulation for incident management. Low-calorific natural gas market Problematic because there is one route and one source. A technical incident on the import line during peak time immediately results in a crisis situation with the activation of a crisis plan: customer disconnection. Need for operational procedure for incidents management. Examination of the use of the L-gas storage site in France and imports from France. Source: CREG n New European regulation A new European regulation deals with the issue of the security of supply 125. This regulation, which entered into force on 2 December 2010, imposes specific standards for the availability of natural gas and infrastructures. As regards L-gas, a regional approach is needed for the proper application of the regulation. Cooperation with The Netherlands and possibly other countries consuming L-gas (France and Germany) will be necessary for an appropriate management of incidents Investment Storage capacity extension As part of the gradual extension of the underground storage capacity in Loenhout, the useful storage volume has been increased from 650 million of cubic metres of natural gas in 2009 to 675 million cubic metres in The last provisional phase will be undertaken in 2011, increasing the useful storage volume to 700 million cubic metres of natural gas. Use of the storage capacity has been made more flexible by increasing the emission capacity and the injection capacity. Reinforcement of Northern Limbourg In 2010, a major extension of the existing H-gas pipeline was undertaken from the Dilsen entry point to Lommel, in a territory mainly supplied by Dutch L-gas. This H-gas pipeline runs from Lommel to Tessenderlo via Ham. This connection will supply the new CCGT electric power station at the Tessenderlo Chemie site. In addition, it will enable customers to switch from L-gas to H-gas in the crossed region, first and foremost for industrial customers along the Albert canal. To continue to guarantee the security of supply, the pipeline from the Dilsen entry point has been reinforced locally. rtr2/vtn2 The laying of the rtr2/vtn2 pipeline in parallel to the existing bi-directional rtr1/vtn1 pipeline along a stretch of almost 170 km between Eynatten and Opwijk is the main achievement of This pipeline has been laid in response to the market demand for over 10 billion cubic metres in additional capacity for cross-border transactions between the Eynatten, Zeebrugge and Zelzate interconnections. This gives a further boost to access to the Zeebrugge hub and it will be possible to supply the Belgian market more easily from the East. In this respect, it has also been made possible since 1 October 2010 to physically export as well as to import natural gas via the existing interconnection with The Netherlands at Zelzate. This is a major achievement for the security of supply. Moreover, it is entirely in line with European Regulation N 994/2010 which entered into force in December 2010 with a view to establishing bi-directional interconnections by 2 December These achievements are fully in line with the plan aimed at making Belgium the crossroads for natural gas in North- Western Europe. Reinforcement of North/South axis The North/South project is the result of a market consultation coordinated by Fluxys and the French TSO, GRTgaz, held over the time frame under the supervision of the CREG and and the French regulator (CRE) supervision. This Open Season gauged market interest for new transmission capacities from border to border crossing Belgium towards France. In this context, fourteen grid users concluded contracts of at least ten years with Fluxys for new capacities from Zeebrugge, Fouron-le-Comte or Eynatten, towards Blaregnies. The new capacities cover a total of 10 billion cubic metres per year. The additional compression capacity needed for this North/South project is planned in Winksele and Berneau. 125 Regulation (EU) 994/2010, cf. note

77 5. Security of supply The additional compression in Berneau is planned by the end of 2011 and will make it possible to carry additional natural gas flows from The Netherlands to Blaregnies. The additional compression in Winksele on the rtr/vtn pipeline is planned by the end of 2012 and amongst other things will, make it possible to move from three balancing zones to a single national balancing point for the H-gas market. It may be necessary to lay a new pipeline of approximately 125 km between Winksele and Blaregnies, but possible rearrangements in the grid users border to border contracts portfolio could make the decision on the new pipeline pointless by the end of Open Season on transmission capacity from France to Belgium The first non-binding phase of a market consultation process that gauges the market s interest in the transmission capacity from France to Belgium was completed in This consultation was launched further to the possible construction of an LNG terminal in Dunkirk intended mainly for international trade in Zeebrugge and the Belgian market. This market consultation revealed sufficient interest for a new pipeline to be laid from Dunkirk to Zeebrugge by means of a new interconnection point in the Furnes region. However, the binding phase will not begin until the initiator, EDF, decides whether to build a new LNG terminal in Dunkirk. As at 31 December 2010, after numerous postponements, a decision was still awaited. The new connection could result in an increased liquidity on the market by coupling the Zeebrugge hub with the French PEG Nord spot market, not to mention the synergies with the Zeebrugge LNG terminal. The CREG conducted a study into this project (Study (F) CREG-945). Open Season on transmission capacity to the Grand Duchy of Luxembourg In the second quarter of 2009, Fluxys launched an Open Season for capacity between Belgium and the Grand Duchy of Luxembourg. This Open Season closed at the end of February 2010 and resulted in a sum of binding requests amounting to a total of 172,000m³/h for the time frame. The capacities reserved as of 2015 are in line with expectations and will give rise to limited investments Security of supply standards Virtual storage service In the past, on repeated occasions the CREG has expressed its concerns over the limited supply of flexibility services for storage in general and the lack of short-term storage services in particular. In order to fulfil its undertakings in this respect, the TSO drew up a proposal for short-term services based on the virtual storage concept. The CREG asked Fluxys to slightly adapt the proposed allocation rules so that they more effectively meet the needs of grid users with limited market share and those of potential new entrants on the market. The new virtual storage concept, with the exception of details of the allocation rules, was explained to grid users (active and non-active) at a shippers meeting held on 8 May The process of optimising the allocation rules continued under the working group consultation between representatives from the CREG and Fluxys. The initial entitlement to which virtual storage user can lay claim is calculated on the basis of MTSR rights on the H-gas grid that the user has subscribed. The formula used to calculate the allocated entitlement takes into account the CREG s concern to facilitate access to the network for new and small actors. The virtual storage service was included in the indicative programme for storage services. Dudzele peak shaving plant The Dudzele peak shaving facility interrupted its activities on 1 July 2010 owing to the unduly low interest from the market, even in the medium term. The facility offered a peak storage capacity of 59 million cubic metres of natural gas and enabled the market to subscribe to an emission capacity of 360 m³(n)/h. There are obviously sufficient interesting alternatives for the market to purchase flexibility or make use of peak storage capacity abroad. LNG terminal In 2010, seven Q-Flex LNG tankers were unloaded in Zeebrugge and truck loading contracts were concluded. Moreover, Fluxys LNG loaded small LNG tankers. The shiploading and truck-loading services which were hitherto relatively underdeveloped are now starting to expand. A problem with the allocation of capacity intended for the Grand Duchy of Luxembourg occurred for the time period. Following the involvement of the CREG in this case, discussions were held between the shippers concerned and the capacity allocation problem was resolved on a negotiated basis between the shippers. 76

78 6. The CREG 77

79 6. The CREG 6.1. The assignments of the CREG 6.2. The Bodies of the CREG In a preliminary ruling (ruling No 130/2010 of 18 November 2010), the Constitutional Court declared that it is compatible with the Constitution to attribute to the CREG, which is not managed directly by the executive power, prerogatives of administrative authority such as monitoring the accounts of companies in the electricity sector or issuing administrative fines. More specifically, the Court decided that the lack of hierarchical control or administrative supervision over the CREG is not contrary to the Constitution in that the CREG is an administrative authority which, while having a significant degree of autonomy, is nevertheless subject to monitoring both by the courts of law (Council of State/judicial courts) and by Parliament (its budget requires approval, its assignment and method of operation are defined by law, its annual report is passed on to the legislator and the competent minister has parliamentary responsibility). The Court added that the fact that the CREG fulfils its assignments with a high level of autonomy results from the requirements of European Union law, which has gradually become more explicit in this area. Moreover, over the course of the year 2010, the chairman, the directors and sixteen members of staff at the CREG were appointed inspectors vested with the powers of authority of officers of the judicial police They have been entrusted with the task of seeking out and establishing, across Belgium as a whole, infringements of certain provisions of the Gas and Electricity Acts, as well as the implementing decrees of these Acts. The individuals in question took an oath before the Minister for Justice and will work under the supervision of the public prosecutor attached to the Court of Appeal in Brussels. Finally, with a view to the expiry of the period allowed for the transposition of the third energy package on 3 March 2011, the Management Board presented two studies on the legislative amendments required to implement the reinforcement of its powers. For a more in-depth discussion of these studies, please refer to paragraph 2.7 of this report The General Council Isabelle Callens, Chairman Marc Leemans, Vice-Chairman In 2010, the chairmanship of the General Council was assumed by Ms Isabelle Callens and the vice-chairmanship by Mr Marc Leemans. The General Council met eight times in An extraordinary meeting was dedicated to the presentation of study 986 on the amendments to be made to the Electricity Act in November (cf. paragraph 2.7 of this report). The General Council unanimously approved the CREG draft budget for 2011at its plenary meeting on 27 October Thanks to the permanent presence of a representative of the Minister for Energy, the work of the General Council was able to focus on the most pressing aspects and periodic updates were provided of the government s concerns regarding gas and electricity. The many current issues broached by members made it possible to keep the Minister for Energy informed of the concerns of the General Council. The General Council was also informed of the positions adopted by the Management Board during hearings in the Chamber of Representatives or at press conferences. In 2010, the General Council put forward five opinions, all of which are available to be consulted at the CREG website. Various studies undertaken by the Management Board as well as questions asked by the Minister for Energy were prepared and discussed in various working groups before being submitted to the General Council. 1. Opinion 45 on Management Board study 945 concerning the possible connection between the LNG terminal in Dunkerque and the Belgian natural gas transmission system ( functioning of the gas market working group). In this opinion, the General Council upholds the conclusions reached by the Management Board (cf. paragraph of this report) and also considers that: Royal Decree of 25 June 2010 appointing members of the Management Board and members of staff of the Commission for Electricity and Gas Regulation as officers of the judicial police (Belgian Official Journalof 23 July 2010).

80 6. The CREG a) there is a need to keep an eye on healthy competition between the Zeebrugge terminal and the future Dunkerque terminal, particularly if the latter were to be entirely released from regulated access rules; b) the two terminals allow major synergies to be achieved by increasing the flexibility of the grid and diversifying sources of supply; c) an international market study (Open Season), organised jointly by Fluxys, GRTgaz (natural gas TSO in France), the CRE (French energy regulator) and the CREG, offers the best guarantees for an appropriate decision; d) the new cross-border connection may not, under any circumstances, be a direct pipeline and must be connected to the interconnected grid in France and in Belgium; e) the connection gives rise to a physical bi-directional interconnection between the connected networks, provided that this has socio-economic advantages for grid users; to do so an initial, inevitable condition will be to work out a solution with regard to odorisation and pressure requirements so that natural gas can actually run from France to Belgium; f) the connection must be covered by the regulated system, both as regards access to the grid and tariffs; g) the new connection must contribute towards efficient development in terms of costs and the operational management of the transmission system; therefore, the impact of the connection on existing activities (swapping or netting, backhaul) must be analysed. In this opinion, the General Council also calls upon the French and Belgian governments and regulators to follow these recommendations as closely as possible when approving and authorising the connection between the French and Belgian natural gas transmission system. 2. Opinion 46 on Management Board study 929 concerning the possible impact of the electric car on the Belgium electricity system (ad hoc working group). The ad hoc working group decided from the very beginning not to analyse the Management Board study in detail (see paragraph of this report), but to make a summary of the general vision on the issues. In this opinion, the General Council asks the Management Board to continue to reflect on the matter of the operation of the Belgian market in light of the possible large-scale introduction of electric vehicles in Belgium and stresses the importance of links between the use of electric vehicles, the networks and the generation of electricity. Moreover, electric vehicles could facilitate the integration of renewable energy sources. The General Council s opinion does not in any way overcome the need for wider reflection in society on the issue of mobility and intermodality in general and the importance of the electric vehicle compared with other alternatives (hydrogen, etc.), so as to make the most of the opportunities provided by electric mobility. The General Council calls for the development of a vision for Belgium and for Europe as a whole. 3. Opinion 47 on Management Board study 944 concerning the initial estimate of the cost of the measures referred to in Article 7 of the law of 29 April 1999 on the organisation of the electricity market ( renewable energies working group). At its meeting on 20 January 2010, the General Council asked the Management Board to conduct a study into the total cost of the support provided for offshore wind farm producers in Belgian waters. In its study (F) CDC-944, the Management Board provided an initial response to this matter (cf. paragraph C.c of this report). The General Council recalled that it had already issued an opinion in May 2009 on the draft directive of the European Parliament and the Council on the promotion of the use of energy from renewable sources. This Opinion 43 is available on the CREG website. In Opinion 47, the General Council makes numerous recommendations, relating in particular to: the selection of the optimal mix of renewable energy sources to reach the targets, taking into account all the social costs and benefits; the optimisation of support mechanisms once the optimal mix of renewable energy sources has been determined; the limitation of support measures to the additional cost compared with the market value of energy produced using renewable sources; the cost of green certificates, the cable and production deviation; and the revenue for the payment of the support mechanism. 4. Opinion 48 on Management Board study 947 concerning the Belgian short-term electricity market Belpex and the use of capacity at the interconnections with France and The Netherlands in 2009 (cf. paragraph of this report) ( functioning of the electricity market working group). In this opinion, the General Council: a) notes that the market players have relatively positive experiences with the price mechanism on Belpex and with the coupling of the trilateral market. The market coupling has certainly contributed towards greater convergence on the Dutch, French and Belgian electricity markets. However, it can only lead to full market integration provided that congestion on the market can be limited so that it no longer (or virtually any longer) has an impact on the formation of market prices. The General Council is calling on the regulators, TSOs and exchanges to seek out solutions together that could lead to full market integration; 79

81 6. The CREG 80 b) notes that price peaks have occurred again and asks the regulators and, if necessary, the competition authorities in the countries concerned to analyse these events in depth and if necessary take steps to prevent such price peaks; c) as regards market shares, the General Council notes that the level of concentration on Belpex has decreased gradually over the past few years. Nevertheless, concentration certainly remains high on the buyer s side, and this worries the General Council, which therefore requests rigorous monitoring by the regulators; d) notes that the market players also have a relatively positive experience with the allocation mechanisms at the borders. In order to achieve even better results, the General Council is inviting all the TSOs in the CWE region (Central West European region), with regard to their own networks and cross-border capacities, to: - use the existing capacities even better; in addition to the security of supply, system operators should see better market functioning as one of their priority objectives; - find the most balanced distribution possible of long/ short-term capacities depending on the market needs; - invest quickly if necessary, in additional capacity to reduce congestion, speed up price convergence and hence facilitate market integration, as is the case with the Moulaine-Aubange line; e) wishes to have a clearer view of the exact destination of congestion rents by the various TSOs concerned; f) also hopes that it will be possible to extend the coupling between Belgium, The Netherlands and France to Germany very quickly. In this opinion, the General Council also invites the Management Board to continue to monitor the operation of the Day-Ahead and the Intraday market in Belgium, the coupling of these markets with neighbouring markets and the use of capacity on the interconnections in conjunction with the other transmission system operators and regulators concerned. 5. Opinion 49 on Management Board study 874 concerning natural gas supply needs, security of supply and infrastructure development ( functioning of the gas market working group). In addition to the affordability of electricity and natural gas for end consumers, the General Council remains very concerned about the security of supply. While an opinion on the security of supply for electricity was issued in 2009 (this opinion 42 is available on the CREG website), no similar opinion had so far been put forward with regard to natural gas supplies. This is why the General Council wished to put forward the following recommendations about the security of natural gas supply, given a fortiori the importance of natural gas in the fuel mix of the country, including for the generation of electricity. a) The General Council feels that it is important to undertake a long-term analysis of needs in terms of natural gas and infrastructure for natural gas for the Belgian market on a regular basis. This is the best way to ensure that the necessary resources are assigned in time so as to provide additional volumes and infrastructure. The General Council therefore calls upon the competent authorities to draw up the prospective study on the security of natural gas supply as quickly as possible (the last indicative plan dates from 2004). b) In the meantime, the General Council refers to the analysis and recommendations made in CREG study 874 on natural gas supply requirements, security of supply and infrastructure development (this study is available on the CREG website); c) The General Council notes that to date, on the liberalised market, no specific standards have been imposed in Belgian legislation as regards security of natural gas supply. It therefore insists on the fact that the existing situation should be compared with the requirements. It also stresses that future European regulation on the security of natural gas supply will impose binding standards in terms of natural gas infrastructure and supply. This regulation will be directly applicable in the Belgian legal system; d) Concerned, among other things, about finding a balance between the infrastructure needed to ensure maximum security of supply on the one hand and the competitiveness of natural gas as an energy vector on the other, the General Council asks to be involved in the interpretation of this regulation in Belgium; e) As regards the high-calorific gas market, the General Council does not question the investments planned by Fluxys, but does make comments about the feasibility of the timing of these projects. For instance, refraining from issuing permits can cause delays and hence hamper access to the market and threaten the security of supply. The General Council therefore stresses the need for a permits policy based on the general interest and on the efficient monitoring of the rate at which projects underway are implemented; f) Low-calorific natural gas has played a major role in promoting the use of natural gas in Belgium and still makes a substantial contribution to final consumers in Belgium in terms of the flexibility of natural gas supplies. However, the General Council is concerned about the availability of the required level of long-term firm exit capacity at Hilvarenbeek, as specified in Management Board study 936 (this study dating from January 2010 is available on the CREG website). In this context, it insists on a coordinated cross-border approach between the countries concerned. In addition, the General Council stresses that, despite the recent developments in

82 6. The CREG the Dutch market model which have prompted a number of new L-gas suppliers to enter the Belgian market, competition on the low-calorific natural gas market is still more limited than that on the high-calorific natural gas market at the moment. The General Council is aware of the fact that the accessibility and appeal of the Belgian market with a view to bringing in flows of natural gas (both for import and for export) are key elements in the security of supply, as well as the control over demand for energy. It is therefore asking the system operator, the authorities and the regulator to pay particular attention to these issues and, by working out an adequate investment and regulation policy, to continue the development of Belgium in its role as a hub for natural gas in Europe. Table 21: Members of the General Council as at 31 December Federal government Regional governments Representative employees organisations sitting on the National Labour Council Representative employees organisations sitting on the Council for Consumption Organisations for the promotion and protection of the general interests of small-scale users Representative organisations of industry, and the banking and insurance sector sitting on the Central Economic Council Representative organisations of the crafts, small and medium-sized trading companies and small-scale industry sitting on the Central Economic Council Actual members DUJARDIN Davine ANNANE Jihanne CHAHID Ridouane ROOBROUCK Nele DE COSTER Nicolas BIESEMAN Wilfried AUTRIQUE Henri JACQUET Annabelle LEEMANS Marc VERHUE Maureen PANNEELS Anne VERCAMST Jan WILLEMS Tom VAN DAELE Daniel ADRIAENSSENS Claude DOCHY Stéphane CALLENS Isabelle CHAPUT Isabelle VAN der MAREN Olivier ERNOTTE Pascal VANDEN ABEELE Piet Deputy members DEWISPELAERE Sophie NIKOLIC Diana HOUTMAN Eric BOEYKENS Marc ONCLINX Philippe TANGHE Martine BOHET Maurice DECROP Jehan VAN MOL Christiaan SKA Marie-Hélène DE MOL Philippe BAECKELANDT Filip JONCKHEERE Caroline STORME Sébastien SPIESSENS Eric RENSON Marie-Christine DE BIE Nico VANDERMARLIERE Frank CALOZET Michel AERTS Kristin WERTH Francine VAN GORP Michel Major electricity consumers CLAES Peter EELENS Claire Major natural gas consumers BRAET Luc de MUNCK Laurent Producers who are members of FEBEG (the Belgian Federation of Electricity and Gas Enterprises) HERREMANS Jan MAERTENS Paul DE GROOF Christiaan de VILLENFAGNE Aude Electricity producers renewable energy sources LAUMONT Noémie BODE Bart Electricity producers cogeneration STEVENS Tine MARENNE Yves Industries that generate electricity for their own needs BÉCRET Jean-Pierre ZADORA Peter Distribution system operators - INTERMIXT HUGE Jacques DECLERCQ Christine HUJOEL Luc DEBATISSE Jennifer PEETERS Guy VERSCHELDE Martin - INTER-REGIES DE BLOCK Gert HOUGARDY Carine TSO for electricity FONCK Pascale GERKENS Isabelle TSO for natural gas TUMMERS Paul DESCHUYTENEER Thierry Holders of a supply permit for natural gas who are members GILLIS Michaël VAN GIJSEL Gert of FEBEG VAN NUNEN Carlos DE BUCK Hilde Environmental associations VAN DYCK Sara TURF Jan VANDE PUTTE Jan VANDEBURIE Julien Holders of a supply permit for electricity who are members HEYVAERT Griet GODTS Annemie of FEBEG VAN BOXELAER Kathleen WYVERKENS Herman Market operator for the exchange of energy blocks proposed VANDENBORRE Catherine LOOS Rob by BELPEX Chairman of the CREG Management Board POSSEMIERS François Source: CREG 127 The list of members of the General Council was modified three times in 2010 by Ministerial Decree of 1 March (Belgian Official Journalof 19 March 2010), 30 March (Belgian official journal of 7 April 2010) and 7 June (Belgian Official Journalof 22 June 2010). 81

83 6. The CREG The Management Board François Possemiers, Chairman Guido Camps, Director Bernard Lacrosse, Director Dominique Woitrin, Director The Management Board is responsible for the operational management of the CREG and undertakes everything that is necessary or useful for the fulfilment of the assignments entrusted to it by the Electricity Act and the Gas Act. The chairman and the three directors who make up the Management Board deliberate as a college in accordance with the usual rules on deliberating meetings. The Management Board is chaired by Mr François POSSEMIERS, who is also responsible for the management of the CREG. The three directors are Mr Guido CAMPS, who is in charge of prices and accounts monitoring, Mr Bernard LACROSSE, who heads the administrative directorate and Mr Dominique WOITRIN, who is in charge of the technical operation of the electricity and natural gas markets. The members of the Management Board were appointed by Royal Decree on 15 January 2007 for a six-year term of office. 82

84 6. The CREG Table 22: Directorates and staff of the CREG as at 31 December 2010 Chairmanship of the Management Board POSSEMIERS François DEVACHT Christiane FIERS Jan JACQUET Laurent LOCQUET Koen ROMBAUTS Josiane Directorate for the technical operation of the markets WOITRIN Dominique GOOVAERTS Wendy VAN KELECOM Inge GHEURY Jacques MARIEN Alain MEES Emmeric VAN ISTERDAEL Ivo CLAUWAERT Geert CUIJPERS Christian DE WAELE Bart FONTAINE Christian PONCELET Yves VAN HAUWERMEIREN Geert FILS Jean-François LUICKX Patrick TIREZ Andreas Directorate for price and accounts monitoring CAMPS Guido FELIX Kim de RUETTE Patrick LAERMANS Jan WILBERZ Eric ALLONSIUS Johan CORNELIS Natalie DEBRIGODE Patricia DUBOIS Frédéric JOOS Benedict MAES Tom BARZEELE Elke COBUT Christine DE MEYERE Francis HERNOT Kurt KUEN Nicolas LIBERT Brice PHILIPPE Quentin PIECK An BROODS David MARTIN Sabine Administrative directorate LACROSSE Bernard SELLESLAGH Arlette General Council DE LEEUW Han Chairman of the Management Board Assistant to the director Secretary of the Management Board Chief advisers Director Assistant to the director Multi-purpose secretary Chief advisers Senior advisers Advisers Director Assistant to the director Chief advisers Senior advisers Advisers Assistant advisers Director Assistant to the director HERREZEEL Marianne Advisers General administration DE PEUTER Caroline Office Manager ESSER Mercédès HAESENDONCK Herman VAN ZANDYCKE Benjamin LOI Sofia CEUPPENS Chris DE DONCKER Nadine VAN MAELE Nele WYNS Evelyne Translators Coordinator Multi-purpose office staff JUNCO Daniel Logistics staff member IT department LAGNEAU Vincent IT specialist GORTS-HORLAY Pierre-Emmanuel Assistant IT specialist Finance SCIMAR Paul Head of Finance LECOCQ Nathalie Accountant PINZAN Laurent Administrative staff member Studies, documentation and archives BOUCQUEY Pascal CHICHAH Chorok DETAND Maria-Isabella HEREMANS Barbara PARTSCH Gwendoline ROOBROUCK Myriam SMEDTS Hilde STEELANDT Laurence ZEGERS Laetitia Senior advisers GODDERIS Philip HENGESCH Luc Adviser Archivist 83

85 6. The CREG 6.3. General policy plan and comparative report on the objectives and achievements of the CREG As stipulated in the Electricity Act, the Management Board prepared the general policy plan 128 setting out the objectives which the CREG aims to achieve in This plan accompanies the draft budget of the CREG and was handed to the Minister for Energy on 29 October 2010 for submission to the Council of Ministers. The structure of the general policy plan for 2011 has been altered compared with that used for the general policy plan for With the adoption of the third European energy package and its transposition into Belgian law, scheduled for 3 March 2011 at the latest, new duties are entrusted to the regulatory authorities. The new structure now distinguishes between the CREG objectives to be attained as part of the so-called Business as usual scenario and the objectives pursued further to the new duties entrusted to the national regulator by the third package. The first part of the general policy plan deals with the context and the latest developments as regards the electricity and the gas markets, both in Belgium and in Europe. In the second part the policy plan sets out in detail the 21 objectives that the CREG has set itself for 2011 and which are included in concise form in the third part. The Electricity Act also stipulates that every year a comparison should be made between the objectives as put forward in the general policy plan and the extent to which they are achieved. The Management Board drew up this comparative report for the year and handed it to the Minister for Energy on 30 April 2010 for submission to the Council of Ministers. In its general policy plan for 2009 the CREG had identified 16 general objectives to be achieved. These objectives were divided into 97 actions that corresponded to the individual assignments to be accomplished. In its comparative report for 2009 the CREG noted, however, that it had undertaken a total of 113 actions in the context of the objectives initially set out. This increase of over 16 % in the number of actions undertaken is the result either of requests for studies, opinions and proposals from the Minister for Energy made over the course of 2009 or of initiatives taken by the CREG to improve the operation of the electricity and the gas markets. Of the 113 actions taken by the CREG in 2009, 58 actions were fully implemented, 8 yielded a better result than hoped, 20 were largely completed by the CREG but could not be finalised owing to external elements, 7 were largely completed, 6 were undertaken to a limited extent, 5 could not be implemented and 9 no longer serve any purpose Cooperation with other bodies The CREG and the European Commission As in previous years, in 2010 the CREG again drew up the National Report from Belgium to the European Commission, working closely with the three regional regulators and the Directorate General for Energy at the Federal Public Service Economy. This report enables the European Commission to draw up its annual report on the progress made with the creation of an internal electricity and natural gas market. The report provides an overview of the Belgian electricity and gas markets during 2009 and hence gives a view of the implementation of European legislation in Belgium. Major developments and striking facts in the period under review included the adoption of the third European legislative package on the internal market for electricity and natural gas, after two years of debate at European level. The year 2009 was also marked by several major acquisitions, including that of supplier Distrigas by Italian company Eni S.p.A. or that of the majority of the shares in SPE (via Segebel) by EDF, as well as by the consequences of previous mergers, such as that of SUEZ and Gaz de France. A new Belgian Act was also approved in 2009 which, amongst other things, forced the GDF SUEZ group to reduce its stake in Fluxys to a maximum of % by 31 December 2009 (cf. paragraph of this report). In addition, the CREG cooperated on numerous other consultation processes and reports on behalf of the European Commission via its membership of CEER and ERGEG (cf. paragraph below) The CREG and ACER Regulation (EC) 713/2009 of the European Parliament and of the Council of 13 July 2009, published in the Official Journalon 14 August 2009, establishes an Agency for the Cooperation of Energy Regulators, known as ACER. The assignment of ACER is to coordinate the work of the national regulatory authorities at European level and its duties include the following: participating in drafting European network codes; deciding on the terms and conditions for access to and operational security applicable to cross-border infrastructures; adopting individual decisions in specific areas; issuing opinions in a series of issues (on the draft statute of ENTSO-E and ENTSO-G (European Network of TSOs for Electricity/Gas), on the ten-year network development plans, etc); monitoring the internal electricity and natural gas markets in cooperation with the European Commission, Plan (Z) CDC Report (Z) CDC-967.

86 6. The CREG the member states and the competent national authorities and informing the European Parliament, the European Commission and the national authorities of its conclusions; informing the European Commission when it notes that a national regulatory authority is not complying with certain provisions of the third energy package; supervising regional cooperation between TSOs. ACER was scheduled to be fully operational by 3 March Initially, CEER will continue to carry out the preparatory work of ACER until the latter is fully operational and has its full staff complement. As soon as ACER is operational, ERGEG (cf. paragraph below) will cease to exist. ACER will comprise an Administrative Board, a Board of Regulators (within which the regulatory authorities of the member states (including the CREG) are represented), a Director, his staff and a Board of Appeal. The Administrative Board met for the first time at the end of March. The first meeting of the Board of Regulators took place on 4 and 5 May 2010 when the internal rules of procedure established by CEER within the Agency Project Team Task Force were approved and used as a basis for the election of the chairman and vice-chairman of the Board of Regulators. There was a consensus among the national regulatory authorities to maintain an alignment, in the interests of continuity, between the general assembly of CEER and the ACER board of regulators, such that Lord John Mogg (Ofggem) was elected chairman and Walter Boltz (e-control) vice-chairman of the Board of Regulators. Mr Alberto Pototschnig was appointed as ACER director on 6 May 2010 by the Administrative Board after obtaining the opinion of the Board of Regulators. As soon as he took up his post, the recruitment of staff got underway. The procedure for appointing the members of the Board of Appeal had not yet been completed by 31 December The head office of ACER is in Ljublijana, Slovenia. However, its activities were provisionally undertaken in Brussels in 2010, while awaiting the move to the official head office in February The Agency s working programme for 2011 was prepared by the national regulatory authorities (following prior approval by the Board of Regulators) and approved by the Administrative Board on 23 September The emphasis will be placed on drafting framework guidelines, issuing opinions on the draft statute, the list of members and draft rules of procedure of the ENTSOs, issuing opinions on the conformity with the framework guidelines of the network codes drawn up by the ENTSOs, adopting decisions on crossborder congestion and exemptions from third-party access to the network. In addition, the Agency will undertake the monitoring missions with which it has been entrusted as quickly as possible. In an initial phase, the Agency will set up three working groups: an electricity working group, a gas working group and a working group responsible for regional coordination The Madrid Forum The European Gas Regulatory Forum, also known as the Madrid Forum, serves as a platform for consultation on the development of the internal natural gas market. Its participants include the European Commission, the member states and the European regulators. The 17 th and 18 th meetings of the Forum were held on 14 and 15 January and 27 and 28 September 131. Since the publication in 2009 of the third European energy package (cf Annual Report, paragraph 1.2, p. 7), this Forum has drawn up a statement of the situation of activities relating to the natural gas market with a view to facilitating implementation of the new European framework to be transposed into national law by 3 March The pilot projects for the development of the Framework Guidelines, which the regulators have to draw up, as well as the network codes, which the TSOs have to establish, were the main subjects discussed in the Forum in Particular attention was paid to pilot framework guidelines projects relating to the allocation of capacity, balancing and tariff harmonisation. As regards drawing up framework guidelines on capacity allocation, the Forum welcomed the work done by ERGEG (cf. paragraph below), which resulted in a final proposal submitted by the regulators to the European Commission at the end of Among the items placed on the Forum agenda by the European Commission were also measures designed to ensure the security of the natural gas supply in the future. This resulted in the publication of Regulation (EU) No 994/2010 of 20 October 2010 concerning measures to safeguard security of the gas supply and repealing Council Directive 2004/67/EC (see paragraph 2.5.A of this report). The launch of a new comitology process relating to the principles of congestion management (implementing European Parliament and Council Regulation (EC) No 715/2009 of 13 July 2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No 1775/2005) The conclusions reached by the Forum and all related documents are available on the European Commission website: 85

87 6. The CREG was also dealt with. Moreover, particular attention was paid to the issue of investment. In this context, the European Commission published an Energy Infrastructure Package to enable better identification and support projects of European interest The Florence Forum The European Electricity Regulatory Forum, also known as the Florence Forum, is a platform for consultation on the development of an internal electricity market whose participants include the European Commission, the member states and the European regulators. The 18th and 19th meetings of the Forum were held on 10 and 11 June and on 13 and 14 December The following items were discussed at both meetings: the internal electricity market, specifically including the work concerning the Framework Guidelines included in the third European energy package, market integrity and transparency, the development of transmission infrastructures and regional initiatives. The final meeting dealt with the implementation of the European Agency for the cooperation of energy regulators (paragraph above) and its work programme. As regards drawing up the framework guidelines, at its last meeting the Forum welcomed the work of ERGEG (paragraph below) concerning the framework guidelines on connection to the network and those on capacity allocation and congestion management. The Forum stressed the importance of the work performed in the field of capacity allocation and congestion management for the creation of a robust framework for market coupling based on price. The Forum particulary stressed the importance of clearly specifying the target model for the Intraday mechanism for the allocation of transmission capacity in the framework guidelines on capacity allocation and congestion management. The Forum also welcomed the good coupling results based on volumes recently put in place between the Central West Europe region (CWE) and the Scandinavian region and agreed that establishing coupling based on price in northwestern Europe (CWE, Scandinavia and United Kingdom) scheduled for 2012 is the first stage in putting in place pricebased coupling that would extend across Europe. As regards the development of transmission infrastructure, the Forum underlined the key role of the regulators and TSOs in putting in place a new pan-european instrument for energy security and infrastructure. In particular, the Forum encouraged the proposal relating to the establishment of a platform dedicated to electricity highways, which would be run by the European Commission in conjunction with ENT- SO-E (European Network of TSOs for Electricity) and the regulators. With regard to regional initiatives, the Forum recalled their key role in putting in place the internal electricity market The London Forum The CREG took part in the third Citizens Energy Forum, also known as the London Forum, on 21 and 22 October The particular feature of this Forum, organised by the European Commission together with CEER, as compared with those in Florence (paragraph above) or Madrid (paragraph above) is that it is intended to enable consumers and their organisations to participate in an active way in the debates. The European Commission is represented by DG ENER (Energy) and DG SANCO (Health and Consumers). The regulatory authorities and public authorities from the member states were also in attendance. The sector was represented amongst others by Eurelectric, Eurogas, Geode and CEDEC. It is also worth noting the presence of independent and autonomous ombudsmen and sector-based complaints services. The Forum welcomed the conclusions of the Informal Energy Council which met on 6 and 7 September 2010, with consumer protection as one of the main issues, and during which the Belgian presidency examined, at ministerial level, the growing phenomenon of energy poverty, proposed to increase the importance of the London Forum and approved the European Commission proposal to prepare a report aimed at establishing: a network of energy ombudsmen with competence for matters of consumer protection; a list of existing and future European practices likely to contribute directly or indirectly to consumers interests; a framework definition of vulnerable customers. The following four main topics were discussed at the 2010 London Forum: the complaint handling procedure, through the approval of the Guidelines of Good Practice on Customer Complaint Handling, Reporting and Classification ; billing, through the approval of the Status Review on Implementation of the European Commission Billing Guidance for Good Practice ; smart meters, through the approval of the draft recommendations on smart metering ; The conclusions reached by the Forum and all the related documents are available on the European Commission website: The conclusions reached by the Forum and all the related documents are available on the European Commission website:

88 6. The CREG the competitive market for the end customer, through the approval of the Guidelines on Retail Market Monitoring Indicators. CEER presentations were given, prepared in the Working Group and its Task Forces, in which the CREG took an active part. The 2010 London Forum asked CEER to undertake the following actions with a view to the 2011 Forum: submit a draft of a status review on the implementation of the Guidelines of Good Practice on Dispute Settlement/Complaint Handling; continue to cooperate within the working groups set up by the European Commission on smart meters, put forward recommendations on regulation regarding smart meters and in particular their functionalities and services; draft a benchmarking report on the role and responsibility of the energy regulators when increasing awareness among and protecting (vulnerable) consumers; draft guidelines of good practice for price comparison instruments; update the guidelines of good practice on switching. Finally, the DG SANCO gave an exclusive presentation at the Forum of its study entitled The functioning of retail electricity markets for consumers in the European Union 134, which is based on the results of the second consumer markets scoreboard 135. A fourth scoreboard has since then been published (in November 2010) by the DG SANCO. The DG SANCO also announced during the London Forum that at the European Council meeting of 3 December 2010 it would communicate a Commission Staff Working Paper on the operation of retail electricity markets for consumers in the European Union 136 and an energy policy for consumers The CREG within CEER and ERGEG The CREG is a member of both CEER and of ERGEG. ER- GEG is an independent consultative group for the electricity and gas sectors made up of energy regulators that was created to advise and assist the European Commission with a view to consolidating the internal energy market. CEER is a cooperation structure made up of these same regulators together with Norway and Iceland which prepares the work of ERGEG. The activities prepared by CEER in specifically include the third energy legislative package, the preparation and creation of an Agency for the Cooperation of Energy Regulators (ACER, cf. paragraph above) and the establishment of framework guidelines intended ultimately to lead to network codes. The CEER Energy Package working group organised three workshops among national Regulation authorities, including one attended by the European Commission. These workshops enabled the national regulatory authorities to develop harmonised solutions to the problems encountered in the transposition of the third energy package. While waiting for ACER to become fully operational, CEER set a series of preparatory steps necessary for its creation (cf. paragraph above) and undertook to make as much progress as possible in drafting the framework guidelines, the objective of which is to create a non-binding regulatory framework to establish an integrated electricity and gas network in Europe. Both in the Gas working group (Capacity Allocation Mechanism) and in the Electricity working group (Grid Connection), members worked first and foremost on pilot framework guidelines, which also highlighted a series of observations and recommendations on the procedure to be followed when drafting these guidelines. These pilot framework guidelines were drawn up by the CEER/ERGEG working group on electricity, networks and market, which is co-chaired by the CREG, and communicated to the European Commission as planned. This working group was also asked to draw up framework guidelines on capacity allocation and congestion management, in which CREG was particularly involved, an initial version of which was published and submitted for consultation in September and October An improved version, taking into account the results of the consultation, was to be sent to the European Commission in February Finally, the working group was also able to start work on the framework guidelines relating to system operation in Moreover, the ten regulators concerned are to consult one another with regard to their participation in the various working groups set up in the context of the North Sea Countries Offshore Grid Initiative. On 3 December 2010, representatives of the ten member states involved signed a Memorandum of Understanding and both ENTSO-E and the ten national regulatory authorities concerned signed a letter of intent This study is available at http/:ec.europa.eu/conumsers/strategy/docs/retail_electricity_full_study_en.pdf The conclusions reached by the European Council of 3 December 2010 can be consulted via the following links: and These activities are mentioned in the CEER Work Programme of 2010 ( DC-18-03_public-WP2010_10-Dec-09.pdf)

89 6. The CREG CEER paid particular attention to smart meters and smart grids in various working groups. For instance, in 2010 the RMC working group drew up Guidelines of Good Practice on Regulatory Aspects of Smart Metering for Electricity and Gas which were to be approved by the CEER general meeting in early After this, the Customer Working Group (new name: Retail Market and Customer Working Group) considered the Guidelines of Good Practice on Complaint Handling, the Billing Status Review and the Guidelines of Good Practice on Retail Market Indicators. In 2010, the Financial Services Working Group concentrated most of its attention on possible fraud mechanisms in the energy sector and in particular on derived products. In this context, contacts with the financial regulators organisation (CESR) were continued. This involved examining the need to adopt rules specifically for the sector on matters that are not governed by the (EC) market abuse directive or the EC directive on financial instruments markets, but which are nevertheless important in the context of transactions that take place on the energy markets. At the end of 2010 the European Commission published a draft regulation on this subject 140. The Financial Services Working Group also produced a study on the basis of the questionnaire sent out to the national regulatory authorities with regard to VAT. The aim here is to provide an overview of the extent to which the national regulatory authorities study the VAT fraud mechanisms at the time of transactions on the electricity or gas market. The CREG also took part in answering the questionnaires sent out by CEER with regard, among other things, to VAT fraud, the procedure for adopting framework guidelines, climate change, CAPEX, compliance monitoring, the quality of regulation and the retail market (European Commission study). These questionnaires result in status reviews, position papers or other summarising documents, presenting not only the differences and similarities between the various member states but also the extent to which European legislation is implemented by the member states. Finally, CEER deployed actions at international level through the Florence School of Regulation, the IERN (International Energy Regulation Network) and the ICER (International Confederation of Energy Regulators), with a view to sharing knowledge and experiences with energy regulators beyond the borders of the European Union as well. It is also worth mentioning the regular contacts with the Federal Tariff Service in Russia and the CEER s participation in the EU-Russia dialogue on gas supplies The CREG and the regional regulators The concertation between the national regulator (CREG) and three regional regulators (BRUGEL, CWaPE, VREG) or Forbeg continued in Six plenary meetings were held. The VREG took the chair in the first half of 2010 and the CREG during the second half of the year. Over time, various working groups have been set up within the Forbeg concertation structure. In 2010, the CREG chaired the working groups on gas, the exchange of information and the complaints procedure. The gas working group met five times in 2010 and tackled the following subjects, among others: the L-gas market, natural gas supplies to Belgium, the code of conduct, the third European energy package, the technical regulations and DSOs connection contracts. The exchange of information working group met five times in 2010 and, as it does every year, took care of a publication by the four regulators on the development of the electricity and natural gas markets 141. This publication notes, among other things, a spectacular increase in the number of takeovers (Essent by RWE, Nuon by Vattenfall, SPE by EDF) and describes the consequences of the merger between SUEZ and GDF (first year when Distrigas operated independently of GDF SUEZ, modification of the Fluxys shareholding body), as well as the implementation of the agreements reached under the Pax Electrica II (swaps, drawing rights, production capacity transfer). The working group also looked into the issue of the extent to which complementary elements could be included in future versions of the joint publication with regard to data on supplier switch and renewable energy. The exchange of information working group also discussed the possibility of aligning the structures of the annual activities reports from the regulators to the structure of the benchmark report drawn up in the context of the national reports passed on to the European Commission and used as basis for the ERGEG 2010 Status Review of the Liberalisation and Implementation of the Energy Regulatory Framework 142. Eventually, the CREG alone decided to adapt the structure of its annual report along these lines. The complaints handling working group convened to meet in the attendance of the Federal Energy Ombudsman, given that he has been fully operational since 2010 (cf. paragraph below). At the Forbeg plenary meeting, the progress of the work on the European third energy package and the launch of the European Agency for the Cooperation of Energy Regulators

90 6. The CREG (ACER, cf. paragraph above) were mentioned regularly. Particular attention was also paid to the work of the European Commission and major publications were mentioned. Moreover, the CREG debriefed meetings of the General Assembly of CEER (cf. paragraph above) and ACER and gave presentations on the subject of the proposed new transmission model, the North Sea Grid Initiative and the coupling of the Central West Europe Nordic market for electricity. The VREG, meanwhile, systematically debriefed meetings of the CEER Customer Working Group and, together with the VREG, the CREG arranged wide-ranging debriefing on the London Forum (cf. paragraph above). In addition, the following topics were covered within Forbeg in 2010: smart networks (policy platform, round table), private networks, MIG (cf. rules and procedures designed to enable the efficient transfer of data between the various players on the gas and electricity markets), injection rates, automatic granting of the social rate, recharging terminals for electric vehicles, fuel mix issue and a joint letter from the four regulators to the Minister for Energy recommending the abolition of the current mechanism for exemption from the federal contribution. Moreover, in 2010 the CREG continued to improve the contents of its website with a view to keeping consumers and market players better informed Participation of CREG members as speakers at seminars In addition to the presentations given as part of its legal missions (including within CEER), members of the CREG attended a number of seminars as speakers in In its capacity as a member of the CERRE (Centre on Regulation in Europe), the CREG also took part in certain activities run and organised by this body Handling questions and complaints In its reasoned opinion of 24 June 2010 (infringement No 2009/2211), the European Commission notes that Belgium has not created a structure at federal level to settle complaints or to provide for the reimbursement or compensation of end customers. Nor has it been demonstrated that such a mechanism exists in the Brussels Region and the Flemish Region. The justification given by Belgium of the existence of a Litigation Chamber, a federal mediator and regulations in the Brussels Region and in the Flemish Region was deemed inadequate in this respect by the European Commission. In the view of the Management Board, only an amendment of the law can provide a satisfactory response to these objections 143. In 2010, the CREG took part in five meetings organised by the federal mediation service for energy. The main aim of these meetings was to organise the procedure for handling complaints that come under the jurisdiction of the energy regulators (CREG, CWaPE, VREG, BRUGEL) or the Federal Public Service for the Economy. As part of this cooperation, the CREG has analysed a number of complaints received by the mediator from end customers. The procedure for appointing the French-speaking federal mediator for energy is still under way. A call for applications was renewed in April Study (F) CDC

91 6. The CREG Table 23: Overview of presentations given by the CREG in 2010 Organising authority Title of seminar Title of presentation Date Febeliec Gedragscode II 13/01/2010 FLAME Successfully managing Gas demand, Supply, Prices, Regulation & Investment in Europe s Globalising Gas & LNG Markets Exploring the latest investment developments in Belgium 04/03/2010 Florence school of Regulation Is there a need for regulation: what, why and how? Early findings from the 2009 ERGEG monitoring survey on natural gas hub regulation 04/03/2010 AFG L accès des tiers au stockage Le cas de la Belgique 04/06/2010 SRBE Les réseaux intelligents Les réseaux intelligents: rêve technocratique 17/06/2010 ou nécessité de demain? Et le consommateur résidentiel dans tout cela? Smart Grids, technocratische droom of de noodzaak van morgen? En wat met de residentiële gebruikers? SRBE Journée d étude SRBE sur Smart grids en smart meters: Comment et 17/06/2010 les Smart Grids pourquoi? Evolution ou révolution? European Energy Markets 10 7 th international conference Possible impact of electric cars on electricity 25/06/2010 on the European Energy market spot prices VSGP Grid Intelligence Toepassing van tarieven voor injectie op het 09/09/2010 distributienet World Energy Congress Responding now to global Possible use of electric cars as balancing 15/09/2010 challenges instrument DEMSEE 2010 Smart grids and smart meters Smart grids en smart meters: How and why? Évolution ou révolution? 23/09/2010 Instituut voor Milieu- en Energierecht (IMER) Permanente vorming klimaaten energierecht Liberalisering in netwerksectoren GEREGULEERDE MEERJARENNETTARIEVEN ELEKTRICITEIT EN GAS 12/10/2010 FEBEG Vervoersmodel aardgas 12/10/2010 E.on Vervoersmodel aardgas 13/10/2010 Febeliec Vervoersmodel aardgas 14/10/2010 SRBE Gestion de la Demande d Électricité dans un environnement libéralisé avec intégration croissante d énergies renouvelables La production d énergie décentralisée Le changement de paradigme du réseau électrique 20/10/2010 CMS De Backer Toepassing van tarieven voor injectie op het 20/10/2010 distributienet Forbeg Consultatie vervoersmodel aardgas 25/10/2010 EMART EMART Energy Framework guidelines Capacity Allocation 24/11/2010 & Congestion Management: the calculation and allocation of transmission capacities (au nom de l ERGEG) AFG L accès des tiers au stockage Le cas de la Belgique 25/11/2010 PCG The annual European Power generation strategy summit 2010 Elaboration of the framework guidelines: The cases of Grid connection & Capacity Allocation and Congestion Management 01/12/2010 Source: CREG 90

92 6. The CREG 6.5. The CREG finances The federal contribution The federal contribution is a surcharge levied on the quantity of gas and electricity consumed in Belgium. This contribution is used to finance the various funds run by the CREG, which are discussed in paragraph below. The quantity of electricity taken up on the transmission system in 2010 increased compared with 2009 but has not yet returned to the level recorded before the economic crisis, notably owing, for industrial customers, to the significant increase in own consumption (cf. paragraph of this report). As regards the quantity of natural gas used in 2010, it appears that this has withstood the crisis better since it has returned to the level recorded before the crisis (cf. paragraph of this report). A. The federal contribution for gas Each quarter the CREG bills the holders of a natural gas supply permit operating on the Fluxys transmission system 144 or one fourth of the annual requirements of the gas funds. These suppliers finance the CREG fund (and its reserve), the social energy fund, the protected customers fund and the heating grant fund directly. Consequently the receipts booked by the CREG for each of these funds exactly match the expected amounts. As at 31 December 2010, however, the suppliers still owed a total of 539,133. n Annual adjustment Each year, a comparison between the amount claimed by the CREG and the amount that suppliers were actually able to invoice their customers during the previous year (2009) gives rise to adjustments. For the CREG, social energy and protected customers funds, this is an adjustment in favour of the funds of 221,024, 627,558 and 712,147 respectively. However, for the heating grant fund, the adjustment amounts to 27,073 in favour of the suppliers. B. The federal contribution for electricity Each quarter the TSO, Elia, pays into the CREG single federal contribution fund the contribution it has invoiced to its customers in the previous quarter. The amount collected is then divided among the CREG, social energy, denuclearisation, greenhouse gas, protected customers and heating grant funds. As at 31 December 2010, the total amount in the federal contribution fund stood at 61,768,390. The federal contribution and the degressivity certified in the last quarter by the TSO and the electricity companies (with regard to the federal contribution relating to deliveries prior to 1 July 2009) respectively amounted to 53,975,032 and 5,969,269 which have yet to be divided among the six funds for the 2010 financial year. n Supplying the funds As in previous years, the expected amounts of the federal contribution for the year 2010 consisted of the basic amount of each fund for the current year and possibly a supplementary amount to offset the shortfall from previous years. Taken as a whole, the revenue recorded from the federal contribution for electricity was 14 % less than the amounts expected in The shortfall in electricity revenue for the various funds compared with the amounts expected, including the aforementioned supplement, is therefore as follows: Table 24: Shortfalls recorded in the funds in 2010 ( ) CREG 1,409,600 Social energy 5,925,841 Denuclearisation 16,932,764 Greenhouse gases 8,256,337 Protected customers 8,211,463 Heating grant 1,554,540 n Exemption and degressivity Source: CREG With the cascade levy system in force since July 2009 (cf Annual Report, paragraph 6.1.2, p. 66), the electricity companies have in principle been billed upstream of the cascade for the entire federal contribution, whereas they are only able to recover the total amount from their end customers subject to the deduction, where appropriate, of the exemption and degressivity measures. Provision is therefore made for these companies to claim the refund of these two measures from the CREG every quarter. In 2010, the CREG therefore booked the sums of 18,797,840 and 37,266,184, corresponding respectively to the exemptions from greenhouse gases and denuclearisation contributions granted by these companies to their end customers. Refunds to electricity companies are made directly using the resources available in these two funds. During the same period, the Federal Public Service for Finance provided the sum of 45,488,235 for the CREG to enable it to cover the degressivity refunded to suppliers. In addition to this amount and in accordance with the Electricity Act 145, the CREG also received the sum of 3,000,000 from ONDRAF/NIRAS (the Belgian agency for radioactive waste 144 As at 31 December 2010, twelve suppliers were active on the transmission grid (SPE having taken over the customers of EDF Belgium on 1 October 2010). 145 Article 21bis, 3, de la loi du 29 avril 1999 relative à l organisation du marché de l électricité, tel que modifié par la loi-programme du 22 décembre

93 6. The CREG and enriched fissile materials), taken from the BP1/BP2 fund and 2,650,000 from the operating fund of Belgoprocess (company specialising in the management of radioactive waste and the decommissioning of nuclear facilities). As the degressivity certified for 2010 as a whole amounts to 49,055,950, the sum of 2,082,285 will have to be refunded to the Federal Public Service for Finance in n Amounts irrecoverable Finally, it should be stressed that the growing number of unpaid electricity bills is impacting on the federal contribution fund managed by the CREG. In fact, every year the CREG settles with the electricity companies the flat-rate amounts (0.7 %) corresponding to the increase in the federal contribution which they have applied to offset the federal contribution billed which may not have been paid to them by the end customer. The irrecoverable amounts of the federal contribution refunded by the CREG to certain companies in this way are higher than the amounts received from other companies. Overall, for 2009 the amounts irrecoverable represent 1.3 % of the receipts from the federal contribution. The accumulated shortfall of 1,036,677 had to be cleared in 2010 by means of a levy from the various funds financed by the federal contribution The funds The CREG Fund The partial cover of the total operating costs of the CREG was set by Royal Decree on 9 March 2010 confirmed by the Act of 29 December 2010 at 15,146,140 for the year The CREG accounts for 2010 are set out in detail in paragraph The Social Energy Fund For 2010, a total of 49,511,288 was provided to help the Public Centres for social well-being with their task of providing guidance and financial social support in the field of energy. This sum was made up of 28,785,633 from the electricity sector and 20,725,655 from the natural gas sector. However, these amounts were supplemented by 6,508,211 and 9,526, respectively to offset the shortfalls of the past and repay the European institutions. The total revenue eventually booked for electricity in 2010 was 29,368,003. The planned amount for the gas fund was achieved. In addition to the balance payable to the Public Centres for social wellbeing for 2009 ( 11,072,576), the cash assets only made it possible to redistribute 38,187,847 of the 40,922,327 required by the Federal Public Planning Service for Social Integration in As at 31 December 2010, the overall amount available in the fund stood at 11,913,364, including interest and amounts still to be distributed from the federal contribution fund. This amount will not be sufficient to pay the entire fourth instalment for 2010 to the Public Centres for social well-being at the start of The Denuclearisation Fund This fund, which is supplied exclusively by the federal contribution charged by the electricity sector, should have stood at 55,000,000 for 2010 (cf Annual Report, paragraph 6.2.3, p. 68), plus 23,843,807 to offset shortfalls from the past and repay the European institutions. Income of 99,177,227 was recorded in the fund, from which 37,266,184 should be deducted as exemptions refunded to the electricity companies. Apart from the payment of the balance from 2009 ( 27,330,000), in 2010 the CREG was therefore only able to pay to ONDRAF/NIRAS the sum of 17,750,000 out of the sum of 41,250,000 which it should have received in 2010 to fulfil its denuclearisation task. The payment arrears to ONDRAF/NIRAS is still increasing, particularly since the schedules for receipt of the federal contribution paid by the TSO and refund to the suppliers of exemption from the denuclearisation contribution meant that the CREG was obliged to maintain operating fund of 10,000,000 to make these reimbursements within the deadlines set by law. As at 31 December 2010, the total amount in the fund stood at 25,734,402, including the amounts still to be distributed from the federal contribution fund. The Greenhouse Gases Fund This fund, which is supplied exclusively by the federal contribution charged by the electricity sector, should have stood at 28,683,289 for the year 2010, plus 10,650,589 to offset the shortfalls from the past and repay the European institutions. Income of 49,875,381 was booked in the fund, from which the sum of 18,797,840 has to be deducted as exemptions refunded to electricity companies. Unlike the denuclearisation fund, which is used in full as soon as it is supplied, there are sums which are not used immediately and which enable the reimbursement to suppliers of the exemption from the greenhouse gases contribution while awaiting receipt of the federal contributions paid by the TSO. As is the case every year, the CREG paid the sum of 2,300,000 for the year 2011 in advance into the organic budget fund of the Federal Public Service for the Environment, intended for the annual financing of the federal policy on the 92

94 6. The CREG reduction of greenhouse gas emissions, which it manages. In addition, following the modification of Article 12 of the federal electricity contribution Royal Decree, the CREG may owe the Federal Public Service for the Environment additional sums 146 amounting to 2,000,000 for 2010 and 1,300,000 for Every year the greenhouse gases fund also prefinances the sum of 11,550,000 corresponding to the VAT due on the annual amount to be paid to ONDRAF/NIRAS. The VAT authorities refunded to the CREG the quarterly sums thus paid. As at 31 December 2010, the overall amount in the fund stood at 41,265,845, including interest and the amounts still to be distributed from the federal contribution fund. No additional amounts were transferred this year from the greenhouse gases fund to the Kyoto Joint Implementation/ Clean Development Mechanism fund (Kyoto JI/CDM). It should be remembered that this fund sets aside resources which are intended specifically to fund projects to reduce emissions of greenhouse gases abroad, enabling Belgium to acquire emission quotas with a view to attaining its targets in the context of the Kyoto protocol. In 2010, the sum of 26,339,099 was drawn on the Kyoto JI/CDM fund for the purchase of CO 2 emission credits. As at 31 December 2010, the total amount in the Kyoto JI/ CDM fund stood at 97,013,391, including interest. The Protected Customers Funds For the year 2010, the needs of these funds, defined by the Royal Decree of 9 March 2010 confirmed by the Act of 29 December 2010, should have stood at a total of 64,000,000 for electricity and 33,900,000 for natural gas, to which should have been added 202,362 and 20,949 respectively to repay the European institutions. Ultimately, only 55,990,899 was booked in the electricity fund in As regards the natural gas fund, however, the planned sum was in fact recorded. Repayments to companies in the sector that supplied protected household customers at maximum social rates in 2010 amounted to 452,207 for electricity suppliers and 135,749 for natural gas suppliers. The small amount of repayments in 2010 is due in particular to the fact that most of the dossiers are incomplete and to the fact that the Royal Decrees on protected customer claims had not yet been published at the end of As at 31 December 2010, the total amounts of the two funds for electricity and gas stood at 132,108,438 and 92,639,735 respectively, including interest and sums still to be distributed from the federal contribution fund. The fund for flat-rate reductions for heating using natural gas and electricity For the year 2010 a total sum of 9,988,339 was provided to enable the financing of the flat-rate discounts provided for by the programme law of 8 June 2008 for heating with natural gas and electricity. This amount consists of 6,891,954 from the electricity sector and 3,096,385 from the natural gas sector. These amounts are, however, supplemented respectively by 1,984,069 and 1,424 to offset the shortfalls of the past and repay the European institutions. Total income of 7,321,483 was eventually booked in 2010 for electricity. The amount planned for gas was actually recorded. Apart from the payment of the 2009 balances relating to grants for electricity ( 4,147,782) and natural gas ( 775,000), no other payments were paid into the organic budget fund run by the Directorate-General for Energy in In fact, noting the absence of any legal basis for its use during the year 2010, the CREG suspended all additional payments. The balance as at 31 December 2010, amounting to 7,072,905, corresponds to the amounts recorded as at that date for the electricity TSO and the natural gas companies and that had not been paid into the organic budget fund. A legal allocation of these funds will need to be found once the annual adjustments with the natural gas suppliers have been made in The fund to offset the loss of revenue suffered by the municipalities Further to the negative opinion No /1/3 from the Council of State on 27 April 2010, the Flemish authorities managing the funds of the municipalities, with which the CREG was in negotiation with regard to the settlement for 2009 with the Flemish municipalities (cf Annual Report, paragraph 6.2.7, p. 69) was obliged to waive this transaction. The CREG itself therefore undertook the settlement of 12,856,802 with the municipalities to which sums were due, having recovered the sum of 88,565 from municipalities liable for payments. As at 31 December 2010, the sum of 574,280 corresponding to the interest collected since 2005 remains in the accounts of the CREG as the interest on the fund capital is only supposed to be used to reimburse suppliers for charges linked to their prefinancing during the period from August 2005 to 31 July 2006 (Article 9, 3 of the Ministerial Decree 146 Act of 29 December 2010 containing various provisions (Belgian Official Journalof 31 December 2010). 93

95 6. The CREG of 13 May 2005 implementing Article 22bis of the Electricity Act). However, these reimbursements have already been effected. A legal allocation of these funds will need to be found The accounts for 2010 On the one hand, the CREG was only able to take note of the prolonged effects of the economic crisis on this income from the electricity sector. On the other hand, it observed charges that remain high further to recourse against its decisions. Taking this as a starting point, it has brought its staff costs and other operating expenses under control by not replacing members of staff who have left the CREG over the year and by reducing the calls made upon external consultants to carry out studies. Both staff costs and other operating expenses therefore remained within the limits set by the budget. reserve. In fact, a great deal was drawn from this reserve in 2009 (cf Annual Report, paragraph 6.3, p. 69) to cover the shortfall in the electricity sector. The surplus booked in 2010 for the natural gas sector will have to be repaid to the gas companies in 2011 by means of an adjustment. This surplus includes the excess surcharges actually recovered in 2009 by the natural gas suppliers from their customers ( 221,024) which were adjusted in However, the amount of revenue earned by the natural gas suppliers in 2010 was not yet known as at 31 December Finally, the adjustment of the surplus collected by the CREG relating to the natural gas sector, which was noted in the CREG accounts in 2009 (cf Annual Report, paragraph 6.3, p. 69) was effected in favour of the natural gas sector. The total charges of the CREG for the 2010 financial year consequently amounted to just 13,595,714, which corresponds to 91 % of the total budget initially planned ( 14,860,634, without bringing the reserve up to the required level and excluding off-budget expenses). It should be noted, however, that legal fees relating to appeals lodged against decisions taken by the CREG ( 646,952) are up on the previous year and they alone account for over 21 % of the total operating costs for Although the total income from the electricity sector only amounted to 88 % of the expected amounts, at the end of 2010 the CREG nevertheless benefited from two salutary extraordinary receipts. On the one hand, it recovered its 2009 membership subscription to a non-profit association following the winding up of this association ( 99,500) and on the other hand it received a settlement further to the adjustment resulting from the structural reductions in the social charges for the years 2008 and 2009 ( 611,656). The income and expenditure of the CREG are broken down between the two energy sectors. For the 2010 financial year, thanks to the extraordinary income referred to above, the surplus income collected by the CREG compared with its actual charges amounted to 1,115,908, divided between surpluses of 246,742 in favour of the electricity sector and 869,166 in favour of the natural gas sector. The surplus booked in 2010 for the electricity sector will be used entirely for the partial re-establishment of the sector 94

96 6. The CREG Table 25: Income statement as at 31 December 2010 ( ) Personnel costs 10,459,025 10,121,156 Salaries and charges 9,937,241 9,587,997 Variation provisions employment agreements for Management Board members 71, ,243 Variation provisions for holiday bonuses ,048 Temporary staff 20,714 1,432 Recruitment costs 9, ,429 Training, seminars 106, ,097 Leasing company cars 254, ,483 Value added tax 59,740 77,913 Bodies 74,927 59,250 Indemnities, General Council (attendance fees and various expenses) 74,927 59,250 Personnel costs sub-total 10,533,952 10,180,406 External experts 1,029, ,232 External studies 217, ,205 Communication service 49,535 19,310 Translators, Auditor, external payroll service provider 115, ,132 Legal fees relating to lawsuits 646, ,585 Operating costs 1,914,169 2,017,658 Rental and charges - premises 913, ,822 Parking facility rental 65,885 59,182 Building maintenance and security 120, ,901 Equipment maintenance and servicing 47,198 48,286 Documentation 108, ,873 Telephone, post, Internet 43,987 44,472 Office supplies 58,706 60,936 Costs of meetings and expenses 98,564 84,769 Travel expenses (including abroad) 57,244 52,256 Membership of associations 61, ,981 Insurance, taxes and sundry costs 146, ,350 Value added tax 192, ,830 Depreciation costs 109, ,585 Depreciation on tangible fixed assets 98,831 90,502 Depreciation on leasing 10,288 17,083 Financial costs 8,951 5,142 Financial charges on leasing and loans 2,773 3,013 Other 6,178 2,129 Other operating costs sub-total 3,061,762 3,079,617 TOTAL CHARGES 13,595,714 13,260,023 Income (surcharges and fees) 12,830,023 13,205,883 Operating cost surcharges 13,707,590 12,911,059 Gas suppliers adjustment, year n-1 221, ,574 CREG adjustment electricity, year n 246, ,481 CREG adjustment gas, year n 869,166 1,261,574 Other fees 17,317 7,343 Financial income 6,599 19,239 Income from current assets 6,542 19,212 Other financial income Extraordinary income 759,092 34,901 Other extraordinary income 759,092 34,901 TOTAL INCOME 13,595,714 13,260,023 RESULT FOR FINANCIAL YEAR 0 0 Source: CREG 95

97 6. The CREG Table 26 : Balance sheet as at 31 December 2010 ( ) 96 FIXED ASSETS Intangible and tangible fixed assets IT and telephone equipment 209, ,593 Security equipment, video surveillance 57,635 56,758 Office furniture and decoration 7,016 10,524 Building refurbishment 24,601 15,901 Leasing 120, ,410 Leased equipment 20,962 31,250 Financial fixed assets 20,962 31,250 Various guarantees Cautions diverses CURRENT ASSETS Amounts receivable within one year 585, ,840 Trade debtors 39,473 37,566 Other amounts receivable 545, ,274 Cash at bank and in hand 417,815, ,184,143 Federal contribution fund 61,768,390 30,319,624 CREG fund 3,219,311 3,711,463 Social Energy Fund 5,051,910 6,963,232 Greenhouse Gases Fund 31,290,683 8,278,569 Denuclearisation Fund 1,389, ,104 Kyoto Fund JI/CDM 97,005, ,803,456 Protected Customers Fund - Electricity 119,942,061 68,609,361 Protected Customers Fund - Gas 92,217,966 57,758,420 Municipalities Fund 574,125 13,305,152 Heating Grant Fund 5,353, ,441 Cash 1,377 1,321 Deferrals and accruals 1,147,040 1,022,246 TOTAL ASSETS 419,778, ,923,680 LIABILITIES CAPITAL AND RESERVES Profit brought forward 1,314,222 1,314,222 CREG sector reserve 1,441,323 1,196,185 Electricity 750, ,562 Gas 691, ,623 Provisions Employment agreements for Management Board members 290, ,048 AMOUNTS PAYABLE Amounts payable at more than one year 17,799 24,440 Leasing obligations 17,799 24,440 Amounts payable within one year 3,342,391 3,932,180 Current portion of amounts payable at more than one year 6,641 9,339 Trade debts 1,808,100 1,754,473 Taxes, salaries and social charges payable 1,527,650 2,166,868 Advances received 0 1,500 Various debts 413,366, ,853,256 Social Energy Fund 11,913,364 10,643,449 Greenhouse Gases Fund 41,265,845 12,815,526 Denuclearisation Fund 25,734,402 5,284,657 Kyoto Fund JI/CDM 97,013, ,880,809 Protected Customers Fund - Electricity 132,108,438 76,594,477 Protected Customers Fund - Gas 92,639,735 58,028,392 Municipalities Fund 574,280 13,305,704 Heating Grant Fund 7,071,524 1,634,724 Federal contribution and degressivity 5,045,704 6,665,518 Accruals and deferrals 5, ,349 TOTAL LIABILITIES 419,778, ,923,680 Source: CREG

98 6. The CREG The company auditor s report on the financial year closed on 31 December 2010 In accordance with the assignment entrusted to us by the Management Board pursuant to Article 9, 1 of the Royal Decree of 10 October 2001 (on approval of the internal rules), we have the honour of reporting to you on the accounts for the past financial year. This report contains our opinion on the accounts as well as the required additional statements and information. Unqualified audit opinion on the accounts We have audited the accounts of the Commission for the financial year ended 31 December 2010, prepared in accordance with the valuation rules adopted by the Management Board. These accounts are summarised in a balance sheet, the total of which amounts to 419,778,634 EUR and an income statement, the balance of which stands at 0 EUR, in accordance with the Royal Decrees of 24 March 2003 on the financing of the Commission, with the total income and charges standing at 13,595,714 EUR. The Management Board is responsible for the preparation of the accounts. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation of the accounts that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate valuation rules; and making accounting estimates that are reasonable in the circumstances. Our responsibility is to express an opinion on these accounts based on our audit. We conducted our audit in accordance with the auditing standards applicable in Belgium, as issued by the Institute of Registered Auditors (Institut des Reviseurs d Entreprises / Instituut der Bedrijfsrevisoren). Those standards require that we plan and perform the audit to obtain reasonable assurance whether the accounts are free from material misstatement, whether due to fraud or error. In accordance with the above-mentioned auditing standards, we considered the Commission s accounting system as well as its internal control procedures. We have obtained from the Management Board and the Commission s officials, the explanations and information necessary for executing our audit procedures. We have examined, on a test basis, the evidence supporting the amounts included in the accounts. We have assessed the appropriateness of valuation rules and the reasonableness of the significant accounting estimates made by the Commission. We believe that these procedures provide a reasonable basis for our opinion. financial year give a true and fair view of the assets, the financial position and the results of the Commission in accordance with the valuation rules adopted by the Management Board. Additional statements and information We would like to supplement our report with the following additional statements and information, which do not modify our audit opinion on the accounts: Without prejudice to formal aspects of minor importance, the accounting records were maintained in accordance with the general rules of the Act of 17 July 1975 on corporate accounting. As specificied in the annual report drawn up by the Management Board, the amount of the adjustment for the 2010 financial year between the gas suppliers and the Commission, calculated in accordance with Article 5, 2 of the Royal Decree of 24 March 2003 on the financing of the Commission by the gas market, was unknown on the date on which the accounts of the Commission as per 31 December 2010 were established and could therefore not be taken into account. The adjustment relating to the previous financial year was duly booked however. We have not established any infringements of the Electricity and Gas Acts or their implementing decrees as regards transactions referred to in the accounts of the Commission. Brussels, 28 January 2011 André KILESSE Auditor In our opinion, the balance sheet for the year ended 31 December 2010 and the income statement for the

99 6. The CREG 6.6. List of acts of the CREG during the year 2010 Tariff decisions (B)628E/19 à (B)628E/ (B)628G/15 à (B)628G/ INTER-ENERGA (elektriciteit) : beslissingen over het tariefvoorstel met budget voor de regulatoire periode , over de initiële waarde van het gereguleerd actief, over de vraag tot goedkeuring van het tariefvoorstel met budget voor het exploitatiejaar 2007 en van het vervolledigde tariefvoorstel met budget voor de 2 laatste jaren van de regulatoire periode INTER-ENERGA (aardgas) : beslissingen over het tariefvoorstel met budget voor de regulatoire periode en over de vraag tot goedkeuring van het vervolledigde tariefvoorstel met budget voor de 2 laatste jaren van de regulatoire periode (B)629E/ INTER-ENERGA (elektriciteit) : beslissing over de vraag tot goedkeuring van het vervolledigde tariefvoorstel met budget voor de netten met een transmissiefunctie voor het laatste jaar van de regulatoire periode (B)631E/19 à (B)631E/ (B)631G/15 à (B)631G/ (B)632E/16 à (B)632E/ (B)633E/19 à (B)633E/ (B)633G/15 à (B)633G/ (B)634E/14 à (B)634E/ (B)634G/14 à (B)634G/ (B)635G/14 à (B)635G/ (B)636E/14 à (B)636E/ (B)637E/14 à (B)637E/ (B)637G/14 à (B)637G/ IVEG (elektriciteit) : beslissingen over het tariefvoorstel met budget voor de regulatoire periode , over de vraag tot goedkeuring van het tariefvoorstel met budget voor het exploitatiejaar 2007 en van het vervolledigde tariefvoorstel met budget voor de 2 laatste jaren van de regulatoire periode IVEG (aardgas) : beslissingen over het tariefvoorstel met budget voor de regulatoire periode en over de vraag tot goedkeuring van het vervolledigde tariefvoorstel met budget voor de 2 laatste jaren van de regulatoire periode PBE (elektriciteit) : beslissingen over het tariefvoorstel met budget voor de regulatoire periode , over de vraag tot goedkeuring van het tariefvoorstel met budget voor het exploitatiejaar 2007 en van het vervolledigde tariefvoorstel met budget voor de 2 laatste jaren van de regulatoire periode INFRAX WEST (elektriciteit) : beslissingen over het tariefvoorstel met budget voor de regulatoire periode , over de vraag tot goedkeuring van het tariefvoorstel met budget voor het exploitatiejaar 2007 en van het vervolledigde tariefvoorstel met budget voor de 2 laatste jaren van de regulatoire periode INFRAX WEST (aardgas) : beslissingen over het tariefvoorstel met budget voor de regulatoire periode en over de vraag tot goedkeuring van het vervolledigde tariefvoorstel met budget voor de 2 laatste jaren van de regulatoire periode GASELWEST (elektriciteit) : beslissingen over de saldi betreffende het exploitatiejaar 2009 GASELWEST (aardgas) : beslissingen over de saldi betreffende het exploitatiejaar 2009 IMEA (aardgas) : beslissingen over de saldi betreffende het exploitatiejaar 2009 IMEA (elektriciteit) : beslissingen over de saldi betreffende het exploitatiejaar 2009 IMEWO (elektriciteit) : beslissingen over de saldi betreffende het exploitatiejaar 2009 IMEWO (aardgas) : beslissingen over de saldi betreffende het exploitatiejaar 2009 Confidential 98

100 6. The CREG (B)638E/14 à (B)638E/ (B)638G/14 à (B)638G/ (B)639E/14 à (B)639E/ (B)639G/14 à (B)639G/ (B)640E/14 à (B)640E/ (B)640G/14 à (B)640G/ (B)641E/14 à (B)641E/ (B)641G/14 à (B)641G/ INTERGEM (elektriciteit) : beslissingen over de saldi betreffende het exploitatiejaar 2009 INTERGEM (aardgas) : beslissingen over de saldi betreffende het exploitatiejaar 2009 IVEKA (elektriciteit) : beslissingen over de saldi betreffende het exploitatiejaar 2009 IVEKA (aardgas) : beslissingen over de saldi betreffende het exploitatiejaar 2009 IVERLEK (elektriciteit) : beslissingen over de saldi betreffende het exploitatiejaar 2009 IVERLEK (aardgas) : beslissingen over de saldi betreffende het exploitatiejaar 2009 SIBELGAS (elektriciteit) : beslissingen over de saldi betreffende het exploitatiejaar 2009 SIBELGAS (aardgas) : beslissingen over de saldi betreffende het exploitatiejaar 2009 (B)642E/ AIEG (électricité) : décision relative aux soldes rapportés concernant l exercice d exploitation 2009 (B)643E/10 à (B)643E/ AIESH (électricité) : décisions relatives aux soldes rapportés concernant l exercice d exploitation 2009 (B)644E/ TECTEO (électricité) : décision relative à la proposition tarifaire accompagnée du budget pour la période régulatoire (B)645G/14 à (B)645G/ (B)646E/14 à (B)646E/ ALG (gaz naturel) : décisions relatives à la demande d approbation de la proposition tarifaire accompagnée du budget pour l exercice d exploitation 2007 ainsi qu à l application des tarifs pour le même exercice d exploitation 2007 et à la constatation d un bonus ou d un malus résultant des tarifs appliqués pour l exercice d exploitation 2008 RÉGIE DE L ÉLECTRICITÉ DE LA VILLE DE WAVRE (électricité) : décisions relatives à la constatation de l existence d un bonus ou d un malus résultant des tarifs appliqués au cours de l exercice d exploitation 2008 et pour l exercice d exploitation 2006 (B)655E/ (B)655G/ SIBELGA (électricité) : décision relative aux soldes rapportés concernant l exercice d exploitation 2009 SIBELGA (gaz naturel) : décision relative aux soldes rapportés concernant l exercice d exploitation 2009 (B)658E/15 à (B)658E/ ELIA : décisions relatives aux soldes rapportés concernant l exercice d exploitation 2009 (B)658E/ ELIA : décision relative au retrait de la décision (B) CDC-130 du 20 mars 2003 relative aux conditions générales de la convention provisoire pour l utilisation non exclusive du réseau Elia par des utilisateurs éligibles raccordés aux réseaux de distribution établis en région wallonne ou en région bruxelloise Confidential 99

101 6. The CREG Other acts (F) CDC (F) CDC (A) CDC (F) CDC (A) CDC (B) CDC (B) CDC (A) CDC (B) CDC (E) CDC (F) CDC (F) CDC (F) CREG (A) CDC Étude relative à l impact possible de la voiture électrique sur le système électrique belge Studie over de mogelijke impact van de elektrische auto op het Belgische elektriciteitssysteem Étude relative aux composantes des prix de l électricité et du gaz naturel Studie over de componenten van de elektriciteits- en aardgasprijzen Advies over de aanvraag van de N.V. Fluxys voor de toekenning van een bijvoegsel bij de vervoersvergunning voor de vervoersinstallaties DN600 LD Antwerpen (SIBP) Schelle en DN400 HD Antwerpen (GCA) Hoboken Étude relative au développement d un marché régional compétitif du gaz naturel à faible pouvoir calorifique Studie over de uitbouw van een regionale competitieve markt voor laagcalorisch aardgas Avis relatif à la demande de la S.A. Fluxys pour l octroi d une autorisation de transport A pour la modification de la station de compression à Haccourt (Oupeye) Décision relative à la demande d approbation de modification du programme indicatif de transport de la S.A. Fluxys relatif à ses activités d acheminement pour la période Beslissing over de vraag tot goedkeuring van de wijziging van het indicatief vervoersprogramma van de N.V. Fluxys voor wat betreft haar overbrengingsactiviteiten voor de periode Décision sur la proposition (à nouveau) adaptée de contrat standard d accès du client final au réseau de transport de gaz naturel (appelé le «contrat standard de raccordement») Beslissing over het (andermaal) aangepaste voorstel van standaardcontract voor de toegang van de eindafnemer tot het aardgasvervoersnet (het zgn. standaard aansluitingscontract ) Advies over de aanvraag van de N.V. Fluxys voor de toekenning van een vervoersvergunning voor de vervoersinstallaties DN250 HD Evergem (Caelbeek - Doornzele) en DN150 HD Evergem (Doornzele) Algist Bruggeman Onderzoek over de controle op de redelijkheid van de directe en indirecte kosten van de permanente expert en de overige kosten van Sibelgas cvba Proposition relative à la nécessité d un renouvellement des autorisations individuelles de production de SPE S.A., suite à son changement de contrôle par le rachat de SEGEBEL S.A. par EDF Belgium S.A. Étude relative à l aperçu des contrats à prix fixes sur le marché résidentiel de l électricité et du gaz Studie over het overzicht van de contracten tegen vaste prijzen op de residentiële markt voor elektriciteit en gas Étude sur une première estimation du coût des mesures visées à l article 7 de la loi du 29 avril 1999 relative à l organisation du marché de l électricité Studie over de eerste raming van de kostprijs van de maatregelen bedoeld in artikel 7 van de wet van 29 april 1999 betreffende de organisatie van de elektriciteitsmarkt Etude relative à la possible connexion entre le terminal GNL de Dunkerque et le réseau de transport de gaz naturel belge Studie betreffende de mogelijke verbinding tussen de LNG-terminal te Duinkerke en het Belgisch aardgasvervoersnet Avis relatif à la demande d approbation des modifications proposées par Belpex concernant le règlement de marché de Belpex Advies over de aanvraag tot goedkeuring van de door Belpex voorgestelde wijzigingen aan het Belpex marktreglement Confidential Published on 100

102 6. The CREG (F) CDC erratum 12/05/2010 (F) CDC (B) CDC (B) CDC (A) CDC (T) CDC (A) CDC (A) CDC (A) CDC (A) CDC (A) CDC (F) CDC (F) CDC (B) CDC (F) CDC Étude relative au marché belge à court terme d électricité Belpex et à l utilisation de la capacité aux interconnexions avec la France et les Pays-Bas en 2009 Studie over de Belgische kortetermijnmarkt voor elektriciteit Belpex en het gebruik van de capaciteit op de interconnecties met Frankrijk en Nederland in 2009 Étude relative à la qualité du paramètre Nc Studie over de kwaliteit van de Nc-parameter Beslissing om [confidentiel] geen administratieve geldboete op te leggen Beslissing om [confidentiel] geen administratieve geldboete op te leggen Avis relatif à l octroi d une autorisation individuelle de fourniture de gaz naturel à ENLOGS Energy Logistics and Services GmbH Verslag van de feitelijke vaststellingen betreffende de directe en indirecte kosten van de permanente expert en de overige kosten van Sibelgas cvba Advies over de aanvraag van de N.V. Fluxys voor de toekenning van een bijvoegsel bij de vervoersvergunning A voor de vervoersinstallatie Herent (Winksele) Compressiestation Avis relatif à la demande de la S.A. Fluxys pour l octroi d une autorisation de transport A concernant une DN250 BP Charleroi IGH Viaduc 2 Avis relatif à l indépendance d un administrateur indépendant au sein du conseil d administration du gestionnaire du réseau national de transport d électricité Avis relatif à l octroi d une autorisation individuelle de fourniture de gaz naturel à Gas Natural Europe SAS Advies over de aanvraag van de N.V. Fluxys voor de toekenning van een vervoersvergunning voor de vervoersinstallaties DN150 HD Leuven (Wilsele ontspanning Kesselstraat) en DN150 HD Leuven (Wilsele Kesselstraat) AB Inbev Étude relative à l achat d énergie pour la compensation des pertes d énergie par les gestionnaires de réseau de distribution entre 2006 et 2008 Studie over de aankoop van energie voor de compensatie van de netverliezen door de distributienetbeheerders tussen 2006 en 2008 Étude relative à l éventuelle suppression ou exonération des tarifs d injection pour les installations de production sur la base de l énergie renouvelable et de la cogénération qualitative Studie betreffende de mogelijke schrapping of vrijstelling van injectietarieven voor de productieinstallaties op basis van hernieuwbare energie en kwalitatieve WKK Décision relative à la demande d approbation de modification du programme indicatif de transport de la S.A. Fluxys relatif à ses activités d acheminement pour la période Beslissing over de vraag tot goedkeuring van de wijziging van het indicatief vervoersprogramma van de N.V. Fluxys, voor wat betreft haar overbrengingsactiviteiten voor de periode Étude relative à la demande d élargissement du champ d application de l arrêté royal du 16 juillet 2002 relatif à l établissement de mécanismes visant la promotion de l électricité produite à partir de sources d énergie renouvelables aux installations de cogénération reliées au réseau de transport fédéral Studie over de vraag tot uitbreiding van het toepassingsgebied van het koninklijk besluit van 16 juli 2002 betreffende de instelling van mechanismen voor de bevordering van elektriciteit opgewekt uit hernieuwbare energiebronnen, op kwalitatieve warmtekrachtinstallaties aangesloten op het federaal transmissienet Confidential Published on 101

103 6. The CREG (F) CDC (B) CDC (B) CDC (B) CDC (F) CDC (Z) CDC (F) CDC (B) CDC (E) CDC (C) CDC (F) CDC Étude relative aux modifications à apporter à la loi du 29 avril 1999 relative à l organisation du marché de l électricité en vue d améliorer le fonctionnement et le suivi du marché de l électricité Studie over wijzigingen aan te brengen aan de wet van 29 april 1999 betreffende de organisatie van de elektriciteitsmarkt voor het verbeteren van de werking en de opvolging van de elektriciteitsmarkt Décision relative à la modification des conditions générales des contrats de responsable d accès proposés par le gestionnaire du réseau de transport d électricité aux utilisateurs du réseau Beslissing over de wijziging van de algemene voorwaarden van de contracten van toegangsverantwoordelijke aangeboden door de transmissienetbeheerder voor elektriciteit aan de netgebruikers Décision relative aux règles complémentaires pour le calcul de la marge à calculer afin de définir les prix maximaux d électricité à appliquer aux clients non protégés dont le contrat de fourniture a été résilié Beslissing over de nadere regels betreffende de berekening van de marge te berekenen voor de bepaling van de maximumprijzen elektriciteit toe te passen op niet-beschermde gedropte klanten Décision relative aux règles complémentaires pour le calcul de la marge à calculer afin de définir les prix maximaux du gaz naturel à appliquer aux clients non protégés dont le contrat de fourniture a été résilié Beslissing over de nadere regels betreffende de berekening van de marge te berekenen voor de bepaling van de maximumprijzen aardgas toe te passen op niet-beschermde gedropte klanten Étude relative aux différents mécanismes de soutien de l électricité verte en Belgique Studie over de verschillende ondersteuningsmechanismen voor groene stroom in België Rapport comparatif des objectifs formulés dans la note de politique générale de la CREG et des réalisations de l année 2009 Vergelijkend verslag van de doelstellingen geformuleerd in het beleidsplan van de CREG en van de verwezenlijkingen van het jaar 2009 Étude sur la structure de coûts de la production d électricité par les centrales nucléaires en Belgique Studie over de kostenstructuur van de elektriciteitsproductie door de nucleaire centrales in België Décision relative à la demande d approbation de modification du programme indicatif de transport de la S.A. Fluxys, relatif à ses activités de stockage, pour la période Beslissing over de vraag tot goedkeuring van de wijziging van het indicatief vervoersprogramma van de N.V. Fluxys, voor wat betreft haar opslagactiviteiten, voor de periode Voorstel betreffende de toekenning van individuele vergunningen voor de vestiging van twee installaties voor de productie van elektriciteit op de site van Dilsen door DILS-ENERGIE N.V. Proposition d arrêté royal portant modification de l article 7, 2, de l arrêté royal du 16 juillet 2002 relatif à l établissement de mécanismes visant la promotion de l électricité produite à partir de sources d énergie renouvelables Voorstel van koninklijk besluit tot wijziging van artikel 7, 2, van het koninklijk besluit van 16 juli 2002 betreffende de instelling van mechanismen voor de bevordering van elektriciteit opgewekt uit hernieuwbare energiebronnen Étude relative à la faisabilité de l instauration d une tarification progressive de l électricité en Belgique Studie betreffende de haalbaarheid van de invoering van een progressieve prijszetting van elektriciteit in België Confidential Published on 102

104 6. The CREG (B) CDC erratum 15/07/2010 (F) CDC (A) CDC (A) CDC (F) CDC (F) CDC Décision relative à la demande d approbation de modification du programme indicatif de transport de la S.A. Fluxys relatif à ses activités d acheminement pour la période Beslissing over de vraag tot goedkeuring van de wijziging van het indicatief vervoersprogramma van de NV Fluxys, voor wat betreft haar overbrengingsactiviteiten voor de periode Étude complémentaire à l étude (F) CDC-537 relative à l impact du système des quotas d émissions de CO 2 sur le prix de l électricité en Belgique en 2009 Studie aanvullend bij studie (F) CDC-537 over de impact van het systeem van CO 2 - emissierechten op de elektriciteitsprijs in België in 2009 Avis relatif à la demande de la S.A. Fluxys pour l octroi d un avenant à l autorisation de transport A pour le prolongement de la canalisation DN250 HP Mons (Obourg-Nimy) Avis relatif à l octroi d une autorisation individuelle de fourniture de gaz naturel à natgas Aktiengesellschaft Étude relative à la facturation des tarifs d injection pour les producteurs décentralisés en cas de tarifs reflétant les coûts de raccordement et de tarification de l utilisation du réseau Studie betreffende de aanrekening van injectietarieven voor decentrale producenten in geval van kostenreflectieve aansluitingstarieven en tarifering voor het gebruik van het net Studie betreffende de opmerkingen over het artikel Nuclear Market Power: Taxation or Liberalization? mede geschreven door professor Proost (KULeuven) Rapport annuel 2010 de la Belgique à la Commission européenne (R) CDC (B) CDC (B) CDC (B) CDC (RA) CDC (F) CDC Lignes directrices concernant la distinction entre activités régulées et non régulées du gestionnaire de réseau de distribution Richtlijnen over de scheiding tussen gereguleerde en niet gereguleerde activiteiten van de distributienetbeheerder Beslissing betreffende de vraag tot goedkeuring van de wijziging van het contract voor het aankopen van groenestroomcertificaten tussen de N.V. Elia System Operator en de N.V. Belwind Décision relative à la modification des conditions générales des contrats de responsable d accès proposés par le gestionnaire du réseau de transport d électricité aux utilisateurs du réseau Beslissing over de wijziging van de algemene voorwaarden van de contracten van toegangsverantwoordelijke aangeboden door de transmissienetbeheerder voor elektriciteit aan de netgebruikers Décision sur la demande d approbation de la méthode d évaluation et de la détermination de la puissance de réserve primaire, secondaire et tertiaire pour 2011 Beslissing over de vraag tot goedkeuring van de evaluatiemethode voor en de bepaling van het primair, secundair en tertiair reservevermogen voor 2011 Rapport relatif au caractère manifestement déraisonnable ou non des prix offerts à Elia System Operator NV pour la fourniture de services auxiliaires pour l exercice d exploitation 2011 Étude relative aux modifications à apporter à la loi du 12 avril 1965 relative au transport de produits gazeux et autres par canalisations en vue d améliorer le fonctionnement et le suivi du marché du gaz naturel et conformément à la directive 2009/73/CE du Parlement européen et du Conseil du 13 juillet 2009 concernant des règles communes pour le marché intérieur du gaz naturel et abrogeant la directive 2003/55/CE Studie over de wijzigingen aan te brengen aan de wet van 12 april 1965 betreffende het vervoer van gasachtige producten en andere door middel van leidingen voor het verbeteren van de werking en de opvolging van de aardgasmarkt en in overeenstemming met de Richtlijn 2009/73/EG van het Europees parlement en de Raad van 13 juli 2009 betreffende gemeenschappelijke regels voor de interne markt voor aardgas en tot intrekking van Richtlijn 2003/55/ EG Confidential Published on 103

105 6. The CREG (F) CDC (F) CDC (F) CDC (B) CDC (B) CDC (A) CDC (F) CDC (F) CDC (B) CDC Étude relative aux objections de la Commission européenne telles que décrites dans son avis motivé du 24 juin 2010 (infraction n 2009/2211) Studie over de bezwaren van de Europese Commissie zoals beschreven in haar met redenen omkleed advies van 24 juni 2010 (overtreding n 2009/2211) Étude relative aux modifications à apporter à la loi du 29 avril 1999 relative à l organisation du marché de l électricité en vue d améliorer le fonctionnement et le suivi du marché de l électricité et conformément à la Directive 2009/72/CE du Parlement européen et du Conseil du 13 juillet 2009 concernant des règles communes pour le marché intérieur de l électricité et abrogeant la Directive 2003/54/CE Studie over de wijzigingen aan te brengen aan de wet van 29 april 1999 betreffende de organisatie van de elektriciteitsmarkt voor het verbeteren van de werking en de opvolging van de elektriciteitsmarkt en in overeenstemming met richtlijn 2009/72/EG van het Europees Parlement en de Raad van 13 juli 2009 betreffende gemeenschappelijke regels voor de interne markt voor elektriciteit en tot intrekking van Richtlijn 2003/54/EG Étude relative à l impact de l arrêt de centrales nucléaires sur le prix de vente de l électricité au client final domestique Studie over de impact van de stopzetting van de kerncentrales op de verkoopprijs van elektriciteit aan de huishoudelijke eindafnemer Décision relative à la modification des conditions générales des contrats de responsable d accès proposés par le gestionnaire du réseau de transport d électricité aux utilisateurs du réseau Beslissing over de wijziging van de algemene voorwaarden van de contracten van toegangsverantwoordelijke aangeboden door de transmissienetbeheerder voor elektriciteit aan de netgebruikers Décision relative à la demande d approbation du programme indicatif de terminalling de la S.A. Fluxys LNG Beslissing over de vraag tot goedkeuring van het indicatief terminallingprogramma van de N.V. Fluxys LNG Avis relatif à la demande d approbation des modifications proposées par Belpex au règlement de marché de Belpex Advies over de aanvraag tot goedkeuring van de door Belpex voorgestelde wijzigingen aan het Belpex marktreglement Étude relative à la comparaison entre les prix payés par Elia System Operator S.A. pour l achat d énergie en compensation des pertes actives sur ses réseaux régionaux avec les prix de l énergie payés par les grands clients industriels au cours de l exercice d exploitation 2009 Étude relative à la relation entre les coûts et les prix des importateurs, des revendeurs et des fournisseurs sur le marché belge résidentiel et industriel du gaz naturel sur la période Studie over de verhouding tussen de kosten en de prijzen van invoerders, doorverkopers en leveranciers op de Belgische residentiële en industriële aardgasmarkt tijdens de periode Décision relative à la demande d approbation de la proposition de la S.A. Elia System Operator de modification des méthodes de gestion de la congestion et des méthodes pour l allocation aux responsables d accès de la capacité disponible pour les échanges d énergie avec le réseau français et avec le réseau néerlandais, telles qu établies dans le cadre de l initiative régionale Centre-Ouest européenne Beslissing over de aanvraag tot goedkeuring van het voorstel van de NV Elia System Operator tot wijziging van de methodes voor congestiebeheer en de methodes voor de toekenning aan de toegangsverantwoordelijken van de capaciteit die beschikbaar is voor energie-uitwisselingen met het Franse en het Nederlandse net, zoals vastgelegd in het kader van het Centraal West-Europees regionaal initiatief Confidential Published on 104

106 6. The CREG (A) CDC (F) CDC (B) CDC (B) CDC (F) CDC (E) CDC (F) CDC (A) CDC (Z) CDC (F) CDC (F) CDC (C) CDC (A) CDC Avis relatif au projet de plan de développement de la S.A. Elia System Operator Advies over het ontwerp van ontwikkelingsplan van de N.V. Elia System Operator Étude relative à la comparaison des prix de l électricité pour un ménage consommant kwh d électricité grise (tarif unique) à Bruxelles, Paris, Berlin, Amsterdam et Londres Studie over de vergelijking van de elektriciteitsprijzen voor een gezin met een verbruik van kwh grijze elektriciteit (enkelvoudig tarief) in Brussel, Parijs, Berlijn, Amsterdam en Londen Décision relative à la demande d approbation de la proposition de la S.A. Elia System Operator relative au plan général pour le calcul de la capacité totale de transfert et de la marge de fiabilité du transport et aux méthodes de gestion de la congestion pour les échanges d énergie avec le réseau français et avec le réseau néerlandais, telles qu établies dans le cadre du couplage des marchés de la région Centre-Ouest européenne Beslissing over de aanvraag tot goedkeuring van het voorstel van de NV Elia System Operator betreffende het algemeen model voor de berekening van de totale overdrachtcapaciteit en de transportbetrouwbaarheidsmarge en betreffende de methodes voor congestiebeheer voor energie-uitwisselingen met het Franse en het Nederlandse net, zoals vastgelegd in het kader van de marktkoppeling van de Centraal West-Europese regio Décision relative à la demande d approbation de la proposition de la S.A. Elia System Operator relative aux méthodes de gestion de la congestion et aux méthodes pour l allocation aux responsables d accès de la capacité disponible en journalier sur les interconnexions Belgique- France et Belgique-Pays-Bas au moyen d enchères implicites faite dans le cadre du couplage des marchés de la région Centre-Ouest européenne Beslissing over de aanvraag tot goedkeuring van het voorstel van de NV Elia System Operator betreffende de methodes voor congestiebeheer en de methodes voor het toekennen, aan de toegangsverantwoordelijken, van de beschikbare dagcapaciteit op de koppelverbindingen België-Frankrijk en België-Nederland via impliciete veilingen, gedaan in het kader van de marktkoppeling van de Centraal West-Europese regio Étude sur l accord nucléaire en Allemagne et son application en Belgique Studie over het nucleair akkoord in Duitsland en de toepassing ervan op België Proposition relative à l octroi d une autorisation de fourniture d électricité à la Pfalzwerke A.G. Studie over de vergelijking van de prijzen die Eandis cvba betaalde voor de aankoop van energie ter compensatie van actieve verliezen op haar distributienetten met de energieprijzen betaald door de grote industriële klanten tijdens het exploitatiejaar 2009 Avis relatif à la demande de la S.A. Fluxys pour l octroi d une autorisation de transport A concernant une DN300 HP Visé (Quai des Fermettes) SPE Lixhe (Navagne) Note de politique générale pour l année 2011 Beleidsplan voor het jaar 2011 Étude relative aux composantes des prix de l électricité et du gaz naturel Studie over de componenten van de elektriciteits- en aardgasprijzen Étude relative à la comparaison entre les prix payés par les GRDs mixtes wallons regroupés au sein de ORES SCRL pour l achat d énergie en compensation des pertes actives sur les réseaux régionaux avec les prix de l énergie payés par les grands clients industriels au cours de l exercice d exploitation 2009 Proposition sur le calcul de la surcharge destinée à compenser le coût réel net supporté par le gestionnaire du réseau résultant de l obligation d achat et de vente des certificats verts en 2011 Avis relatif à la demande de la S.A. Fluxys pour l octroi d une autorisation de transport A concernant une DN150 HP Lessines-Baxter Confidential Published on 105

107 6. The CREG (A) CDC (E) CDC (A) CDC (A) CDC (B) CDC (A) CDC erratum 08/12/2010 (B) CDC (B) CDC (B) CDC (B) CDC (B) CDC (F) CDC (E) CDC Advies over de toekenning van een individuele leveringsvergunning voor aardgas aan Progress Energy Services BVBA Voorstel betreffende de toekenning van een vergunning voor de levering van elektriciteit aan Essent Belgium N.V. Advies over de aanvraag van de N.V. Fluxys voor de toekenning van een vervoersvergunning voor de vervoersinstallatie DN300 LD Merelbeke (Gaversesteenweg) Gent (Zwijnaarde Ringvaart) Advies over de aanvraag van de N.V. Fluxys voor de toekenning van een vervoersvergunning voor de vervoersinstallatie Dendermonde (Oudegem Paalstraat) Station Ontspanning Beslissing over de aanvraag van Belwind voor toekenning van groenestroomcertificaten voor de elektriciteit opgewekt door windturbines A04, B02, B06, B07 en C02 op de Blighbank Avis relatif au projet d arrêté royal modifiant l arrêté royal du 20 décembre 2000 relatif aux conditions et à la procédure d octroi des concessions domaniales pour la construction et l exploitation d installations de production d électricité à partir de l eau, des courants ou des vents, dans les espaces marins sur lesquels la Belgique peut exercer sa juridiction conformément au droit international de la mer Advies over het ontwerp van koninklijk besluit tot wijziging van het koninklijk besluit van 20 december 2000 betreffende de voorwaarden en de procedure voor de toekenning van domeinconcessies voor de bouw en de exploitatie van installaties voor de productie van elektriciteit uit water, stromen of winden, in de zeegebieden waarin België rechtsmacht kan uitoefenen overeenkomstig het internationaal zeerecht Beslissing over de aanvraag van Belwind voor toekenning van groenestroomcertificaten voor de elektriciteit opgewekt door windturbines A05, A10, B01, B03, B05, B08, B09, B10, C03, C04, C05, C06, C07, C09, C10, D01, D02, D03, D04, D05, D06, D07, D10, F03 en F05 op de Blighbank Advies over de aanvraag van de N.V. Fluxys voor de toekenning van een vervoersvergunning voor de vervoersinstallatie DN250 HD Brugge (Dudzele P.S. - Oostkerkestraat) Advies over de aanvraag van de N.V. Fluxys voor de toekenning van een bijvoegsel bij de vervoersvergunning voor de vervoersinstallatie Brugge (Dudzele Oostkerkestraat) - Station Décision relative à la demande d approbation de la proposition de la S.A. Elia System Operator relative aux méthodes de gestion de la congestion et aux méthodes pour l allocation aux responsables d accès de la capacité disponible sur l interconnexion Belgique-France Beslissing over de aanvraag tot goedkeuring van het voorstel van de N.V. Elia System Operator betreffende de methoden voor congestiebeheer en de methoden voor de toekenning van de beschikbare capaciteit op de koppelverbinding België-Frankrijk aan de toegangsverantwoordelijken Décision relative à la modification des conditions générales des contrats de responsable d accès proposés par le gestionnaire du réseau aux utilisateurs du réseau Beslissing over de wijziging van de algemene voorwaarden van de contracten van toegangsverantwoordelijke aangeboden door de transmissienetbeheerder voor elektriciteit aan de netgebruikers Étude relative à l évolution du terme fixe et/ou de capacité dans le réseau de distribution entre 2003 et 2009 Studie over de evolutie van de vaste en/of capaciteitsterm in het distributienettarief tussen 2003 en 2009 Voorstel betreffende de toekenning van een individuele vergunning voor de bouw van een warmtekrachtkoppelingeenheid door de N.V. Stora Enso Langerbrugge te Langerbrugge (Gent) Confidential Published on 106

108 6. The CREG (E) CDC (E) CDC (B) CDC (F) CDC (A) CDC (B) CDC (B) CDC (B) CDC (B) CDC (A) CDC Proposition relative à l octroi d une autorisation de fourniture à Enovos Luxembourg S.A. Proposition relative à l octroi d une autorisation individuelle relative à l extension d une installation de production d électricité (parc éolien) à Mettet/Fosses-la-Ville par la S.A. Électricité du Bois du Prince Décision relative à la modification des conditions générales des contrats de responsable d accès proposés par le gestionnaire du réseau aux utilisateurs du réseau Beslissing over de wijziging van de algemene voorwaarden van de contracten van toegangsverantwoordelijke aangeboden door de transmissienetbeheerder voor elektriciteit aan de netgebruikers Étude relative aux mécanismes de fixation des prix de l énergie en vigueur en 2009 au sein des contrats de fourniture d électricité des grands clients industriels de Electrabel S.A. Avis relatif à l octroi d une autorisation individuelle de fourniture de gaz naturel à Enovos Luxembourg S.A. Décision sur la demande d approbation de la méthode d évaluation et de la détermination de la puissance de réserve primaire, secondaire et tertiaire pour 2011 Décision concernant la proposition de la S.A. Elia System Operator concernant les règles de fonctionnement du marché relatif à la compensation des déséquilibres quart-horaires pour l année 2011 Beslissing over het voorstel van de NV Elia System Operator betreffende de werkingsregels van de markt voor de compensatie van de kwartieronevenwichten voor 2011 Décision relative à la demande d approbation du programme indicatif de transport de la S.A. Fluxys relatif à ses activités d acheminement pour la période Beslissing over de vraag tot goedkeuring van het indicatief vervoersprogramma van de NV Fluxys, voor wat betreft haar overbrengingsactiviteiten voor de periode Beslissing over de aanvraag van Belwind voor toekenning van groenestroomcertificaten voor de elektriciteit opgewekt door windturbines A01, A02, A03, A06, A07, A08, A09, B04, C01, D09, E01, E02, E03, E04, E05, E06, E07, E08, E09, E10, F02 en F04 op de Blighbank Advies over de toekenning van een individuele leveringsvergunning voor aardgas aan Essent Belgium N.V. Confidential Published on 107

109 Chief Editor Bernard LACROSSE Rue de l Industrie, Brussels Design and production

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