European Developments Transmission Workgroup 2 nd February 2012

European Developments

Transmission Workgroup2nd February 2012

EU CAM Network Code and CMP Guideline Proposal Update

Transmission Workgroup 2nd February 2012

Content

ENTSOG Capacity Allocation Mechanism (CAM) Network Code Update

Introduction

High Level Principles

Timescales

Congestion Management Procedures Guidelines (CMP) Update

Introduction

High Level Principles

Timescales

Introduction

ENTSOG CAM Development Progress

Following on from December’s Workstream update regarding the re-consultation on the CAM Code and Stakeholder responses

ENTSOG have amended the Code in-line with Stakeholder feedback

Moves away from GB Entry regime (as was originally proposed in the draft Code)

Both CAM and CMP relate to IP points only within the European Union

Timelines described later in presentation

Summary of Responses (from Dec Workstream update)

Products Start date Algorithm Limit price steps

Quarterly 14 1st Jan 5 Multiple 28 Unlimited 35

Yearly 24 1st Oct 29 Single 6 Limited 1

No preference

0 No preference

4 No preference

4 No preference

2

Minimise unsold

Default Rule

Auction Premium Split

Minimise 9 Max 12 Proportional 13

Draft NC 24 Partial 5 Equal 9

No preference

5 No preference

21 No preference

16

Full consultation responses available at: http://www.entsog.eu/publications/index_g_cam.html

http://www.entsog.eu/publications/index_g_cam.html

(CAM) - High Level Principles

Principles of Co-operation

Standardisation of communication - Included an agreed approach to communication procedures within NC. The Code would commit TSOs to working together to develop agreed communication procedures

Gas Year - 1st Oct

Allocation of firm capacity Capacity reservation – at least 10% of technical capacity to be

released for shorter duration products* subject to ACER clarity on definition

Standard Capacity products – Yearly (15yrs), then quarterly (for

Year 1), monthly (month ahead), Daily (Day ahead) and Within Day.


Allocation of firm capacity (cont)

Within-day capacity allocation - Sell within-day firm capacity via auctions and (due to the Guideline text) a potential to nominate interruptible capacity within-day via a non-auction method (although needs to be the same method either side of the IP)

Auction algorithm

Longer duration products - Multiple round ascending clock - greater perceived simplicity, lower vulnerability to strategic bidding (since price discovery measures are embedded in the design) and ability to adjust bids or step out of an auction in response to the progress of auctions at other IPs

Number of price steps in a volume based auction - Unlimited number of price steps, included is a time limit to avoid an overlap with the next relevant auction

Minimisation of unsold capacity - Small price steps. Approach reduces unsold capacity while avoiding pro rata

Short Term Products – Day Ahead & Within Day – Uniform price


Cross-border contracted capacity

Mandatory bundling - Partially unbundled default rule approach

Under this approach, the capacity to be bundled after implementation of the default rule would be determined by the lower of the aggregated bookings on either side of the IP

Non-matching capacity would remain unbundled and would be split proportionally amongst network users

Sunset Clause

Now included in final CAM Code to satisfy CAM Guideline

Forces Users to agree amongst themselves the capacity held (as a bundle) either side of the IP point

Max timeline 5 yrs (after Code comes into force)


Tariffs

Revenue Equivalence - Introduces a non-arbitrary and reasoned approach to setting the tariffs for different product duration

Allows system users to procure capacity according to their identified needs by minimising any undue incentive to book capacity before such a need is identified

Avoids cross-subsidies between network users – Users who require highly variable gas flows, the levels of which are only known shortly before the actual gas flow, will be able to match capacity bookings to their requirements by building a highly variable product profile


Booking Platforms – The Code includes next steps and timings

Sets out Next steps in the process to achieving a single EU platform

No later than 1 year after the Code comes into force, ENTSOG shall publish a report describing the number and operation of existing and planned booking platforms

Based on this report – a market consultation process to identify the market’s needs with respect to booking platforms; which shall last at most 12 months and shall end with the publication of a comprehensive report setting out the market’s requirements for booking platforms by ENTSOG

The report will also provide an assessment of costs and time needed to reduce the number of platforms or to eventually establish an EU-wide booking platform meeting the market’s requirements. A corresponding action plan towards a single EU wide booking platform, and a timetable for its implementation shall be part of this report.

Interaction with CMP Guidelines?

ACER tasked Frontier Economics to review ENTSOG CAM auction design

CAM Timescales

Activity By when

ENTSOG Finalise Network Code 19/01/12

Internal Governance Approval 26/01/12

Stakeholder Workshop – Brussels

(CAM Launch)

31/01/12

Stakeholder Support Process (2 weeks) Ends 13/02/12

ENTSOG Board Approval 06/03/12

Deliver Network Code to ACER 09/03/12

Capacity Allocation Mechanisms (CAM) - Potential Timescales

2014 2015 201620132012

Network Code Provided to ACER09/03/12

ACER ReviewNC 3 mths?

Comitology 12 mths?

Amend Codes 9 mths

System Implementation [18mths?]

June JuneMar Sept

Introduction

ENTSOG CMP Update

Continued to influence the Commission on the content and impacts of the Guideline Proposal

Held discussions in particular on the direct impacts to the CAM Code

European TSOs lobbying relevant Ministries in preparation for the Comitology process

Commission issued Impact Analysis documents mid Jan 12

CMP – High Level Principles

Capacity increase via oversubscription and buy-back

Provides TSO’s with an incentive to make additional amounts of Firm Capacity available over and above the technical capacity

Additional amount above technical capacity to be offered ‘upfront’ in an auction

The technical capacity is to be allocated before any oversubscribed incentive based capacity

Joint Regulator & TSOs to co-operate to develop best practices

Incentive schemes needed within and across member states IPs


Firm Day-ahead use-it-or-lose-it mechanism

Restriction of re-nomination rights (w.e.f 1st July 2016) subject to Regulator decision at IP

Surrender of booked capacity

Users can surrender capacity at any time to the TSO

Obligations remain until reallocated

Unsold capacity to be sold before surrendered capacity


Long Term use-it-or-lose-it mechanism

Removes current firm contractual rights where Users do not utilise the capacity over a defined period

Information provision

Data is to be made available on one central platform

Interaction with CAM?

CMP Guidelines

The Commission published the latest version of the Draft Guidelines – 19th December 2011

GB Stakeholder meeting held with DECC 13th January 2012

Written views provided to DECC

The first Comitology meeting for Member States held 26th January 2012

Congestion Management Procedures (CMP)- Potential Timescales

201420132012

Comitology Starts26th January 2012

Comitology lasts for ???

Agree CMP regime with relevant NRA(s) by / Implementation by 1st July 2013?

July

EU Tariffs Update

Transmission Workgroup2nd February 2012

ENTSOG response to ACER Tariff Scoping consultation

ACER is expected to issue a Tariff Scoping consultation – January 2012

Responses are invited by [x] March 2012

Following response analysis by ACER the Commission will decide whether ACER will be invited to write the Framework Guideline or use the Comitology guideline route.

Potential tariff codification process(es)

ACER Consultationon FG scope

Commissiondecides whether toinvite ACER to write FGor go COM guideline route

March Summer 2012

Response analysisby ACER

September

FG drafting by ACER,2 month formal consultation,6 months overall until submission to COM

Invitation letter

Timeline is very indicative

COM scrutinizes FGand invites ENTSOG

February 2013

ENTSOG runs12 monthNetwork codeprocess

Commission drafts guidelines and sends themdirectly to comitology

Alternative or cumulative

Interoperability Update

Transmission Workgroup

2nd February 2012

Interoperability Framework Guideline

We now expect ACER’s consultation on the Framework Guideline to be published in March

This is to allow the regulators more time:

To complete ‘problem identification analysis’ – i.e. what are the genuine technical barriers

To take further views from the Interoperability Expert Group (meeting scheduled this month in Ljubljana)

To finalise their thinking on the scope

National Grid NTS will continue to argue that the scope should be limited to interconnectors, not all entry / exit points

ENTSOG TYNDP 2013-2022 – Stakeholder Joint Working Sessions

TYNDP 2013-2022: Stakeholder Joint Working Sessions

The Ten Year Network Development Plan (TYNDP) 2013-2022 will be the 3rd edition of the non-binding Union-wide plan of infrastructure development and will build on the past experience and feedback received.

Based on ENTSOG best practices a series of Stakeholder Joint Working Sessions have been set-up on the following topics:

Infrastructure

Demand

Supply

Market Integration

Security of Supply


The first of the TYNDP SJWS took place on 24th January.

The morning session was focused on the ‘Infrastructure’ topic. The methodology used in the previous TYNDP and the feedback received from stakeholders was discussed.

The afternoon session covered both ‘Supply and Demand’, and again an overview of the process and methodology used in the previous TYNDP was discussed. Stakeholders then outlined some potential improvements.


ENTSOG will take away high level proposals from stakeholders and at the next SJSW on these topics come back with a solid proposal, encompassing the key points from the discussion

The next SJWS is going to be on Wednesday 15th February in Brussels

The topics covered will be Market Integration, Security of Supply and an overview of the ENTSOG Network Modelling Tool

As always the SJWS are open to all stakeholders who wish to take part

ENTSOG maintains a register and will pro-actively notify those on the register about developments in this and other areas of ENTSOG’s work. Please write to [email protected] if you want to be included in this e-mailing list.

EU Updates Timetable

Timetable aims to highlight the key items (consultations, workshops, decisions, etc.) National Grid NTS expect to cover via this agenda item in the forthcoming months

Topic TX Workgroup

• Gas Regional Investment Plan (GRIP) Consultation Feedback.

• Winter Outlook update

March 2012

• Balancing update• Interoperability update

April 2012

Documents

European Developments Transmission Workgroup 2 nd February 2012