OPINION AB 1/2014 OF THE ADMINISTRATIVE BOARD. of 10 June 2014 THE ADMIM$TRATIVE BOARD OF THE AGENCY FOR THE COOPERATION OF ENERGY REGULATORS,

Transcription

1 AER Agency For the ooperation OPINION AB 1/214 OF THE ADMINISTRATIVE BOARD OF THE AGENY FOR THE OOPERATION OF ENERGY REGULATORS of 1 June 214 ON THE APPROVAL OF THE FINAL AOUNTS FOR THE FINANIAL YEAR 213 THE ADMIM$TRATIVE BOARD OF THE AGENY FOR THE OOPERATION OF ENERGY REGULATORS, HAVING REGARD to Regulation (E) No 7 1 3/29 of the European Parliament and of the ouncil of 1 3 July 29 establishing an Agency for the ooperation of Energy Regulators, and, in particular, Articles 1(1) and 24(5), HAVING REGARD to Decision AB No 22/213 of the Administrative Board of the Agency for the ooperation of 12 December 213 on the adoption of the Financial Regulation of the Agency for the ooperation of Energy Regulators, and, in particular, Article 99(3), HAVING REGARD to the preliminary observations of the European ourt of Auditors of 29 April 214 on the annual accounts of the Agency for the ooperation for the financial year 213, WHEREAS: (1) On 29 April 214, the European ourt of Auditors issued its preliminary observations on the annual accounts of the Agency for the ooperation of Energy Regulators for the financial year 213. (2) On 2$ May 214, the Director has submitted to the attention of the Administrative Board the final accounts for the financial year 213. (3) The Administrative Board shall deliver an opinion on the final accounts of the Agency. HAS ADOPTED THIS OPINION: 1 j L211, , p. 1.

2 AER Agency for the ooperation Article 1 The Administrative Board takes notes of the preliminary observations issued by the European ourt of Auditors on the annual accounts for the financial year 213, attached as per Annex 1 to this Opinion. Article 2 A favourable opinion on the final accounts of the Agency for the financial year 213 as attached in Annex 2 to this Opinion, is hereby adopted. Article 3 The Administrative Board invites the Director to take immediate actions to remedy the shortcomings identified by the European ourt of Auditors in its preliminary observations and to report in due course on the actions undertaken. Article 4 This Opinion shall be communicated, together with the final accounts, to the accounting officer of the ommission, the European ourt of Auditors, the European Parliament, and the ouncil by 1 July 214. Done at Ljubljana on 1 June 214. For the Administrative Board Signed Razvan Eugen Nicolescu hairman of the Administrative Board

3 AER Agency for the ooperation ANNEX 1 TO OPINION AB 1/214 OF THE ADMINISTRATIVE BOARD OF THE AGENY FOR THE OOPERATION OF ENERGY REGULATORS

4 1615 EBPOHEKA METHA HAHATA TRIBUNAL DE UENTAS EUROPEO EVROPSKY UETNI DVUR DEN EUROPJEISKE REVISIONSRET EUROPAISHER REHNUNGSHOF EUROOPA KONTROLLIKODA EYPQIIAIKO EAEFKTIKO YNEAPIO EUROPEAN OURT OF AUDITORS OUR DES OMPTES EUROPEENNE UIRT INIUIIOIR NA HEORPA *** 1 *,* J EUROPSKI REVIZORSKI SlID ORTE DEl ONTI EUROPEA EIROPAS REVIZIJAS PALATA EUROPOS AUDITO ROMAI EUROPAI SZAMVEVOSZEK IL-QORTI EWROPEA TAL-AWDITURI EUROPESE REKENKAMER EUROPEISKI TRYBUNAL OBRAHUNKOWY TRIBUNAL DL ONTAS EUROPEU URTEA DE ONTURI EUROPEANA EUROPSKY DVOR AUDITOROV EVROPSKO RAUNSKO SODIE EUROOPAN TILINTARKASTUSTUOMIOISTUIN EUROPEISKA REVISIONSRATTEN Preliminary observations with a view to a report on the annual accounts of the Agency for ooperation for the financial year 213 These preliminary observations were adopted by hamber IV at its meeting of 29 April , rue Alcide De Gasperi Luxembourg L - Telephone (+352) Telefax (+352) EA-INFO@EA.EUROPAEU Internet:

5 INTRODUTION I. The Agency for ooperation (hereinafter the Agency, aka AER ), which is located in Ljubljana, was created by Regulation (E) No 713/29 of the European Parliament and of the ouncil2. The Agency s main task is to assist National Regulatory Authorities in exercising, at Union level, the regulatory tasks that they perform in the Member States and, where necessary, to coordinate their action. Under the REMIT regulation3, the Agency was given new additional responsibilities, together with national regulatory authorities, regarding the monitoring of the European wholesale energy market4. INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANE 2. The audit approach taken by the ourt comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations. STATEMENT OF ASSURANE 3. Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFE, the ourt has audited: 2 OJL2I1, ,p Regulation No 1227/211 ofthe European Parliament and ofthe ouncil of25 October 211, OJ L 326, , p. 1, which assigns an important role to the Agency in supervising trading in wholesale energy markets across Europe. 4 Annex II summarises the Agency s competences and activities. It is presented for information purposes. AB Opinion on final accounts financial year 213 (2).doc

6 (a) the annual accounts of the Agency, which comprise the financial statements5 and the reports on the implementation of the budget6 for the financial year ended 31 December 213, and (b) the legality and regularity of the transactions underlying those accounts. The management s responsibility 4. The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions7: (a) The management s responsibilities in respect of the Agency s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the ommission s accounting officer8; making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alla, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. 5 These include the balance sheet and the economic outturn account, the cash flow table, the statement ofchanges in net assets and a summary ofthe significant accounting policies and other explanatory notes. 6 These comprise the budgetary outturn account and the annex to the budgetary outturn account. 7 Articles 39 and 5 ofommission Delegated Regulation (E No 1271/213 (OJ L 328, , p. 42). 8 The accounting rules adopted by the ommission s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International financial Reporting Standards (IfRS) issued by the International Accounting Standards Board. AB Opinion on final accounts financial year 213 (2).doc

7 (b) The management s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. The auditor s responsibility 5. The ourt s responsibility is, on the basis of its audit, to provide the European Parliament and the ouncil9 with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The ourt conducts its audit in accordance with the IFA International Standards on Auditing and odes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the ourt to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. 6. The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the AB Opinion on final accounts financial year 213 (2)doc

8 reasonableness of accounting estimates and the overall presentation of the accounts. 7. The ourt considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. Opinion on the reliability of the accounts 8. In the ourt s opinion, the Agency s annual accounts present fairly, in alt material respects, its financial position as at 31 December 213 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the ommission s accounting officer. Opinion on the legality and regularity of the transactions underlying the accounts 9. In the ourt s opinion, the transactions underlying the annual accounts for the year ended 31 December 213 are legal and regular in all material respects. 1O.The comments which follow do not call the ourt s opinions into question. OMMENTS ON BUDGETARY MANAGEMENT I I. The Agency carried over I,9 million euro or 56 % of total committed title II appropriations gency s building and associated costs), mainly related to the implementation of the REMIT regulation. This is an operational, multiannual activity and should have been budgeted under title III, a shortcoming which was rectified in subsequent commitment appropriations. 12.In addition, the Agency carried over 3,1 million euro or 91 % of total committed title III appropriations, also related to the implementation of the REMIT regulation. The exceptionally high rate of carry-over for title III is mainly 9 Article 17 ofregulation (E No 1271/213. AB Opinion on final accounts financial year 213 (2).doc

9 due to some 3 million euro in additional funding received through an amended budget approved on 31 October 213. OTHER OMMENTS 13The Agency held 5,5 million euro in cash at year-end, which included some 3 million euro relating to the late budget amendment (see paragraph 12). Nevertheless, average cash balances during the year were significantly higher than justified by operational requirements. FOLLOW-UP OF PREVIOUS YEARS OMMENTS 14.An overview of the corrective actions taken in comments from previous years is provided in Annex I. response to the ourt s AB Opinion on final accounts financial year 213 (2).doc

10 Status of corrective action Year ourt s comment. (ompleted I Ongoing I Outstanding I N/A) In order to cover higher school fees, the Agency grants staff whose children attend primary or secondary school a top up allowance in addition to the education allowances provided for 212 in the Staff Regulations1. Total 212 top up allowances ompleted amounted to some 23 euro. They are not covered by the Staff Regulations and are therefore irregular. Status of corrective action Year ourt s comment (ompleted / Ongoing / Outstanding / N/A) ANNEX! Follow-up ofprevious years comments 211 The high level of appropriations not used and of carry-overs as well as the low level of payments indicate shortcomings in budget planning and implementation and are at odds with the ompleted budgetary principle of annuality. There is room to improve the transparency of recruitment procedures. As an example, vacancy notices did not specify the maximum number of candidates to be put on a reserve list 21 1 and made no reference to the possibility of appeal. Moreover the questions for written tests and interviews and their weightings were not prepared before the examination of the applications. ompleted AB Opinion on final accounts financial year 213 (2).doc

11 The Agency carried over committed appropriations under title II gency s building and associated costs) of its budget amounting to I,Z million euro, representing 81 % of total 212 committed title II appropriations. These carry-overs mainly ompleted relate to the implementation of the REMIT regulation which is ongoing. Since the implementation is linked to the Agency s operational activities, it should normally have been budgeted undertitle III. 212 In 212, the Agency made 2 budget transfers of some 1 million euro and affecting 43 budget lines. This indicates ompleted weaknesses in budget planning. The Agency held 4,2 million euro in cash at the year end, including the 21 1 budget surplus of I,6 million euro which 212 resulted from an excessive call for funds in 211 and was recovered by the ommission in January 213. This is not consistent with a rigorous treasury management. Ongoing The audited recruitment procedures revealed shortcomings affecting transparency and an equal treatment of candidates: questions for interviews and tests were not set before the 212 examination of the applications. The conditions for admission to Ongoing written tests and interviews and for being included in the list of suitable candidates were not specified in sufficient detail and the measures taken to ensure the anonymity of candidates sitting written tests were inadequate. 1_Article 3 of Annex VII provides for twice the basic allowance of 252,81 euro = 55,62 euro. AB Opinion on final accounts financial year 213 (2).doc

12 To to to to to to to to to to to to ANNEX!! Agencyfor the ooperation ofenergy Regulators (Ljubljana) ompetences and activities Areas of Union competence deriving from the Treaty rticle 114 (ex Article 95 TE) andarticle 194 ofthe Treaty on the Functioning oj the European Union) The European Parliament and the ouncil shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning ofthe intemal market. In the context ofthe establishment and functioning ofthe internal market and with regard for the need to preserve and improve the environment, Union policy on energy shall aim, in a spirit of solidarity between Member States to: (a) (b) (c) ensure the functioning ofthe energy market ensure security of energy supply in the Union; promote energy efficiency and energy saving and the development of new and renewable forms of energy; and - ompetences of the Agency s specified in Regulation (E) No of the European Parliament and ofthe ouncil, ommission Regulation (E No ; Regulation (E No of the European Parliament and ofthe ouncil) Governance (d) promote the interconnection of energy networks. The European Parliament and the ouncil, acting in accordance with the ordinary legislative procedure, shall establish the measures necessary to achieve these objectives. Such measures shall be adopted after consultation ofthe Economic and Social ommittee and the ommittee ofthe Regions. Objectives The purpose ofthe Agency is to assist National Regulatory Authorities in exercising, at Union level, the regulatory tasks that they perform in the Member States and, where necessary, to coordinate their action. Tasks complement and coordinate the work ofnational Regulatory Authorities, participate in the creation of European network rules, take, under certain conditions, binding individual decisions on terms and conditions for access and operational security for cross-border infrastructure, give advice on various energy-related issues to the European institutions, monitor and report developments on the energy markets, formulate a proposal to the ommission on the annual cross-border infrastructure compensation sum for the IT mechanism, cooperate with the national regulatory authorities, ESMA, competent financial authorities of the Member States and where appropriate with national competition authorities to monitor the wholesale energy markets, assess the operation and transparency of different categories of market places and ways of trading, make recommendations to the ommission as regards market rules, records of transactions, orders to trade, standards and procedures which could improve market integrity and the functioning ofthe intemal market, assist the NRAs in assessing the consistent application ofthe Projects ofommon Interests (PIs) identification criteria/ost-benefit Analysis (BA) methodology, in evaluating their cross border relevance within a region and in presenting such an assessment to the Regional Groups, provide an opinion on the draft regional lists ofthe electricity and gas PIs and on the consistent application ofthe criteria and the cost-benefit analysis across regions, provide an opinion to the ommission and the Member States on the methodologies for a harmonised energy system-wide BA at Union-wide level proposed by the ENTSOs, to monitor the implementation of PIs, to facilitate the sharing of good practices and provide recommendations on incentives and common methodology to evaluate the incurred higher risks of investments in electricity and gas transmission. Administrative Board omposition Two members appointed by the European Parliament, two members appointed by the ommission and five members appointed by the ouncil. Each member has an alternate.

13 the provides delivers approves operational administrative Network Opinion Opinion Opinion Tasks The Administrative Board adopts the Agency s work programme and the budget. It ensures that the Agency carries out its mission and performs the tasks assigned to it in accordance with the Agency Regulation. Director Appointed by the Administrative Board after a favourable opinion from the Board of Regulators and on the basis ofa list ofcandidates proposed by the ommission. Board of Regulators omposition A senior representative ofthe regulatory authorities from each Member State and one non-voting representative ofthe ommission. Each member has an alternate, nominated by the national regulatory authority from each Member State. Tasks Board provides opinions to the Director on the opinions, recommendations and decisions that are considered for adoption, guidance to the Director in the execution of its tasks, an opinion to the Administrative Board on the candidate to be appointed as Director, and the work programme ofthe Agency. External audit European ourt of Auditors. Discharge authority Resources made available Budget 213 (212) to the Agency in 213 (212) 1 1,9 (72) million euro European Parliament acting on a recommendation from the ouncil. Staff as at 31 December 213 (212) Posts listed in the establishment plan: 49 (43) Posts occupied on 31 December: 49 (42) Other staff: 2 (14) Total staff: 69 (57), ofwhich assigned to: tasks: 41 (34) tasks: 28 (23) Products and services 213 One Framework Guideline (Gas: FG on rules regarding harmonised transmission tariff structures). Public consultations organised as required under Article 1 ofregulation (E) No 713/29, including workshop. codes (a) (b) (c) Seven Reasoned Opinions on Network odes (Electricity: Network ode on Forward apacity Allocation, Network ode on System Operations, Network ode on Operational Planning and Scheduling, Network ode on Load Frequency ontrol and Reserve, Network ode on Demand onnection, Gas: Network ode on Balancing and Network ode on Interoperability and Data Exchange). Four Qualified Recommendations on Network odes (all in Electricity: Network ode for Requirements for Grid onnection Applicable to all Generators, Network ode on apacity Allocation and ongestion Management, Network ode on Operational Security and Network ode on Operational Planning and Scheduling). Three Recommendations (Electricity: Network ode on Demand onnection, Network ode on Load Frequency ontrol and Reserves; Gas: Network ode on Gas Balancing of Transmission Networks). on ENTSO-E Work Programme for 213. on ENTSO-E Work Programme for 214. on apacity Market for the ITRE ommittee ofthe European Parliament.

14 Opinion Opinion Opinion Opinion Opinion Opinion Opinion Opinion Opinion Opinion Opinion Opinion Opinion Opinion opinion Guidance Update Recommendation Recommendation Recommendation Annual IT Report Report High-Level A The On on the ENTSO-E Winter Outlook Report 212/213 and Summer Review 212. Opinion on whether long run average incremental costs are suitable for the assessment of infrastructure costs to be used in the inter-transmission system operator (TSO) compensation mechanism. on the ENTSO-E R&D Roadmap and implementation Plan on ENTSO-E Annual Report 212. on ENTSO-E Summer Outlook Report 213 and Winter Review 212/2 13. on the ENTSO-E Manual ofprocedures (Transparency Platform). on ENTSOG 21 1 Annual Report. on ENTSOG 213 Work Programme. on 212/213 Gas Winter Supply Outlook. on Gas Regional Investment Plans (GRIPS) 211(12) - 22(21). on Gas Summer Supply Outlook. on ENTSOG 212 Annual Report. on Gas TYNDP on the format, defined by ENTSOG, which can be used to download data from the transparency platform (Regulation 715/29, Annex I, 3.1.1(1) (e)). on ENTSOG 214 Work Programme. on the consistent application ofthe criteria and the BA methodology for submitted projects across regions and evaluation oftheir European added value. on Development ofnetwork ode amendment proposal on Incremental and New apacity (Gas). of the 2nd edition of the Guidance on the REMIT application, 3 edition of the guidance on the application of REMIT definitions, and update of Q&A paper. on New Regulatory framework for Inter-TSO ompensation. to the E on the Records of Transactions (balancing market contracts and transportation contracts). regarding ross-border ost Allocation Requests submitted in the framework of the first Union list ofelectricity and gas projects ofcommon interest. Report on REMIT activities. monitoring report 212. on apacity Remuneration Mechanisms and the Internal Electricity Market. on ENTSO-E and ENTSOG implementation ofthe tasks in Article 8(1), (2) and (3) of Regulation 714/29 and Article 8(1), (2) and (3) ofregulation 715/29 respectively. onclusions of an Internal Workshop (with concerned NRAs) on Loop flows. Joint AER-EER Market Monitoring Report rticle 1 1 of Regulation (E) No 7 1 3/29) was issued on 28 November; a presentation took place in Brussels. Regional Initiatives Status Review for 21 2 was published in February. Four On-line Gas Regional Initiatives (GRIs) and Four On-line Electricity Regional Initiatives (ERIs) quarterly reports were published. 17 May the Agency organised its Annual onference Energy Markets: 214 and beyond ; 2 participants attended. Source: Annex provided by the Agency.

15 ANNEX 2 TO OPINION AB 1/214 OF THE ADMINISTRATIVE BOARD OF THE AGENY FOR THE OOPERATION OF ENERGY REGULATORS

16 Agency for the ooperation AER Report on Budgetary and Financial Management Agency for the ooperation of Energy Regulators Final Accounts of the European and I January 31 December 213 Agency for the ooperation - FinalAccounts2Ol3

17 AER Agency for the ooperation Table of ontents ERTIFIATION OF ANNUAL AOUNTS 3 INTRODUTION 4 LEGALBASIS 4 BAKGROUND INFORMATION 4 PART I FINANIAL STATEMENTS 5 EONOMI OUTTURN AOUNT 6 BALANESHEET 7 ASH FLOW STATEMENT 8 STATEMENT OF HANGES IN NET ASSETS 9 NOTES TO THE FINANIAL STATEMENTS 1 EONOMI OUTTURN AOUNT - NOTES 11 BALANE SHEET - NOTES 12 PART II REPORT ON BUDGETARY AND FINANIAL MANAGEMENT 18 BUDGETARY OUTTURN AOUNT 2 BUDGET IMPLEMENTATION 21 BUDGETARY OUTTURN REONILIATION 33 BUDGETARY MANAGEMENT 34 PART III ESTABLISHMENT PLAN 4 Agency for the ooperation - Final Accounts *- :J V

18 Final AER Agency for the ooperation ERTIFIATION OF ANNUAL AOUNTS The annual accounts of the Agency for the ooperation (hereinafter the Agency ) for the year 213 have been prepared in accordance with Title IX of the Agency s Financial Regulation as well as the accounting rules adopted by the European ommission s Accounting Officer. I acknowledge my responsibility for the preparation and presentation of the annual accounts of the Agency in accordance with Article 5 of the Agency s Financial Regulation. I have obtained from the authorising officer, who certified its reliability, all the necessary information for the production of the accounts that show the Agency s assets and liabilities and the budgetary implementation. I hereby certify that based on this information, and on such checks as I deemed necessary to sign off the accounts, I have a reasonable assurance that the accounts present fairly, in all material aspects, the financial position, the results of the operations and the cash-flow of the Agency. 13 May 214 Rodica Mandroc, Accounting and Budget Officer [signed electronically] Agency forthe ooperation - - Accounts

19 - Regulation - Regulation - Regulation AER m Agency for the ooperation INTRODUTION LEGAL BASIS The European Agency for the ooperation (hereinafter referred to as the Agency ) with the seat in Ljubljana, Slovenia has been established by Regulation (E) No 71 3/29 of the European Parliament and of the ouncil of I 3 July 29 (the founding Regulation ). The overall mission of the Agency, according to its founding Regulation, is to assist national regulatory authorities (NRA5) to perform their duties at the European Union level and to coordinate their actions whenever necessary. The Agency s activities are also governed by the following regulations: (E No 838/21 of 23 September 21 of the European Parliament and of the ouncil on lnter-tso ompensation Mechanism; (E No 1227/21 1 of 25 October 21 1 of the European Parliament and of the ouncil on wholesale energy market integrity and transparency; (E No 347/21 3 of I 7 April 21 3 of the European Parliament and of the ouncil on guidelines for trans-european energy infrastructure and repealing Decision No /E and amending Regulation (E) No 713/29, (E) No 714/29 and (E) No 715/29. BAKGROUND INFORMATION According to the founding Regulation, the Agency s governing bodies on administrative matters are the Administrative Board and the Director. The Director of the Agency, Mr Alberto Pototschnig is, according to Article I 7 of the founding Regulation, responsible for representing the Agency and in charge of its management. The Administrative Board, chaired by Mr Piotr Wo±niak, is composed of nine members with two members appointed by the European Parliament, five members appointed by the ouncil and two members appointed by the European ommission. Each member has an alternate. The Administrative Board shall give an opinion on the final accounts of the Agency as drawn up by the Director in accordance with Article 24(4) and (5) of the founding Regulation. The Agency s expenditures for 21 3 were integrally financed through an annual subsidy from the general budget of the European Union. In accordance with Article 43(1) of the Agency s Financial Regulation adopted by the Administrative Board with Decision AB n 22/21 1, the Administrative Board appointed Mrs Rodica Mandroc on 22 September 21 1 as the Accounting and Budget Officer of the Agency for the ooperation of Energy Regutors-RnalAccounts213 4

20 AER Agency Agency. for thc ooperation The following accounts together with a report on budgetary and financial management have been drawn up in accordance with Articles of the Agency s Financial Regulation and Article 24 of the founding Regulation. PART I FINANIAL STATEMENTS The funds necessary to perform the Agency s operations are received in the form of an annual subsidy from the general budget of the European Union. The initial subsidy for the financial year 213 amounted to 8, and has been upwardly adjusted by additional funding towards the end of the year amounting to 2,989, assigned to cover expenditure related to the energy market monitoring project. The approval and receipt of this additional funding by the end of October 21 3 had a significant impact on the economic and budgetary result for the financial year ending 31 December The economic outturn account for the year ending 31 December 21 3 shows a large positive result of 4.7m ( 1.2m in 212) mainly due to the late receipt of the additional funding whose effective expenditure had to be carried forward in the 214 financial year. The impact of the additional funds can be as well observed in the closing balance of the cash and cash equivalents for the financial year showing a closing amount of 5.4m ( 2.4 in 212). The impact on the budgetary result is presented and detailed in the second part of the annual accounts report. The following financial statements and notes have been drawn up for the financial year ending 31 December213. Agency for the ooperation - Final Accounts * ;_

21 AER Agency for the ooperation EONOMI OUTTURN AOUNT for the year ending 31 December 213 REVENUE European ommission subsidy Other operating revenue TOTAL OPERATING REVENUE Notes I January - 31 December 213 I I I 514, ,373.8 I I,736,669.3 I January- 31 December 212 6,549, ,549, ADMINISTRA TIVE AND OPERA TIONAL EXPENSES Staff expenses Fixed asset related expenses Other administrative expenses Operational expenses TOTAL ADMINISTRATIVE AND OPERATIONAL EXPENSES 2 4,474, , I 524, ,38.3 6,766, ,767, I 63, , , ,341,58.96 SURPLUSI(DEFIIT) FROM OPERATING ATIVITIES 4,97,31.47 I,28,256.2 FINANIAL OPERATIONS 3 Financial operations expenses SURPLUS! (DEFIIT) FROM FINANIAL ATIVITIES (52.29) 3. (3.) EONOMI RESULT OF THE YEAR 4,97, I,27,956.2 Agency for the ooperation - Final Accounts 213-6

22 AER Agency for the ooperation BALANE SHEET ASSETS as of3l December213 NON-URRENT ASSETS Intangible fixed assets Tangible fixed assets Plant and equipment omputer hardware Furniture and vehicles Other fixtures and fittings TOTAL NON-URRENT ASSETS Notes 4 5 I January - 31 December 213 I,324, , , , , ,7.46 I,764,846.9 I January - 31 December 212 2, , , , , , , URRENT ASSETS Short-term receivables urrent receivables Sundry receivables Prepaid expenses and accrued income ash and cash equivalents TOTAL URRENT ASSETS , , , ,22.9 5,468, ,266, , , , ,215,5.25 4,273,191.5 TOTAL URRENT AND NON-URRENT ASSETS 8,31, ,694, EQUITY AND LIABILITIES I January-31 December 213 I January- 31 December 212 EQUITY Accumulated surplus/(deficit) Economic result of the year TOTAL EQUITY 2,134, ,97, ,15, , ,27, ,134, URRENT LIABILITIES Accounts payable urrent payables Accrued expenses and deferred income Accounts payable with consolidated entities TOTAL URRENT LIABILITIES 8 926, , , , ,559, , , ,281, ,559, TOTAL EQUITY AND LIABILITIES 8,31, ,694, Agency for the ooperation - Final Accounts 213,. o_

23 AER Agency for the ooperation ASH FLOW STATEMENT Surplusl(deficit) from operating activities ash Flows from Operating Activities Adjustments Amortization (intangible fixed assets) Depreciation (tangible fixed assets) Depreciation (transferred fixed assets) Amount written off (tangible fixed assets) (lncrease)/decrease in Short term Receivables (lncrease)/decrease in Other Liabilities lncrease/(decrease) in urrent payables lncrease/(decrease) in Liabilities related to consolidated entities Net ash Flow from Operating Activities Note I January - 31 December 213 4,97, , I 84, (739,949.89) 238,152.5 (8,948.77) (1,862,588.74) 2,79, I January - 31 December 212 I,28, , I 54, I,371,64.72 ash Flows from Investing Activities Purchase of tangible and intangible fixed assets (1537,327.21) (97,312.81) Net ash Flow from Investing Activities (1,537,327.21) (97,312.81) Financing Activities Financial operations revenues/expenses Net ash Flow from Financing Activities (52.29) (52.29) (3.) (3.) Net increase/(decrease) in cash and cash equivalents ash and cash equivalents at the beginning of the period ash and cash equivalents at the end of the period I,253, ,215, ,468, I,273, ,21 5,5.25 2,387, Agency for the ooperation - Final Accounts * --- &

24 AER Agency for the ooperation STATEMENT OF HANGES IN NET ASSETS as at 31 December 213 Net Assets. Opening balance Economic Total Net result of the Assets year Balance as of 1 January 213 2,134, O OO 2,134, Economic result ofthe year. 4,97, ,97, Balance as of3l December 213 2,134, ,97, ,15,145.3 Agency for the ooperation -Final Accounts 21 3

25 AER Agency for the ooperation NOTES TO THE FINANIAL STATEMENTS AOUNTING POLIIES AND PRINIPLES The objective of the financial statements in general is to provide users with an overview on the financial performance, position and cash flow of an entity. For a public entity like the Agency this objective is more specific as the information contained is used in the decision making process as well as to demonstrate the accountability of the Agency towards the resources entrusted to it. The financial statements for the year 21 3 were prepared on the basis of the European ommission Accounting Rules as laid down by the accounting officer of the European ommission, applicable to the specific environment of the European Union and which are based on the International Public Sector Accounting Standards and International Financial Reporting Standards. The financial statements are prepared on an accrual basis whereas the reports on the implementation of the budget are prepared on a cash basis. Reconciliation between the two methods is presented in the second part of this report. The accounting system of the Agency contains general and budget accounts with the functional currency being Euro. The budget accounts provide a detailed picture on the implementation of the budget and are based on cash accounting principles. The general accounts prepared on an accrual accounting basis present the financial performance and position of the Agency as at the end of the financial year. URRENY AND BASIS FOR ONVERSION Functional and reporting currency The functional and reporting currency used in the preparation of the financial statements for the Agency is Euro. Transactions Foreign currency transactions were converted into Euros in accordance with Article 6 of the general Implementing Rules using the official European ommission exchange rates of the day on which the payment order was drawn up. Foreign exchange gains and losses resulting from the settlement of transactions in foreign currency are recognised in the economic outturn account. HART OF AOUNTS The chart of accounts used by the Agency follows the structure of the chart of accounts used by the European ommission (PUE). Agency for the ooperation - Final ;_*_;s;= Accounts S

26 - the - income - income - foreign Final AER Agency for the ooperation EONOMI OUTTURN AOUNT - NOTES 1. Revenue The 21 3 revenues of the Agency consist of subsidy received from the general budget of the European Union, on fixed assets transferred from the parent Directorate, resulted from the application of salary and country coefficient adjustments, and exchange realised gains. European ommission subsidy Other operating revenue 31 December 213 I I 514, ,373.8 I I,736, December 212 6,549, ,549, Expenses Staff expenses consist of personnel-related expenses such as salaries, allowances and other welfare benefits. Fixed assets-related expenses contain the charge of amortisation of intangible assets and the depreciation of tangible assets for the financial year ending 31 December 213. Other administrative expenses consist of costs associated with the building, office running costs, including the cost of physical inventory that does not qualify as financial assets, as well as the cost of interim personnel. Operational expenses include the cost of operational missions, meetings, workshops, public hearings and other operational expenditure incurred for the functioning of the Agency. Administrative and operational expenses Staff expenses Fixed asset related expenses Other administrative expenses Operational expenses 31 December 213 4,474, , I 524, ,38.3 6,766, December 212 3,767, I 63, , , ,341,58.96 Agency for the ooperation -.., Accounts

27 AER Agency for the ooperation 3. Financial expense Financial expenses relate to bank charges for operating the Agency bank accounts. Financial expenses 31 December 31 December Financial operations expenses BALANE SHEET - NOTES NON-URRENT ASSETS Assets are resources controlled by the Agency as a result of past events from which future economic benefits or service potential is expected to flow. Fixed assets are assets with a useful life of more than one reporting period. The valuation of fixed assets in the financial statements of the Agency is based at their acquisition price. The book value of these assets is equal to their acquisition price increased or decreased by revaluations, decreased by depreciation and amounts written off. For the record of fixed assets the Agency uses ABA Assets2 as inventory application, which is an integrated part of the ABA platform. Two main categories can be distinguished: intangible and tangible assets. 4. Intangible fixed assets Intangible fixed assets recorded in the inventory of the Agency consist of assets without physical substance and are represented by acquisitioned software and internally generated intangible assets still under construction at year end. Intangible assets at book value 31 December 31 December Intangible assets I 5, ,173.2 Intangible assets under construction I 39, I,324, , Tangible fixed assets Assets with a physical substance recorded in the inventory of the Agency consist mainly of furniture, computer hardware, telecommunication and audio-visual equipment and a small number of other equipment and fittings. Tangible fixed assets at book value 31 December 31 December Plant and equipment 1, ,71.22 Agency forthe ooperation - Final Accounts ;:;l1 rinr;e. -- -,

28 .. Agency AER for the ooperation omputer hardware Furniture and vehicles Other fixtures and fittings 3, , , , , , , ,64.16 Amortisation and depreciation Depreciation and amortisation as a systematic allocation of the loss in value over the useful life of an asset is calculated using the straight-line method with the following rates: Type of asset Straight line depreciation and amortisation rate omputer software 25% Furniture 1% rransport and kitchen equipment 12.5% omputer hardware 25% rechnical equipment 25% relecommunication audio-visual equipment 25% Details on the classification and depreciation amounts of the fixed assets can be found in the following table: Agency for the ooperation - Final Accounts 213 Jp 13

29 Depreciation Depreciation of Assets assets Additions transferred Depreciation transferred Account Opening during the from DG losing Depreciation Rate Opening charge for the from DG Accumulated losing number Asset category balance year ENER balance and Method balance year ENER Depreciation book value 211 omputersoftware 37, , , L25% 16,77.5 8, , , omputerhardware 544, , , , L25% 236, , , , Totals 699, ,535, , ,237, , , , ,764,846.9 AER Agency for the ooperation FIXEDASSETS O1.OJ Intangible assets under construction. 1 39, ,647.5.%.... 1,39,647.5 Plant, machinery and equipment 2, , L 12,5% ,7.38 1, Furniture and rolling stock 53, , ,63.38 L 1%; 12,5%, 25% 9,6.84 6, , , Otherfixtures and fittings 62, , ,73.89 L25% 15, , , ,7.46 Agency for the ooperation - Final Accounts

30 -_ AER.I Agency for the ooperation URRENT ASSETS Receivables Receivables are carried at original invoice amount less any write-down for impairment. A write-down for impairment of receivables is established only where there is objective evidence that the Agency will not be able to collect all amounts due according to the original terms of the receivables, with the impaired amount being recognised in the economic outturn for the year. 6. Short-term receivables The Agency benefits from a direct exemption for VAT from the Slovenian state for purchases above the threshold amount of 6. For purchases where the direct exemption is impracticable to obtain, the VAT is refunded by the Slovenian state on a quarterly basis. The advance payment made to one of the contractors and recorded as short-term pre financing relates to services expected to be provided in the course of 214 by the respective contractor. Salary advances paid to staff members are processed and/or recovered by the Pay Master Office (PMO) from the staff member salary in the month following that of the payment. Deferred charges consist of prepayments made during the year mainly on subscriptions and insurance premiums, recovery of overpaid salaries of staff members, December related bank charges and deposit made for the rental of furnished offices from Poslovni enter za Opravljanje elovitih Pisarniskih Storitev d.o.o. Overpaid salaries to staff members derive from the application of ouncil Regulation 1416/213 from 17 December 213 on the adjustment ofcountries correction coefficient with effectfrom I July 213. Effective recovery was initiated in February December 31 December VAT receivable Short term pre-financing 475,.. Salary advances paid to staff 23, ,9.52 Deferred charges Prepayments 74, , Accrued income Bankcharges Deposits and guarantees 2,94 2,94 798, , ash and cash equivalents The main bank account of the Agency and the imprest account are held with Uniredit AG Germany based on a banking services contract signed between the two parties. At 31 Agency for the ooperation - Final Accounts

31 AER Agency for the ooperation December 21 3 the balance of the main bank account contained the 21 3 budgetary outturn (approx. O4m) that yet has to be returned to the general budget of the general budget of the European Union, and the related cash needed to honour the Agency s financial obligations carried over into 214 including the extra funds received ( 3m) in the form of an budgetary adjustment in November December 31 December Bank account 5,458, ,29,349.8 Imprestaccount 1,6.98 5,59.7 Pettycash ,468, ,215,5.25 EQUITY AND LIABILITIES 8. urrent liabilities As of 31 December 21 3 the Agency settled all its current obligations towards its suppliers. Accrued expenses relate mainly to goods or service delivered at the end of the financial year but for which the invoices have not been received amounting to 397, According to Staff Regulation nnex V Leave, Article 4) the staff members are entitled to a compensation equal to one thirtieth of his/her monthly remuneration for each leave day due to him/her at the time of leaving the service. A holiday compensation amounting to has been calculated and recognised as accrued expenses for all untaken annual leave entitlements as at the end of the 21 3 financial year. The budgetary outturn result remains the property of the European ommission and the Agency has an obligation to return the unused amount of the pre-financing. The 21 3 related budgetary outturn will be returned during 214 on the request of the European ommission. Interest yields on the pre-financing fall under the same obligation and have to be returned to the European ommission. The interest earned during the financial year 213 amounting to 3,6.3 (212: 6,829.63) will be returned during 214 at the request of the European ommission. 31 December 31 December Accounts payable. 8, Accrued expenses 57, ,25.46 Repayable positive budgetary outturn (md. interest) 418, ,281, , ,559, Agency for the ooperation - Final Accounts

32 - office - use Final AER Agency for the ooperation HANGES IN AOUNTING POLIIES There have been no changes in accounting policies for the financial year 213. OTHER DISLOSURE ontribution in kind During the financial year 21 3 the following contributions in kind have been accepted: From the ouncil of European Energy Regulators: space, logistical and secretarial support for the Agency s liaison office in Brussels free of any rent, fees and charges. From the Government of the Republic of Slovenia: of office space offered free of any rent or related charges pursuant to the Seat Agreement signed on 26 November 21 for the first two years ofthe Agency operation. The rent-free period ended on 31 January 21 3, date from which the Agency is covering the cost of its premises. In both cases neither the legal title nor the economic ownership has passed to the Agency, therefore the non-exchange component of these transactions is not accounted for in the accounts of the Agency. EVENTS AFTER BALANE SHEET DATE The Agency has not identified any material event after its balance sheet date that would have an impact on its financial performance and position. Agency for the ooperation - Accounts

33 ,, --, Agency AER for the ooperation PART II - REPORT ON BUDGETARY AND FINANiAL MANAGEMENT The approved EU subsidy for the Agency for the financial year 213 amounted to 1 I 93,22, including a budget amendment amounting to 2,989, received in October 213. There was no agreement reached for any contribution towards the Agency from the EFTA states. The following table presents the implementation of these appropriations for the period between I January and 31 December 213: Title I. hapter Heading rpnn aiance ommitted ommitted % Paid TITLE I HAPTER 11 HAPTER 12 HAPTER 13 HAPTER 14 Expenditure relating to gaff and resources Staffin active employment Missions and duty travel Soclo-medical infrastructure Social services TOTAL TITLE I 4,941,299. 4,722, % 4,661, % 218, , ,. 92, % 72, % 12, , ,5. 23, % 6, % , ,. 24, % 22, % , ,94,799. 4,863,133.85W 9545% 4,762, % 231, ,893.1 TITLE 2 HAPTER 2 HAPTER 21 HAPTER 22 HAPTER 23 HAPTER 24 Agencys building and associated costs Agencys premises costs Data processing Moveble property and associated costs urrent administrative eopenditore omputer infrastructure, telecommunication and postage TOTAL TITLE 2 661, , % 538, % 3, , ,888,896. 1,886, % 469, % 2, ,416, ,1. 151, % 79, % 5, , , , % 315, % 15, , ,8. 234, % 91, % 4, , ,399,9. 3,367, % 1,495, % 31, ,871, TITLE 3 HAPTER 3 HAPTER 31 HAPTER 32 HAPTER 33 AHPTER 34 AHPTER 35 Operational expenditure Representation eopenses Operational missions Stakeholder involvement, public relations and website Translations Professional indemnity REMIT operations TOTAL TITLE 3 2,. 2,. 1.% 9, %. 1, ,. 237, % 22, % 2, , , , % 82, % 14, , ,537. 1, % 4, % 14,158. 5, ,. 5,. 1.% 5,. 1.%.. 2,989,. 2,988, %..% ,988, ,436,412. 3,44, % 33, r 8.84% 31, ,11,94.17 GRAND TOTAL BUDGET ,93,22. 1;,635,175.42r 9753% 6,561, % 295, ,73,82.75 A detailed description of the 21 3 budget implementation can be found under the Revenue and Expenditure sub-sections of the Budgetary Management section of this report. Other revenue recorded by the Agency as assigned revenue stemming from the fund source 14 and amounting to 4, resulted from recovered overpaid amounts during the financial year From this assigned revenue, was used towards the expenditure to which it had been assigned. The following table presents the implementation of these appropriations for the period between I January and 31 December 213: hapter Heading bppropnation -... Balance ommitted %ommitted %Paid ommitment HAPTER 12 Missions and duty travel 15..%.% 15. HAPTER 14 Social services %.%. 12 HAPTER 31 Operational missions % % TOTAL FUND SOURE 4 4, ;,661.61r 39.58% % 2, ,2. Agency for the ooperation - Final Accounts veveso -

34 AER Agency for the ooperation A detailed description of this budget implementation can be found under the Revenue and Expenditure sub-sections of the Budgetary Management section of this report. In addition to the current year appropriations an amount of was carried forward from the financial year 21 2 to honour the payment appropriations from the commitments estimated by the Agency at that point in time. An amount of 1,832,595.1 was consumed by the end of the financial year 21 3 with the difference of 1 I 8, to be returned to the European ommission during the financial year 214. The following table presents the implementation of these appropriations for the period between I January and 31 December 213: Title I r1. hapter Heading TITLE I HAPTER 11 HAPTER 12 HAPTER 13 HAPTER 14 Expenditure related to employeesofthe agency Staff in active employment Missions and duty travel Socio-medical infrastructure Social services TOTAL TITLE I... prias n mrnitted Paid h mmitted hpaid Balance mmthient, I(23) 172,4972 1, % 1, % 71, ,29. 2, % 2, % 15, , , % 7, % 2, , % % , % 129,252.59W 59.2% 89, TITLE 2 HAPTER 2 HAPTER 21 HAPTER 22 HAPTER 23 HAPTER 24 Agencys building and associated costs Agency premises costs Data processing Mumble property and associated costs urrent administrative eopenditure Postal charges, telecommunication and compater infrastr. TOTAL TITLE 2 2, % % 1,5.6. 1,43, ,43, % 1,43, %.. 72, , % 71, % , , % 117, % 16, , , % 36, % 2, I cci an us I can cn an 98.69% 1,63, % 21, TITLE 3 HAPTER 3 HAPTER 31 HAPTER 32 HAPTER 33 AHPTER 34 Operational expenditure Representation eopenses Operational missions Stakeholder invelmment, pubtc relations and website Translations Professional indemnity TOTAL TITLE 3 5, , % 5, % , , % 2, % 1, , , % 59, % 4, , % % ,. 5,. 1.% 5,. 1.%.. 8, , % 73, % 7,4.7. GRAND TOTAL 1,951,49.4 1,832, % 1,832, % 118, More details on the implementation of these commitments can be found under the Revenue and Expenditure sub-sections of the Budgetary Management section of this report. Agency for the ooperation - Final Accounts

35 assigned Final. AER Agency for the ooperation BUDGETARY OUTTURN AOUNT The Budgetary Outturn Account presents on a cash basis the actual amounts cashed as income and the amount of cash consumed to honour the payment of commitments, as well the amounts of unutilised and cancelled appropriations. INOME ommission subsidy Other income - revenue TOTAL INOME 31 December 213 I I 93,22. 4, A December 212 7,241,85. 4,39.98 Z!245! EXPENSES Expenditure related to employees of the Agency -Title I Payments arry-forwards 4,762, ,93.1 4,15, ,14.5 Agency s building and associated expenses - Title II Payments arry-forwards I 495, I ,374.6 I 651,92.63 Operational expenditure - Title Ill Payments arry-forwards 34, ,11, , , TOTAL EXPENSES I I,636, ,793, Total appropriations not utilised 297, , BUDGETARY OUTTURN BEFORE SPEIAL ITEMS 297, , ancelled carry-overs Exchange rate differences BUDGETARY OUTTURN 118, , (472.1) (781.92) 41 5, ,66.11 Interest generated by the end of the financial year to be returned to the ommission Total to be returned to the ommission 3,6.3 6, , , Agency for the ooperation - Accounts

36 .fl. AER Agency for the ooperation BUDGET IMPLEMENTATION The following tables present the detailed budget implementation by budget Titles, as well as individual budget lines Fund Source l (see also headings for 4 and 8). Budget implementation current year Fund source l TITLE I Budget ommitted Paid arry forward Total expenditure Appropriations not utilized Executed TITLE 2 Budget ommitted Paid arry forward Total expenditure Appropriations not utilized Executed TITLE 3 Budget ommitted Paid arry forward Total expenditure Appropriations not utilized Executed 31 December 213 5,94,799. 4,863, ,762, , ,863, , % 3,399,9. 3,367, ,495, ,871, ,367, , % 3,436,412. 3,44, , ,11, ,44, , % TOTAL Budget ommitted Paid arry forward Total expenditure Appropriations not utilized Executed 11,93,22. 11,635, ,561, ,73, ,635, , % Agency for the ooperation - Final Accounts 213 ;=. 21

37 AER Agency for the ooperation Implementation of 213 budget - fund source U, Budget ommitted Paid arry forward Agency for the ooperation - Final Accounts2Ol 3 22

38 H> 11( L D -h D -S ( ( It I.3Q) :3 J 1 %) c) 3 H 3 a) a) 3 a) a) A A A a 3 H H a a) a) 3,)),) F)- D D D D 3 D 3 D ) D D D D D D AD D AD D D a 3 D a D a 3 3 D D a D 3 3 a,) o a) a),) ) ( p ) H ( ),) ) H ),) ),) H H,) ) a,),),) a 3,) 3,) a a) ) ( ).a) H H a),) ( ) a,) ) ).) ),),),) H ) H ( a ) a ) ) a!a) ) a ( ) ). H,) a ) H ) ),) H ),) ) ( H,) 3,) H H ) H a ),).) a).a) H HH,) a) ( ) ( ) ) ) a,) ) a ) ) H a) a,) ) ( )) a,) H ) H ( ( a H a H D D a 3 D D AD a H a) ) 1 aa z D D a,) ( ( (,) ) 3 a (,) ) a 3 a D D 3 a,) ( ) a a = 3 3 ) = h = = - ) r %)?),),) I ID (OH H H a 3 H 3 ) ah I o 3 o H o H 3,) H(,) (H ) 3 ( a a ( ( a a) 3 (,) 3 Ho aa) H (fl ( 3 H

39 - IA-141 ISocialwelfareofstaff I 2,.1 19, %I 19, %I sum:i 2O,OOOOO I I %I 2.91 I I---- A-221 Purchase offurniture 36,6. 33, % 17, % Sum: 36, % 17, % Agency for the ooperation -Final Accounts I I I I ol I AER Agency for the oopration I % St. Official Budget Item Description ppropiation ommitec2) ommited I (1) (211) Paid %Paid Balance Balance (3) (311) ommitment (1-2) Payment (2-3) I13 red1 services and equipment , % 6, % f Sum: 23, % 6, G.54% G I A-141 Staffommiffee I I 4691 R6I 9364%I %I I I P sum:i 5, %I 95i5iI 5O.31%I Li.2ooo Rent I 46, %I I 82.97%I I. --- IA-2 1. I A-211.,,,,, itemovai costs Sum:I I I I 99.85%I I 99.97%I I S lutilities I 9,5.1 1.%I 78, %I [Ot I. 33..I, 1.%I a,i,,,..., 83.36%. I I ol ol ol , I 1.%I %I,.,.... I - sum:i %I I 82.87%I I IA-2o2o llnsurance Sum:I 3,5.I 3,5. I 2, %I %I 2,693.85I 76.97%I., 6 I 76.97%I IA-23 Securityand sunieillance ofbuildings I o 21 I o 211 1%I 15916I 49.95%I ol , Is2o31, IHealth and safety at work goo.i I 813.OOI I 9.33%I OOI.,, 871 Sum:I I I %I. I 5,94.6 I %I Ii.-2o4o. Ii.-2o41 Audio & \,.-o-, -, I I I I i (u,:u.e)i, I 9677%I I 79.93% I..1 i ¾1,,. 1 I I Sum:I 87, %I 7,12.45I 821 A-2 11 A-2 12 A-2 I 3 A-21 4 A91 A-2 16 Software REMIT REMIT a.)f_o,,o, REMIT -nanifro-ina enftwae REMIT consultancy Sum: I 38,4. I a ,888, I 36, I 59, I % 1 % 99.95% 1 I.% gg 92% 99.87% , % I.% 78 4¾ 37.47% 12.56% 1.% 12.9% 24.88% I I

40 omrnitment(l-2) Payment (2-3) A-222 Transportation costs 17,. 14,8. 876% 13, % Sum: 17, % 13, % A-223 Libraryacquisitions 13,5. 13,5. 1.% 48, % Sum: 13, % 48, % A-23 Stationeryandofficesupplies 15,. 14, % 8, % Sum: 15, % 8, % A-231 Bankcharges 2, % % Sum: 2, % % A-232 Legal expenses..% A-2321 Expertconsultation 224,. 221, % 25, % Sum: 224, % 25, % A-233 Administrathe Board meetings 37,5. 29, % 9, % A-2331 Board ofregulators meetings 125,2. 125,2. 1.% 56, % A-2332 Board ofappeal meetings 24,2. 24,2. 1.% % A-2333 External participants to meetings 5,3. 4, % 4, % A-2334 EU Agencies Network 2,2. 18, % 17, % Sum: 212, % 11, % A-24 Postalcharges 4,2. 4,2. 1.% 2, % Sum: 4, % 2, % A-241 Telecommunications subscriptions and charges 37,6. 37, % 3, % Sum: 37, % 3, % A-242 Hardware and otherequipment 197,. 193, % 58, % Sum: 197, % 58, % B3- Representation expenses 2,. 2,. 1.% 9, % Sum: 2,. 2 1.% 9, % Operational Missions Gas Department 75,. 75,. 1.% 62, % B3-11 Operational Missions ElectdcityDepartment 9,. 87, % 73, % B3-12 Operational Missions MarketMonitoring Department 75,. 75,. 1.% 67, % Sum: 24, % 22, % AER Agency for the ooperation St. Official Budget Item Description ppropiation ommitec2) ommited %Paid Agency for the ooperation - Final Accounts

41 B3-2 Publichearingsworkshops conferences 72, , % 61, % Website setup and maintenance 45, % B3-22 Publications information material 15,. 14, % 12, % B3-23 Reports production 25, % 7, % Sum: 157, % 82, % fl. 5,. B3-5 Hosting deployment and operations 2,89,. 2,88, % B3-52 SMARTS developmentlicenses and consultancy 9,. 9,. 1.% 9 B3-54 REMIT hardware..% Sum: 2,989, % Sum: 11,93, A2[97.53% % AER Agency for the ooperation % St. Official Budget Item Description ppropiafion ommitec2) ommited /opaid omrnitment(l-2) Payment (24) IB3-3 ITranslalion att 24,537. 1, % I I 4, % Sum:I 24, % 4, % insurance I 5,. 1.% 5,. 1.% sum:i 5,. 5 1.% 5,. 1.% Agency for the ooperation - Final Accounts

42 AER m Agency for the ooperation BUDGET IMPLEMENTATION URRENT YEAR - FUND SOURE 4 31 December 213 TITLE I Budget 27. ommitted I 2. Paid. arry forward I 2. Total expenditure I 2. Appropriations not utilized I 5. Executed 44.44% TITLE 3 Budget ommitted Paid Total expenditure Appropriations not utilized I Executed 3.8% TOTAL Budget 4, ommitted 1, Paid arry forward I 2. Total expenditure I Appropriations not utilized 2, Executed 39.58% Implementation of 212 budget - 4 fund source,n I Budget ommitted Paid arry forward Agency for the ooperation - FinalAccounts2l3 27

43 AER Agency for the ooperation BL. Official Budget Item Description ommitec2) ommited (1) L I (211) A-122 Mission expenses Director Office staffi 1,5 % 1,5. I.% Paid % Paid Balance Balance (3) (311) ommltment Payment (24) :: P141 Socialwelfareofstaff 1,2. 1,2. 1.% idj Sam: 1, % Operational Missions Gas Department 1, % % Sum: 1, % % Sum: % % BUDGET IMPLEMENTATION APPROPRIATION FUND SOURE 8 TITLE I Budget ommitted Paid Total expenditure ancelled carry forwards Executed TITLE 2 Budget ommitted Paid Total expenditure ancelled carry forwards Executed TITLE 3 Budget ommitted Paid Total expenditure ancelled carry forwards Executed TOTAL Budget ommitted Paid Total expenditure ancelled carry forwards Executed 31 December , , I 29, I 29, , % I 651,92.63 I 63,25.4 I 63,25.4 I 63, , % 8, , , ,92.2 7, % I 951,49.4 I 832,595.1 I 832,595.1 I 832,595.1 I 18, % Agency for the ooperation - Final Accounts2l 3 28

44 AER Agency for the ooperation Implementation of 212 budget - s fund source v, FLzi IHzzj I L I I F-I Budget ommitted Paid I I F I Agency for the ooperation - Final Accounts ::- b_li

45 A-1142 Schoolingfees 82, % 32, % Sum: 82, % 32, % A-I 16 Expenditure related to recruitment 17, , % 17, % Sum: % 17, % Supplem entary clerical and interim A-117 senaces 6,63. 4, % 4, % A-1171,lministratheassistance 7,394. 5, % 5, % Sum: 14, % 1, % A-12 ssion expenses Administrati staff 36,29. 2, % 2, % Sum: 36, % 2, % A-13 Medical ser Aces and equipment 9,63. 7, % % Sum: 9, % 7, % A-141 Socialwelfareofstaff % % Sum: 1, % % A-2 Rent 1, % % 943 Sum: 1, % % 943 A-24 Other expenditure on buildings % % Sum: % % A-211 Software 1,343,. 1,343,. 1.% 1,343,. 1.% A-212 Subscriptions IT 6,56. 6, % 6, % Sum: 1,43, % 1,43, % A-221 Purchaseofftirniture 51, , % 51, % Sum: 51, % 51, % AER Agency for the ooperation Detailed budget implementation of appropriations carried forward fund source 8 I B L Official I Paid Balance Balance Budget Item Description L ommftod(2) ppproplation ommitod (3) (311) ommitment (1-2) Payment (2-3) A-112 Training and informationforstaff 57,821. 4, % 4, % Sum: 57, % 4, % Agency for the ooperation - Final Accounts

46 ommitment(1 2) Payment (24) A-222 Transportationcosts 4,199. 3, % 3, % Sum: 4, % 3, % A-223 Libraryacquisitions 15, , % 15, % Sum: 15, % 15, % A-23 Stationeryand office supplies % % Sum: % % A-231 Bankcharges 146..% Sum: % A-2321 Expertconsultation , % 68, % Sum: 8, % 68, % A-233 Piministrati i Board meetings 12,598. 7, % 7, % A-2331 Board ofregulators meetings 37,44. 37, % 37, % A-2333 External participants to meetings 3,526. 3, % 3, % Sum: 53, % 48, % A-24 Postalcharges % % Sum: % % Telecommunications subscriptions and A-241 charges 4,456. 2, % 2, % Sum: 4, % 2, % A-242 Hardware and otherequipment , % 34, % Sum: 34, % 34, % B3- Representation expenses 5,861. 5, % 5, % Sum: 5, % 5, % B3-1 Operational Missions Gas Department 3,958. 2, % 2, % Sum: 3, % 2, % AER Agency for the ooperation B L Official Budget Item Description pprop,abon ommitec2) ommited %Paid Agency for the ooperation - Final Accounts

47 I B3-4. Insurance 5,. 5,. 1.% 5,. 1.% Sum: 5,. 5 1.% 5,. 1.% Sum: 1,951, % % AER Agency for the ooperation B L [om;(1 2) PaYment (24) Official Budget Item Descnption jroiation ommitec2) iiited /;d B3-2 Publichearingsworkshopsconferences 6,241. 6, % 6, % B3-21 Website setup and maintenance 39,99. 39,99. 1.% 39,99. 1.% B3-22 Publications information material 1,331. 1, % 1, % B3-23 Reports production 16, , % % Sum: 63, % 59, % [ 1B3-3.. Translation ati 1, % % Sum: 1, % % Agency for the ooperation - Final Accounts E

48 Agency for the ooperation AER BUDGETARY OUTTURN REONILIATION Given the different basis of the presentation of the information between the budgetary and financial statements, reconciliation is performed between the two systems, as follows: REONILIATION BETWEEN ARUAL BASED EONOMI RESULT AND ASH BASED BUDGET RESULT Economic result for the year 4,97, ,27,956.2 Adjustment for accrual items (items not in the budgetary result but included in the economic result) Adjustments foraccrual ut-off(revetsal N-1) (23, ) (384,14.59) Adjustments for Accrual ut-off (cut- off N ) 432, , Amount from liaison account with ommission booked in the Economic Outturn Account (6, ) (13,149.7) Unpaid invoices at year end but booked in charges. 15,51.95 Depreciation of intangible and tangible assets 193, , Accrued income ( ). Payments made from carry over of payment appropriations I 832, , Bank charges and received interest at year end (3,69.93 ) (1.35) Adjustment for budgetary items (item included in the budgetary result but not in the economic result) Assetacquistions (1,536,578.25) (97,312.81) New pre-financing paid in the year 213 and remaining open as at (475,. ). New pre-financing received in the year 213 and remaining open as at , ,66.11 Payment appropriations carried over to N+J (5,75,2.75 ) ( ) ancellation of unused carried over payment appropriations from previous year 118, , Other non-reconciled tems ( total 415, ,388.3 Budgetary result 415, ,66.11 Including amount of exchange rate differences ( Amount not explained.. Agency for the ooperation - Final Accounts 21 3, 33

49 AER Agency for the ooperation BUDGETARY MANAGEMENT Budgetary principles The budget of the Agency has been established in compliance with the principles of unity, budgetary accuracy, annuality, equilibrium, unit of account, universality, specification, sound financial management and transparency, as set out in the Agency s Financial Regulation. Subsidy from the general budget of the European Union ommitment and payment appropriations amounting to 1 I 93,22 were allocated to the Agency in 213 from the general budget ofthe European Union. This included a budget amendment of 2,989, and was allocated as follows: AERBudget2Ol3 Title I 5,94,799 Title II 3,399,9 Title III 3,436,412 Total 11,93,22 Budget and accounting management systems In order to record and keep track of the budgetary transactions, the Agency uses ABA, the same financial system used by the European ommission, with the SAP system integrated as back-end for the accounting part. The Business Objects web platform is used as the reporting tool. The workflow access in ABA allows for an instant audit trail and provides the authorising officer with an overview on the segregation of duties compliance as required under the four-eyes principle. The inventories are managed by the Agency in accordance with its Financial Regulation and the system used to record inventory items is ABA Assets2. Nomenclature The nomenclature of appropriations is as follows: l : Appropriations voted in the current budget 4: Internal assigned revenue (current year) 8: ommitments carried forward corresponding appropriations I : Universal income voted in the budget l4: Internal assigned revenue REVENUE For the financial year ending 31 December 21 3 the Agency s budget was funded by a subsidy from the general European Union budget amounting to 1 I 93,22. On top of the annual subsidy an amount of 4, I was recognised under the fund source 14 as Agency for the ooperation - Final Accounts

50 AER Agency for the ooperation assigned revenue stemming from recovered overpaid amounts. Non-budgetary revenue in the form of bank interest received on the daily account balance amounting to 3,6.3 and recorded in the accounts of the Agency will be returned to the European ommission according to Article 51 of the Agency s Financial Regulation. Also to be returned to the European ommission is the positive result of the budgetary outturn amounting to 415,923.78, containing the unused 213 appropriation of 297,581.49, the cancelled appropriations carried forward from 212 amounting to 118, and an exchange rate loss of EXPENDITURE urrent year appropriations l Title jf Heading Original Budget amtnt Final Budget ommitments ommitment Payments TFrLE1 E)tPENDIPJRE RELATING TO EMPLOYEES OF ThE AGENY 5886, ,799 OT % % TIrLE2 GENYS BUILDING AND ASSOIATED OSTS , % 1495, % OPERATIONAL EXPENDITURE , ,436, , % 353, t.84% ::::: TOTAL BUDGET ,941, gtOO.OY 11,93,22.Oi 11,635, V1. 6,561, tt% Title I The budget allocated under Title I was implemented to a level of 95.45% during the financial year The budgetary reserve set aside for salaries indexation was cancelled as the proposed indexation has not been approved. Title 2 The Agency managed to finalise most of the tender procedures launched during the financial year 21 3 and this resulted in a high implementation of the allocated budget under Title 2. A few large and complex tender procedures also lengthy in terms of processing time, led to a low implementation of the payment appropriations resulting in the need to carry forward these funds into the following financial year. Title 3 The budget amendment requested during 213 necessary to ensure continuity in the implementation of Regulation (E No 1227/211 on Wholesale energy market integrity and transparency, received towards the end of October The Agency managed to place all the planned orders before the end of the year, which resulted in a high implementation of the commitment appropriation. However, the late approval of the budget amendment resulted in the need to carry forward these funds into the following year to honour the legal obligations and the implementation of the payment appropriations for this title remained low. Paym, Agency for the ooperation - Final Accounts ;:z

51 AER Final Agency for the ooperation urrent year assigned revenue 4.% ommitment Payment. Payments execution execution Title Heading Assigned revenue ommitments lithe I EXPENDITURE RELXflNG TO EMPLOYEES OF ThE AGENY 2,7. 1, % - lithe 3 OPERA11ONAL EXPENDITURE 1, % % TOTAL 4, , % % From the overpaid amounts amounting to 4, recorded as assigned revenue for the financial year an amount of was used before the year end to cover expenditure for which it was assigned to. arry forward appropriation fund source 8..- Budget carded. ommitment Payment Title Heading ommitments Payments forward from 212 execution execution 1]IJ_ EXPENDIThRE RELATiNG TO EMPLOYEES OF ThE AGENY 219, , % 129, % 11ThE2 AGENYS BUILDING AND ASSOIATED OSTS 1,651,93. 1,63, % 163, % OPERA11ONAL EXPENDIThRE 8, , % 73, % TOTAL 1,951,49. 1,832, % 1,832, % Title I Appropriations carried forward under Title I related mainly to recruitment costs for the vacant positions published during 212, stafftraining costs, schooling fees and missions expenditure. The majority of cancelled appropriation related to the decision to stop the payment of schooling top-up fees. The cancelled amounts will be returned to the European ommission during 214. Title 2 Most of the appropriations carried forward under this title were consumed in order to honour obligations the Agency had towards its suppliers. The unused portion was cancelled and is to be returned to the European ommission. Title 3 Appropriations carried forward under this Title to cover outstanding operational expenditure from the financial year 21 3 resulted in a minor saving given the margin recorded on mission orders which was no longer needed as most claims where more or less matching the orders. A minor saving was also recorded under the production of reports leading to an overall implementation of the carried forward budget under this Title of 9.81%. Agency for the ooperation - Accounts

52 AER Agency for the ooperation Budget transfers During the financial year 21 3 a number of budgetary transfers took place in order to reallocate resources from areas where budgetary savings were identified towards areas of scarce resources to ensure the achievement of the year s objectives. There were 12 lots of approved budgetary transfers made within and between titles including one budget transfer above the 1% limit as approved by the Administrative Board. The following table presents the detailed budgetary transfers made during the financial year. Agency for the ooperation -FinAccounts2O13 37

53 A11 B.o9/ So/oIos ood 92Ot9/ l , ,6917. A112 l 49, ,334-45, -36,3. 42,42. 4/ /tho.sdd36Qs29/ l 1, ,983.,1142 SohooO.sg 1..s l 122, ,65-1, -1,. -5,. 5,. A1 M.U9/2158v9/o5 od.q2lpss.ot l 19,175 4,325 23,5. A osoolfl.. l 4, ,. AER Agency for the ooperation 29/ S B f ) Bod A.pte t )O1/2Of 27M5I2Of O/O7I2O1 O1OS2O13 619( OW2O13 2/1/213 O!1O! OS/ /11/213 :: A/lull 9.2odod NOtI3/E/q2lt$ l ,42-4,. -6,9. 553,1, bo.9/9/g o mo oo A112 l ,563. 9, ,.9/) A113 9/soso. ogoks*ts9/ks.* l 92,254 2,7. -4, -5,7. 13,361., Uo.ssp9/ylo.otI t1p$y$t3ft.,. 3, A118 dooy*ob$ist.52 l 43,423. 9,794-9,5. -13,. 3,717. A12 M)58/oo.op.ss.s 4,95 11,42. -5, -2,. 5,. A2.o* l 489,5. 11, ,..1, ,5-18,5 439,555 I!;it: : L :I:i,, I J Agency for the ooperation - Final Accounts

54 212 ubsolpttonu IT l A213 4ITHontntgS.tmn l 4,7. 9,22 1,, R3AtTupptIontIoou d.mntpmout l 28, , 34, 342, 187,1.9 94,399. A223 Librory *oqolnltnton l 57,118 12,882 2,. 6,5.,5,.2331 Bou99 of R.gulato3 9tI l 172,332. 3,88. 86,. 125,2. * to&pmt99tn to 2,93 6,516 1,46 25,3. A2334 WAg.nsi.s 9.99 l 4, 92 9,5 5,7. 2,2. A241 sub.o iptnto. mu 99mg.s 81,597. 1,43. -3,. -7,, -24,. 37,6. A242 Ilnodon,. mu oth..q99pmoot l 4, ,42. 3,. 3,. 1,, 22,3,3,.-, AER Agency for the ooperation Acc.ptaqc.. O4ff!2O13 17/ /213 O6Ni2O13 ] 1OO7I2O13 1/ /9/213 2/1/213 8( / Budgot Fund Am.nd.d mo1 Noom ono NomoI Normol rmoi Norma Normol NoomM krm No,o Noomol.dk Av&(obb oo Line Jdg.t(1) Tronsf.r Troosf.o Traosf.r Trwsf.o Taost. Toonsf.r Tooost. Tron;t.r Tronsl.r Transt. Tronst.r Tanst.r Amount h maim M16996 Gun l 75,. 75,933,33 3p.,ton.tMuslonn El.otskfty.pmtm.nt,. 313 l 75,,., 75,. 34 lnsu,mm l 5,. s.ooo.ao! SMA33mou ::: Agency for the ooperation - Final Accounts 21 3, 39

55 AER Agency for the ooperation PART III ESTABLISHMENT PLAN The numbers of temporary posts as authorised under the 213 budget are as follows: 213 Function group and grade Authorised under EU Budget Permanent Posts Temporary Posts AD1G AD15 AD14 1 AD13 AD12 AD11 4 AD1O AD9 2 AD8 6 AD7 6 AD6 4 AD5 11 AD total 34 AST11 AST1O AST9 AST$ AST7 ASTG AST5 1 AST4 AST3 14 AST2 AST1 ASTtotal 15 TOTAL 49 GRANDTOTAL 49 Agency for the ooperation -Final Accounts LflUIU]L - =-- -