the swedish energy markets inspectorate’s annual report 2015 · the energy market...

The Swedish Energy Markets Inspectorate’s

ANNUAL REPORT2015

The Swedish Energy Markets Inspectorate (Ei) is an authority which is commissioned to strive for well-functioning energy markets.

The main purpose of our work is to ensure Swedish has well-functioning distribution and trade of electricity, district heating and natural gas. We shall also safeguard customers' interests and strengthen their position on the markets.

In concrete terms, this means that we monitor companies' compliance with the regulatory framework. We are also responsible for developing the rules of play and informing customers of which rules apply. We regulate the terms for monopoly companies that run electricity and natural gas networks and monitor the competitive energy markets.

The energy markets need rules of play. We ensure that they are followed.

The Swedish Energy Markets Inspectorate Box 155, 631 03 Eskilstuna, Sweden The Swedish Energy Markets Inspectorate R2016:09 Project Manager: Maria Werleskog Text: Maria Windås and Maria Werleskog Copyright: Swedish Energy Markets Inspectorate The report is available from www.ei.se Print: Elanders Sverige AB 2016 Cover image: Jessicka Strandell and Johnér/Ingemar Lindewall (electric cables). Portrait of the Director-General, page 3: Studio56 Photography. Page 16 (electric cables): Johnér/Ingemar Lindewall. Other images: Jessicka Strandell.

THE SWEDISH ENERGY MARKETS INSPECTORATE’S ANNUAL REPORT FOR 2015

[DOKUMENTETS RUBRIK]

Contents A word from the Director General ..................................................................................... 3

Abbreviations ........................................................................................................................ 5

The year in brief .................................................................................................................... 6

Mandate and management .............................................................................................12

Vision and goals .................................................................................................................13 Ei's target model .......................................................................................................... 13

Performance model ...........................................................................................................15 Change in performance reporting ............................................................................. 15

PERFORMANCE REPORTING ............................................................................................18

Supervision and consideration .........................................................................................19 Goal 2015 - Supervision and consideration ............................................................. 21 Performances and comparison .................................................................................. 22 Examples of this year's performance ........................................................................ 23

Regulatory development ...................................................................................................32 Goal 2015 – Regulatory development ....................................................................... 33 Performances and comparison .................................................................................. 33 National commissions ................................................................................................ 34 International regulatory development ..................................................................... 36 Nordic work ................................................................................................................. 41 Self-initiated commissions ......................................................................................... 42 Regulations ................................................................................................................... 43

Consumer information ......................................................................................................48 Goal 2015 - Consumer information ........................................................................... 49 Performance and comparisons in the business segment ....................................... 49 Consumer contact ........................................................................................................ 50 Elpriskollen .................................................................................................................. 51

Efficient organisation ........................................................................................................52 Goal 2015 – Effective organisation ............................................................................ 53 Efficiency ...................................................................................................................... 54 Organisation ................................................................................................................. 55

Interaction and dialogue ...................................................................................................60 Concluded consultations ............................................................................................ 60 Interaction .................................................................................................................... 60 Seminars and meetings ............................................................................................... 62 The Energy Markets Council ..................................................................................... 63

Facts and compilations .....................................................................................................64

THE SWEDISH ENERGY MARKETS INSPECTORATE’S ANNUAL REPORT FOR 2015 1


FINANCIAL STATEMENTS ..................................................................................................67

Profit and loss statement .................................................................................................69

Balance sheet .....................................................................................................................70

Appropriation report ..........................................................................................................72

Additional information and notes....................................................................................73 Additional information .............................................................................................. 73 Valuation principles .................................................................................................... 73 Notes ............................................................................................................................ 76

Summary of material information ..................................................................................82

Management team ............................................................................................................83



A WORD FROM THE DIRECTOR GENERAL

A word from the Director General

This past year has been intensive. The big transformation taking place on the energy markets is having a major impact on Ei and our questions are high up on the agenda, both in the EU and in Sweden. It creates challenges, but also affords us the opportunity to contribute suggestions and conduct supervision with the aim of improving the functionality and efficiency of the market.

We have experienced low prices on the electricity market for a number of years, but 2015 saw prices hit record lows. This was much to the delight of the country's electricity customers, but has also contributed to a situation in which four of the country's ten nuclear reactors may have to be shut down prematurely. Over the past year, Ei has produced a number of simulations of the impact that a premature decommissioning of nuclear power would have on the energy and power balance.

There are different ways of resolving potential future power shortages. We have long argued that the untapped potential in the form of customers' capacity to be flexible is part of the solution. Correct metering of consumption is also a prerequisite for flexibility, and in the past year we submitted a recommendation regarding functional requirements for future meters. I am also very pleased with regard to the government commission which we started work on: to highlight opportunities for greater demand response. This work will continue in 2016.

The endeavour to interlink the EU's wholesale markets for electricity entered a new phase in the past year and binding regulatory frameworks came into force. This entails new responsibilities for Ei. In 2015, we submitted recommendations to ACER regarding the specifics of the cost allocation for the transmission connection between Lithuania and Poland (LitPol Link). ACER adopted our recommendations in its decision, which means that Swedish electricity network customers do not need to pay for the connection.

The European Commission has raised its ambition with regard to harmonisation of the markets via the so-called Energy Union. We have been active and expressed our views on how we believe the markets shall be developed; primarily via our international networks. There is a great willingness to listen to what we have to say, and we have made good progress in the Nordics when compared with many other countries. Despite this, even our markets have room for improvement. For this reason, I feel it is most gratifying that all Nordic countries, including Sweden, have taken important steps to centralise information processing on the market via



A WORD FROM THE DIRECTOR GENERAL

service hubs, and that we are moving towards an electricity supplier-centric model. This will benefit customers.

Much of the regulatory development is focused on the electricity market, but over the past year we have also continued to follow up on the “Prisdialogen” [price dialogue] initiative in the district heating sector. We have found that those participating see the initiative as a very positive development. We have also carried out a follow-up of the new system operator on the gas side, Swedegas, and have established that the transfer of responsibility for the balance of supply and demand in the network, from Svenska kraftnät to Swedegas, has gone well.

Though Ei has many regulatory development assignments, our express strategy has for a number of years been to increase supervision of the existing regulatory frameworks. I am therefore pleased to note that in 2015 we allocated around 62 per cent of our time to supervision. We have also adopted new strategies for self-initiated supervision, and the largest supervision project of the year looked at how well electricity grid operators and electricity suppliers live up to the consumer information regulations. The supervision encompasses over 170 companies and will be completed in early 2016. The end of the year also saw a critical situation for market monitoring in accordance with REMIT and the transparency regulation. After such a long preparatory period, it is good to see that the investigatory work is now fully underway.

Over the year, we have made decisions regarding revenue caps for all of the country's electricity grid operators. The work has been extensive, owing to the sheer quantity of cases as much as the fact that the regulatory frameworks were partly new. Less than half of the grid operators have appealed Ei's decision with regard to the part which applies to the returns (wacc) they are entitled to.

The fact that the energy markets are in a transitional period has an impact on Ei's work. Among other things, it means that we are working hard to find effective working methods and make the right prioritisations. Shortening the case backlog, especially where permits are concerned, is a prioritised area. The ability to follow up the impact of our work is also becoming increasingly important. One step in this direction is the performance reporting presented in this annual report. We will continue to develop this area in the years to come.

Finally, I would like to thank all Ei employees for your hard work in 2015. I also extend my thanks to all companies and organisations who in one way or another contribute to our operations.

Anne Vadasz Nilsson Director General



ABBREVIATIONS

Abbreviations

ACER The Agency for the Cooperation of Energy Regulators. ACER is a cooperative organisation between the EU's supervisory authorities in the energy sector.

CEER Council of European Energy Regulators. CEER is an organisation for independent supervisory authorities within the European Union and EEA (European Economic Area).

Ei The Swedish Energy Markets Inspectorate

ENTSO-E European Network of Transmission System Operators for Electricity. ENTSO-E is a cooperative organisation for European transmission system operators for electricity.

ENTSOG European Network of Transmission System Operators for Gas. ENTSOG is a cooperative organisation for European transmission system operators for gas.

PCI Acronym for the term Project of Common Interest within the EU.

REMIT REMIT is an acronym of the Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency. The regulation forbids market manipulation and insider dealing.

TSO Acronym for the term Transmission System Operator



THE YEAR IN BRIEF

The year in brief

JANUARY

Supervision and information in accordance with the transparency regulation (543/2013) The transparency regulation comes into force. The purpose of the regulation is to increase transparency and provide all electricity market actors, irrespective of size, the same access to information.

The regulation means that electricity grid operators, electricity producers and large, electricity-intensive companies shall record data on e.g., the production, transmission and consumption of electricity. Ei is the authority responsible for monitoring compliance with the transparency regulation.

Ei submits recommendations to ACER regarding the costs associated with LitPol Link Ei submits recommendations to The Agency for the Cooperation of Energy Regulators (ACER) regarding the cost allocation for the transmission connection LitPol Link planned between Lithuania and Poland. In Ei’s opinion Sweden should not contribute financially to any part of the project. The origin of the recommendations was a request from the Lithuanian supervisory authority for energy for Sweden to co-finance the construction of LitPol Link. Litgrid, which is a transmission system operator in Lithuania, had estimated that there were economic benefits for neighbouring countries in the Baltic Sea region and that these countries should therefore contribute financially to parts of the project.

FEBRUARY

Ei participates in seminar on the power reserve's future Ei participates in a seminar on the power reserve at the Ministry of the Environment and Energy. The seminar looks at the question of whether the power reserve will exist after 2020. Prior to the seminar, Ei analysed the demand for power based on a number of different scenarios in order to see what would happen on the electricity market if demand outweighed supply. According to Ei's analysis, with the right price signals and flexibility among customers, the market could handle extreme situations without a power reserve.

MARCH

Memorandum of Understanding with the Nordic gas exchange Ei signs a Memorandum of Understanding (MoU) with the Nordic gas exchange Gaspoint Nordic and DERA, the Danish supervisory authority, with the intention of ensuring that the monitoring duties in accordance with REMIT are carried out in a uniform and effective manner.



THE YEAR IN BRIEF

Court action regarding electricity network charges discontinued The Supreme Administrative Court announces that the court will not examine the matter of the revenue cap for electricity grid operators for the period 2012-2015. The court action regarding electricity network changes for the period 2012-2015 is thereby concluded and the Administrative Court of Appeal's judgment of 2014 stands.

Prisdialogen analysed Has the district heating sector initiative Prisdialogen [the price dialogue] strengthened consumers' position on the market and has it contributed to predictability in terms of the price development? These are two of the questions which Ei will review in its evaluation of Prisdialogen. An interim report will be submitted to the Government at the end of March.

Hub before supplier-centric relocation process: the economical solution At the Government's request, Ei is looking into the possibility of introducing a supplier-centric relocation process despite the fact that the system employing a centralised information processing model – a so-called service hub – is not yet in place. Ei's investigation reveals that this is not recommendable.

Electricity grid operators apply for revenue caps for the period 2016-2019 Electricity grid operators are submitting proposals for revenue caps for the next period of regulation. A revenue cap is the maximum total amount that the grid owner may charge their customers. The responsibility for determining electricity grid operators' revenue caps belongs to Ei. The applications amount to a total SEK 176 billion. Ei shall scrutinise and make a decision on the operators' revenue caps by 31 October 2015 at the latest.

APRIL

Proposal for simplified connection of renewable electricity production Ei submits the report Tröskeleffekter och förnybar energi – förslag till permanent lösning [Threshold effects and renewable energy – proposal for a permanent solution] to the Government. Ei's task was to find a market solution to facilitate the connection of renewable energy production to the electricity grid. In the report, Ei proposes two solutions.

Sweden does not need to co-finance LitPol Link ACER (Agency for the Cooperation of Energy Regulators) has decided that Sweden does not need to pay for the LitPol Link which is being constructed between Lithuania and Poland.



THE YEAR IN BRIEF

MAY

Ei provides recommendations for functional requirements for future electricity meters Ei submits the report Funktionskrav på framtidens elmätare [Functional requirements for future electricity meters] to the Government. In the report, Ei proposes two additions to the Electricity Act. Ei also recommends that the authority produce provisions which clearly regulate which functional requirements are to be introduced.

Provisions on efficiency and quality Ei's new provisions and reports regarding effective utilisation of the electricity networks and quality regulation are published. The provisions will form the basis of Ei's decisions on electricity grid operators' revenue caps for the period 2016-2019.

Inspection of the information provided by companies to electricity consumers Ei begins supervision of electricity suppliers and electricity grid operators in terms of their duty to inform. Access to information is necessary in order to be active on the market. The inspection will continue throughout the year.

JUNE

New government commission: customer flexibility Ei receives a new government commission regarding customer flexibility Among other things, Ei will investigate how customers can have a more active impact on their electricity consumption. The commission shall be concluded, with a final report submitted to the Government, no later than October 2016.

Long and frequent power outages in 2013 In 2013, a relatively large amount of customers were affected by long power outages, whilst the number of short outages represented a decrease since the previous year. This information is available in Ei's report Leveranssäkerheten in elnäten 2013 [Security of supply in electricity grids 2013], published in June.

Ei in Almedalen Ei participates as a speaker in a number of seminars in Almedalen, and organises the seminar “Is the customer the solution to a functioning future electricity market?”

Annual report Ei publishes the annual report Sveriges el- och naturgasmarknad [The Swedish electricity and natural gas markets]. The report includes matters of regulation, competition and security of supply. The structure of the report has been developed in collaboration with the other European regulatory agencies and the European Commission.



THE YEAR IN BRIEF

Projects of common interest The public utility Svenska kraftnät submits a report regarding projects of common interest (PCIs) to Ei. The project concerns a heavy-current cable with the route Ekhyddan–Nybro–Hemsjö. The upcoming application will be prepared in 2016 and the actual project application shall be submitted to Ei in 2017.

New commission for a more customer-friendly electricity market Ei and Svenska kraftnät are commissioned by the Government to continue work on the issue of introducing a centralised information processing model; a so-called service hub. Ei's commission also includes continuing work with previous recommendations regarding the introduction of a supplier-centric model.

Transmission limitations in Germany negative for Nordics' socio-economy In its report Överföringsbegränsningar mellan Norden och Tyskland [Transmission limitations between the Nordics and Germany], Ei looks at the socioeconomic impact of limitations in the connections between Germany and the Nordics during the period 2012-2014. Ei establishes that the transmission connections between the three Nordic bidding zones SE4, DK1, DK2 and Germany are often limited due to a surplus of renewable power in northern Germany. This is due to the fact that the Germany electricity grids have major limitations when it comes to transmission.

The first decisions on revenue caps 2016-2019 Ei makes the first 14 decisions on electricity grid operators' revenue caps for the period 2016-2019; i.e., how much the operators may charge their customers.

JULY

The European Commission's Summer Energy Package On 15 July, the Commission presents its summer package, including two announcements regarding how the Commission believes the EU electricity market should be reformed for the best interests of customers. The announcements are part of the creation of an Energy Union for Europe.

AUGUST

Ei responds to a referral concerning offshore wind power Ei responds to a referral concerning the Swedish Energy Agency's report on recommendations for greater support for offshore wind power. Ei does not believe that a special support system for offshore wind power should be introduced, and that instead the matter should be investigated further.

New EU regulations to increase electricity trade come into force The Commission Regulation (EU) 2015/1222 establishing a guideline on capacity allocation and congestion management (CACM), have become legislation. The purpose of the new regulations is that they will help to increase trade in electricity in Europe. The regulations include methods for how electricity exchanges and transmission network operators shall handle the calculation and distribution of capacity. They also contain minimum requirements for operating an electricity



THE YEAR IN BRIEF

exchange with the purpose of establishing competition between electricity exchanges in Europe.

Ei responds to a referral concerning the power reserve issue In a response to a referral, Ei supports the Ministry of the Environment and Energy's proposal that the Power Reserve Act be extended to 2025. At the same time, Ei writes in its response that this is not a long-term solution as it constitutes an intervention in the market which has a negative impact on the price signals. The future power reserve issue should instead be remedied by means of a new market design that exploits greater demand response.

SEPTEMBER

Supervision and information in accordance with the Transparency Regulation Ei is responsible for monitoring compliance with the Commission Regulation (EU) No 543/2013 on submission and publication of data in electricity markets (Transparency Regulation) and is due to visit a number of the companies subject to the Regulation in the autumn. The visits will also provide these companies with the opportunity to ask questions about the regulation, which entered into force in January 2015.

OCTOBER

Reporting in accordance with REMIT 7 October will see the beginning of a new phase in the monitoring of Europe's energy markets in accordance with REMIT. As of now, all actors trading in physical or financial wholesale energy products on an organised marketplace must be registered with and report transactions to the EU's common supervisory authority for energy; ACER. Ei has participated in the registration process by checking and approving each registered actor. However, it is the actors themselves who are responsible for ensuring the content of the registered material is correct.

Decision on electricity grid operators' revenue caps for the period 2016-2019 Ei has now completed its inspection and made a decision regarding revenue caps for Sweden's about 180 electricity grid operators. The total amount decided on by Ei was 164 billion, which was around six per cent lower than what the electricity grid operators applied for.

NOVEMBER

Transfer of responsibility for balancing the transmission network has gone well The reform of 2013, which meant that the responsibility for balancing supply and demand on the transmission network for the natural gas grid for western Sweden was transferred to Swedegas AB from Svenska kraftnät, has been a success. This is established by Ei in the report Utvärdering av systembalansansvaret på gasmarknaden [Evaluation of responsibility on the gas market for balancing the transmission network] submitted to the Government.



THE YEAR IN BRIEF

DECEMBER

Ei appoints Nord Pool Spot nominated electricity market operator Ei decides to appoint Nord Pool Spot AS as the nominated electricity market operator (NEMO). The decision is valid for four years. The decision means that Nord Pool Spot may perform the single day-ahead and intraday market coupling in all Swedish bidding zones. The fact that Ei is now making a decision regarding the operation of electricity exchanges is due to new regulations from the EU which came into force in August 2015; Commission Regulation (EU) 2015/1222, also referred to as CACM.

Background report to Energikommissionen In March 2015, the Government appointed Energikommissionen [the Swedish Government's Energy Commission], which has the task of reviewing future energy requirements based on current and existing research. The Commission is to identify challenges and opportunities with regard to the future energy supply. The task is to submit the basis for a broad political agreement regarding the direction of the energy policy, with a focus on the period from 2025 onwards. The Director-Generals of Ei, Svenska kraftnät and the Swedish Energy Agency are in the commission, the remaining members of which are parliamentary compound. In December 2015, Ei submitted a background report with a factual summary for the Commission's work moving forward.



MANDATE AND MANAGEMENT

Mandate and management

Ei is a supervisory authority working on behalf of the Government (the Ministry of the Environment and Energy). Ei's duties are governed through terms of reference

(2007:1118), the annual appropriation directions and specific government commissions. The operations are governed by the Swedish energy policy and the work contributes to

implementation of the Government and the Swedish Riksdag's energy policy for well-functioning energy markets.

Ei's mandate includes conducting supervision of the energy markets for electricity, natural gas and district heating. Ei is also the authority which provides permits for constructing and using electric cables. Ei is also preparing cases involving gas pipelines for the Government, who will make decisions on concessions. The authority will also provide recommendations for legislative changes and other measures which could serve to develop the energy markets.

Ei also participates as Sweden's representative in the development of the energy markets in the Nordics and Europe and cooperates with other European supervisory authorities and with the Agency for the Cooperation of European Regulators (ACER) in order to harmonise the regulatory frameworks. Ei's commission includes performing duties stipulated in EU regulations and directives.

Also included in its duties is disseminating knowledge to customers (energy customers in the form of companies and organisations) and to consumers (individuals) with the purpose of increasing their awareness and activity on the energy markets. Ei helps to make consumers and customers more active and aware by providing information on how the electricity, natural gas and district heating markets work, which regulatory framework applies and what opportunities and rights they have.

The outline of the annual report is based on Ei's mandate in accordance with terms of reference and appropriation directions, as formulated in the authority's business plan.

• Supervision and consideration • Regulatory development • Consumer information • Efficient organisation

Our mission is to work for well-functioning energy markets.



VISION AND GOALS

Vision and goals

The energy markets are in a state of constant change. The integration with the EU, environmental requirements, technological development, new consumer behaviour and new ownership conditions affect the conditions. This means that

Ei's commission to work for well-functioning markets is both a matter of securing the current rules of play and ensuring long term

development and reliable operability of the market. Creating predictability means that companies and customers must know what to do in order to become active parties on the markets. They must also feel assured that the markets will not be eliminated or become defective tomorrow.

Ei's target model Based on Ei's terms of reference, the authority has identified three business segments: supervision and consideration, regulatory development and consumer information. For every business segment, Ei has formulated a number of goals. Ei has also formulated a goal for efficiency, which concerns improving processes and procedures and living up to the requirement of being an efficient and modern authority.

For each business segment, and for the area of efficiency, Ei has formulated an overarching goal which is visionary in its nature. Every third year, Ei also makes a decision on three-year goals which are broken down into one-year goals in the annual business plans.

The one-year goals are formulated based on areas in which Ei wishes to achieve a shift; i.e., where the authority wishes to be better. The results of the one-year goals are presented in the annual report.

Ei's four overarching goals are:

Effective supervision and efficient issuance of permits Ei has an effective supervision process and efficient issuance of permits. This helps to ensure well-functioning energy markets in which society's interests in networks with long-term security of supply, stable prices and sustainable development are balanced.

Our vision is to create predictability on markets subject to continuous change.



VISION AND GOALS

Clear regulatory development We submit well-supported and clear proposals which in the long term contribute to a regulatory framework which is tailored to the energy markets.

Effective consumer information We endeavour to ensure customers are aware of the rules of play on the energy markets. The customers must understand their rights and be able to make active choices.

Efficiency We conduct effective and legally secure operations with the right expertise and quality. We use our resources well so that we fulfil our task with good results.

The annual report demonstrates how well Ei has performed in the one-year goals for 2015. The report can be found in the chapters Supervision and consideration, Regulatory development, Consumer information and Efficiency.

In the annual report, the performance is assessed as follows:

The goal has been fulfilled.

The goal has been partially fulfilled.



PERFORMANCE MODEL

Performance model

Change in performance reporting From 1 January 2015, Ei has a new method of performance reporting. The new method is based on the time and cost associated with certain operations and the performance is presented in terms of volume and cost.

The performance reporting was developed at Ei in 2014. It was introduced because the selection and comparability of indicators for the previous time reporting was unsatisfactory for the organisation. The new performance reporting, which is based on reported time and other costs linked to a code defined based on a certain type of operation, is clearer and easier to measure. The performance report for 2015 is thus a better reflection of Ei's operations.

Ei's internal performance reporting currently consists of 90 performance codes which cover all of Ei's core activities. In the annual report, Ei presents some twenty performance statistics which are primarily selected based on the following three criteria.

• The performance statistics shall in total account for more than 80 per cent of Ei's time and costs associated with core activities.

• The performance indicators must have a volume that can be measured, such as the number of decisions or reports.

• It must be possible to compare one year's performance statistics with that of others.

The government commissions presented under Regulatory development may last for a number of years, but cannot as individual performances be compared over time. Nor are all performance indicators measurable in volume. This year, we have therefore chosen to merge certain performance statistics and report a total cost for certain operations. However, the costs only concern time spent and costs in 2015.

The costs per performance have been calculated based on the time the employees have reported for each performance code and other costs recorded in the report linked to the performance codes. The cost of time spent per performance includes the cost for personnel and overheads.



PERFORMANCE MODEL

For each performance (or grouping thereof), a volume has been attached, for example the number of decisions or reports. The volumes are based on the number of cases in the case management system (ÄHL) with status ‘decided’. The cases are in the first instance linked manually to the respective performance code based on the classification structure in ÄHL. This link is quality-assured by the manager concerned.

In order to achieve continuity over time, the annual report presents performances to which the authority has allocated the most time. This does not always coincide with the areas in which the authority wishes to achieve a shift; i.e., the authority's goals for 2015. For this reason, there is not always a performance linked to each goal.

For each goal which we have set in the various business segments, we have also considered what goal attainment entails and what must be done in order to achieve this. Our assessment of goal attainment is made based on these aspects.

The common denominator between Ei's one-year goals and the performances is the way in which they are linked to the business segments. The performance reporting is therefore structured based on our business segments.

The introduction of the new method of performance reporting January 2015 means that statistics are not entirely comparable with those from previous performance reports. The older model is based on estimated time and costs recorded in the report. We have nevertheless chosen to report a comparison under the respective business segment or the performances (or groups thereof) which are the same as those of the previous year.



PERFORMANCE MODEL

Ei's performance model adheres to the following structure.



PERFORMANCE REPORTING



SUPERVISION AND CONSIDERATION

Supervision and consideration

Within the supervisory area, Ei looks at compliance with the regulatory frameworks that the authority monitors. The supervision of regulations with the support of provisions issued by Ei is also included in the business segment, as these concern the application of and adherence to the law. In the permit area, Ei considers applications for a concession, i.e., permits for electricity and gas lines. Supervision and consideration is the business segment to which Ei allocates the most resources.

Ei's supervisory area is broad and extensive. The supervision encompasses the three energy types electricity, natural gas and district heating. In accordance with the terms of reference, Ei is responsible for supervision and regulation in accordance with the following acts:

• The Electricity Act (1997:857) • The Natural Gas Act (2005:403) • The Act (1978:160) on Certain Pipelines • The District Heating Act (2008:263) • The Act (2013:385) on intervention against market abuse when trading in

wholesale energy products

A large proportion of Ei's operations involve the authority considering applications for concessions, i.e., permits for electricity and gas lines. Ei's permit consideration process adheres to the Electricity Act (1997:857), the Natural Gas Act (2005:403) and the Act (1978:160) on Certain Pipelines.

Supervision and consideration is Ei's largest business segment. Ei decides on matters such as permits for heavy-current cables and prepares applications for permits for natural gas pipelines for the Government. Ei also conducts supervisory activities associated with the three energy types electricity, natural gas and district heating.

Cost of business segment: SEK 71.6 million

Supervision andconsideration61,6 %

Other operations38,4 %




Ei also has a number of duties in accordance with EU regulations and directives in the energy sector. Some of the more important among these are Regulation (EC) No 714/2009 on conditions for access to the network for cross-border exchanges in electricity and Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency (REMIT).

Ei's supervision can be divided into scheduled and indication-driven supervision. A basic principle for prioritising the scheduled initiatives is that they are planned periodically so that supervision over time takes place over large parts of the regulatory framework. The prioritisations also include reserving capacity in order to carry out initiatives where there are indications that the regulations are not being followed. Supervision of the new regulations is also being prioritised in order to ensure they are being adhered to.

Preventive work in the form of information and guidance is important in order for actors on the energy markets to have the best conditions to do things right from the start. In 2015, Ei has paid special attention to clear communication of the regulatory frameworks that the authority is monitoring and making decisions and prioritisations for. Ei has for example announced the new reporting requirements according to REMIT, implemented an extensive supervisory initiative regarding consumer information and built up an organisation for effective supervision as per REMIT. Ei has also arranged a series of seminars on three occasions with the purpose of developing the dialogue with the industry concerning the consideration of permits for heavy-current cables in order to create a better understanding of the legal requirements imposed on electricity grid operators in conjunction with the consideration process. The seminars looked specifically at the requirements for electricity grid operators to produce environmental impact assessments and invite parties affected by the lines to consultation.




Goal 2015 - Supervision and consideration

Goal Goal attainment Assessment

1 a) Maintaining a high standard of work, we have determined the electricity grid operators revenue caps in accordance with new regulations.

Decisions regarding revenue caps has been made in accordance with the new regulatory framework and with the help of a new, clearer work process. All decisions were made before the set deadline. Ei has assessed the quality based on the following:

• Were the calculations accurate?

• Have the companies received a good standard of information?

Based on the criteria for high quality set by Ei, the goal is deemed to be fulfilled.

1 b) We have conducted a supervisory initiative with regard to consumers' access to information and the opportunity to be active on the electricity market.

An extensive supervisory initiative has been carried out in which Ei has looked at the information provided by electricity suppliers to consumers. Ei has also looked at how all electricity grid operators inform their customers about the security of supply, consumption costs and the right to compensation for outages. The initiative began with a number of seminars aimed at companies, in which Ei spoke about the regulatory framework. The supervision encompasses over 170 companies.

Ei's assessment is that the goal has been fulfilled.

1 c) We have established effective market monitoring under REMIT in order to prevent market abuse and insider dealing on the electricity and gas markets.

Ei's work to monitor the wholesale market in accordance with REMIT has started as planned and supervision commenced on 7 October. Additional activities are required before the goal can be considered completely fulfilled.

Ei's assessment is that the goal is partially fulfilled.

1 d) We have conducted information and guidance initiatives in order to facilitate companies' applications for concessions.

The companies have been invited to three seminars/training courses with a focus on environmental impact assessments and consultation. The information on the website is continuously improved in order to allow companies and stakeholders to find the information they need.


1 e) We are handling concession applications electronically.

The work to fulfil the goal was commenced in 2014. In 2015, the work is complete and all concession applications (receipt of applications and referrals) are handled electronically.


1 f) We handle cases regarding the extension of concessions in accordance with an established plan and have reduced the case backlog.

Two people have been given temporary positions in order to contribute to the work of reducing case balances. The plan is 40 cases concluded by the turn of the year 2015/2016.

The plan is followed and over 40 extension cases were concluded at the turn of the year. The case backlog has decreased and the goal has been fulfilled.




Performances and comparison Here is a description of the duties and performances in the supervision and consideration operations to which the authority has allocated the most time over the year. As the performance model is new, it is not entirely compatible for use in comparisons with previous years. The previous performance model is based on the estimated time allocated, whereas as the new is based on the actual reported time and costs linked to the performance.

In table 1, Ei has chosen to compare the performances which are the same as the previous year, in order to gain a certain degree of comparability. A table with performances of the year in accordance with the new performance model is presented at the end of this chapter.

Table 1. Comparison of performance: supervision and consideration, 2013-2015

Performance supervision and consideration

Volume 2015

Cost 2015 SEK

(thousand)

Volume 2014

Cost 2014 SEK

(thousand)

Volume 2013

Cost 2013 SEK

(thousand)

Decisions concession cases 284 21388 334 17984 322 14102

Decisions connection cases 104 3167 223 1995 135 3390

Decisions revenue caps 213 20885 6 22469 11 16237

Supervision supply quality 42 6489 14 2829 9 5167

Complaint cases 16 2314 35 1214 20 706

Reports and memos 3 - 1 2066 1 355

The number of concession cases decided on also includes decisions on non concession-bound networks. The total volume is somewhat lower than in 2014. The volume reduction between these years is due to the fact that we investigated fewer but more complicated cases in 2015. In 2014 we dismissed a large number of network concession cases without examining them on the merits as a result of an amendment to law in 2013.

The number of decided connection cases has gone down while costs have increased compared with 2014. The differences in costs can be explained by a greater number of complicated cases in 2015 and by a more exact performance reporting. However, it can be noted that performance in 2015 is on a par with the result in 2013.

A decision on revenue caps is made every four years. During the year Ei has made a decision on the electricity grid operators' revenue caps. The cost also includes examination of the information upon which the revenue caps are based. A decision on the gas companies' revenue caps was made in 2014. The cost in 2015 is partially attributable to costs for legal counsels in the appeal processes for the gas cases. That the cost for 2014 was high is due to the extensive court actions regarding the electricity grid operators' revenue caps for the previous period.




Supervision of quality of supply includes both self-initiated supervision and complaint cases regarding quality of supply. The volume in 2015 relates to the number of supervision cases concluded during the year, while the volume for 2013-2014 relates to the number of reviewed operators. The cost for 2015 also includes the cost for the report Leveranssäkerheten i elnäten 2013 [Security of supply in electricity grids 2013] (Ei R2015:14) and the memorandums Elnätsföretagens redovisning av risk- och sårbarhetsanalyser och åtgärdsplaner 2014 [Electricity grid operators' report of risk and vulnerability analyses and action plans 2014] (Ei PM2015:01) and Tjänster för efterfrågeflexibilitet [Demand response services] (Ei PM2015:02).

The number of decisions in complaint cases regarding consumer-related provisions (excluding quality of supply) refers to both electricity and gas. The volume in 2014 also included complaint cases regarding quality of supply, which explains the decline. The new performance reporting also includes the cost for supervision cases, for which reason it is not comparable with previous years.

Examples of this year's performance

Permit consideration for network concessions The area of permits has seen an increase in the number of concession applications in recent years and this inflow looks like it will continue. The increase is due to a considerable expansion of the Swedish electricity network, conversions, new production of, e.g. wind power and reinforcements of the grids. Several applications concern the laying of former overhead lines in the ground. Ei has prioritised the processing of new lines concerning renewable electricity production or reinforcements in relation to other cases.

Results: During the year, 88 applications were received concerning a new line network concession and 16 applications concerning the extension of a line network concession. Ei made 81 decisions concerning a new line network concession.

Permit consideration for extension cases In recent years Ei has had a large quantity of older extension cases to process and make decisions about. In 2015 Ei has placed an extra focus on reducing the case balance for extension cases (See Goal 1f under Supervision and consideration). At the beginning of the year Ei had approximately 300 pending cases concerning the extension of network concessions.

Results: In December 2015 the number of pending cases concerning the extension of network concessions was 226. Some of the cases have been dismissed as a result of an amendment to law in 2013, while around 40 older extension cases have been prepared and considered. 106 cases concerning the extension of line network concessions for electricity have been decided during the year.




Projects of common interest Since 2013, there has been a PCI Regulation, which simply means that the European Commission approves proposed PCI projects (projects of common interest) that benefit at least two Member States. PCI projects are to be handled in a particular manner in the event of a permit application, and there should also be an opportunity for the country in question to apply for financing support from other countries involved and from the EU.

In September, Ei made an initial decision (Ref. 2015-103122) about Sweden's first PCI project in Sweden concerning electricity. The project concerns an electric cable in Småland and Blekinge that will be connected to NordBalt, the electricity link being built between Sweden and Lithuania. The cable along the route Ekhyddan–Nybro–Hemsjö has been on the EU's list of PCI projects since 2013.

Swedegas AB's project “Gothenburg LNG Terminal” is included in the Union list of projects of common interest as set out in the PCI Regulation. The project is intended to construct and operate a terminal at which all suppliers of liquefied natural gas (LNG) to the Swedish market can reserve capacity. The effects of the project are primarily in Sweden and no other country than Sweden is affected by any direct costs or negative effects. In light of the cross-border allocation of costs, Ei decided that the actual investment costs for the project will be borne by the relevant transmission system operator, i.e. Swedegas AB (Ref. 2015-103185).

In 2015 Ei participated in the work to evaluate the European electricity and gas projects that will gain PCI status and be included in the second Union list to be established by the Member States in 2016. An evaluation of this kind is made every two years.

In 2015 Ei also processed a cost allocation case with reference to a request from the Lithuanian transmission system operator LitPol Link for the public utility Svenska kraftnät to pay for certain parts of an infrastructure project in Lithuania. The reason for this is that the project has the status of a PCI project according to the Union list for 2013 and the LitPol Link project was considered to concern Sweden as well. Ei's proposal in this case was that there should be no cost allocation (Ref. 2014-101554). The question was subsequently considered by ACER, which shared Ei's conclusion.

Permits for natural gas During the year Ei has handled a dozen applications concerning an extended period of validity for natural gas concessions. These were submitted for government consideration with the proposal that they be approved.




Results: During the year, almost half of the applications have been considered by the Government, which has made decisions in line with Ei's opinions and granted an extended period of validity for the concessions. The Government made decisions concerning an additional two cases in 2015 following Ei's submission of opinions in 2009 and 2012.

Consideration of connection fees During the year Ei handled a number of cases involving consideration of whether the fee payable by a customer to connect to the electricity grid was reasonable. Issues concerning other types of connection terms have also been considered. The focus was on making decisions about older cases and reducing the case balance.

Results: In 2015 Ei has made 104 decisions in connection cases. Both case balances and the age structure of ongoing cases have decreased considerably during the year.

The electricity grid operators' revenue caps 2016–2019 Since electricity grid operators have a monopoly there is no competition in the electricity network market. In the absence of competition it is Ei's task to ensure that the grid owner charges its customers a reasonable tariff, i.e. a tariff that covers the grid owner's costs for owning, operating and maintaining the electricity network so that consumers can be supplied. Electricity network regulation means that Ei decides on the total amount (revenue cap) that grid owners may charge their customers. During the summer and autumn Ei made decisions on the electricity grid operators' revenue caps for the period 2016–2019.

Results: Decisions were made for all electricity grid operators in Sweden during 2015, a total of 185 decisions on revenue caps for the supervisory period 2016–2019.

In total, the electricity grid operators had applied for revenue caps of approximately SEK 176 billion. Ei's decisions total SEK 164 billion, which is around six per cent lower than the operators' applications. 81 operators, that is 44 per cent, have appealed Ei's decision.

The natural gas companies' revenue caps are appealed Ei has previously carried out ex post regulation of the natural gas companies' tariffs, but since 1 January 2015 ex ante regulation has been applied. In 2014, Ei made decisions regarding the natural gas companies' revenue caps for the period 2015–2018.

Results: Four of nine decisions were appealed by the gas companies and in November 2015 oral public proceedings were held at the administrative court. A judgment is to be pronounced in early 2016.




Review of the electricity grid operators' outage data Every year the electricity grid operators must report information on the previous year's power outages.

Results: The outages are reported at the consumer level and form the basis for Ei's supervision and its annual report on the security of supply in Sweden. This data is also used in the quality adjustment of the electricity grid operators' revenue caps. In connection with reporting Ei checks the correctness of the data submitted.

Security of supply in electricity grids 2013 (Ei R2015:14) Every year Ei presents a summary of the security of supply in the electricity grids. This assignment is part of Ei's supervision under the Electricity Act. The report Leveranssäkerheten i elnäten 2013 – statistik och analys av elavbrott i Sverige [Security of supply in electricity grids 2013 – statistics and analysis for power outages in Sweden] (Ei R2015:14) is based on the electricity grid operators' outage data. The conclusions that Ei can draw are that several smaller storms together contributed to 2013 having relatively long average downtimes. It was a windy year, but nevertheless within the variations existing between normal years. Despite the Electricity Act's functional requirement that no outages within the grid owner's responsibility may exceed 24 hours, a full 1.4 per cent of consumers, corresponding to 70,000 consumers, were affected by power outages that lasted longer than 24 hours.

As 2013 was a year with many long power outages, society's total cost for these outages was relatively high. The cost for the power outages in 2013 is calculated to be approximately SEK 1.3 billion. This can be compared with the cost of SEK 0.8 billion for power outages in 2012, which was a normal year in terms of the length of downtimes and number of outages. The biggest costs from power outages arise for trade and services and for industries.

Results: Ei intends for this report to draw attention to the development of the security of supply in the Swedish electricity grids. The summary is also used as a basis for Ei's supervision.

Supervision of security of supply following the winter storms This year Ei completed its supervision following the winter storms of 2011–2012. During the winter storms, many households were affected by outages longer than 24 hours. For this reason, Ei requested the submission of action plans from the operators in question. Ei has now followed up whether these operators have implemented the measures they described and whether the security of supply in the electricity grids has thereby been improved.

Results: In light of the measures described by the grid operators, all cases have now been concluded, 21 in 2015. Ei will follow up the security of supply for these operators to ensure that the deficiencies have been rectified.




Electricity grid operators' report of risk and vulnerability analyses and action plans 2014 – Memo Under the Electricity Act, electricity grid operators are to each year prepare a risk and vulnerability analysis concerning the security of supply in the electricity network and an action plan showing how the security of supply in their own grid will be improved.

Results: In the memorandum Elnätsföretagens redovisning av risk- och sårbarhetsanalyser och åtgärdsplaner 2014 [Electricity grid operators' report of risk and vulnerability analyses and action plans 2014] (Ei PM2015:01), Ei has compiled the data reported by electricity grid operators in 2015.

Demand response services – Memo Under the Electricity Ordinance (2013:208), Ei is to each year compile and publish the technical requirements and other conditions for providing services in the form of altered electricity consumption. The summary can be found in the memorandum Tjänster för efterfrågeflexibilitet [Demand response services] (Ei PM2015:02). This summary also presents the barriers experienced by electricity suppliers and energy service companies. Under the Electricity Act, electricity grid operators may not set requirements that make it difficult for companies to offer flexibility services.

Results: Ei's assessment is that there is nothing in its investigation to indicate that electricity grid operators set requirements that make it difficult for companies to offer services in the form of altered electricity consumption.

Supervision concerning electricity consumers' access to information In 2015, Ei has conducted a major supervisory initiative with regard to electricity consumers' access to information and the opportunity to be active on the electricity market. The background to Ei's decision to review this area is that many consumers have complained about information from electricity suppliers and grid owners.

Ei's supervision has looked at the consumer information of both electricity grid operators and electricity suppliers. The supervision commenced with a number of operator seminars at which Ei presented the regulations.

Results: The supervision reviewed 174 operators, a total of 193 cases. In 2015, 49 injunction decisions were made and it is estimated that a further 40 or so decisions will be made in January 2016.




Supervision of guarantee of origin labelling for electricity Electricity suppliers are to show consumers on their invoices and websites how the electricity they sold was produced. They are to be able to show whether their electricity comes from renewable energy, nuclear energy or fossil energy sources. In 2015 Ei completed supervision of how 16 electricity suppliers manage their guarantee of origin labelling.

Results: All 16 companies had correct guarantee of origin labelling for electricity sold in 2013.

Supervision in accordance with REMIT REMIT is an acronym of the European Parliament and Council Regulation (EU) No 1227/2011 of 25 October 2011 on wholesale energy market integrity and transparency. The regulation forbids insider dealing and market manipulation on the European wholesale markets..

In 2015, Ei produced and implemented information initiatives for all market actors trading in an organised marketplace to be registered with ACER. Ei has participated in the registration process by checking and approving each registered item. However, it is the actors themselves who are responsible for ensuring the content of the registered material is correct. As of October 2015 actors are to report transactions to ACER.

Results: The registration process has functioned well and Ei's assessment is that the actors that needed to be registered at this time were indeed registered.

Supervision in accordance with the Transparency Regulation Ei is responsible for monitoring compliance with the Transparency Regulation (Commission Regulation (EU) No 543/2013 on submission and publication of data in electricity markets), which began to be applied on 5 January 2015. The purpose of the Regulation is to increase transparency and provide all electricity market actors, irrespective of size, the same access to information.

In the spring and autumn, Ei visited some of the operators covered by the regulation in order to verify regulatory compliance and the existence of procedures. These visits also gave operators the opportunity to ask questions about the Regulation.

Results: The visits have confirmed satisfactory compliance with the Transparency Regulation as regards the operators concerned. Ei plans to visit more operators in 2016.




Ei appoints Nord Pool Spot nominated electricity market operator Ei has decided (Ref. 2015-100457) to appoint Nord Pool Spot AS a nominated electricity market operator (NEMO). The decision is valid for four years. The decision means that Nord Pool Spot may perform the single day-ahead and intraday market coupling in all Swedish bidding zones. The fact that Ei is now making a decision regarding the operation of electricity exchanges is due to new regulations from the EU which came into force in August 2015 – Commission Regulation (EU) No 2015/1222, also referred to as CACM.

Approval of interim measures – the Network Code on Gas Balancing Ei has decided to approve Swedegas AB's report on interim measures concerning gas balancing (Ref. 2014-102284). These interim measures mean that Swedegas is permitted certain exemptions from Commission Regulation (EU) No 312/2014 of 26 March 2014 establishing a Network Code on Gas Balancing of Transmission Networks.

Supervision at the international level Ei also participates in the supervision of compliance with EU legislation through the European energy regulator ACER. ACER conducts regular follow-up of compliance with the EU's electricity and gas market legislation as regards the operators covered by such legislation. Ei contributes by submitting continuous information to ACER about Swedish conditions and the compliance of Swedish actors and by participating in the working groups where supervision is conducted. ACER formulates recommendations and opinions with reference to its supervision. These opinions contain information on compliance as well as proposals for amendments and improvements in order to secure compliance.

Ei's Director General is a member of ACER's Board of Regulators. The task of the Board of Regulators is to advise ACER's Director in daily operations and to approve the opinions and recommendations that ACER intends to make decisions on.

Ten-year network development plans for transmission in Europe As part of its work with ACER, Ei has participated in evaluating the ten-year development plans of the European transmission network operators.

Results: The evaluation has been presented by means of ACER Opinion on the Entso-E draft ten year network development Plan 2014 published in February 2015.




Table 2. 2015 performance in the area of supervision and consideration

Performance supervision and consideration Volume 2015 Cost 2015 SEK (thousand)

Decisions network concession, line/area electricity 242 19842

Decisions concession gas 14 642

Number of considerations/decisions NCN 28 904

Decisions connection terms 104 3167

Decisions revenue caps electricity 213 18917

Decisions revenue caps gas* - 1968

Decisions supervision cases, quality of supply** 42 6489

Decisions consumer-related provisions electricity grid 72 2300

Decisions consumer-related provisions gas 3 14

Decisions consumer-related provisions trade in electricity 8 2645 Decisions consumer-related provisions district heating 1 156

Decisions method approval electricity 184 38

Decisions method approval gas 2 351

Supervision EU regulations electricity, gas and market excl. Transparency Regulation Participation in EU recommendations and opinions

5

12

3769

Supervision under the Transparency Regulation 1 774

Supervision in accordance with REMIT 9 4595 *Decisions on revenue caps are made every four years. In 2015, Ei has decided on the electricity grid operators' revenue caps. Decisions on the gas companies' revenue caps were made in 2014. **Includes work on the report Leveranssäkerheten i elnäten 2013 [Security of supply in electricity grids 2013] (Ei R2015:14). Ei has a number of duties in accordance with EU regulations and directives in the energy sector. “Supervision EU regulations electricity, gas and market excl. Transparency Regulation” reports the costs for cases with reference to this. This performance otherwise reports costs that Ei has in order to participate in the supervision conducted by ACER for securing compliance with EU legislations regarding the electricity and gas markets. Ei participates in the production of recommendations and opinions and in ACER's various working groups. Also the cost that is attributed to Ei's work on follow-up and implementation of adopted legislation is presented here.

“Supervision under the Transparency Regulation” refers to Ei's work with information on the interpretation of the legislation. During the year Ei carried out supervisory visits to different companies and answered questions. Ei's task is to ensure that market data is correct.




“Supervision in accordance with REMIT” corresponds to work performed with respect to individual cases and to continuous market monitoring. This also reports costs attributable to the development of REMIT supervision, both that of Ei and joint monitoring with the other Nordic/Baltic regulators and ACER, and the work to support market actors in the registration process.

Table 3. International reports and opinions from ACER in the supervisory area

International reports from ACER in which Ei has participated

ACER Opinion on the ENTSO-E draft ten year network development plan 2014 No 01/2015

ACER Opinion on the ENTSO-E winter outlook report 2014/15 and summer review 2014

No 05/2015

ACER Opinion on the ENTSO-E implementation plan 2016–2018 of the research and development roadmap 2013–2022

No 06/2015

ACER Opinion on ENTSOG’s summer supply outlook 2015 No 07/2015

ACER Opinion on the annual report for the year 2014 of the European network of transmission system operators for gas

No 08/2015

ACER Opinion on the ENTSO-E summer outlook report 2015 and winter review 2014/2015

No 1O/2015

ACER Opinion on the draft ten-year network development plan 2015 submitted by ENTSOG

No 11/2015

ACER Opinion on the ENTSO-E Annual report No 12/2015

ACER Opinion on the ENTSOG draft interconnection agreement template of default terms and conditions

No 13/2015

ACER Opinion on the draft regional lists of proposed electricity projects of common interest 2015

No 14/2015

ACER Opinion on the draft regional lists of proposed gas projects of common interest 2015

No 15/2015

ACER Opinion on ENTSOG’s 2016 draft annual work programme No 16/2015



REGULATORY DEVELOPMENT

Regulatory development

As instructed by the Government, Ei is to continuously monitor and analyse the development of the electricity, natural gas and district heating markets and submit proposals for changes to the regulatory framework or for other measures that may improve how the markets function.

Ei participates on Sweden's behalf in the development of the markets for electricity and natural gas within the Nordic region and the EU.

Ei cooperates with energy regulators in other countries and with the Agency for the Cooperation of European Regulators (ACER). The aim is to pursue harmonised regulatory frameworks and to create equivalent conditions on the markets for electricity and natural gas within the Nordic region and the EU. Part of the Nordic cooperation takes place through NordREG.

Ei's regulatory development rests on two pillars: government commissions (appropriation directions, special decisions and assignments in the Government's instruction) and self-initiated investigations and activities within Ei's area of responsibility.

Regulatory development's share of Ei's total activities is largely steered by the scope of commissions from the Government and by the development of EU legislation. The commissions from the Government are usually to examine or map factual circumstances and to submit proposals for changes to the regulatory framework or to the way in which the markets operate. Some commissions are more process-oriented, such as on Sweden's behalf pursuing harmonised regulatory frameworks for the electricity and gas markets at the EU level. Self-initiated regulatory development can be implemented in different forms, such as

Ei submits proposals for changes to the regulatory framework or for other measures to promote the function of the electricity, natural gas and district heating markets. Ei also participates in the work to develop the Nordic and European markets for electricity and natural gas.


Regulatorydevelopment32,6 %

Other operations67,4 %




investigations that might result in reports, bill or amended provisions and general advice, or participation in international cooperation with other regulators.

Ei always makes an assessment of where work can do most to achieve the goals. The focus has been on improving the situation for consumers in the electricity market and to strengthen the Swedish and Nordic end-user markets.

2015 has seen continued work within NordREG to harmonise the Nordic end-user markets for electricity, and Ei finds it reasonable to conclude that increased trade over national borders will also entail the need for cross-border supervisory initiatives.

Goal 2015 – Regulatory development


2 a) We work according to a plan for regulatory development that is common to the whole of Ei.

Ei works according to a common three-year plan and a common one-year activity plan. There is also an agency-wide activity list for 2016.


2 b) We focus on submitting well-supported proposals on information exchange and the consumer-related processes in the electricity market that are deemed critical to an appropriate design of the electricity market.

In 2015, Ei has submitted proposals to the Government about functional requirements for future electricity meters and a cost-benefit analysis for a supplier centric relocation process. Within NordREG, CEER and ACER, Ei has prioritised duties concerning consumer-related processes and market design.


Performances and comparison Ei has had several commissions from the Government in the area of regulatory development in 2015. We present here the most important commissions within electricity, gas and district heating and the performances on which the authority has spent most time during the year.

A table with a selection of this year's performances under the heading of regulatory development is presented at the end of this chapter. As the performance model is new, it is not entirely compatible with previous years. The previous performance model is based on the estimated time allocated, whereas the new is based on the actual reported time and cost. In table 4, Ei has chosen to compare the performances which are the same as the previous year, in order to gain a certain degree of comparability.




Table 4. Comparison of performance: regulatory development 2013-2015

Performance Regulatory development

Volume 2015

Cost 2015 SEK

(thousand)

Volume 2014

Cost 2014 SEK

(thousand)

Volume 2013

Cost 2013 SEK

(thousand)

Reports and memos 13 10337 13 13070 12 18986

Regulations 10 3284 8 7307 8 2644

International reports 28 15132 66 6368 63 6065

The number of reports and memos is unchanged compared with previously. In 2014, Ei's reports and memorandums were presented here (the number of completed government commissions). This year, besides Ei's own reports, we also include a report ordered by Umeå University and the background report to the Swedish Government's energy commission. As of this year, each government commission has been given its own performance code. Commissions started before 2015 are not reported separately. Therefore no total cost can be presented for these performances this year. The reported cost for 2015 instead refers to the time and cost attributable to the year's performances related to government commissions.

The number of regulations is somewhat higher this year but the costs substantially lower than in 2014. The majority of the regulations during the year entailed only a minor change to existing regulations, whereas in the previous year there was a new regulation or extensive changes.

The international reports and opinions through Ei's participation in ACER, CEER or NordREG numbered 66 in 2014. In that year we presented all reports and opinions as regulatory development since the main aim of our participation still was to develop regulatory frameworks. There were fewer reports and opinions this year, but on the other hand more strategic issues have been treated.

National commissions

Evaluation of the sector initiative Prisdialogen (Ei R2015:04) Ei was commissioned to evaluate the sector initiative Prisdialogen [the price dialogue] to see whether this initiative has increased confidence in the sector and whether the position of consumers has been strengthened in a satisfactory manner. Ei presented its conclusions in the interim report Utvärdering av branschinitiativet Prisdialogen [Evaluation of the sector initiative Prisdialogen] (Ei R2015:04).

The evaluation shows that consumers have a positive perception of Prisdialogen and that consumer confidence in the district heating market appears to have been strengthened. But since Prisdialogen has only existed since 2013 it is too early to comment on whether it is sufficient for increasing the predictability of price development and confidence in the district heating sector.




The interviews conducted with consumers and suppliers show that many are positive, but Ei notes that there are still unresolved issues. Examples are how small house owners are to be more widely covered by the consultation process and whether there should be penalties if district heating suppliers do not adhere to the price forecasts which they stated at the consultation.

Ei notes that since the initiative has been running for such a short period it is not possible to see the effects in full. The initiative is based on a long-term perspective and needs time to develop. Ei will follow up this work by means of a further report to be presented in late March 2016.

Supplier centric relocation process - a cost-benefit analysis (Ei R2015:05) At the Government's request, Ei has looked into the possibility of introducing a supplier centric relocation process despite the fact that the system employing a centralised information processing model – a so-called service hub – is not yet in place. Ei's cost-benefit analysis reveals that this is not recommendable.

The main reason is that the investments in system development, internal change management and a central internet service that must be made by electricity suppliers and electricity grid operators in order to already now introduce a supplier centric relocation process cannot be reused in the service hub that is planned to be in operation within three to four years. The commission is described in the report Elhandlarcentrisk flyttprocess – kostnadsnyttoanalys [Supplier centric relocation process – cost-benefit analysis] (Ei R2015:05).

Threshold effects and renewable energy (Ei R2015:08) Ei was commissioned to draft proposals on how to handle threshold effects when connecting large-scale renewable electricity production. In today's grids a lack of capacity is not unusual, and this necessitates reinforcements of the network. This is especially true when connecting larger installations. Ei's report Tröskeleffekter och förnybar energi – förslag till permanent lösning [Threshold effects and renewable energy – proposal for a permanent solution] (Ei R2015:08) presented two proposals that could reduce the threshold effects.

The first proposal is based on grid owners implementing a premature division of the connection fees. This first proposal also has a supplementary proposal whereby assistance in the form of loans financed via the national network tariff can be provided primarily for the grids that have difficulty in handling the major investment sums that might be involved.

The second proposal, also financed via the national network tariff, moves this handling to a central fund which, following an application from a grid owner, can contribute with financing to reduce the threshold effects. Ei advocates this fund proposal as it eliminates the threshold effects to the greatest extent while also preserving the economic incentives that steer operators towards an expansion of




renewable electricity production. The Government has sent the report on referral to a number stakeholders.

Functional requirements for future electricity meters (Ei R2015:09) Ei was commissioned to investigate and propose which functional requirements should be placed on electricity meters in the future. Ei's report Funktionskrav på framtidens elmätare [Functional requirements for future electricity meters] (Ei R2015:09) presented a proposal entailing the general regulation of functional requirements in electricity meters and metering systems by means of two additions to the Electricity Act. The report also proposed a number of concrete functional requirements that should be regulated through ordinance and provisions. All in all, Ei sees a significant market potential within energy services as a result of the functional requirements that have been analysed. In addition to this, there are good opportunities for streamlining the operation of the electricity grids and the promotion of local electricity production and for seeing an increase in consumers' awareness of their electricity use if functional requirements are introduced. The Government Offices sent Ei's report on referral to stakeholders in June–September.

Transfer of responsibility for balancing the transmission network has gone well (Ei R2015:17) The reform of June 2013, to transfer the responsibility for balancing supply and demand on the transmission network for the natural gas grid for western Sweden to Swedegas AB from Svenska kraftnät, has been a success. This is established by Ei in the report Utvärdering av systembalansansvaret på gasmarknaden [Evaluation of responsibility on the gas market for balancing the transmission network] (Ei R2015:17) submitted to the Government.

Follow-up of goals for the work of simplification at central authorities At the beginning of the year, Ei was commissioned together with around twenty other government agencies to follow up the Government's goals for increased service, reduced processing times and a greater understanding for the conditions of companies. This follow-up took place in the form of a report to the Swedish Agency for Economic and Regional Growth, which then submitted a joint report to the Government on behalf of all the agencies concerned.

International regulatory development

Commission guidelines and network codes In recent years, EU Member States have prepared and adopted a large number of new rules, known as Commission guidelines and network codes, for the electricity and gas markets. Commission guidelines and network codes are a step towards creating a common internal market for electricity and gas within EU. This is intended to increase security of supply, contribute to energy sustainability and strengthen competition in the electricity and gas markets for the benefit of Europe's energy consumers. Since several years, there are legally binding regulations setting




out common rules of play for cross-border trade in electricity and gas between Member States. Commission guidelines and network codes are legally binding rules that provide a more detailed EU regulatory framework.

On behalf of Sweden, Ei has actively participated in the work on the European Commission guidelines and network codes for electricity and gas. This includes Ei participating in working groups within ACER and in ACER's Board of Regulators, representing Sweden in a number of committee meetings, submitting information to the Ministry and informing Swedish actors. In 2015, Ei had a commission to submit to the Government a summary of what each relevant Commission guideline and network code entails. The summary includes an analysis of the consequences that the Commission guidelines and network codes are expected to have for Swedish consumers, operators and other actors, and an assessment of what possible deviations from these rules might entail.

The work on these guidelines and network codes is part of Ei's commission to pursue harmonised regulatory frameworks within the Nordic region and the EU. Ei will report to the Government on its commission.

Commission guideline – Guidelines for Capacity Allocation and Congestion Management (CACM) The CACM guideline states the methods for calculating capacity on the day-ahead and intraday markets for electricity and for calculating cross-zonal capacity. The guideline also contains provisions for establishing competition between electricity exchanges in Europe. The guideline entered into force on 14 August 2015 and thereby also began to apply in Sweden with immediate effect. As a consequence of this legislation Ei, for example, appointed a nominated electricity market operator (electricity exchange) in early December.

Status: Ei completed the government commission in 2015.

Network code on Requirements for grid connection of Generators (RfG) The RfG network code defines requirements on production units that are connected to the electricity grid. In June 2015, the EU Member States in the committee voted yes to the Commission guideline, Requirements for grid connection of Generators (RfG). This means that the guideline has been referred to the European Parliament and the European Council for final approval. At this stage, the guideline can be rejected, but not amended, and Ei's commission may therefore be deemed completed. Ei presumes that the guideline will be adopted. The Commission guideline is expected to enter into force in 2016.





Network code on Demand Connection (DCC) This network code concerns requirements for connection to electricity grids. These requirements are placed on new installations, for example demand facilities such as industries, distribution facilities and demand units providing demand response services. Certain existing facilities can also be covered by the network code. In order for existing facilities to be covered by the network code, certain criteria are to be met, for example that the facility is modified to such an extent that its connection agreement must be revised.

On 16 October 2015, the EU Member States voted yes to the network code in the committee. This means that the network code has been referred to the European Parliament and the European Council for approval. At this stage, the network code can be rejected, but not amended, and Ei's commission may therefore be deemed completed. Ei presumes that the network code will be adopted. DCC is expected to enter into force in 2016.


Network code on requirements for grid connection of High Voltage Direct Current systems and HVDC Connected PPMs This network code concerns the connection of HVDC lines to the electricity grid. The network code also concerns the connection of HVDC-connected production units. In September 2015, the EU Member States voted yes to HVDC in the committee. This means that the network code is now referred to the European Parliament and the European Council for approval. At this stage, the network code can be rejected, but not amended, and Ei's commission may therefore be deemed completed. Ei presumes that the network code will be adopted. The Commission guideline is expected to enter into force in 2016.


Commission guideline – Forward Capacity Allocation (FCA) This Commission guideline states methods for calculating long-term cross-zonal capacity allocation rules (for all time-frames except day-ahead and intraday) and for the management of forward risk-hedging products. A proposed Commission guideline has been drafted by ENTSO-E, and ACER has submitted a reasoned opinion on the network code. In October 2015, the EU Member States voted yes to FCA in the committee. This means that the guideline is now referred to the European Parliament and the European Council for approval. At this stage, the network code can be rejected, but not amended, and Ei's commission may therefore be deemed completed. Ei presumes that the network code will be adopted. The Commission guideline is expected to enter into force in 2016.





Pending commissions on Commission guidelines and network codes Ei is working on a further two network codes and one Commission guideline for electricity and on one network code for gas on behalf of the Government. These commissions will also run during 2016. Since these network codes and the Commission guideline are pending they have not yet been translated into Swedish and been given a Swedish designation.

The pending commissions for electricity are the network code on Emergency and Restoration (ER) concerning what should be done in the event of a major disruption in the electricity network; the Commission guideline on Transmission system operation (SO), whose purpose is to state rules for operational security, operational planning, frequency control and frequency quality in the national grids and for the regional cooperation of system operators; and finally the network code on Electricity Balancing (EB) containing common legislation for the design of Europe's balance markets to make them more uniform.

Work is also being done on the network code on Harmonised transmission tariff structures for gas (TAR) containing common legislation for the design of gas network tariffs in order to bring about more uniform tariffs within the EU. In December 2015, Ei presented an opinion to the Government concerning this network code.




Report on the Swedish electricity and natural gas markets 2014 (Ei R2015:13) Every year, Ei publishes the report Sveriges el- och naturgasmarknad [The Swedish electricity and natural gas markets] (Ei R2015:13). The report includes matters of regulation, competition and security of supply. The structure of the report has been developed in collaboration with the other European regulatory agencies and the European Commission. The report summarises the previous year's developments in the Swedish electricity and natural gas markets.

New ACER guidelines on the cost allocation of PCI projects The process of linking Europe's transmission networks to create a single market raises issues of how to allocate the costs for projects of common interest (PCI) between the countries that will benefit. In 2015, several European regulators and ACER have taken a stance on applications for cost allocation between countries. Thus, in its work with ACER, Ei has participated in the revision of the ACER guideline concerning recommendations for how to manage cost allocation cases.

End-user markets in Europe Ei has participated in the work to draft proposals for how to develop Europe's end-user markets for electricity and gas. Among other things, Ei has chaired the end-user market group, Retail Market Task force in CEER. CEER's publications included the report Advice on Customer Data Management for better retail market functioning and evaluation of responses containing recommendations on information exchange in the electricity and gas markets. CEER has also published a joint document describing the regulators' position on what characterises effective end-user markets, Position paper on well-functioning retail markets.

The role of the distribution system operators In 2015, CEER published the recommendation The future role of the DSOs – A CEER conclusions paper. In 2015, Ei prioritised participation, together with the other European regulators under CEER, in the European dialogue on the role that Europe's distribution system operators are to have in the future electricity market. Ei notes that several of the proposals submitted by CEER are found in the European Commission's Summer Energy Package.

The European Commission's Summer Energy Package During the summer and autumn Ei participated in the work to submit views on the Commission's Summer Energy Package containing various proposals for how the energy market in Europe should be developed. Ei's work included analysing and submitting views on the summer package via the referral responses of ACER, CEER and the Ministry of the Environment and Energy to the Commission. Ei has also participated in the Ministry of the Environment and Energy's consultations with Swedish actors and authorities.




Through this work, Ei has contributed towards the provision of information on Swedish conditions and the Swedish regulatory framework and towards ensuring that Swedish conditions are taken into consideration in the Commission's continued modification of the electricity and gas markets.

Sector analysis of different forms of capacity mechanisms Together with Svenska kraftnät, Ei has submitted documentation to the Government Offices with reference to the European Commission's sector analysis of various capacity mechanisms in the EU. In this investigation, the Swedish electricity market model with a power reserve is of interest to the Commission. The documentation analyses and gives Ei's view on how the regulatory framework should be developed within this area.

Nordic work

Nordic collaboration to develop the end-user market for electricity in the Nordic region In order to develop the end-user market for electricity, the Nordic regulators carry out a series of annual activities within the partner organisation NordREG. NordREG also has the Nordic Energy Ministers' commission to pursue development of the Nordic electricity market.

Ei chairs NordREG's Retail market working group. Work in 2015 has resulted in two different studies of the tasks of Nordic TSOs and DSOs with regard to information exchange on the electricity market. NordREG has also initiated a study describing the design of the Nordic regulatory frameworks for demand response and micro-production. Based on the studies carried out, NordREG has established that there is no present need for producing further Nordic recommendations concerning the design of the end-user market.

During the year, NordREG submitted views to the Nordic energy ministries in NordREG Memo to EMG on demand-side flexibility and NordREG response to THEMA report on Capacity adequacy in the Nordic Electricity Market.

Ei has also led NordREG's work to analyse various issues in connection with the Commission guideline on CACM.

Furthermore, the regulators have presented a status report concerning the Nordic electricity market, in which NordREG notes that the Nordic market functions well but that it also faces challenges.




Self-initiated commissions

Investigation of the power reserve In February, Ei participated in a seminar on the power reserve at the Ministry of the Environment and Energy. The seminar looked at the question of whether the power reserve will exist after 2020. Prior to this seminar, Ei analysed the demand for power based on a number of different scenarios in order to see what would happen with the electricity market if demand outweighed supply. The results demonstrate that the power reserve is not needed. With the right price signals and flexibility among customers, the market could handle extreme situations without a power reserve. The analysis can be found in the document Sammanfattning inputs och förutsättningar i Ei:s bedömning av effekt- och energibalansen 2025 [Summary of inputs and conditions in Ei's assessment of the power and energy balance 2025].

Research report on consumer flexibility In recent years, Ei has looked a great deal at the issue of flexibility. Among other things, Ei has ordered two research reports on the subject by Professor Runar Brännlund and his research team at Umeå University. In May 2015, the team completed its second report for Ei – An electricity market in transition – demand flexibility and preference heterogeneity.

The first report, En elmarknad i förändring – Är kundernas flexibilitet till salu eller ens verklig? [An electricity market in transition – Is consumer flexibility for sale or even real?] examined how flexible electricity consumers actually are and what is required to get them to alter their consumption patterns. In the second report, the research team studied the issue further on the basis of various parameters. These included how consumers choose contracts and consumption in relation to income.

Transmission limitations in Germany negative for Nordics' socio-economy (Ei R2015:11) In its report Överföringsbegränsningar mellan Norden och Tyskland [Transmission limitations between the Nordics and Germany], Ei looks at the socioeconomic impact of limitations in the connections between Germany and the Nordics during the period 2012-2014. Ei establishes that the interconnections between the three Nordic bidding zones SE4, DK1, DK2 and Germany are often limited due to a surplus of renewable power in northern Germany. This is due to internal transmission limitations in the German electricity network.




Regulations

Regulations on revenue caps for electricity grid operators (EIFS 2015:1), (EIFS 2015:2) In September 2014, the Government established new regulations for ex ante regulation via the Ordinance (2014:1064) on revenue caps for electricity grid operators (the revenue cap ordinance). The ordinance lays down several important principles and parameters for how ex ante regulation shall be formulated for 2016 and onwards. The ordinance also contains several points which give Ei new authorisation. With the support of the ordinance, Ei has developed new regulations. The regulations introduced are The Energy Markets Inspectorate's regulations (EIFS 2015:1) on network concessionaires' revenue cap proposals and gathering of information to determine the limits of the revenue cap and The Energy Markets Inspectorate's regulations (EIFS 2015:2) on reasonable costs and a reasonable return when calculating a revenue framework for electricity grid operators. The regulations are being applied for the first time for the supervisory period 2016-2019.

The report The Energy Market Inspectorate's regulations on revenue caps for electricity grid operators (EI R2015:01) is intended to facilitate an understanding of and explain in greater detail the intention of the provisions laid down in the regulations.

Regulations on timescales for electrical power generation facilities (EIFS 2015:3) Ei has produced new regulations on defining timescales for the connection of electrical power generation facilities. The regulations are aimed at electrical power generation facilities. The regulations apply to electricity grid operators that have received an application for connection to an electrical power generation facility. The Energy Market Inspectorate's regulations on defining timescales for the connection of electrical power generation facilities (EIFS 2015:3) came into force on 01 July 2015.

Regulation on outage reports (EIFS 2015:4) In May, Ei established The Energy Markets Inspectorate's regulations (EIFS 2015:4) on the obligation to report power outages for the assessment of supply quality in the electricity grid. The regulations place high requirements on electricity grid operators to report electrical outages to Ei. At the same time, parts of the outages reports are simplified for electricity grid operators. The new rules enter into force on 1 January 2016.

Incentives to increase security of supply in electricity grids (EIFS 2015:5) In May, Ei published the regulation The Energy Markets Inspectorate's regulations on what is meant by quality in the network concessionaires' manner of conducting network operations when establishing revenue caps (EIFS 2015:5). The purpose of the regulation is to result in a higher supply quality in the electricity grids. The revised regulation is one of the regulations that forms the basis of Ei's calculation of network




concessionaires' revenue caps. The regulation is to provide companies with the incentive to improve the security of supple in the electricity grid. A new addition in the revised regulations is that the quality of local grids is not only compared with historical data from the same company, but also with an average quality for other electricity grid operators with similar conditions. In conjunction with the publishing of the regulation, the report Quality regulation of a revenue cap for electricity grid operators - Revised method for the supervisory period 2016-2019 (Ei R2015:06) was also published.

Incentive for efficient use of the electricity grid (EIFS 2015:6) In May, Ei published The Energy Markets Inspectorate's regulations on what is meant by efficient use of the electricity grid when establishing revenue caps (EIFS 2015:6). Along with the new regulation comes incentive for electricity grid operators to make more efficient use of their grids by reducing network losses and achieving a more even distribution of the load over the day. In conjunction with the publishing of the regulation, the report Efficient use of the electricity grid (Ei R2015:07) was also published.

Adaptation of the metering regulations as a result of new rules for micro-produced electricity (EIFS 2015:7) Since 1 January 2015, electricity suppliers have an obligation to accept electricity produced by an electricity consumer who is entitled to a tax reduction for the micro-production of renewable electricity. Ei has therefore adapted the metering regulations for electricity so that they are in line with the changes in the Electricity Act. Regulations amending the Swedish Energy Market Inspectorate's regulations and general advice (EIFS 2011:3) on metering, calculation and reporting of electrical power transmitted (EIFS 2015:7) took effect on 01 July 2015.

Regulatory amendment regarding submitting information to Ei's price comparison site Elpriskollen (EIFS 2015:8) In January 2015, a consultation was held with representatives from the industry regarding potential amendments to Ei's reporting system Elin and the price comparison site Elpriskollen and which information electricity suppliers should report to Ei. Three of the amendments required regulatory changes before they could be implemented. This resulted in Regulations and general advice amending the Energy Markets Inspectorate's regulations and general advice (EIFS 2013:7) on the obligation of electricity suppliers to provide information about the prices and terms of supply applied to electricity consumers. The regulatory amendment has the reference EIFS 2015:8.




Regulatory amendment on reporting power outages (EIFS 2015:9) In December, Ei published a regulatory amendment which looks at companies' obligation to report power outages. Regulations amending the Energy Markets Inspectorate's regulations (EIFS 2015:4) on the obligation to report power outages for the assessment of supply quality in the electricity grid. The regulatory amendment enters into force on 01 January 2016.

Regulatory amendment on electricity grid operators' reporting to Ei (EIFS 2015:10) In December, Ei published a regulatory amendment which concerns electricity grid operators. The regulation states what type of information electricity grid operators should report to Ei in the annual reports. Among other things, the amendment means that starting with the reporting for 2017, companies must also report the average load factor. The information reported is used by Ei as a basis for calculation of electricity grid operators' revenue caps, among other things. The name of the regulation is Regulations and general advice amending the Energy Markets Inspectorate's regulations and general advice (EIFS 2012:4) on accounting of network operations. The regulatory amendment has the reference EIFS 2015:10 and is effective as of 1 January 2016.




Table 5. Performance for 2015 in regulatory development (concluded government commission)

Performance, regulatory development

Volume 2015 Cost 2015 SEK (thousand)

Government commission

Threshold effects and renewable energy Ei R2015:08 1 675

Functional requirements imposed on future electricity meters Ei R2015:09

1 1804

Relocation process, cost and benefit analysis Ei R2015:05 1 655

Prisdialogen follow-up Ei R2015:04 1 758

Evaluation of responsibility on the gas market for balancing the transmission network Ei R2015:17

1 65

Commission guidelines and network regulations

Network code FCA 1 659

Network code CACM 1 540

Network code RFG 1 585

Network code HVDC 1 99

Network code DCC 1 168

Network code TAR 1 257

Table 6. International reports from NordREG

International reports from NordREG in which Ei has participated

Work Programme 2015 February

Thema Report 2015-02: Mapping of TSO and DSO roles and responsibilities related to information exchange

May

Thema Report 2015-03 Rules and regulation for demand response and micro-production

May

Mapping of TSOs’ and DSOs’ roles and responsibilities related to market design to enable energy services

July

NordREG’s status report- update and national development August

NordREG response to THEMA report: Capacity adequacy in the Nordic Electricity Market

August

NordREG memo to Elmarkedsgruppen regarding demand-side flexibility August

Tariffs in Nordic countries – survey of load tariffs in DSO grids November

Statistical Summary of the Nordic Energy Market 2014 November

Measures to support the functioning of the Nordic financial electricity market November




Table 7. International reports from ACER

International reports from ACER in which Ei has participated

ACER Opinion on the network code on harmonised transmission tariff structures for gas

No 02/2015

ACER Opinion on the network code on emergency and restoration No 04/2015

Table 8. International reports from CEER

International reports from CEER in which Ei has participated

Status Review of Renewable and Energy Efficiency Support Schemes in Europe in 2012 and 2013

January

CEER’s International Activities: Core Strategy and Objectives February

CEER Benchmarking Report 5.2 on the Continuity of Electricity Supply Data update

February

CEER Advice on How to Involve and Engage Consumer Organisations in the Regulatory Process

March

CEER Advice on Customer Data Management for Better Retail Market Functioning Electricity and Gas

March

CEER Advice on customer information on sources of electricity March

Implementing the 2020 Vision for Europe’s Energy Customers CEER Action Plan 2015 – 2017

March

CEER response to European Commission Consultation paper of the Revision of Regulation (EU) No 994/2010 concerning measures to safeguard security of gas supply and repealing Council Directive 2004/67/EC

April

CEER Final Vision on Regulatory Arrangements for the Gas Storage Market May

Security of Gas Supply A CEER Concept Paper July

The Future Role of DSOs July

CEER Response to European Commission Consultation on an EU Strategy for LNG and Gas Storage

September

CEER Response to the Energy Community consultation on Draft Policy Guidelines "On the Promotion of Organised Electricity Markets in the Contracting Parties"

September

Joint ACER-CEER response to the European Commission’s consultation on risk preparedness in the area of security of electricity supply

October

Position paper on well-functioning retail energy markets October

CEER Statement on Delivering a New Deal for Energy Consumers July



CONSUMER INFORMATION

Consumer information

Ei's duties include strengthening consumers' position on the markets for electricity, natural gas and district heating. According to the terms of reference, Ei shall also produce information which is easily accessible in order to enable consumers to make active choices.

The electricity trading market is in constant change, with a continuous influx of new actors, types of contract and energy service companies. Individual consumers are often at a disadvantage in terms of their knowledge compared with that of energy companies, which is why they are a prioritised target group for Ei. If the energy markets are to function well, it is important that the energy consumers are active.

Ei's task is to explain how the market and the regulatory framework function to facilitate customers and consumers' comparisons of electricity supply contracts and choose the option best suited to their needs.

It is important for Ei's work to capture suggestions and questions from energy customers in order to gain an overview of the problems and errors they experience. In the supervisory area, questions and complaints often form the basis for measures taken against companies which are found in violation of the regulatory frameworks which Ei monitors. If a problem cannot be rectified via existing legislation, Ei can choose, following an investigation, to submit proposals for regulatory changes to the Government. Lessons learned from Ei's contact with consumers are therefore an important basis for supervision and regulatory development.

The functioning of the free energy market depends on well-informed customers who can make active choices.


Consumerinformation 5,8%

Other information94,2%




Goal 2015 - Consumer information


3 a) We systematically produce a basis for supervision and regulatory development based on questions and complaints from customers.

Ei has a system for structuring and managing questions received from consumers. Several of the complaints lead to supervisory initiatives. Clearer procedures for how complaints from consumers are managed have been developed over the course of the year within the scope of Ei's work on its processes.


3 b) We have expanded our consumer information on Elpriskollen to include the natural gas and district heating markets.

The work to develop Ei's price comparison site Elpriskollen.se over the course of the year has been divided into two parts. One is about improving the tool companies use when they report information to Elpriskollen. The other is about reformulating, improving and expanding the information on www.elpriskollen.se. It is estimated that the work will be completed in early 2016.

Ei's assessment is that the goal is partially fulfilled.

Performance and comparisons in the business segment As the performance model is new, it is not entirely compatible for use in comparisons with previous years. The previous performance model is based on the estimated time allocated, whereas as the new is based on the actual reported time. In table 9, Ei has chosen to compare the performances which are the same as the previous year, in order to gain a certain degree of comparability.

Table 9. Comparison performance consumer information 2013–2015

Performance Consumer information

Volume 2015

Cost 2015 SEK

(thousand)

Volume 2014

Cost 2014 SEK

(thousand)

Volume 2013

Cost 2013 SEK

(thousand)

Consumer contact 1446 3 514 1 845 3 736 736 3 387

Elpriskollen - 2 852

The number of questions from the public (Consumer contact) has decreased somewhat since the previous year. This may be due to low electricity prices and little media attention to consumer related energy issues.

Rebuilding of the Elpriskollen website began in 2015; thus the high costs for the year.




Consumer contact Consumer contact is a function which, among other things, works with responding to questions and handling complaints, primarily from consumers, (individuals) about how the electricity, gas and district heating market works and which rules apply. The goal of this operation is to ensure consumers understand their rights and are able to make active choices. Consumer contact also responds to a smaller number of questions and complaints each year from companies and organisations. Much of the consumer contact function's work is managed via telephone, e-mail and social media.

Since 2014, consumer contact also uses the web-based tool Kundo. This allows consumers to ask questions or search for answers to questions previously asked, all directly via the internet. The majority of questions and complaints received by consumer contact concern the electricity grid regulation; most commonly, matters of electricity network charges and network connection. Questions about electricity traders contract terms and current electricity prices on the electricity trading market are also common.

Ei also cooperates with the Swedish Consumer Agency and several other authorities in the national information service “Hallå konsument”, which was launched in spring 2015. The information service is impartial and its task is to help consumers to gain answers to various questions.

In 2015, consumer contact received 744 calls, 609 questions via e-mail, 61 questions via Kundo and 32 questions via post and social media. On Facebook, Elpriskollen had around 600 followers by the end of 2015 and the website itself has on average 5,300 users per month.

Figure 1. Number of questions and complaints

1446

1845

736611

0200400600800

100012001400160018002000

Questions and complaints from the public




Table 10. Proportion (%) of questions answered within 5 days

Year 2015 2014 2013

Proportion (%) of questions answered within 5 days

97 97 98

Elpriskollen In order to strengthen consumers' position on the electricity market, Ei offers a website for price comparisons – Elpriskollen.se – where consumers can compare prices and terms and conditions of the most common contracts from all electricity trading companies. The possibility to compare prices is a prerequisite for active customers. Ei therefore works continuously to develop the service so as to follow changes on the electricity market and inform about current topics. Over the year, the work to improve both reporting to Elpriskollen and the website itself has been underway. The launching of the new website is estimated to take place in early 2016.



EFFICIENT ORGANISATION

Efficient organisation

According to the Government Agencies Ordinance, each authority's administration shall ensure that activities are conducted efficiently and in accordance with applicable law, reported in a reliable and fair manner and continuously developed. The authority must also make economical use of state funds. For Ei, this means that we prioritise the initiatives which create the best conditions for us to achieve our goals in the core activities. We also prioritise the initiatives required to fulfil the regulatory frameworks which we are covered by.

Ei works continuously with quality assurance so as to fulfil the requirements for a legally secure, efficient and effective case handling. Our work is often carried out in project form so as to ensure the right competence and high quality.

Ei's duties have increased in scope and complexity since the authority was formed in 2008. The organisation has grown and the number of employees by the end of 2015 was 114. This can be compared with 64 in 2008. Parallel to this growth, the requirement for sound internal control has increased, as have the requirements for having documented working methods which guarantee high quality and legally secure exercising of public authority.

Ei has set up a number of goals intended to improve processes and contribute to activities being conducted in an efficient manner.

The areas which have been most important for Ei to develop are the management of activities, processes and methods in the core activities, as well as competence supply and IT.

Ei's work with efficiency is about improving processes and procedures and living up to the requirement of being an efficient and modern authority.




Goal 2015 – Effective organisation


4 a) We have developed and increased the efficiency of our process for larger supervisory initiatives.

In 2015, work has been underway to improve the supervisory process. Among other things, procedures have been developed to systematically coordinate and manage the indication-driven supervision. A new procedure for the work with revenue caps 2016-2019 has been applied in order to increase the efficiency of the process. An evaluation of the supervisory initiative regarding the underlying information for the revenue caps for 2013-2015 has also been performed.


4 b) We have developed and increased the efficiency of our project process.

In 2015, a decision on a new project model was made. The purpose of Ei's project process is to ensure that employees working in projects carry out the work based on predetermined conditions and that changes are taken into account via control without jeopardising the project goals. Aside from a new project model being established, an information session was also held for project managers and members.


4 c) We have developed our work with competence supply with the purpose of improving conditions for the organisation to maintain the right competence.

Implementation of the career ladder and a clearer structure for performance conversation has led to a situation whereby the authority now has a clearer and more comprehensive picture of the organisation's recruitment and training needs. This has improved conditions for the organisation to maintain the necessary competence for goals to be fulfilled. To further improve conditions for a good supply of competence, work on an internal course catalogue began last year. The premise of the course catalogue is to support the career ladder's requirements for competence. The implementation of a more organised resource planning within the authority has also improved opportunities for Ei to redistribute competence internally. Ei's student initiative began in 2014/2015. It is intended to create good contact with universities and other HEIs and highlight Ei as a potential employer for prospective lawyers, economists and engineers.

Ei shall also develop a competence supply strategy and finalise the internal course catalogue. Ei's assessment is that the goal is partially fulfilled.

4 d) We have begun introducing more effective IT support for project and document management.

Over the year, Ei has concentrated its work on project support in order to pave the way for a future document management project. A project portal has been set up in SharePoint and the portal will be used in a number of projects in order to then be evaluated before it is properly introduced in 2016.





Efficiency Over the year, Ei has worked to increase the efficiency of the organisation by reviewing procedures, processes and organisation. A new organisation and clearer division of roles between core administration and support administration have been implemented, as well as clarification in the distribution of tasks between Ei and the National Government Service Centre (Statens servicecenter). This has led to working methods which are both more effective and more uniform. A merging of the department for market monitoring and the international department has also been prepared. The new organisation will be effective as of 1 January 2016.

Two of Ei's goals for 2015 were about creating more efficient processes. The processes which commenced during the year are the supervisory process, the project process, the permit process, the consumer contact process and the report and statistics process. The work to manage all concession applications electronically that started in 2014 has for example been finalised.

Up to and including 2013, Ei shared IT operations with the Swedish Energy Agency. From spring 2014, Ei has been responsible for its own operations. It is only from 2015 onwards that the results can be consulted on an annualised basis. They reveal that Ei has saved approximately SEK 4.5 million in 2015 with the change. In 2015, Ei has also taken a decision regarding an IT strategy for 2015-2018.

Common basic values Ei's work with basic values is directly linked to sound management culture and an efficient and legally secure state administration. Via leadership based on basic values, we also lay the foundations for our employees to grow and take on responsibilities. The words that permeate our conduct towards the surrounding world and one another are integrity, transparency and quality. The work with basic values in 2015 has been aimed at improving the meeting culture. Developing rules of play for meetings and the booking of meetings was an area for development identified by employees in 2014. In 2015, regulations have been developed, implemented and follow up.

Ei and the role of the civil servant Many of Ei's tasks involve exercise of public authority, and it is therefore important that all employees have sound knowledge and understanding of the responsibility that comes with being a civil servant. In these matters, Ei works from the common basic values for state employees. Ei also has a policy regarding objectivity and impartiality. Among other things, the policy states that it is of great importance that all measures taken by the authority are objectively grounded and that employees' impartiality cannot be questioned. There are also special guidelines regarding bribery, conflict of interest and secondary activities.




Ei has worked to clarify the role of the civil servant by informing about regulatory frameworks, common basic values and internal guidelines as part of an introductory training for all new employees. The subject has also been discussed in a lecture during Ei's development conference in spring. Over the year, Ei's case management handbook has been revised and updated. Among other things, the handbook deals with the management of public documents, personal data and confidentiality, the various stages of case management and procedures for registration and archiving. Ei also has an administrative law team with members from all departments to handle questions and disseminate knowledge throughout the organisation.

Accessibility In order to improve accessibility to Ei's premises, an accessibility analysis has been performed. The analysis has led to a plan for measures aimed at increasing accessibility for employees and visitors with disabilities. The majority of measures in the plan have been carried out over the past year, and the work continues in 2016.

Organisation

Management The Energy Markets Inspectorate's Director-General is Anne Vadasz Nilsson. The Deputy Director-General is Tony Rosten. The management team consists of the Director-General, the Chief Counsel, the Chief Economist and the Heads of Department.

The management team meets once per week. All employees gather once per week at “fikaforum” [meetings over coffee] for general information about the authority’s activities. Information is also regularly published on Ei's intranet.

The Advisory Council According to Ei's instruction, there should be an advisory council in place. The Advisory Council exists for transparency in activities and to advise the Director General, but has no decision-making functions. The chair of the Advisory Council is Ei's Director-General. The council, which consisted of six members in 2015, met on three occasions.

Ei's Advisory Council 2015

• Mia Ohlsson, Head of Communications • Lina Bertling Tjernberg, Professor • Gunnar Westling, Doctor of Economics • Linda Burenius Magnusson, Managing Director • Mikael Hvinlund, Director of Communications • Peter Nygård, Senior Advisor




Figure 2. Organisational chart

This organisational chart applied up until 31 October 2015. Thereafter, the Administration and Strategic Coordination Division was divided into four units. A Chief Economist function was also created.

Employees At the beginning of 2015, Ei had 111 employees. By the end, the number was 114. The year had seen 21 new employees arrive and 18 employees leave. During the summer, nine people were employed for temporary work.

The authority has a high turnover of personnel. The professional group most difficult to recruit is technicians/engineers with several years' experience as they are in demand on the labour market.

Good development opportunities and competence supply Ei's commitment for 2015-2017 is that the authority has a holistic view, strategy and scheme surrounding competence supply in the form of career paths, strategic recruitment and an improved internal competence supply. There must be a common vision for Ei's competence needs. Special focus must be placed on strategic recruitment and internal career paths.

The goal for 2015 was for Ei to have developed its work with competence supply with the purpose of improving conditions for the organisation to maintain the right competence. In 2015, we have strengthened our core activities via strategic recruitment of competence in the areas of economics, administrative law and environmental law. In the supporting activities, we have increased competence via the recruitment of experts in the area of procurement and economics.

In 2014, internal career paths were developed for case handlers. The equivalent career path for administrators was complete in 2015. In connection with the introduction of the career ladder, an analysis was made of employees' competence




levels in relation to the requirements of their positions. Work has also begun on a course catalogue; the premise of which is to support the career path's competence requirements. The competence requirements shall also be used to create new courses which will become part of the authority's internal course catalogue.

In all performance conversations between manager and employee, a dialogue is maintained regarding the employees' needs of professional and personal development based on operational requirements.

Implementation of the career ladder and a clearer structure for performance conversations has led to a situation whereby the authority now has a clearer and more comprehensive picture of the organisation's recruitment and training needs. This has also meant that the authority now has a better foundation for dialogue with employees regarding their professional and personal development. This has improved conditions for the organisation to maintain the necessary competence for goals to be fulfilled.

The implementation of a more organised resource planning within the authority has improved opportunities for Ei to redistribute competence internally.

Work environment and health The number of employees at Ei has almost doubled since the beginning of 2008.

It has arisen in the systematic work environment efforts that the authority's premises do not correspond to Ei's needs. Among other things, the air in the workspaces does not meet the quality prescribed by the Swedish Work Environment Authority. Due to a growing number of employees and limitations in the air quality of the office, Ei has worked on a premises provision plan for the short and long term. The work is estimated to be complete in the first quarter of 2016.

All employees at Ei are offered one hour of wellness activities per week and wellness allowance. In 2015, employees took advantage of 61 per cent of the time allocated for wellness activities. 67 per cent of employees took advantage of wellness benefit. The total amount of sick leave remains on a stable and low level.

Table 11. Sick leave with at least 60 days of total sick leave, in per cent

Sick leave 2015 2014 2013 2012

Total 45.5 20.7 19.4 41.2




Table 12. Sick leave as a proportion of total working hours by sex, in per cent

Sick leave 2015 2014 2013 2012

Women 3.3 3.7 2.1 3.3

Men 1.8 1.2 1.1 1.3

Total 2.7 2.6 1.7 2.5

Figure 3. Sick leave as a percentage of total working hours by age group

Table 13. Number of employees by age and sex (per cent)

Gender 29 years or younger 30-49 years 50 years or older Total by sex

Women 7 47 10 64

Men 7 21 8 36

Total 14 68 18 100

Table 14. Number of employees including those on leave

Gender 31/12/2015 31/12/2014 31/12/2013

Women 73 67 65

Men 41 44 43

Total 114 111 108

0

1

2

3

4

5

6

Total 29 or younger Between 30 and 49 50 or older




Equality and diversity Equality and diversity are included as a natural part of Ei’s operational activities. The percentage split of women and men at the authority is 64/36. All personal statistics are produced and analysed based on sex and age. This has been done in the wage analysis prior to salary, for example, as well as for recruitment and analyses of sick leave.

The student initiative At the end of 2014, Ei began a three-year student initiative. The aim of the initiative is to highlight Ei as a future employer for prospective engineers, economists and lawyers and make contacts with researchers in universities and other HEIs. In 2015, a number of employees at Ei have attended labour market conferences at three HEIs; Umeå University, Uppsala University and the Royal Institute of Technology (KTH), and conducted seven guest lectures at HEIs and universities. Ei has also offered three students degree projects, one of which was concluded in 2015. In order for employees of Ei to be good supervisors, a supervisor training course has been run.

External parties' impressions of Ei For the third year running, external consultants have interviewed 36 stakeholders in the Government/Riksdag, authorities, the energy sector and journalists/opinion makers for a qualitative stakeholder analysis. Ei receives a somewhat lower rating in 2015 than 2014 on the matter of how Ei fulfils its role; a rating of 5.7 on a scale of 1-10, compared with 5.8 in 2014.

The analysis reveals a split image of Ei, where consumer representatives have a more positive image of Ei than stakeholders which represent energy companies and in certain cases also the public authority and political sphere.

When stakeholders give their views on Ei, they are clearly influenced by the court processes concerning electricity grid operators' revenue caps 2012-2015. The stakeholders which have a negative view of Ei often refer to these court processes and believe that confidence in the authority has been undermined as Ei has not accepted the court decision. Those giving a positive view of Ei describe the authority as being new, fresh and at the forefront and that Ei has strengthened its independence. A general picture is that Ei is a relatively unknown authority and that more dialogue is desired.

Dialogue was also called for in previous years' surveys, and Ei's focus during the year has therefore been on dialogue in the form of seminars, newsletters and online information, and through participation in other stakeholders' seminars. Evaluations of some of Ei's own seminars show that many participants felt that they received good information and that they appreciate seminars as a communication channel.



INTERACTION AND DIALOGUE

Interaction and dialogue

As instructed by the Government, Ei is to particularly interact with the Swedish Consumer Agency and the Swedish Competition Authority regarding consumer issues and market monitoring of the competitive energy markets. With respect to questions concerning security of supply and transmission quality in the electricity grids, Ei is to interact with the National Electrical Safety Board, and with respect to questions concerning the development of the common market for electricity within the Nordic countries and the EU, Ei is to interact with the authority and state owned enterprise Svenska kraftnät.

Ei also otherwise strives for effective interaction with authorities and other actors. Ei is to consult with the authorities affected by our proposed measures.

Concluded consultations Ei has hosted a number of consultations in 2015. These include consultations on the revision of regulations and on the Commission guideline Emergency and Restoration (ER). Ei has also hosted consultations on the simplified settlement provisions included in the government commission to propose measures that can stimulate demand response.

Market actors have also had opportunity to attend a Nordic consultation on the network code FCA (Forward Capacity Allocation) and forthcoming regulations regarding instruments for cross-border trade in Europe.

In March and September Ei invited written consultations about the network code for gas, TAR (harmonised transmission tariff structures for gas).

Interaction

Interaction with the Swedish Consumer Agency Ei has interacted with the Swedish Consumer Agency regarding the information service Hallå konsument launched in spring 2015. This information service is a cooperation between several authorities. It is impartial and its task is to help consumers to gain answers to various questions. Ei is an authority responsible for

Ei interacts with several actors in its government commissions and according to its instruction. Ei also has dialogue with sector and consumer representatives in various issues and contexts.




providing information to energy consumers and is therefore tasked with contributing to the information service on the basis of Ei's areas of responsibility.

In addition to interaction on Hallå konsument Ei also meets the Swedish Consumer Agency together with the Swedish Consumer Energy Market Bureau a number of times a year to discuss consumer issues in the energy markets based on these organisations' different powers and responsibilities

Interaction with the Swedish Competition Authority Ei has interacted with the Swedish Competition Authority in the work on Commission guidelines and network codes and in the work on REMIT.

Interaction with the Swedish Financial Supervisory Authority Ei has interacted with the Swedish Financial Supervisory Authority in the work on REMIT.

Interaction with the Swedish Economic Crime Authority Ei interacts with the Swedish Economic Crime Authority in the work on REMIT.

Interaction with the National Electrical Safety Board Ei has interacted with the National Electrical Safety Board on issues of emergency preparedness and of quality of supply.

Interaction with Svenska kraftnät Ei has interacted with Svenska kraftnät in the work on Commission guidelines and network codes and on issues of emergency preparedness and of quality of supply. The commenced government commission on a service hub also involves interaction with Svenska kraftnät and other parties concerned.

Svenska kraftnät has been kept informed regarding the government commission to evaluate responsibility on the gas market for balancing the transmission network and has had opportunity to provide input.

Interaction with the Swedish Energy Agency Ei has interacted with the Swedish Energy Agency on issues of emergency preparedness and of quality of supply.

The Swedish Energy Agency has been kept informed regarding the government commission to evaluate responsibility on the gas market for balancing the transmission network and has had opportunity to provide input.

Ei interacted in the Swedish Energy Agency's government commission to produce a proposal for greater support for offshore wind power.




Interaction with the Swedish Consumer Energy Markets Bureau Ei interacts continuously with the Swedish Consumer Energy Market Bureau in issues concerning consumers and problems on the consumer market for electricity and gas. Ei is represented on the Swedish Consumer Energy Market Bureau's board and the Bureau is the appointed national point of contact. In addition to this, Ei, the Swedish Consumer Energy Market Bureau and the Swedish Consumer Agency meet a number of times a year to discuss consumer issues in the energy markets based on these organisations' different powers and responsibilities

Other interaction During the year, Ei has provided participants and mentors for the programme Rörlighet i staten [Mobility in the State]. This is a collaborative project involving a number of authorities and the Ministry of Enterprise and Innovation. The project's vision is removing boundaries to make central government Sweden's best workplace.

Ei has also started an external reference group for international issues. This group had three meetings in 2015.

The government commission Förhandsreglering naturgas – påverkan på biogas [Ex ante regulation natural gas – the impact on biogas] to be completed in 2016 involved interaction with the sector (grid owners, biogas producers, balancing authorities) through discussion, e-mail exchanges and questionnaire surveys.

In the government commission Utvärdering av systembalansansvaret på gasmarknaden [Evaluation of responsibility on the gas market for balancing the transmission network] the views of all actors on the gas market have been collected in several rounds through, e.g. written questionnaires and interviews.

Seminars and meetings Besides Ei's work in reference groups for several of its government commissions, Ei has during the year organised a number of major activities for sharing knowledge and conducting dialogue. One example is Almedalsveckan (Almedalen Week) at the end of June. Ei was a speaker at a number of events and also arranged a seminar. Seminars have also been arranged on the role of the distribution system operators, the flexibility of electricity consumers, functional requirements for future electricity meters, the government commission on demand response and the government commission on a service hub.

Ei has also had a role to provide guidance and has arranged a number of seminars and training sessions to explain the regulatory framework. These have covered topics such as REMIT, generator tariffs for local grids and the consideration of permits for heavy-current cables with a particular focus on the requirements on electricity grid operators to perform environmental impact assessments and to host consultations.




The Energy Markets Council Ei's Energy Markets Council has representatives for consumers and actors on the energy markets. The aim is to simplify dialogue between different stakeholders and Ei and to give opportunity for actors to submit views on Ei's activities. The representatives raise issues that are important from the perspectives of consumers, companies or society and that can be an input to Ei’s future regulatory development, supervision or investigation within the authority's activities. The Council has met three times during the year. One of these was a joint meeting for consumer representatives and company representatives and two were individual meetings.



FACTS AND COMPILATIONS

Facts and compilations

Ei’s activities are primarily financed by administrative appropriations. The part of the activities involving natural gas is financed by fees in accordance with the Ordinance (2008:1330) on certain fees in the natural gas area. Activities involving market monitoring are financed with fees in accordance with the Ordinance (2014:1059) on certain fees for registration and supervision of trade in the wholesale energy market.

Activities are divided into three business segments; supervision and consideration, regulatory development, and consumer information.

Table 15. Financial results broken down by business segment for the years 2013–2015

Table 16. Financial results for the years 2011–2015

The largest business segment is supervision and consideration, which accounts for 61.6 per cent of the total costs in 2015. Regulatory development has decreased compared to the previous year. The main reason for this is that the amount of government commissions in 2015 was less than in 2014, which has enabled us to spend a larger share of our resources on supervision and consideration where the need of resources remains great. The IT support in the business segment of consumer information has been developed during the year in order to simplify and streamline reporting for electricity suppliers and to improve the search tool used

All amounts in SEK thousand

Supervision and consideration Regulatory development Consumer information

2015 2014 2013 2015 2014 2013 2015 2014 2013

Revenue from appropriations

66 693 56 508 48 808 35 247 40 217 43 942 6 251 5 091 5 952

Other revenues 3 523 2 774 1 750 1 862 1 975 1 575 330 250 213

Operational costs 71 645 62 354 51 596 37 863 44 378 46 452 6 715 5 617 6 292

All amounts in SEK thousand

Profit and loss statement

2015 2014 2013 2012 2011

Revenue from appropriations

108 191 101 816 98 702 94 261 92 599

Other revenues 5 715 4 999 3 538 4 001 5 131

Operational costs 116 223 112 349 104 339 99 851 98 002




by consumers to compare electricity prices. This increases costs compared with 2014, and the business segment of consumer information accounts for 5.8 per cent of the total costs in 2015.

Table 17. Activities subject to a fee, natural gas and supervision of trade in the wholesale energy market

Fees under the Ordinance (2008:1330) on certain fees in the natural gas area This fee is to finance that part of Ei's activities which takes place under the Natural Gas Act (2005:403) and provisions issued by virtue of this Act. We have previously applied a broad interpretation of which activities were to be financed through tariffs. For 2015, Ei has decided to reduce the types of performance to be included in fee-financed activities. Only work under supervision and consideration and regulatory work concerning natural gas are types of performance to be financed through tariffs.

The fee under the Ordinance is to be paid by those who are proprietors of a natural gas pipeline and who transmit natural gas in an outtake point. The method for levying a supervision fee was changed in 2015. The fee is now to be calculated based on the total quantity of energy in the natural gas that proprietors of a natural gas pipeline transmit in outtake points on the natural gas pipeline. The requirement for the fee payer to be connected to a transmission network has been removed. This means that a new actor, Stockholm Gas, can be included among those liable to pay a fee.

From 2016 supervision fee revenues will no longer be at Ei's disposal. Instead, Ei has received appropriation funds to cover these costs. The accumulated deficit now reported will be repaid by Ei using appropriation funds over the next four years.

Activity Acc +/- to end of 2013

2014 +/- Revenues 2015

Costs 2015 2015 +/- Acc +/- to end of 2015

Activities under public law

Fees under the Ordinance (2008:1330) on certain fees in the natural gas area

- 3 487 -5 533 3 815 3 249 566 -8 454

Fees under the Ordinance (2014:1059) on certain fees for registration and supervision of trade

0 0 1 850 4 733 -2 883 -2 883

Total -3 487 -5 533 5 665 7 982 -2 317 -11 337




Fees under the Ordinance (2014:1059) on certain fees for registration and supervision of trade Ei's duties under the Act (2013:385) on intervention against market abuse when trading in wholesale energy products are financed through tariffs. The fee is to be calculated in accordance with the Ordinance (2014:1059) on certain fees for registration and supervision of trade in the wholesale energy market. It consists of two parts, a register-keeping fee and a fee for supervision and market monitoring. The register-keeping fee is a fixed sum per actor and year, SEK 4,000. The fee for supervision and market monitoring is to correspond Ei's annual costs for monitoring, though no more than SEK 7,000,000 per year. This amount is distributed among all market actors based on their respective share of total trade. The fee for 2015 is calculated for the period the market actors have been registered (October-December).

Ei's costs in 2015 were SEK 4,733,000, of which a considerable portion consisted of preparatory work. A fee of SEK 1,850,000 will be invoiced for 2015, which corresponds to Ei's costs for the period October-December. The remaining SEK 2,883,000, which constitutes costs for preparatory work and forms part of the basis for levying the fee, will be distributed across the next three years.

Table 18. Pending cases in 2015

Ingående balans

Nya ärenden 2015

Beslutade ärenden

2015Utgående

balansNya ärenden

2014

Beslutade ärenden

2014Nya ärenden

2013

Beslutade ärenden

2013Stödjande och styrande 99 316 266 149 324 314 379 358

Administrativa ärenden 97 281 232 146 291 279 340 318Inkomna 17 138 113 42 104 109 142 138Upprättade 80 143 119 104 187 170 198 180

Utredningar och remisser 2 35 34 3 33 35 39 40Inkomna 2 35 34 3 33 35 39 40

Tillsyn och prövning 1027 2723 2627 1123 1904 2405 1925 2291Tillsyn - el 335 1766 1547 554 887 1058 827 1169

Inkomna 17 211 85 143 62 72 55 45Upprättade 318 1555 1462 411 825 986 772 1124

Tillstånd - el 597 198 276 519 148 334 212 323Inkomna 517 158 255 420 132 299 210 282Upprättade 80 40 21 99 16 35 2 41

Prövning- el 65 68 106 27 110 224 211 135Inkomna 63 68 105 26 109 224 210 135Upprättade 2 1 1 1 1

Tillsyn och tillstånd - naturgas 19 21 38 2 29 37 17 20Inkomna 18 7 24 1 15 16 1 3Upprättade 1 14 14 1 14 21 16 17

Tillsyn och redovisning - fjärrvä 11 661 656 16 728 751 658 644Inkomna 0 1 1 0 4 4 1 1Upprättade 11 660 655 16 724 747 657 643

Tillsyn grossistmarknad 0 9 4 5 1 1Inkomna 0 2 1 1Upprättade 0 7 3 4 1 1

Kundinformation 94 385 454 25 200 217 739 735Kundinformation, frågesvar 94 385 454 25 200 217 739 735


Regelutveckling 32 82 78 36 85 132 130 75Regelutveckling 32 82 78 36 85 132 130 75


Totalsumma 1252 3506 3425 1333 2512 3068 3173 3459Inkomna 738 1053 1110 681 679 993 1432 1416Upprättade 514 2453 2315 652 1833 2075 1741 2043



FINANCIAL STATEMENTS



FINANCIAL STATEMENTS

The appropriation for 2015 totalled SEK 105,117,000. Ei carried over SEK 3,138,000 from 2014 to 2015. The available amount for 2015 therefore was SEK 108,256,000.


Operating revenues amounted to SEK 113,907,000 and consist mostly of appropriations, to a lesser proportion of tariff revenue and a small proportion of grants and financial income.

Operating expenses were SEK 116,223,000, which is an increase of about SEK 3,900,000 (3.4%) compared with 2014. This is almost entirely attributable to personnel costs, which rose by around SEK 8,100,000 (11.2%). In the same period, the number of full-time equivalents increased by 10 (10.3%).

Net change in capital was SEK -2,317,000 and is entirely attributable to the operations charged with tariffs.

Balance sheet

Total assets dropped by SEK 786,000 compared to 2014.



PROFIT AND LOSS STATEMENT


(SEK thousand) Note 2015 2014

Operational revenues Revenue from appropriations 1 108 191 101 816 Revenue from fees and other remuneration 2 5 668 4 914 Revenue from subsidies 27 42 Financial income 3 20 43 Total 113 907 106 815

Operating expenses Personnel costs 4 -80 588 -72 500 Costs for premises -4 656 -4 845 Other operating costs 5 -28 792 -32 562 Financial costs 6 -11 -41 Depreciation and amortisation -2 177 -2 401 Total -116 223 -112 349

Operations results -2 317 -5 533

Recovery performance Tax revenue etc. 50 70 Funds provided to the state budget from recovery activities -50 -70 Balance 0 0

Change in capital for the year 7 -2 317 -5 533



BALANCE SHEET

Balance sheet

(SEK thousand) Note 31/12/2015 31/12/2014

ASSETS Intangible fixed assets Capitalised development expenditure 8 3 409 4 063 Total 3 409 4 063

Tangible fixed assets Improvement expenditures for a third party property 9 0 2 Machinery, fixtures and fittings, installations, etc. 10 987 1 300 Total 987 1 302

Claims Accounts receivable 639 0 Claims from other agencies 11 1 453 2 576 Other claims 0 19 Total 2 092 2 595

Cut-off entries Deferred costs 12 1 522 1 997 Other accrued revenues 13 3 176 1 002 Total 4 699 2 999

Balance with central government Balance with central government 14 511 -5 102 Total 511 -5 102

Cash and bank balances Balance, interest account with the Swedish National Debt Office 0 6 627 Total 0 6 627

TOTAL ASSETS 11 699 12 485



BALANCE SHEET

(SEK thousand) Note 31/12/2015 31/12/2014

CAPITAL AND DEBTS Administrative capital 15 Central government capital 60 60 Change in capital brought forward -9 020 -3 487 Change in capital in accordance with the profit and loss statement 7 -2 317 -5 533 Total -11 277 -8 960

Provisions Other provisions 16 824 669 Total 824 669

Debts, etc. Loans with the Swedish National Debt Office 17 4 278 5 344 Interest account credit with the Swedish National Debt Office 18 3 887 0 Current liabilities to other agencies 19 1 952 1 943 Accounts payable 4 418 6 778 Other current liabilities 20 1 251 1 185 Total 15 786 15 250

Cut-off entries Accrued expenses 21 6 366 5 526 Total 6 366 5 526

TOTAL CAPITAL AND DEBTS 11 699 12 485



APPROPRIATION REPORT

Appropriation report

Report against appropriations

(SEK thousand)

Appropriations Transfer amount brought forward

This year’s allocation in

appropriation directions

Revocation

Total Expenditure

Transfer amount carried

forward

available amount amount amount Not

e

Exp. area 21 1:7 Framework appropriations

ap.1 Swedish Energy Markets Inspectorate: Administration costs

22 5 677 105 117 -2 539 108 256 -108 242 14

Total 5 677 105 117 -2 539 108 256 -108 242 14 Report against revenue heading

(SEK thousand)

Revenue heading Calculated Revenues Not

e amount

2714 Sanction charges etc. 221 Charges for delay under the Electricity Act (1997:857) and under the District Heating Act (2008:263)

23 50 50

Total 50 50



ADDITIONAL INFORMATION AND NOTES

Additional information and notes

All amounts are given in SEK thousands unless otherwise stated. This may result in discrepancies due to summation.

Additional information

Accounting principles

Applied accounting principles The authority’s accounting follows generally accepted accounting principles and the Bookkeeping Ordinance (2000:606) and the Swedish National Financial Authority (ESV)’s regulations and general advice for this. The annual report is prepared in accordance with the Ordinance (2000:605) concerning the Annual Reports and Budget Documentation and the National Financial Management Authority's regulations and general advice.

In accordance with the National Financial Management Authority's regulations in Section 10 of FBF (the Bookkeeping Ordinance), the authority applies the financial year-end of 5 January. After the financial year-end, invoices in excess of SEK 20 thousand have been booked as cut-offs. The monetary limit the previous year was SEK 10 thousand.

Accrual accounting for administrative expenses

As of 2009, annual leave accrued prior to 2009 is only booked as appropriation expenditure when withdrawn in accordance with the exemption provision. The closing balance in 2014 is SEK 576 thousand, which decreased in 2015 by SEK 50 thousand.

Valuation principles

Fixed assets As assets are recognised proprietary software, acquired licences and rights, as well as machinery and fixtures with an acquisition value of at least SEK 20 thousand and an estimated economic life of at least three years. The monetary limit for 'Improvement expenditures for a third party property' is SEK 50 thousand.

The depreciation period for 'Improvement expenditures for a third party property' is no longer than the remaining period of validity on the lease, with a minimum of three years.




Depreciation is implemented according to a straight line depreciation method.

Depreciation during the year of acquisition occurs from the month in which the asset is put in service. Laptop computers, and also mobile phones and tablets, are expensed immediately as they are considered to have a life shorter than 3 years.

Depreciation periods applied

3 years Computers and peripherals

5 years Interior furnishings Machinery and technical facilities Other office machinery Proprietary software, licences, rights

Current assets Claims have been reported in the amounts that, following individual assessment, are estimated to be paid.

Debts Debts have been reported in the nominal amount.




Remuneration and other benefits Council members/ other board positions Remuneration Lina Bertling 3 Member of the board for Power Circle, Member of the board for IEEE Power & Energy Society, Member of the board in In-Grid Pictures Lina Bertling AB Member of the board of MPs and researchers (RIFO) Mia Ohlsson 5 Member of the Swedish Telecom Advisors’ board, Member of the board for Karlstad Business School at Karlstad University Peter Nygårds 3 Chair of the board for Mid Sweden University Member of the Capital Market Council at the Swedish Agency for Growth Policy Analysis Chair of the board for the Swedish Tourist Association Chair of the board for the owner foundation IVL Member of IVL AB Chair of the board for ARS utvecklings AB Chair of the board for Ecolime Comfort Ceilings AB Gunnar Westling 5 Member of the board for Framship AB Member of the board for Promandat Fastighets AB Member of the board for Promandat Förvaltning AB Member of the board for Odeon AB Linda Burenius Magnusson 3 Member of the board for the trade association Swedish Wind Energy (economic association) Member of the board for the non-profit organisation 100 % förnybart Mikael Hvinlund 2

Senior officers/ board positions

Travel benefit Salary

Anne Vadasz Nilsson, Director General 16 1,092 Member of the board for the Swedish Post and Telecom Authority (PTS)

Employee sick leave For information on sick leave, see page 58 of the annual report.




Notes Profit and loss statement (SEK thousand) 2015 2014

Note 1 Revenue from appropriations Revenue from appropriations 108,191 101,816

Total 108,191 101,816

Total “Revenue from appropriations” (SEK 108,191,000) differs from the sum “Expenditure”

(SEK 108,242,000) for the appropriation Exp. area 21 1:7. The difference (SEK 50 thousand) is due to the reduction in

holiday pay earned before 2009. This item has been charged to

appropriation, but is not recognised as an expense in the profit and loss statement.

Note 2 Revenue from fees and other remuneration Revenue from fees under public law 5,665 2,780

Other revenues from fees and other remuneration 3 2,134 Total 5,668 4,914

Operations requiring full cost coverage Public legal fees in the field of natural gas Revenues 3,815 2,776

Costs 3,249 8,309 Profit for the year 566 -5,533 Accumulated profit -8,454 -9,020

Operations requiring full cost coverage

Public legal fees in the field of registration and supervision of trade in the wholesale energy market.

Revenues 1,850 Costs 4,733 Profit for the year -2,883 Accumulated profit -2,883 Note 3 Financial income Interest on account with the Swedish National Debt Office 8 43

Interest on loans with the Swedish National Debt Office 12 0 Total 20 43

The interest rate for interest and current accounts with the Swedish National Debt Office has been negative since 18/02/2015.




2015 2014 Note 4 Personnel costs

Salary costs (excl. employer's contribution, pension premiums and other fees in accordance with laws and agreements) 51,891 46,051

Of which salary costs for non-employed personnel 498 396 Social security contributions 24,853 21,121 Other costs for personnel 3,844 5,328 Total 80,588 72,500

Note 5 Other operating costs Travel, hospitality, information, sales loss 4,033 3,342

Purchase of goods 2,100 2,453 Purchase of consulting services 11,079 15,867 Purchase of IT services 10,073 7,828 Activation of own development work on fixed asset -1,080 0 Purchase of other services 2,588 3,072 Total 28,792 32,562

Note 6 Financial costs Interest on account with the Swedish National Debt Office 1 0

Interest on loans with the Swedish National Debt Office 0 31 Other financial costs 10 10 Total 11 41

The interest rate for interest and current accounts with the Swedish National Debt Office has been negative since 18/02/2015.

Note 7 Change in capital for the year Fee-financed operations, deficit -2,317 -5,533

Total -2,317 -5,533




Balance sheet 31/12/2015 31/12/2014 Note 8 Capitalised development expenditure Opening cost of acquisition 16,568 16,568

Construction work in progress 1,080 0 Total cost of acquisition 17,648 16,568 Opening accumulated depreciation -12,504 -10,769 Depreciation for the year -1,735 -1,735 Total accumulated depreciation -14,239 -12,504 Closing book value 3,409 4,063

Note 9 Improvement expenditures for a third party property Opening cost of acquisition 2,923 3,192

Sales/disposals, acquisition values for the year 0 -269 Total cost of acquisition 2,923 2,923 Opening accumulated depreciation -2,921 -3,081 Depreciation for the year -2 -82 Sales/disposals, depreciation for the year 0 242 Total accumulated depreciation -2,923 -2,921 Closing book value 0 2

Note 10 Machinery, fixtures and fittings, installations, etc. Opening cost of acquisition 2,853 2,938

Acquisitions for the year 128 1,132 Sales/disposals, acquisition values for the year 0 -1,217 Total cost of acquisition 2,981 2,853 Opening accumulated depreciation -1,554 -2,174 Depreciation for the year -440 -584 Sales/disposals, depreciation for the year 0 1,205 Total accumulated depreciation -1,993 -1,554 Closing book value 987 1,300

Note 11 Claims from other agencies Claims input VAT 1,453 2,576

Total 1,453 2,576

Note 12 Deferred costs Deferred rental costs 1,062 1,061

Other deferred costs 461 936 Total 1,522 1,997

Note 13 Other accrued income REMIT accrued income Q4 2015 1,850 Supervision fees natural gas Q4 2015 1,326 1,002

Total 3,176 1,002 THE SWEDISH ENERGY MARKETS INSPECTORATE’S ANNUAL REPORT FOR 2015 78



31/12/2015 31/12/2014 Note 14 Balance with central government Recovery Opening balance 0 0

Recognised against revenue heading -50 -70

Recovery funds paid to non-interest-bearing flow 50 70 Claims related to Recovery 0 0

Appropriations in interest-bearing flow Opening balance -5,677 -5,318

Accounted to appropriations 108,242 101,933 State allocations added interest account -105,117 -104,625 Repayment of appropriation funds 2,539 2,333 Debts related to appropriations in interest-bearing flow -14 -5,677

Claims for holiday pay debts not recognised against appropriations

Opening balance 576 693 Recognised against appropriations for the year according to the

exemption rule -50 -117 Claims for holiday pay debts not recognised against

appropriations 525 576

Other claims/debts in the Government Central Account with the Riksbank

Opening balance 0 0 Payments to non-interest-bearing flows 50 70 Payments pertaining to appropriations and revenue headings -50 -70 Other claims in the Government Central Account with the

Riksbank 0 0

Total Balance with central government 511 -5,102

Note 15 Administrative capital

Specification of change of administrative capital

Government capital without required return consists of art on loan from Public Art Agency Sweden




31/12/2015 31/12/2014 Note 16 Other provisions Provision for local transition work Opening balance 669 530

Change for the year 155 139 Closing balance 824 669

Note 17 Loans with the Swedish National Debt Office Relates to loans for investments in fixed assets. Opening balance 5,344 6,447

New borrowings during the year 73 1,298 Amortisations this year -1,139 -2,401 Closing balance 4,278 5,344

Granted loan limit according to appropriation directions 11,000 11,000

Note 18 Interest account credit with the Swedish National Debt Office

Granted interest account credit with the Swedish National Debt Office according to appropriation directions 9,000 7,000

Interest account debt carried forward 3,887 0 Total 3,887 0

Note 19 Current liabilities to other agencies Employer's contributions 1,319 1,221

Accounts payable other agencies 633 722 Total 1,952 1,943

Note 20 Other current liabilities Employee withholding taxes 1,251 1,185

Total 1,251 1,185

Note 21 Accrued expenses Accrued holiday pay, including social security contributions 4,701 4,266

Other accrued salaries including social security contributions 787 588

Other accrued expenses 878 673 Total 6,366 5,526




Appropriation report Note 22 Exp. area 21 1:7 Framework appropriations ap.1 Swedish Energy Markets Inspectorate's

administration costs

According to its appropriation directions, the authority has an appropriation credit of SEK 3,154 thousand at its disposal. In 2015 the authority has not utilised this credit.

The authority may utilise SEK 3,138 thousand of the transfer amount brought forward, i.e. 3 per cent of the previous year’s allocation of SEK 104,625 thousand in accordance with the appropriation directions.

The appropriation is interest-bearing.



SUMMARY OF MATERIAL INFORMATION

Summary of material information

(SEK thousand) 2015 2014 2013 2012 2011 Loan limit at the Swedish National Debt Office

Granted 11,000 11,000 13,000 10,000 9,000 Utilised 4,278 5,344 6,447 8,838 5,714 Overdraft facility at the Swedish National Debt Office *

Granted 9,000 7,000 8,000 8,000 8,000 Maximum utilisation 6,953 0 0 0 0 Interest account, Swedish National Debt Office

Interest revenues 8 43 180 312 198 Interest costs 1 0 0 0 0 Fee revenues

Appropriated fee revenues Calculated amount in accordance with the appropriation directions 7,000 3,075 4,000 5,300 6,000 Fee revenues 5,665 2,776 2,878 3,513 4,601 Other fee revenues 3 2,138 389 6 198 Appropriation credit

Granted 3,154 3,139 3,022 2,887 2,707 Utilised 0 0 0 0 0 Appropriations

Framework appropriations

Saved appropriations 14 5,677 5,318 16,274 14,317 Mandates (not applicable) Personnel

Number of Full-Time Equivalents 107 7 88 84 84 Average number of employees 117 111 92 89 88 Operating costs per Full-Time Equivalent 1,066 1,133 1,160 1,160 1,150 Change in capital**

This year -2,317 -5,533 -2,099 -1,589 -492 Balanced -9,020 -3,487 -1,388 201 253 *With reference to the overdraft facility being exceeded during the year, this has been raised to SEK 9,000,000 in 2015. **As of 2012, periodisations that relate to accrued or deferred revenues are recognised against revenue heading and the change in capital for the year is therefore attributable to the fee-financed activities alone. Change in capital brought forward from 2011 relating to cash-accrual differences for recovery has been adjusted in connection with the transition and has been transferred to the item 'Balance with central government'.



MANAGEMENT TEAM

Management team

Back row from the left: Tommy Johansson, Tony Rosten, Therése Hindman Persson, Anders Wallinder, Per Wenna.

Front row from the left: Hanna Abrahamsson, Caroline Törnqvist, Anne Vadasz Nilsson, Ing-Marie Olofsdotter, Sara Sundberg.


I certify that the annual report provides a true and fair view of the results of the organisation and of expenses, revenues and the agency's financial position. Eskilstuna, 19 February 2016

Anne Vadasz Nilsson Director General


ENERGY MARKETS REQUIRE RULESTO PROVIDE A LEVEL PLAYING FIELD.

WE ENSURE THAT THE RULES ARE FOLLOWED.

the swedish energy markets inspectorate’s annual report 2015 · the energy market...

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