1 Economic deg ree o f marke t openness Die Ene rg ie - PDF document

Die Ene rg ie -AG. Degree o f Marke t Openness o 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 Degree o f Marke t Openness Die Ene rg ie -AG. • Sta te o f l i be ra l i s a t i on o f t he Eu r opean e lec t r i c i t y marke ts va r i e s – “Deg ree o f marke t openness ” has become a benchmark – Compar i sons o f degrees o f marke t openness take a l ega l v i ew – Rat io o f cus tomer demand vo lumes e l i g i b l e t o sw i t ch to t o ta l demand vo lume • I n t he case o 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 openness – Acco rd ing to t he l aw a l l cus tomers a re e l i g i b l e t o change supp l i e r • Economic deg r ee o f marke t openness can d i f f e r f r om a l ega l deg ree • We used the “ s ub t rac t i on me thod ” as i n t roduced by t he Bundeska r te l l amt The fo l l ow i ng g i ves an es t ima te o f t he economic deg ree o f marke t openness o 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 Chr i s toph Mü l l e r/ Wo l f gang Wienken 1

Economic deg ree o f marke t openness Die Ene rg ie -AG. • Economic and l ega l deg ree o f marke t openness can va ry due t o “ba r r i e r s t o ent r y ” – Tar i f f and non - tar i f f ba r r i e r s t o 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 ow ing we focus on ta r i f f ba r r i e r s on t h e supp l y s i de o 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 o 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 o r t he economic degr ee o f ma rke t openness – Non- ta r i f f ba r r i e r s need a h ighe r degree o f j udgement » Are s tanda rds se t b y an i ncumben t p ro t ec t i ng cus tomers o r s t opp ing new en t ran ts • Ex is tence o f supp l i e r s i n a marke t segmen t does no t i nd i ca te absence o f ba r r i e rs t o en t r y – Supp l i e r s i n a marke t segmen t c ou ld chose to overcome 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 open ” Chr i s toph Mü l l e r/ Wo l f gang Wienken “Sub t rac t i o n me thod ” Die Ene rg ie -AG. • The sub t rac t i on method ca l cu la t es the p r i ce ne t o f a l l monopo l y componen ts ( P R ) . . . A l l i nc l us i ve ( “ t o t a l ” ) e l ec t r i c i t y p r i ce ( P T ) minus A l l t axes ( t ) minus Network cha rges ( P N ) = Rema inde r ( P R ) f or ene rgy ( P E ) and sa les ( P S ) • . . . and compares t h i s aga ins t a benchmark ( P R * ) , t ak ing account o f – W ho lesa le p r i ces – Cos ts o f b i l l i ng , r e ta i l , marke t i ng – A l l ow 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 o f marke t openness m E * demand of customers with p < p R R m = E t t l d d Chr i s toph Mü l l e r/ Wo l f gang Wienken 2

Approach f o r t he domes t i c cus tomer segmen t Die Ene rg ie -AG. 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 ons were done on 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 on 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 o o 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 owner pub l i shes Componen ts • For P T 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 o f f e r o f t he i ncumbent – W eigh ted w i t h per cen tage o f cus t omers s t i l l on s tandard t a r i f f ( 70 ,7%, un i f i ed ra te ) • For t 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 Data f o r t h e i ndus t r i a l cus tomer segmen t Die Ene rg ie -AG. • The da ta bas i s f o r i ndus t r i a l cust omers i s no t as good as f o r domes t i c cus tomer s – Network cha rges a re ava i l ab le f o 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 P T we used Euros ta t – Euros ta t pub l i shes end cus tomer p r i ces f o 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 o f a l l t axes f o 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 omers 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 on 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 on hour s – On ly l im i t ed samp le (14 cases i n 7 ne two rks ) • For P N we used t he ne two rk char ges o f t he ne two rk owners i n t h e spec i f i c t owns – Low vo l t age connec t i on f o r t ype A – Med ium vo l t age connec t i on f o r t y pe B Chr i s toph Mü l l e r/ Wo l f gang Wienken 3

Benchmark ( P R * ) f o r t he Rema i nde r ( P R ) Die Ene rg ie -AG. • Two componen t s i n P R : P E ( cos t s o f ene rgy ) and P S ( cos t o f sa l es ) Domes t i c Cus tomers • For P E we used “ oppo r tun i t y cost s ” o f t he who lesa le marke t o f 2 . 6 c / kWh – EEX spo t p r i ces f or Q2 /Q3 2002 ( hour l y auc t i on ) – 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 on hou rs ) • Bundeska r te l l a mt a rgued fo r 3 . 0 c / kWh fo r P R * – Based on 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 o 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 o f €25 pe r cus tomer and yea r • We used 3 .0 c / k Wh as P R * fo r d omes t i c cus tome rs I ndus t r i a l cus tomers • Lower u t i l i sa t i on hou rs shou ld resu l t i n h i ghe r ene rgy p r i ces P E • Highe r demand l eads t o a l ower “ pe r kWh” componen t f o r P S • We used 3 .0 c / k Wh as P R * 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 Resu l t s : Domes t i c cus tomers ( I ) Die Ene rg ie -AG. Rema inde rs Network cha rge (PN) and t axes ( t ) (PR) ork areas 60 net w PR* 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Market price, net [c/kWh] I n t o ta l 25 ne two rks w i t h P R < P R * Chr i s toph Mü l l e r/ Wo l f gang Wienken 4