1 Madrid, 2 nd Nov 2011 17 th IG Meeting South Gas Regional Initiative.

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Madrid, 2nd Nov 2011

17th IG Meeting

South Gas Regional Initiative

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17th IG meeting SGRI- Agenda

I. Opening

I.1 Welcome

I.2 Approval of the agenda and minutes from the last meeting (for approval)

II. Development of ENTSOG first draft of CAM Network Code (for information by TSOs)

III. Capacity Allocation Mechanism harmonisation

III.1 Comments sent by Stakeholders (for information by Regulators)

III.2 Progress on the CAM harmonization at Portugal-Spain interconnections (for

information by TSOs)

IV. Congestion Management Procedures harmonisation

IV.1 Comments sent by Stakeholders (for information by Regulators)

IV.2 CMP Comitology guidelines (for information by Regulators and for discussion)

V. First draft of the regional investment plan (for information by TSOs)

VI. MIBGAS:

VI.1 Proposal to achieve an integrated market (for information by Regulators)

VI.2 Update of the ERSE-CNE study on cross border tariffs between Portugal and

Spain (for information by Regulators)

VII. AOB and next meetings

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II. Development of ENTSO-G first draft of CAM

Network Code

(Information by TSOs)

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III. Capacity Allocation Mechanisms

harmonization

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III.1 Comments sent by Stakeholders

• Two responses received commenting on the design of the Spanish-

Portuguese auction

• Main comments are:

Participants:

The requirement for shippers to be registered in both countries where the

capacity at the interconnection point is auctioned should be removed (one agent)

At least, affiliate companies should be considered the same shipper (one agent)

Product definition:

Annual products required to assure the possibility to book flat capacity during 12

consecutive months (two agents)

Balance of capacity assigned to different products: other products should be

allocated in this coordinated process, like day ahead, interruptible and backhaul

(one agent)

Bundled and unbundled products should coexist (one agent)

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• Main comments are (cont.):

Capacity offered:

Incentives required for TSOs to assure they offer the maximum capacity and to

promote investments (one agent)

An analysis of how to maximize the capacity offered and on the possibility of

single virtual point is needed (one agent)

Allocation methodology:

The CAM should ensure a flat allocation alongside different interconnection

points, in order to incentivise gas flow around Europe (one agent)

Multiple round algorithm for long term products is suggested, similar to the

Spanish one used for allocation of underground storages capacity (one agent)

Reserve price:

Reserve price equal or lower than the regulated tariff (one agent)

For very short term capacity (day-ahead or within day), reserved price zero or

lower than the regulated tariff (one agent)

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Binding window (TSOs’ proposal is 5 days):

The TSOs’ proposal allows shippers not to participate the first 4 days of the

binding window. In this case, aggregated information on the bids provided at

the end of these days will not be reliable. An alternative proposal is to have

rounds with firm offers from the beginning. (Two agents)

Volume-based cleared-price auction:

While one agent agree with this mechanism, since it is considered to better

maximize the allocation of capacity and minimize the number of bids where

pro rata is applied, the other is against this mechanism, because the pro rata

may allocate capacity that it is impossible for the shipper to use and because

the maximization of capacity may involve no more capacity for others auctions

or products

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Other comments:

CMP and CAM should be developed in parallel, because CAM effectiveness

would be limited by contractual congestions (one agent)

There’s a need for keeping coherence with allocation processes applied in the

OS between Spain and France: timing, period offered, time products, etc. (one

agent)

It would be interesting to keep coordination between allocation in the different

interconnection points within the SGRI in the future (one agent)

Coordination between TSOs is considered essential (single point of contact,

single nomination, coordinated data exchange, coordinated capacity

calculation, etc.) (one agent)

Coherence between gas products and electricity market schedules is required

(one agent)

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Area of work Responsible

Starting

Deadline

CAM harmonisation proposal (CAM pilot testing Sp‐Pt borders)

TSOs Jan. 2011 Jan. 2012

III.2 Progress on the CAM harmonization at Portugal-Spain interconnections

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IV. Congestion Management Procedures

harmonization

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IV.1 Comments sent by Stakeholders

• One response received on the proposal for CMP harmonization

between France and Spain

• Main comments are: CMP and CAM should be developed in parallel, because CAM effectiveness would

be limited by contractual congestions

Interconnection points between Spain and Portugal should also be considered in

the proposal

CMP should be specific for every capacity product, the same CMP for short and

long term capacity shouldn’t be appropriate

TSOs should develop a coordinated secondary capacity market, which would

promote the application of UIOSI mechanism

Ex ante mechanisms, like oversubscription or interruptible capacity, are required in

order to maximize the capacity offered in the short and mid term

TSOs should develop a common, clear and transparent UIOLI mechanism for long

term capacity

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DR

AF

T• Scope:

All interconnection points regardless of whether they are currently

congested or not

• Mandatory:

Overselling and buy-back firm capacity before 1 January 2013:

TSOs must propose the scheme and NRAs will approve it

The mechanisms will be based on statistical scenarios and structured as

revenue and cost-sharing scheme between TSOs and users

If there is a potential congestion, buy-back mechanism will be market-based

NRAs (in consultation with TSOs) may set minimum overselling volume

TSOs to inform NRAs regularly on the functioning of the system

IV.2 CMP Comitology Guidelines (amending Regulation 715/2009)

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DR

AF

T


• Optional:

Firm day ahead UIOLI,

Mandatory since 1 July 2016 if ACER monitoring report shows that in 2015

contractual congestion has occurred in the allocation of products with a duration

of one month or longer

Based on renomination rights restrictions:

o Firm renominations upwards allowed up to 50% of the fraction of the initially

not nominated capacity. The remaining capacity can be nominated on

interruptible basis

o Renominations downwards allowed down to 50% of the initial nominations

o If initial nomination is over 90% of the booked capacity, renominations

downwards are not allowed

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DR

AF

T


• Other mechanisms:

Surrender of booked capacity mechanism:

When contractual congestion exists, TSO is obliged to accept

surrendered capacity

TSOs to define conditions for user to surrender totally or partially their booked

capacity to TSOs

NRAs to approve the mechanisms

Long term UIOLI:

Capacity holders will lose their capacity if:

o Capacity is requested but it’s not available in the primary market

o Primary holder has not offered unused capacity in the secondary market

o Primary holder uses less than 80% of its contracted capacity for more

than 12 consecutive months without justification or during a winter month

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APPROVAL PROCEDURE: UPDATE

• Impact assessment and draft document presented in the

last Madrid Forum

• The Forum invited EC to start the comitology process

• Informal meeting between EC and representatives of the

Member States on the 14th October, countries were given

10 days for written comments

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V. First draft of the Regional Investment Plan


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VI. MIBGAS

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VI.1 Proposal to achieve an integrated market

COMMENTS SENT BY STAKEHOLDERS

• Two stakeholders sent comments proposing a plan to foster MIBGAS

Agent 1 proposal:

The existence of different regulations hampers the functioning of MIBGAS:

In the short term, the proposal is to analyse measures which foster the access to

interconnection capacities and LNG terminals, and to design a common balancing

mechanism, integrating historical transit capacities:

o The same CMP for the entire interconnection capacity

o To carry out the CAM pilot project

o To revise the tariff methodology in Spain

o To compare Spanish regulated tariff and historical transit costs

o To align balancing flexibility and imbalances charges

o To remove the minimum volume requirement to access the regulated exchanges

mechanism in the Portuguese LNG terminal

In the mid term it would be necessary to analyze the integration model

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COMMENTS SENT BY STAKEHOLDERS

Agent 2 proposal:

SHORT TERM

With regard to pancaking:

o To finalize NRAs’ study on cross border tariffs; afterwards NRAs to propose harmonized tariff

o TSOs to analyze administrative pancaking and to simplify the access to interconnection

infrastructures

CMP and CAM to be developed at the same time, since CAM’s effectiveness is limited by contractual

congestion

With regard to interconnection capacity between Spain and Portugal, the agent proposes:

o To establish a coordinated and transparent capacity calculation methodology

o TSOs to improve coordination in order to increase the capacity and its utilization: single

communication point and process, single nomination, single data format and standard procedures

to sort out operational constrains

o To consider one single virtual point (Tuy + Badajoz) in capacity allocation processes

o TSOs to define and develop the following mechanisms: Overselling and buy back, interruptible

capacity, backhaul capacity and secondary market

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Agent 2 proposal (cont.):

SHORT TERM

NRAs, with Stakeholders’ cooperation, to identify asap in which cases to create

national wholesale market areas is possible, and to define where more than one

Member State are required when achieving a well functioning wholesale market

MID TERM

Definition of common balancing rules and penalizations

Development of a coordinated, cost reflective and transparent access tariffs for

all infrastructures

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VI.2 Update of ERSE-CNE study on cross border tariffs between Portugal and Spain

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VII. AOB and next meetings

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VII. AOB and next business

AOB:

• Spanish hub operator (presentation by Enagas)

• Transparency compliance ( follow North Region plan)

Next meetings:

• ACER asking for a six month agenda

• Next SG meeting with Ministries, ACER and EC representatives

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Conclusions:

• On CAM harmonization ERSE and CNE will give feed back to TSOs on the

way forward and will propose the implementation to both Governments

• On the CMP pilot project, doubts on the way forward are shown,

considering the current draft of EC CMP comitology guidelines:

mandatory/voluntary oversubscription, ways of surrender the capacity,

opportunity to continue with the harmonization of UIOLI long term

between France and Spain. Risk and cost should be taken into

consideration. Since the cost of UIOLI long term is low, the SGRI will

follow working as planned. A precise proposal for the next steps will be

made by TSOs.

• On the GRIP, TSOs will share with the SGRI the investment plan for

comments of regulators and stakeholders. In the next IG meeting the plan

will be presented and discussed.

Conclusions

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Conclusions:

• On tariffs harmonisation in Spain and Portugal, after the

finalisation of the study, it will be sent previously to TSOs

for comments to be provided in a week, and then

submitted to public consultation

• On transparency, regulators will submit questionnaires to

check compliance with Regulation, following North Region

example

• Regarding next meeting agenda, regulators will send asap

a proposal

Conclusions

1 Madrid, 2 nd Nov 2011 17 th IG Meeting South Gas Regional Initiative.

Documents

Transcript of 1 Madrid, 2 nd Nov 2011 17 th IG Meeting South Gas Regional Initiative.