Ms. Upulka Weeraratne, Deputy General Manager (Energy Marketing), Ceylon Electricity Board (CEB)

Economic, legal, technical and financial skills are central to the administrative and economic regulation of the public utilities. The constantly changing environment not only requires proper response from the regulatory side, it is also essential to be aware of the global trends in the energy sector. The current economic climate across the world and the emergence of renewable energy sources have pointed to the need of addressing recent technological innovations that demand a different approach to regulatory practice. Corresponding to these new challenges the training course aims to focus on some of the discussed topics from a “smart perspective”.

Course Objectives:

This 6-day training course will be organised into thematic modules focusing on the hottest issues and global trends of energy sector regulation. The training program combines “classic” regulation under the traditional vertically integrated industry structure with up-to-date issues of regulation by discussing the topics from a “smart” point of view. The prime objective of the course is to provide basic technical, economic and legal regulatory skills that are needed to design and manage successful regulatory systems for the energy industry.

During the Course the following broad themes are addressed:

• Role and functions of the regulator
• Price and tariff regulation
• Competition and regulation in electricity and gas
• The interlinks between energy policy and regulation
• Investment, innovation incentives and conclusion
• + A full day site visit to Paks Nuclear Power Plant

Visit to Paks Nuclear Power Plant

The program will feature a day-long visit of the Paks Nuclear Power Plant which has been generating electricity for more than 30 years. The plant will be extended with two new power units (each with the capacity of 1200MW by the late 2020s). The program will include presentation of the Visitors’ Centre followed by a guided tour of the Secondary System.

Target Audience:

The course is available to practising energy regulators and to non-regulators such as ministry and local government representatives, banking institutions, law and investment firms, consulting companies and regulated utility companies.

Course Syllabus:

MODULE 1 – ROLE AND FUNCTIONS OF THE REGULATOR (Day 1 – Monday)

The principal objectives of the regulatory institutions are a) to protect energy consumers from monopoly pricing and behaviour; b) to protect private investment from politically dictated prices and from regulatory uncertainty and c) to monitor and foster energy market competition. In order to meet the above objectives under a private and increasingly competitive industry setting, the regulator should be a decision making body highly independent from short-term political influences and direct industry interests. This module provides participants with an overview on the objectives as well as on the institutional setting and decision making processes of energy regulatory institutions. Common tasks for energy regulators (stemming from the need for economic regulation) are discussed. Ownership structure in the regulated sector has strong impact on the regulation. Publicly owned utilities are still dominant form in many economies (both in emerging and developed markets), so the challenges regulators face in this situation will be looked at in a dedicated lecture. Also, a dedicated case study on Oman will be introduced in this first module.

Day 2– Tuesday: will be dedicated to a site visit to the PAKS nuclear power plant, with presentation on the plant operations

MODULE 2 – PRICE AND TARIFF REGULATION (Day 3 –Wednesday)

One of the principal tasks of energy regulators is to set or authorise regulated prices for the companies under regulation. Participants will be provided with the theoretical basics and also an overview of the price regulatory process, including the setting of the revenue requirement, tariff design alternatives and questions in the choice of a price regulatory regime. Participants will be involved in a hands-on exercise to determine a tariff based on their new skills. A dedicated presentation will cover retail price regulation and social issues in emerging economies. The available models of retail price regulation, pro and contras of the various price setting mechanism will be look at in details. Emerging social issues of market reforms, possible instruments to handle social issues (energy poverty, coverage issues), and their advantages – disadvantages will be introduced.

MODULE 3 – COMPETITION AND REGULATION IN ELECTRICITY AND GAS; IMPACT OF REENEWABLE POLICY GOALS (Day 4 –Thursday)

A major change in electricity industry structure which also transforms the regulator’s entire job is when competition is introduced into the operations of the traditionally vertically integrated sector. This part of the course will introduce the basic ideas and principles behind recent restructuring and liberalisation process in the electricity sector, with a special emphasis on the competitiveness issue. The practice of unbundling and providing regulated access to essential facilities is discussed. Different models of wholesale and retail competition are introduced. Dedicated lecture will cover the natural gas sector, where additional challenges are faced in introducing competition amongst suppliers. Issues with network access and long term contract on competition will be addressed in details. Climate change concerns coupled with high oil prices and increasing government support are driving increasing renewable energy legislation and incentives all around the world. The role of energy regulators in recognizing the advantages of renewables is very complex. Regulators are to provide necessary supports to develop new project while these incentives must be consistent with basic regulatory policies. Participants will learn about the renewable policy instruments and their use in the energy sector with focus on the regulatory tools to support renewable energy. The impact of renewables on the functioning of competitive energy markets (e.g. merit order effects, and impacts on investments in generation) will also be assessed. The new emerging directions in renewables policies to make support schemes more competitive by utilizing tenders will be scrutinized based on examples of best practices of EU member states as well as in non-EU countries.

MODULE 4– THE INTERLINKS IN ENERGY POLICY AND REGULATION (Day 5- Friday)

This special day is dedicated to the introduction ion of the EU energy policy fundamentals, where the main drivers and targets of the present EU policy will be discussed, including security of supply considerations, climate commitments, renewable policies, technology dynamics and digitalization presently driving the European policy agenda. The impact of these policies on the sector regulation will be introduced. Although based on European examples, the lessons learnt from the lecture cover global trends in energy market developments and its regulation. A dedicated presentation will cover the global gas market trends and competition policy related issues in the sector. The value chain in natural gas markets, operations of LNG markets, the present trends in the EU gas market regulation (source diversification and liberalization) and the infrastructure regulation will be introduced with illustrative cases. The various type of price formation in natural gas markets will be introduced and market transparency and monitoring issues will also be covered in the presentation.

MODULE 5 – INVESTMENT AND INNOVATION INCENTIVES (Day 6 – Saturday)

The ‘missing money’ problem in the energy sector is a phenomenon that affects not only the developing countries, but recently also frequently appear in developed countries as well. If the required investment levels are not achieved in a longer time horizon, it could seriously affect the service quality within the electricity sector. The details of incentive regulations, to overcome some of the problems in electricity network will be looked at, and the interaction of regulation and service quality will be assessed. A case study on Italy will serve as basis for examining the emerging issues in a real country example. The country serves as a good illustration, how innovative solutions in the sector could be incentivized, helping to solve some critical issues in electricity network regulation.