Market Operator (Regulatory Oversight)

This issue paper has been prepared by KEMA on behalf of ERRA, the Energy Regulatory
Regional Association. ERRA is a voluntary, non-profit, international organization, representing
22 energy regulators from Central and Eastern Europe and Central Asia who have primary
responsibility for energy regulation in their countries.1 More specifically, this report has
been ordered by the Licensing/Competition Committee, which currently examines the issue
of Market Operators (regulatory oversight) under its 2007 work plan.
The overall objective of this paper is to provide the Licensing/Competition Committee with
recommendations on the role of the regulator with respect to market operators. To provide
the necessary background, the report includes an analysis of the different market models
and segments, introduces the different terminologies and explains the role and time horizon
of different parts of the wholesale market. Furthermore, we also comment on the issue of regional
integration, which plays an increasingly important role in Europe and elsewhere. After
introducing the specific role and functions of a market operator, we discuss the role and
methods of regulators regarding supervision and development of the energy market.
Throughout these discussions, we provide examples from different countries, in order to provide
an overview of the different international practices and tendencies. Finally, our report
concludes with a summary and a number of recommendations regarding the role of regulators
with respect to market operators.


KEMA International B.V.

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