[PDF] - 1 Economic deg ree o f marke t openness Die Ene rg ie PDF Document

SLIDE 1

1

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

Degree

f

Marke t Openness

f

t he German E lec t r i c i t y Supp l y I ndus t r y

Chr i s toph Mü l l e r Wol fgang Wienken

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

Degree

f

Marke t Openness

Sta

te

f

l i be ra l i s a t i

n
f

t he Eu r

pean

e lec t r i c i t y marke ts va r i e s

– “Deg ree

f

marke t

penness

” has become a benchmark – Compar i sons

f

degrees

f

marke t

penness

take a l ega l v i ew – Rat io

f

cus tomer demand vo lumes e l i g i b l e t

sw

i t ch to t

ta

l demand vo lume

I

n t he case

f

t h e German E lec t r i c i t y Supp l y I ndus t r y : 100% ma rke t

penness

– Acco rd ing to t he l aw a l l cus tomers a re e l i g i b l e t

change

supp l i e r

Economic

deg r ee

f

marke t

penness

can d i f f e r f r

m a

l ega l deg ree

We used

the “ s ub t rac t i

n

me thod ” as i n t roduced by t he Bundeska r te l l amt

The fo l l

w

i ng g i ves an es t ima te

f

t he economic deg ree

f

marke t

penness
f

t h e German E l ec t r i c i t y I ndus t r y i n sum mer /au tumn 2002

SLIDE 2

2

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

Economic deg ree

f

marke t

penness
Economic

and l ega l deg ree

f

marke t

penness

can va ry due t

“ba

r r i e r s t

ent

r y ”

– Tar i f f and non

tar

i f f ba r r i e r s t

pa

r t i c i pa te i n t he mar ke t – For cus tomers as we l l as supp l i e r s

I

n t he fo l l

w

ing we focus

n

ta r i f f ba r r i e r s

n

t h e supp l y s i de

f

t he marke t

– Non- ta r i f f ba r r i e r s a re more d i f f i c u l t t

i

nc lude i n a quan t i t a t i ve ana l ys i s

» Targe t r esu l t i s a “ p e rcen tage f i gu re ” f

r

t he economic degr ee

f

ma rke t

penness

– Non- ta r i f f ba r r i e r s need a h ighe r degree

f

j udgement

» Are s tanda rds se t b y an i ncumben t p ro t ec t i ng cus tomers

r

s t

pp

ing new en t ran ts

Ex

is tence

f

supp l i e r s i n a marke t segmen t does no t i nd i ca te absence

f

ba r r i e rs t

en

t r y

– Supp l i e r s i n a marke t segmen t c

u

ld chose to

vercome ba

r r i e r s a t a cos t – I n such cases a marke t segmen t shou ld no t be c l a ssed as “economi ca l l y

pen

”

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

“Sub t rac t i

n

me thod ”

The

sub t rac t i

n

method ca l cu la t es the p r i ce ne t

f

a l l monopo l y componen ts (PR) . . .

A l l i nc l us i ve ( “ t

t

a l ” ) e l ec t r i c i t y p r i ce (PT ) minus A l l t axes ( t ) minus Network cha rges (PN) = Rema inde r (PR) f

r

ene rgy (PE) and sa les (PS)

.

. . and compares t h i s aga ins t a benchmark (PR*) , t ak ing account

f

– W ho lesa le p r i ces – Cos ts

f

b i l l i ng , r e ta i l , marke t i ng – A l l

w

ing fo r a supp l y marg in

We used

th i s me thod to ca l cu lat e an economic deg ree

f

marke t

penness

mE

d d t t l p p with customers

f

demand m

* R R E

< =

SLIDE 3

3

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

Approach f

r

t he domes t i c cus tomer segmen t

Data sou rce

We

inc luded the 60 l a rges t ne two rk a reas ( cover i ng 87% o f a l l c us tomers )

– A l l ca l cu la t i

ns

were done

n

a netwo rk i nd i v i dua l b as i s

We co

l l ec ted pub l i shed p r i ces da ta

n

p r i ces and ne two rk cha rges

– Standa rd Ta r i f f t ha t eve ry supp l i e r has t

f

f e r by l aw – “Bes t O f fe rs ” t ha t i ncumben ts supp l i e r s f r equen t l y make – Network cha rges eve ry ne twork

wner

pub l i shes

Componen ts

For

PT we ca l c u la ted a we igh t ed ave rage p r i c e

– From s tanda rd t a r i f f and bes t

f

f e r

f

t he i ncumbent – W eigh ted w i t h per cen tage

f

cus t

mers

s t i l l

n

s tandard t a r i f f ( 70 ,7%, un i f i ed ra te )

Fort we

i nc luded E lec t r i c i t y t ax , CHP levy , r enewab le l evy , muni c i pa l way l evy

– On a ne twork i ndi v i dua l bas i s where needed

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

Data f

r

t h e i ndus t r i a l cus tomer segmen t

The

da ta bas i s f

r

i ndus t r i a l cust

mers

i s no t as good as f

r

domes t i c cus tomer s

– Network cha rges a re ava i l ab le f

r

a lmos t a l l a reas – But end cus tomer p r i ces a re con f i den t i a l

For

PT we used Euros ta t

– Euros ta t pub l i shes end cus tomer p r i ces f

r

seven German c i t i es

» Er fu r t , Le ipz ig , Hannove r , F rank fu r t , München , Düsse ldo r f , Hamburg » Pr i ces a re g i ven net

f

a l l t axes f

r

seve ra l cus tomer t ypes ( hence no f u r t he r t axes cons ide red )

– W e used two cust

mers

t ypes

» Type A : 160 ,000 kWh pe r yea r / 100 k W peak demand / 1 600 u t i l i sa t i

n

hou r s » Type B : 1 ,250 ,000 kWh pe r yea r / 500 kW peak demand / 2500 u t i l i sa t i

n

hour s

– On ly l im i t ed samp le (14 cases i n 7 ne two rks )

For

PN we used t he ne two rk char ges

f

t he ne two rk

wners

i n t h e spec i f i c t

wns

– Low vo l t age connec t i

n

f

r

t ype A – Med ium vo l t age connec t i

n

f

r

t y pe B

SLIDE 4

4

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

Benchmark (PR* ) f

r

t he Rema i nde r (PR)

Two

componen t s i n PR : PE ( cos t s

f

ene rgy ) and PS ( cos t

f

sa l es ) Domes t i c Cus tomers

For

PE we used “

ppo

r tun i t y cost s ”

f

t he who lesa le marke t

f

2 . 6 c / kWh

– EEX spo t p r i ces f

r

Q2 /Q3 2002 ( hour l y auc t i

n

) – Va lued w i t h a domes t i c p ro f i l e (VDE W H0 , 4700 ut i l i sa t i

n

hou rs )

Bundeska

r te l l a mt a rgued fo r 3 . c / kWh fo r PR*

– Based

n

who lesa le p r i ces as g i v en above – Tha t wou ld l eave €12 pe r cus tomer and yea r f

r

r e ta i l , marke t i ng , b i l l i ng and marg i n – L i ch tb l i c k pub l i shed f i gu res

f

€25 pe r cus tomer and yea r

We used

3 .0 c / k Wh as PR* fo r d

mes

t i c cus tome rs I ndus t r i a l cus tomers

Lower

u t i l i sa t i

n

hou rs shou ld resu l t i n h i ghe r ene rgy p r i ces PE

Highe

r demand l eads t

a

l

wer

“ pe r kWh” componen t f

r

PS

We used

3 .0 c / k Wh as PR* fo r i n dus t r i a l cus tome rs

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

Resu l t s : Domes t i c cus tomers ( I )

I n t

ta

l 25 ne two rks w i t h PR<PR*

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Market price, net [c/kWh]

Network cha rge (PN) and t axes ( t ) Rema inde rs (PR) PR*

60 net w

rk areas

SLIDE 5

5

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

Resu l t s : Domes t i c cus tomers ( I I )

Average

PR a t 3 . 14 c / kWh, s tanda rd dev ia t i

n
f

.74 c / kWh

25

ne two rks w i t h PR<PR*

– Represen t i ng 13 . 5 M io . cus tomers / 40 .5 TWh o f d

mes

t i c e l ec t r i c i t y demand (39%) – Economic deg ree

f

marke t

penness
f

t he domes t i c marke t segment i s 61%

Var

ies cases cou ld be ca l cu la ted us ing

n

l y bes t

f

f e r

r

S tanda rd Ta r i f f f

r

PT

Base Case PT at Best Offer PT at Stan- dard Tariff Number of Networks where PR<PR* 25 48 20 Number of customers where PR<PR* 13.5 Mio. 26.1 Mio. 9.9 Mio. Percentage of demand where PR<PR* 39% 75% 29% Economic degree of market openness 61% 25% 71%

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

Resu l t s : I n dus t r i a l cus tomers ( I )

No case w i t h PR<PR*

2 4 6 8 10 12 14 16

Type A / München Type B / München Type B / Hannover Type A / Leipzig Type A / Hamburg Type B / Düsseldorf Type A / Hannover Type B / Frankfurt Type A / Frankfurt Type A / Düsseldorf Type B / Leipzig Type B / Erfurt Type B / Hamburg Type A / Erfurt

Market price, net of all taxes (c/kWh)

SLIDE 6

6

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

Resu l t s : I n dus t r i a l cus tomers ( I I )

PR a

re s i gn i f i can t l y above PR*

– Type A : Ave rage PR a t 5 .12 c / kWh , s tanda rd dev iat i

n
f

.78 c / kWh – Type B : Ave rage PR a t 5 .32 c / kWh , s tanda rd dev iat i

n
f

.77 c / kWh

Degree
f

marke t

penness

f

r

i ndus t r i a l cus tomer segmen t i s 100%

– Bas i s

f

a sma l l samp le – Sta rk d i f f e rence t

resu

l t s

f

domes t i c cus tomer s egmen t ra i ses conce rns – Non ta r i f f

ba

r r i e r s a re no t cove red , bu t a re more i mpor tan t f

r

l a rger cus tomers

But

: Resu l t s do no t comp ly w i t h “ ene rgy economics ”

– Average PR o f t y pe A cus tomers i s l

wer

t han ave r age PR fo r t ype B cus tomers

» Type B has h ighe r u t i l i sa t i

n

hou rs , whi ch shou ld l ead t

a

l

we

r p r i ce

– Average PR a re above p r i ces t ha t wou ld resu l t f r

m ex

t reme ly un f avou rab le demand p ro f i l es

» Demand ing 160 ,000 kWh ove r t he 1600 h ighes t p r i ce hou r s resu l t s i n 4 .3 c / k Wh » Demand ing 1 ,250 ,000 kWh ove r t he 2500 h ighes t p r i ce hou rs resu l t s i n 3 ,8 c / kWh

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

Conc lus ions

Economic

and l ega l deg ree

f

marke t

penness

can d i f f e r

The

l ega l deg ree

f

t he German e lec t r i c i t y mar ke t i s 100%

The

economic deg ree

f

t he German e lec t r i c i t y marke t i s l

we

r

– 91% when based

n

demand vo lumes – 61% when based

n

cus tomer numbers – W hen cons ide r i n g ta r i f f ba r r i e r s t

en

t r y

n

l y

Tar

i f f ba r r i e r s t

en

t r y a re more p resen t i n t he domes t i c marke tsegmen t

– I ssue i s t he d i f f e r en t i a l be tween ne twork cha rge and marke t p r i ce

» I ncumben t se t s bo t h (ne two rk cha rge and S tanda rd Ta r i f f ) » He igh t

f

t he ne twor k cha rge i s i n i t se l f no t an i s sue

– “Sub t rac t i

n

me t hod” can se rve as an app roach to i den t i f y t a r i f fba r r i e r s

Conce

rns abou t t he da ta qua l i t y f

r

i ndus t r i a l cus tomer segmen t

SLIDE 7

7

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

Back Up

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

Domes t i c e lec t r i c i t y p r i ces (PT ) and ne twor k cha rges (PN)

12 13 13 14 14 15 15 16 16 17 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 Standard Tariff Best Offer c/kWh

60 ne two rk a reas

5,0 5,5 6,0 6,5 7,0 7,5 8,0 8,5 9,0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 c/kWh

Network cha rge

SLIDE 8

8

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

Pr i ces (PT ) and Ne two rk cha rges (PN) f

r

i ndus t r i a l cus tomer s

2 4 6 8 10 12 14 16 Erfurt Leipzig Ham burg Frankfurt Düsseldorf Hannover M ünchen

160,000 kWh/a 1,250,000 kWh/a c/kWh

1 2 3 4 5 6 7 8 E rf urt Leipzig H am burg Frankf urt Düsseldorf Hannover München 160,000 kWh/a 1,250,000 kWh/a c/kW

Pr i ces (PN) Network cha rges (PN)

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

Domes t i c Pr i ces (PT ) aga ins t netwo rk cha rges and taxes ( PN + t )

Very

week co r r e la t i

n

be tween ne two r k cha rges (w i t h

r

w i t hou t t ax ) and end cus tomer p r i ces

0,0 2,0 4,0 6,0 8,0 10,0 12,0 14,0 16,0 18,0 5,0 5,5 6,0 6,5 7,0 7,5 8,0 8,5 9,0

Network charge pn Marekt price p T Electricity Price (excl. VAT) Electricity Price (excl. all taxes) c/kWh c/kWh t

SLIDE 9

9

Chr i s toph Mü l l e r/ Wo l f gang Wienken

Die Ene rg ie

AG.

I ndus t r i a l Pr i ces (PT ) aga ins t ne two rk cha rges (PN)

St rong co r re la t i

n