Introduction to the Bundesnetzagentur BNetz A Visit of

Introduction to the Bundesnetzagentur (BNetz. A) Visit of FTS Bonn 01. 03. 2010 Annegret Groebel International Relations / Postal Regulation Bundesnetzagentur

Brief overview § 01. 1998: Regulierungsbehörde für Telekommunikation & Post (Reg. TP) • regulation of two sectors: telecommunications and postal services § New responsibilities: • electricity, gas (both Jul 2005) and railways (Jan 2006) regulation • Reg. TP renamed Bundesnetzagentur (BNetz. A) in July 2005 § BNetz. A’s task: • market intervention (deregulation) in order to • develop and promote sustainable competition in these markets 2

BNetz. A’s mission • Establish and secure fair competition (all sectors) • Provide and safeguard user interests, e. g. low-priced, efficient & eco-friendly supply of energy • Efficient and reliable network operation (power & gas) • Encourage efficient investment in infrastructure and promote innovation (telecoms) • Promote development of the internal market of the European Union (all sectors) • Ensure provision of elementary telecoms and postal services throughout Germany 3

The electricity market value chain Potentially competitive market segments Generation/ Production Wholes ale trading Transp ort and Distribu tion network s „Natural monopoly“ Suppl y ►Regulation > 1500 network operators 4 electricity TSOs 22 gas TSOs 4

Electricity Transmission System Operators in Germany 1 En. BW Transportnetz 2 E. ON Netz 3 RWE Transportnetz Strom 4 Vattenfall Europe Transmission Source: VDN, Daten und Fakten 2005 5

The Federal Network Agency § Sector-specific authority tasked with ensuring effective competition in the net-bound sectors § Telecommunications and Posts (since 1998), § Electricity and Gas (since 2005), and § Railways (since 2006) HQ in Bonn § BNetz. A employs ca. 170 staff in energy regulation, overall ca. 2600 § Independent higher federal authority in the scope of business of the Ministry of Economics and Technology (BMWi) 6

Organization chart (1) § Headed by President and two Vice-Presidents • nominated by government upon proposal of Advisory Council • appointed by the President of Germany § Advisory Council • members of Upper House of Parliament & Lower House of Parliament • advise BNetz. A on various issues § Ruling Chambers Ø key regulatory decisions executed by Ruling Chambers Ø one chairman and two vice chairs Ø clear rules for ruling chamber proceedings o o hearings oral proceedings participation in proceedings investigation rights Ø independent rulings § Departments: Economic, Legal and Technical for all five sectors 7

Organization chart (2) President Vice President's Chamber (Ruling Chamber 1) Information Technology and Security Department for Economic Regulation Telecoms incl. numbering Department for International Coordination & Postal Regulation Department for Energy Regulation Human Resource Accounting Department for Legal Telecoms Regulation Frequency Management Technical Telecoms Regulation incl. standardisation Department for Railway Regulation Ruling Chambers 2 3 4 5 6 Management Office 7 8 Regional Offices of BNetz. A 9 8

Organisation chart (3) Energy regulation – Ruling chambers Ruling Chambers BK 4 Investment Budgets, Individual Electricity Network Charges, Pipe-to-pipe competition BK 6 Electricity Network Access BK 7 Gas Network Access BK 8 Electricity Network Charges BK 9 Gas Network Charges 9

Organization chart (4) Department 6 Energy Regulation Ruling Chamber 4 Investment Budgets Ruling Chamber 6 Access to Power Grids Ruling Chamber 7 Access to Gas Grids Ruling Chamber 8 Electricity Tariff Approval Ruling Chamber 9 Gas Tariff Approval 601 Economic Policy Issues 607 Gas Distribution Network Access 602 Incentive Regulation, Benchmarking 608 Electricity Transmission Grid Access, Cross Border 603 Market Watch, Monitoring Electricity/Gas Transmission Network Access, Cross Border 604 Unbundling & Legal 610 Use of System Charges, Electricity 605 IT based Data Processing, Renewables 611 Use of System Charges, Gas 606 Electricity Distribution Grid Access 609 612 Cooperation with State authorities 10

Independent regulator ? § BNetz. A = higher federal authority located in scope of business of Ministry of Economics & Technology § What about independence? Ø no influence by market players Ø no influence on daily business by Ministry § Regulator has to be impartial § How can independence be guaranteed? Ø clear separation of responsibilities Ø rules that clearly define the roles Ø institutional set-up 11

Independent regulator ! § Transparency • consultations • oral hearings • publication of docs § Ruling chambers’ decisions • independent (consistency requirement) • no overruling by Ministry § No control at all? • Ministry can give directives, but they have to be published • BNetz. A decisions subject to legal review by independent courts 12

Accountability § Annual report on all five sectors § Activities report every two years on status and development of telecoms & energy markets § Monitoring report of energy sector § Report of the Monopolies Commission to be submitted every two years to report whethere is effective competition in the telecoms & energy markets § Report to the European Commission on energy matters to be submitted annually § Principles of its administration to be published at regular intervals 13

Division of labour Sectoral regulation vs. Competition law (1) § Energy Industry Act aims at a secure, low-priced, consumer-friendly, efficient, and environmentally compatible supply of electricity and gas (§ 1 (1)) § Competition and security of supply are equal aims of regulation (§ 1 (2)) § Electricity and gas networks have to be neutralised in order to create competition 14

Division of labour Sectoral regulation vs. Competition law (2) § Basic split of energy competences between the Federal level authorities: § Federal Network Agency: Network regulation under the Energy Industry Act, inter alia: § approving network access charges ex-ante § setting-up an incentive regulation scheme § ensuring non-discriminatory network access and set conditions § taking steps against abuse of market position by network operators § monitoring unbundling provisions § setting fines, where appropriate § Federal Cartel Office: Application of competition law in Generation/production and supply: § Abuse of market power in wholesale markets, § control of end-user prices, § merger control 15

BNetz. A & BKart. A (1) § Regulatory body for sector regulation: • economic and technical regulation • economic regulation: ex-ante & access regulation, ex-post control of abusive practices • technical regulation: frequency allocation, technical standards, radio monitoring etc. § Cartel office for competition policy § Clear line between regulator and cartel office: • definition of regulated services laid down in: • separate laws (e. g. Telecommunications Act, Energy Industry Act) • legal provision for information exchange to ensure legal security and avoid misunderstanding and double work 16

BNetz. A & BKart. A (2) § Collaboration between regulator and cartel office: • comments by cartel office prior to publishing decisions • agreements on defining relevant markets & determining SMP • facilitates investigating for both authorities § Applying same standards: • same threshold for dominance applied to all sectors to ensure close link between common competition policy and sector regulation 17

Division of labour Federal vs. regional level § Split of regulatory competencies § Regional competence for networks with fewer than 100. 000 customers § Regional competence for networks not crossing State borders § Regional Regulatory Authorities control tariffs, system responsibilities, unbundling provisions, conduct abuse proceedings for their operators § BNetz. A has in addition sole responsibility for EU level contact § Transfer of competencies from the States to BNetz. A is possible (currently 6 out of 16 States have indeed transferred their competencies to BNetz. A, all in all BNetz. A regulates 245 electricity and 220 gas networks) § Uniform regulation ensured through a joint Committee of BNetz. A and the 10 existing Regional Regulatory Authorities 18

Division of labour 10 Regional Regulatory Authorities Hamburg Brandenburg Nordrhein-Westfalen Sachsen-Anhalt Hessen Sachsen Rheinland-Pfalz Saarland Baden-Württemberg Bayern

Thank you for your attention! Annegret Groebel Department for International Relations / Postal Regulation Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen P. O. Box 80 01, 53105 Bonn, Germany E-Mail: annegret. groebel@bnetza. de Phone: +49 -228 -14 -9040