2nd GASPOOL Customer Forum4th GABiGas and GasNAO-D report – effects on

processes in the market area

Ingrid Peters

12 August 2010

2

Agenda

Balancing-relevant developments since 1 Oct. 2009

• 4th report on the implementation of GABi Gas resolution of 28 May 2008

• Amendment to Gas Network Access Ordinance (GasNAO-D)

• Cooperation Agreement (CoA IV) change

3

4th GABi Gas report

Background

• Unexpected high requirements for positive control energy (CE) in thefirst six months of fiscal 09/10 in all market areas� Balancing group network operators (BGNO) have to buy large amounts of CE

• Consequences:– Significant increase in CE allocations by 1 April 2010

– Dramatic liquidity situation with BGNOs

• Possible causes:– Allocations by exit network operators too low (SLP quality, data quality, etc.?)

– Nominations by transport customers too low (misuse, compensation energyprices significantly lower than oil-indexed prices, etc.?)

• Solution proposal by associations: "Activities for removing systematicsubsidence slopes in RAM system"

• "4th report of BG 7 on the implementation of the GABiGas resolution of 28 May 2008" published

� Implementation on 1 April 2010

4

4th GABi Gas report

4th report content: Balancing group accounting

� Set objective, incentives for system-compliant behavior:

• Price basket change to fix compensation energy prices:TTF, Zeebrügge, NCG-VP, NBP, GASPOOL Hub

• Spread extended between positive (factor 1.2) and negative (factor 0.9) compensation energy

• Balancing group analysis: BGNOs are asked to follow up on faulty developments and to sanction violations of the obligation to balance the balancing group attributed to misused arbitrage � regular monitoring

• Associations are asked to evaluate the activities of the 4th report with regard to its influence on CE requirements by the end of 2010

5

4th GABi Gas report

4th report content: Network accounts

� Set objective, cause analyses and incentives for system-compliant

behavior:

• Traffic light system: Network accounts publishing and settling with

significant long-term subsidence levels

• Federal Network Agency (FNA) reporting system: Network account

reports sent with significant short-term subsidence levels to the FNA

• Flanking activities:

– BDEW/VKU project for network accounts analysis and for validating SLP profiles

(results will be available in fall 2010)

– Publication of those exit network operators that do not provide required data, not

on time, incomplete or in insufficient quality to the BGNO on the BGNO's Internet

pages

6

4th GABi Gas report

Traffic light system and reporting system

Calculation of the network account balance 0

The basis for checking network accounts is the network account balance 0, calculated on the basis of the daily volumes, in accordance with the definition of the"BDEW/VKU/GEODE business processes guideline for managing and administering gas balancing groups" of 21 August 2008:

Not BG-relevant: Not BG-relevant:

� Total of all GIPs to upstream NOs � Total of all GIPs to downstream NOs

�Poss. network buffer emptying, provided

separately agreed�

Poss. network buffer emptying, provided

separately agreed

� Liquid gas entry at biogas facilities

BG-relevant allocated values: BG-relevant allocated values

Total of all entries, e.g. Total of all exits, e.g.

� Biogas entries � Storage facility filling

� Storage facility exits � SLP in acc. with SLP method

� Mini inter-market-area transport

or GUP entries

� RLM as allocated

� (Mini inter-market-area transport

or GUP exits= Saldo 0: SLP and RLM MMM, fuel value differences, grid losses,

measurement inaccuracies, inventory differences in network buffer

Entries Exits

7

4th GABi Gas report

Traffic light system

Source: Conversion aid for network accounting (still being agreed)

%100*

kWhin RLM)(SLP 08/09GWJ LV Allokation

kWhin bzw.4 3 aldoNetzkontos kum.(%) 3/4 aldoNetzkontos kum.er prozentual

1

∑ +

=n

Calculation parameters:

-4,0%

-3,0%

-2,0%

-1,0%

0,0%

1,0%

2,0%

3,0%

4,0%

Veröffentlichung, keine Abrechnung

Veröffentlichung und Abrechnung

Vorwarnstufe, Erläuterung zum Grund der Abweichung

Vorwarnstufe, Erläuterung zum

Grund der Abweichung

8

4th GABi Gas report

Reporting system

%100*5

(%) 5 aldoNetzkontosr monatlicheer prozentual

∑

=

LVinkWhAllokationmonatliche

kWhinaldoNetzkontosrmonatliche

-3,00%

-2,00%

-1,00%

0,00%

1,00%

2,00%

3,00%

Ap

r 20

10

Ma

i 20

10

Ju

n 2

01

0

Ju

l 20

10

Au

g 2

01

0

Se

p 2

01

0

Okt 2

01

0

No

v 2

01

0

De

z 2

01

0

Ja

n 2

011

Fe

b 2

011

Mrz

20

11

mo

na

tlic

he

r p

rozn

etu

ale

r N

etz

ko

nte

nsa

ldo

Me

lde

syste

m

BN

etz

A

Grenzwert + 2,0 %

Grenzwert - 2,0 %

Meldung an BNetzA Meldung an BNetzA

Meldung an BNetzA

Source: Conversion aid for network accounting (still being agreed)

Calculation parameters:

9

Agenda

Balancing-relevant developments since 1 Oct. 2009

• 4th report on the implementation of the GABi Gas resolutionof 28 May 2008

• Amendment to Gas Network Access Ordinance (GasNAO-D)

• Cooperation Agreement (CoA IV) change

10

GasNAO-D - Status

Status Quo

• 3 Feb. 2010: BMWi issues 1st version for consultation

• Statements by associations (e.g. BDEW, VKU, Geode), extensive hearings

• 19 May 2010: Adopted by cabinet; numerous changes compared with1st version

• 9 July 2010: Passed by Bundesrat; some but not all committee changeproposals accepted

• Final adoption by the Bundestag still pending

� GasNAO: Need for adjustment, as extensive changes have been madesince 2005 (GABi Gas, GeLi Gas, etc.)

11

GasNAO-D – important changes

Important changes with relevance for balancing

• Clear definition of market roles

• [Number of market areas (§ 21)]

• Discontinuation of VTP charge (§22)

• Tolerance on compensation energy volumes (§23)

• New SLP profile "Domestic gas customers (§24)"

• New regulations for biogas (§§ 31 – 37)

• Extended FNA powers (§ 50)

12

GasNAO-D – definition of market roles

Definition of market roles

• Previously: Differentiation between network operators and balancing group network operators

• New: Introduction of "Market Area Responsible" (MAR); MAR tasks in particular include (§ 20):

– Operation of the virtual point

– Balancing group admin; especially – contract admin, data transfer and balancing

groups publication and accounting

– Procuring and controlling the use of control energy

• Continued separate responsibilities for balancing and capacitymarketing tasks

13

GasNAO-D – discontinuation of VTP charge

Discontinuation of VTP charge (§22)

• All transactions on the VTP are therefore free of charge for thecustomers

• This also applies for purely paper traders, that do not pay anynetwork charges at all, but who receive a service and cause costs nonetheless � further socialization of costs

• But: § 50 Para. 10 – FNA allocates definition competence feesand charges for using the VTP(monitoring, so that specifications do

not do not surpass practical requirements)

14

GasNAO-D – 5% tolerance volume

Tolerance on compensation energy volumes (§23)

• "(The daily balancing account balance) … is reduced by 5% of the volume delivered to the end consumer without standard loadprofile and without nomination alternatives (tolerance volume). This account balance determined as such will be reportedimmediately by MAR to the BGR and billed as compensationenergy. The tolerance volume must be transferred in thebalancing period after the next, and compensated in the BGR'sbalance. …"

15

GasNAO-D – 5% tolerance volume

Basic assumptions for implementation

• Assessment basis for the tolerance volumes for D and thetolerance transfer to D+2 is the RLM allocation data available for d on D+1.

• A difference between D+1 and the replacement value-correctedM+29 data is not corrected.

• The transfer volumes determined for D (to be transferred to D+2) have no effect on the structuring contributions to D (i.e. the transfervolume is only deducted after the balancing group account balanceon D has been determined).

• The tolerance transfer from D is informed to the balancing groupresponsible D+1, so that they can nominate D+2 for this.

• The tolerance band applies at both sides and enables a reductionin the balancing group account balance to zero, but not any further.

• Implementation date: 1 Oct. 2011

16

GasNAO-D – 5% tolerance volume

01.10. 02.10. 03.10. 04.10. 05.10. 06.10. 07.10.

RLM volumes 150 200 20 30 160 210 170

SLP volume 80 75 60 55 75 90 70

Allocation total 230 275 80 85 235 300 240

Nomination 240 273 77 88 220 296 240

Balancing group difference 1 10 -2 -3 3 -15 -4 0

Theor. tolerance, 5% on RLM

Allocation volume D+1 7.5 10 1 1.5 8 10.5 8.5

Indication of theor.

transfer (on d+2) -7.5 10 1 -1.5 8 10.5 -8.5

Transferred tolerance from D-2 (to be

considered by BGR with nomination)7.5 -2 1 1 -8

Account balance after considering D-2 tolerance 4.5 1 -14 -3 -8

Useable D day tolerance -7.5 2 -1 -1 8 3 8

Account balance after D tolerance2.5 0 3.5 0 -6 0 0

17

GasNAO-D – 5% tolerance volume

Negative effects for CE requirements

• Regulation is incompatible with GABi Gas, as a system-externaltolerance volume is granted in the day regime

• 5% regulation for RLM customers results in increased CE requirement

• Added costs incurred by granting the tolerance are incorporated intothe CE allocation � it must therefore be checked whether or not theRLMoT are involved in the CE allocation

� § 50 Para 9: FNA definition competence, in particular also for an assessment of the tolerance volume that deviates from § 23 Para. 2 Sentence 2

� § 30: FNA provides the Federal Ministry of Economics and Technology a report on the evaluation of the financial effects of the compensationand control energy system on 1 April 2011; the report is to be compiledwith the participation of financial experts

18

GasNAO-D – accounting period, SLP domestic gas

customers

Balancing group accounting (§23 Para. 2 Sentence 5)

• Balancing group accounting is made 2 months after therespective accounting month at the latest

New SLP profile "Domestic gas customers (§24)"

• In the future: 3 groups of end consumers– Commercial customers

– Domestic gas customers

– Heating gas customers

• Implementation date:1 Oct. 2011

19

Agenda

Balancing-relevant developments since 1 Oct. 2009

• 4th report on the implementation of the GABi Gas resolutionof 28 May 2008

• Amendment to Gas Network Access Ordinance (GasNAO-D)

• Cooperation Agreement (CoA IV) change

20

CoA change

Cooperation Agreement IV

• § 8 Para 6 GasNAO-D: Obligation for network operators in Germany to conclude a cooperation agreement by 1 July 2011. CoA IV regulationscome into force 1 October 2011.

• Schedule for CoA compilation (from today's point of view):– ASAP: Work groups start (largely already started)

– February 2011: Finalized CoA draft

– March/April: Discussion with FNA, committee processes

– End April 2011: CoA sent to contract partners (network operators)

– 1 July 2011: CoA adoption

– 1 Oct. 2011: CoA IV comes into effect

• Objective: Further development towards Grid Code. The CoA, thestandard contracts and the guidelines are to include this.

21

CoA change

External FNA Network User Forum

BDEW/VKU/GEODE

Steering CommitteeGas Cooperation Agreement

BDEW (German Energy and Water Association)

GEODE (European independent distributioncompanies of gas and

electricity)

VKU (Association of MunicipalCompanies) work groups

Voting process

CoA associations BDEW/VKU legal experts group

Standard Gas ContractsLegal arrangement of the CoA regulations

BDEW/VKU/GEODE

negotiation delegation*Working out the contentof the CoA regulations

Further project groups

Organizational structure

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