VZCZCXYZ0017
PP RUEHWEB

DE RUEHIT #0449/01 1491138
ZNR UUUUU ZZH
P 291138Z MAY 07
FM AMCONSUL ISTANBUL
TO RUEHC/SECSTATE WASHDC PRIORITY 7078
INFO RUEHAK/AMEMBASSY ANKARA PRIORITY 6630

UNCLAS ISTANBUL 000449 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR USAID 
 
E.O. 12958: N/A 
TAGS: ENRG TU
SUBJECT: ENERGY REGULATORS DISCUSS POSSIBLE RELATIONSHIP 
 
 
This message was coordinated with Embassy Ankara. 
 
¶1. (SBU) Summary:  The Energy Regulators Regional Association 
(ERRA) met in Istanbul May 21-22 to discuss regional energy 
market development, energy security, renewable energy, and 
energy efficiency.  The conference was partially funded by 
USAID.  Yusuf Gunay, President of the Energy Market 
Regulatory Authority of Turkey (EMRA), seeks collaboration 
with the USG on energy regulatory matters, also identified 
separately as an Economic Partnership Commission (EPC) action 
item.  Gunay raised this possibility with Robert Archer, 
Energy Team Leader of the Energy and Infrastructure Division 
of USAID's Bureau for Europe and Eurasia, on the margins of 
the conference.  EMRA officials were pleased that Gunay was 
named the new ERRA president at the conclusion of the 
conference.  End Summary. 
 
Regulatory Conference 
--------------------- 
 
¶2. (U) The Energy Regulators Regional Association (ERRA), a 
voluntary organization comprised of energy regulatory bodies 
of Central/Eastern Europe (CCE) and the Commonwealth of 
Independent States (CIS), held its 6th Energy Regulation and 
Investment Conference from May 21-22 in Istanbul, Turkey. 
The conference proceedings revolved around the following four 
themes: (1) regional energy markets, (2) regional energy 
security, (3) electricity and gas market development, and (4) 
renewables and energy efficiency.  The conference was 
partially funded by USAID and several U.S. officials 
participated. 
 
¶3. (U) Robert Archer, Energy Team Leader of the Energy and 
Infrastructure Division of USAID's Bureau for Europe and 
Eurasia, explained that USAID collaborates with ERRA Member 
States to help them develop sound energy regulatory 
frameworks.  The three main characteristics of such 
frameworks are authority, autonomy, and accountability.  In 
particular, the appropriate actors in the energy sector must 
have sufficient authority to exercise their regulatory 
functions, including through the levying of tariffs.  These 
regulatory actors must also be autonomous from short-term 
political influence.  Accountability should be improved 
through increased transparency, specifically by promoting 
public participation and regular reporting to legislative 
officials.  Mr. Archer further stated that regulatory 
activities should be predictable, since unpredictability in 
this context creates problems for investors.  He also 
identified two current trends in the energy sector: 1) the 
emergence of regional markets and an increase in cross-border 
trading necessitates greater transparency, and 2) customers 
are demanding higher quality service. 
 
¶4. (U) James Kerr, president of the U.S. National Association 
of Regulatory Utility Commissioners (NARUC), and Missouri 
electricity commissioner, stated that NARUC has been working 
with ERRA Member States since 1999.  The challenges that 
regulators and investors face in these countries - 
specifically those concerning environmental protection and 
energy efficiency - are similar to those faced in the United 
States.  NARUC has established a task force on climate change 
and will encourage lawmakers to consider the impact that any 
potential climate-related legislation will have on consumers. 
 He further noted that the U.S. Congress will consider energy 
efficiency legislation in the near future. 
 
Energy Partnership 
------------------ 
 
¶5. (U) The issue of an energy partnership between USG and 
EMRA was raised on May 22 by a senior EMRA representative. 
Robert Archer, Energy Team Leader of the Energy and 
Infrastructure Division of USAID's Bureau for Europe and 
Eurasia, met Yusuf Gunay, president of EMRA, on the sidelines 
of the 6th Energy Regulation and Investment Conference in 
Istanbul to follow up on this matter. 
 
¶6. (SBU) Mr. Gunay explained that EMRA would like to 
collaborate with the USG in the same way that USG does with 
other foreign regulators (such as Croatia and the New York 
State Public Utility Commission) at both the state and 
federal regulatory commission levels.  EMRA would also like 
to engage the State Department in a dialogue on strategic 
issues of mutual concern (also separately identified in the 
February Economic Partnership Commission meetings by EMRA 
officials).  Mr. Gunay saw common U.S.-Turkish interests in 
the energy sector, as demonstrated by American AES 
Corporation's sizable presence in Turkey (strong interest in 
the postponed electricity distribution privatization).  He 
also pointed out Russia's increased interaction with Turkey 
on energy matters. 
 
¶7. (SBU) Mr. Archer said the issue of funding would need to 
be examined further and that candidates for state regulatory 
partnerships would need to be identified.  He told Mr. Gunay 
that he would consult with AmEmbassy Ankara and the 
Departments of State and Energy and then advise AmEmbassy 
Ankara on what can and cannot be done concerning a 
relationship between the USG and EMRA. 
 
¶8. (SBU) COMMENT:  Gunay and EMRA officials have long sought 
increased interaction with the U.S., building from periodic 
visits to the U.S.  We strongly endorse this kind of 
cooperation to assist EMRA in increasing its competence and 
in maintaining its independence.  EMRA has struggled to 
maintain its authority vis a vis the Energy Ministry and has 
not hesitated to work on controversial issues such as fuel 
product trade (enforcing a fuel marker provision to combat 
rampant smuggling).  EMRA has been criticized for moving too 
slowly on wind and hydroelectric licensing for new projects. 
JONES