The system operator's role and challenges in an open market environment

In 1991 the Swedish Government took the first major step toward a competitive electricity market by deciding to remove transmission activities from Vattenfall, the state owned power board. A new state utility, Svenska Kraftnat, was subsequently launched on January 1st 1992 to manage the national transmission network and foreign links. In addition to being a network company, Svenska Kraftnat, as a neutral player, was given the task of promoting competition on the electricity market. At the same time Vattenfall AB was reformed as a company which could compete on equal basis with other generating companies. Work on revising the old Swedish Electricity Act from 1902 was carried out during 1993 and 1994. The new regulations were finally approved in Parliament on October 25th 1995 to come into force from January 1st 1996. The main features of the new act are briefly mentioned. The main implications of the new legislation for Svenska Kraftnat as national transmission network operator, national system operator, and promoter of competition on an open electricity market have been: the need for a new transmission-network tariff in an open network; the need for a new function-the balance service-to handle the system operation; the need for an open market place-a trading exchange-for electricity; and the need for system operation agreement between the Nordic countries. How these issues have been tackled and solved is described in this paper.