Interfaces between system operators, market operators and other market actors

The background for the paper is work done within the JWG C2/C5-05. Related work was published in 2002 based on the responses of a questionnaire circulated in 2001. This paper contains a review and an update of the conclusions made at that time, together with a description of market developments with increased focus on the interfaces between the market actors. Some of the findings of the 2001 questionnaire responses seemed to be linked to how long the market had been in operation. During the liberalization, most countries appear to take several steps instead of going for an over complicated solution immediately. A new questionnaire that focused on status of liberalization and the progress since 2001 has been circulated. Responses were received from 10 countries. The paper gives a brief description of the status for each country and discusses the driving forces. The findings are that for example both for USA and Europe external forces as political decisions are important. In USA the Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Council (NERC) are important drivers for the liberalization process. In Europe similarly the EU and the EU-Directives and associated regulations and guidelines are important drivers. The EU internal market directive defines fundamental principles and milestones for the process. To which extent the member states implement the changes differ. Some are in front while others just follow the minimum requirements. In USA the states are also in very different stages of liberalization. Other countries as Brazil, Korea and Japan are working on liberalization issues but are not currently fully liberalized. Another important observation is that market design is a continuous process where functions are introduced in steps. All the countries that early made steps in the direction of liberalization of electricity industry, have made reviews of their original schemes and are redesigning the markets. In Europe some changes have been made due to regulations imposed by the European Union, while other adaptations are made to enhance market functioning and to increase competition.