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Transfers and Trades
Transmission Workstream
03-05-07
Background
Currently no flexibility for unsold / sold capacity to be reallocated to different ASEPs
could, in extreme, lead to capacity sterilisation
National Grid NTS accepted under TPCR to take reasonable steps to facilitate capacity transfer (unsold capacity) and capacity trades (sold capacity) between ASEPs
To be supported by Entry Capacity Transfer and trade Methodology Statement outlining how rates will be determined
Ideal Process
Licence Obligation
Methodology Statement
UNC Modification
Systems Development
Implementation
All elements need to be in place to successfully implement trading and transfer processes
Licence Conditions
Not yet finalised or agreed with National Grid NTS
Based on current wording provided by Ofgem, neither of the two proposed Modifications would fully satisfy the requirements.
The key issue particularly for capacity transfers is the following wording:
“Prior to any mechanism for the release of capacity (other than obligated incremental capacity) the licensee shall use reasonable endeavours to meet any requests from a shipper for a transfer rate or rates calculated in accordance with the methodology prepared pursuant to paragraph [[8(c) of this condition]]”
Other issues also exist.
Methodology Statement
This was issued yesterday for consultation.
The consultation closes on the 30 May.
National Grid NTS will then provide proposed methodology to Ofgem for approval.
Ofgem have [2] months to veto the Methodology Statement.
According to this timeline in order to implement the Modification proposals (transfers - 2 July) we would need a positive decision from Ofgem, as the proposals are contingent on having an approved Methodology Statement.
We would also need to have the new Licence Obligation in place in order to enact the Methodology Statement.
It is intended to discuss the Methodology Statement later at a high level after going through the two Modification Proposals.
UNC Modification - Transfers
Mod 133 was developed to facilitate capacity transfers, however the process was lengthy and complicated.
Revised version of the Mod now developed. Intention to implement the Mod ahead of this winter
– in order to do so this will require “urgent status” Methodology Statement will be consulted upon in
parallel.
Transfer – before or after trades?
Key question in looking at the transfer Mod was when should it take place.
Intention to undertake the process after AMSEC, but before or after trades?
Advantages of doing it before trades: Trades process likely to be FCFS and therefore indefinite length of time The trading process provides an opportunity to resolve any positions that
may result from the AMTSEC Improves exchange rates for trades as removes “space” above sold level. Discourages purchasing capacity from other ASEPs for the purpose of
trading it to another ASEP, which is likely to lead to an inefficient reallocation of capacity
Disadvantages of doing before trades: Does not provide the industry with the initial opportunity to optimise the use
of already sold capacity Potentially the transfer process will mean that there is no scope for certain
trades to be undertaken
Process – Registration process initiation
1: AMSEC results orMod implementation date*
2
2. AMTSEC registration process initiated
Business days
* Note: The initial AMTSEC registration will be held on 2 July 2007, assuming methodology statement and UNC Mod approved
• NGG invites Users to participate in the AMTSEC
• NGG provides Users with a list of
• sold out ASEPs “recipients” on a monthly basis
• list of non-sold out ASEPs “donors” on a monthly basis
• First AMTSEC will cover period Oct 2007 – March 2008
Total = 2 days
Process – Shipper registration
1: AMSEC results orMod implementation date
2
2. AMTSEC registration process initiated
3. Users register for AMTSEC
5
• Users commit to pay the application fee to participate in the AMTSEC
• [consultation to be launched on fee]
Total = 7 days
Business days
Process – Publication of auction details
1: AMSEC results orMod implementation date
2
2. AMTSEC registration process initiated
3.Users register for AMTSEC
• NGG publish the following auction information
• Date of auction
• Nodal maximum for recipient ASEPs
• Indicative exchange rate matrix (see next slide)
• Available months
Total = 12 days
4: Publication ofauction details via invitation
Business days
5 5
Indicative exchange rate matrix
Process – Auction
1: AMSEC results orMod implementation date
2
2. AMTSEC registration process initiated
3. Users register for AMTSEC
Total = 17 days
Business days
5. Auction held
4: Publication ofauction details via invitation
5 5 5 (minimum)
• See next slide for auction details
Auction details
• Registered Users can place, amend and withdraw bids on the day of the auction from 08:00-17:00.
• Information required:
• Identity of user
• Recipient ASEP
• Available month
• Amount of entry capacity kWh/day
• Minimum amount of entry capacity kWh/day (must be more than minimum eligible amount)
• Bid price in p/kWh, which must not be less than reserve price at recipient ASEP
• Maximum 5 bids per User at anyone time for each ASEP and available month
We are currently reviewing whether
bid information can be displayed
during the auction process
Process – Allocations
1: AMSEC results orMod implementation date
2
2. AMTSEC registration process initiated
3. Users register for AMTSEC
Total = 32 days
Business days
5. Auction held
4: Publication ofauction details via invitation
5 5 5 (minimum)
• NGG provide following information to Users that have been allocated capacity:
• Available month
• Recipient ASEP
• Capacity amount (kWh/day)
• Price paid (p/kWh
• See next slide for allocation process
15
6. Allocations provided to Users
Allocation Process
1. All bids are ranked in terms of price irrespective of the recipient ASEP.
2. Bid price is to 4 decimal places
3. Where there are equal priced bids the earliest submitted valid bid will be processed first
4. Each bid is dealt with independently of any bids later in the ranking.
5. For each bid the donor, and subsequent donors if necessary, with the best exchange rate are identified and if possible the bid is fully satisfied.
6. Limitations on satisfying a bid are:
• Insufficient donor capacity
• Incremental risk limit reached
• Nodal maximum at recipient reached
• Less than user specified minimum amount available
Process – Results Publication
1: AMSEC results orMod implementation date
2
2. AMTSEC registration process initiated
3. Users register for AMTSEC
Total = 34 days
Business days
5. Auction held
4: Publication ofauction details via invitation
5 5 5 (minimum)
15
7: Auction information to all users
6. Allocations provided to Users
2
• NGG provide auction information to all Users (see next slide)
Results Publication
in respect of each Recipient ASEP for each Available Month: the highest, lowest and weighted average price of all accepted capacity
bids; the aggregate amount of Monthly NTS Entry Capacity allocated; the total number of Users that submitted capacity successful bids; the total number of Users that submitted capacity unsuccessful bids;
in respect of each Donor ASEP for each Available Month: the amount by which the Unsold NTS Entry Capacity was reduced; and the remaining amount of Unsold NTS Entry Capacity.
Potentially seek to incorporate in existing reports (Mod137)
Urgent Mod Potential Timetable
Send to JO 4/5 Ofgem grant urgency 7/5 Issue consultation 8/5 Closed for responses 22/5 Final Mod report 29/5 Mod Panel 5/6 Ofgem decision 12/6 Implementation 2/7
UNC Modification - Trades
National Grid NTS issued a draft Mod at the transmission workstream meeting on 1/3/07. Minimal discussion.
E.ON raised an urgent Mod138 on trades that utilises a window. We could not implement the Mod as it relies on ex-ante exchange rates. This was not supported by the Mod panel: vote 5-3. Ofgem to decide on this Mod on the 8 May.
National Grid NTS has revised its original Mod, although the core principles are still the same.
Process – Transfer Invitation Process
1: Publication of AMTSEC results
Business days
5
2. Transfer invitation process
• NGG publish the following invitation information
• The day of the transfer window
• Recipient ASEPs (those sold out in either AMSEC or AMTSEC)
• Nodal maximum for recipient ASEPs
• Available months
• for first window Oct 07 – Mar 08
Total = 5 days
Process – Transfer Request
1: Publication of AMTSEC results
Business days5
2. Transfer invitation process
Total = 12 days
7
3. Receipt of transfer requests
See next slide for request requirements
Process – Transfer Request
• Users provide the following information:
• Identity of User
• Recipient ASEP
• Donor ASEP
• Available month
• Transfer amount kWh/d
• Minimum transfer amount kWh/d
• Each request is time stamped
• Requests must be received between 08:00-17:00
• Each User is limited to one request per window
• User commits to pay application fee
• [Charging subject to separate consultation]
Process – Provision of Transfer Rate
1: Publication of AMTSEC results
Business days
5
2. Transfer invitation process
Total = 17 days
7
3. Receipt of transfer requests
5
4. Provision of transfer rate
• NGG will treat each request on a first come first served basis
• A transfer rate will be provided to the first User in the queue for the requested transfer according to an approved methodology statement
Process – Transfer acceptance
1: Publication of AMTSEC results
Business days
5
2. Transfer invitation process
Total = 19 days
7
3. Receipt of transfer requests
5
4. Provision of transfer rate
• The User must confirm acceptance of the transfer or else it will be deemed failed
• The trade must be reflected on Gemini within office hours
• This will reduce User’s obligated capacity at donor ASEP and increase User’s obligated capacity at recipient ASEP
2
5. Transfer acceptance
7. Transfer acceptance
Process – Next request
1: Publication of AMTSEC results
Business days
5
2. Transfer invitation process
Total = 26 days
(2 requests)7
3. Receipt of transfer requests
5
4. Provision of transfer rate
2
5. Transfer acceptance
5
6. Provision for next request transfer rate
• NGG will treat each request on a first come first served basis
• A transfer rate will be provided to the second User in the queue for the requested transfer according to an approved methodology statement
Repeat steps 4 & 5 for
each request
2
UNC Modification - Trades
The same constraints exist as for trades i.e. nodal max, risk limit etc.
Trade will be reflected in Gemini through the use of a National Grid NTS trading account
Once all requests have been satisfied in the window or are no longer valid, a new window will be opened subject to certain conditions
Transfers that are for an available month that is within 7 days of the start of that month and has not yet been processed will have that month removed from the request
Publication details still to be developed, user confidentiality a key concern
Methodology Statement
One statement has been prepared to cover the methodology of how to calculate an exchange rate between entry points.
The methodology is equally applicable to both trades and transfers.
The methodology statement does not cover how a user requests a transfer or trade, this is dealt with in the accompanying network code modifications.
The fundamental element of the methodology statement is to ensure that costs, particularly buy back risk, do not increase as a result of effecting the trade or transfer.
High level process (1)
High level process (2)
Assessment of risk level
Exchange rates – work in progress
"The information/data set out below is indicative only and has been provided by National Grid on a good faith basis for information purposes only. It should not be relied on by any person for any purpose, and any person uses or relies on such information/data entirely at their own risk. National Grid accepts no liability arising from any such use or reliance. The calculation or methodology used to derive such information/data will not necessarily be that used in any implemented regime, and National Grid reserves its rights in this regard."
Base Data: Demand, Flow & Donors
"The information/data set out above is indicative only and has been provided by National Grid on a good faith basis for information purposes only. It should not be relied on by any person for any purpose, and any person uses or relies on such information/data entirely at their own risk. National Grid accepts no liability arising from any such use or reliance. The calculation or methodology used to derive such information/data will not necessarily be that used in any implemented regime, and National Grid reserves its rights in this regard."
Base Data: Recipients
"The information/data set out above is indicative only and has been provided by National Grid on a good faith basis for information purposes only. It should not be relied on by any person for any purpose, and any person uses or relies on such information/data entirely at their own risk. National Grid accepts no liability arising from any such use or reliance. The calculation or methodology used to derive such information/data will not necessarily be that used in any implemented regime, and National Grid reserves its rights in this regard."
Exchange rate matrix (capacities)
"The information/data set out above is indicative only and has been provided by National Grid on a good faith basis for information purposes only. It should not be relied on by any person for any purpose, and any person uses or relies on such information/data entirely at their own risk. National Grid accepts no liability arising from any such use or reliance. The calculation or methodology used to derive such information/data will not necessarily be that used in any implemented regime, and National Grid reserves its rights in this regard."
Exchange rate matrix (ratios)
"The information/data set out above is indicative only and has been provided by National Grid on a good faith basis for information purposes only. It should not be relied on by any person for any purpose, and any person uses or relies on such information/data entirely at their own risk. National Grid accepts no liability arising from any such use or reliance. The calculation or methodology used to derive such information/data will not necessarily be that used in any implemented regime, and National Grid reserves its rights in this regard."
Feedback
The Methodology Statement has been issued for comment
Timely responses to this document would be appreciated
In particular views on whether there should be maximum exchange rates for the unsold process
Open discussion
