Slide 1

CAM PROPOSAL FOR HARMONISATION 15 th SG meeting Madrid 7 th February 2012 Slide 2 2 Regulators views 1 Slide 3 3 DECIDED 1MechanismOK 2CapacityTBD Single Virtual Point was not commonly agreed, but its implementability was discussed during the last IG - see TSOs comments on products 3ProductOK It is understood that it will be an annual auction of monthly products, but the "firmness" of the product(s) remains to be defined - see TSOs comments on products 4Gas dayOK TSOs explained in the 18th IG that: - The final goal is to standardise the gas day from 5:00 to 5:00 UTC. However, during an interim period other harmonised gas day, if approved by NRAs, could be implemented. - The hour difference could be treated in the same way as it has dealt with in the past. 5UnitsOK 6 Definition of allocation procedure OK 7PriceOK TSOs have already provided data on interruptions in the past. Capacity has never been interrupted. Detailed information on capacity usage has also been provided. 8 Secondary capacity markets OK TSOs would recommend to ensure that capacity cannot be "unbundled" after allocation, just including a condition on the Spanish a Portuguese regulations that, in case of trading the capacity on the secondary market, the trade will not be accepted unless the capacity remains bundled (i.e. the same shipper is buying the capacity at both sides of the border) 9ApplicationOK 10Gas yearOK Note that "gas year" is only defined for capacity allocation purposes in this process, with no other operational implications Slide 4 4 Points to be defined by regulators 2 Slide 5 5 REMAINING POINTS TBD by NRAs 1 Definition of allocation procedure NC Note that TSOs proposal already solved this issue (see Annex II) 2 Allocation of capacity on the Portuguese side NC It must be ensured that changes in capacity status are consistent at both sides of the border Existing contracts on the Spanish side will be respected Note that capacity already booked on the Spanish side might change at any time due to: the flexibility granted to shippers to reduce booked capacity at very low or no cost the possibility of booking available capacity under current rules (FCFS) Given that contracts on the Spanish side cannot be cancelled unilaterally by the TSO, TSOs would suggest to harmonise capacity currently allocated according to the situation in Spain. If current holders of capacity refused to take capacity at both sides, capacity would be freed up and added to this coordinated allocation process. If capacity was freed up on the Spanish side before harmonisation, capacity would be freed up and added to this coordinated allocation process. 3Price and revenuesNC Note that the draft NC published by ENTSOG on 31/01/2012 foresees that the revenues from the auction premium from Bundled Capacity above the Reserve Price shall be split according to agreement between the transmission system operators, approved by the relevant national regulatory authority, where appropriate. In the case that no agreement is concluded before the auction, the revenues from the auction premium from Bundled Capacity shall be attributed to the transmission system operators proportionally to the Reserve Prices at the time of the auction for their capacities in the Bundled Capacity set according to article 7.3. 4 CMP application and short-term capacity allocation NC 5 Definition of interruptible price regime NC TSOs have already provided data on interruptions in the past. Capacity has never been interrupted. Detailed information on capacity usage has also been provided. Slide 6 6 3 Points to be proposed by TSOs Slide 7 7 REMAINING POINTS TO BE PROPOSED by TSOs 1Products TSOs proposals on these points are shown in the following slides 2 Definition of allocation procedure 3 Companies allowed to request 4Request format 5Calendar Slide 8 8 1. Products (1/8) capacity offered TSOs have been asked to detail the capacity to be offered by each TSO through the auction on a similar format to the table below Slide 9 9 1. Products (2/8) existing capacity The following tables below show the technical, booked and available capacity on the Spanish side. Capacity in GWh/day VALENA DO MINHO / TUY Portugal -> Spainoct-12nov-12dic-12ene-13feb-13mar-13abr-13may-13jun-13jul-13ago-13sep-13 Technical capacity25.00 Contracted capacity0.00 Available capacity25.00 Capacity in GWh/day TUY / VALENA DO MINHO Spain -> Portugaloct-12nov-12dic-12ene-13feb-13mar-13abr-13may-13jun-13jul-13ago-13sep-13 Technical capacity40.0030.00 40.00 Contracted capacity13.07 11.07 Available capacity26.9316.93 18.93 28.93 Slide 10 10 1. Products (3/8) existing capacity Capacity in GWh/day BADAJOZ / CAMPO MAIOR Spain -> Portugaloct-12nov-12dic-12ene-13feb-13mar-13abr-13may-13jun-13jul-13ago-13sep-13 Technical capacity134.00 134.0 134.00 Contracted historical89.00 Contracted TPA45.00 Available capacity0.00 Capacity in GWh/day CAMPO MAIOR / BADAJOZ Portugal -> Spainoct-12nov-12dic-12ene-13feb-13mar-13abr-13may-13jun-13jul-13ago-13sep-13 Technical capacity70.0035.00 70.00 Contracted capacity15.00 0.00 Available capacity55.0020.00 35.0070.00 The following tables below show the technical, booked and available capacity on the Spanish side. Slide 11 11 1. Products (4/8) VIP implementability Technical capacities at the border between Spain and Portugal were reviewed by Enags and REN in 2011 (see Annex III). Any capacity product offered to the market should built on the capacities already agreed. Firm capacity from Spain to Portugal at Badajoz is 134 GWh/d. This is fully booked in the long term as of 7/2/2011. Firm capacity from Spain to Portugal at Tuy is 40 GWh/d in Summer, 30 GWh/d in Winter. This capacity, partially available, is firm but subject to operational conditions on the Spanish side. Enags view is that capacities from Spain to Portugal are of different nature and, therefor, they cannot be aggregated and undifferentiated. Enags believes that if a VIP was created, there would not be a single firm capacity service at the VIP from Spain to Portugal. Moreover, current procedures already ensure that commercial capacity at Tuy can be used if there is physical availability at Badajoz, regardless the operational conditions are met or not (see slides on interconnection capacity). Slide 12 12 1. Products (5/8) VIP implementability Enags identifies the following challenges to establish a VIP: Need to adapt the regulatory framework (and IT systems) in Spain and Portugal to make it possible to book and nominate capacity at the VIP. If capacities at Tuy were considered interruptible, need to clarify: Whether or not this is consistent with the FG on CAM, which estates that the creation of a VIP should not result on a reduction of technical capacity (see Annex I). Consequences for already firm but conditioned capacities at Tuy. Consequences for other firm but conditioned capacities anywhere else in the Spanish system. Whether interruptible capacity could be booked before all firm capacities had been booked. How to define a tariff based on the probability of interruption. If capacities at Tuy were aggregated and undifferentiated (all sold as firm with no operational conditions), need to clarify the responsibility of TSO if capacity is interrupted given that it is known that certain operational conditions have to be met. Slide 13 13 1. Products (6/8) - Oversubscription scheme? Enags would not recommend to impose an obligation to offer an amount of firm capacity higher that the technically available amount of firm (non- conditioned) capacity. This would in fact be an oversubscription scheme, which would require a buy back scheme to avoid interruptions of firm capacity, whose implementation in the Spanish and Portuguese systems would be complex and potentially very expensive. Creating a VIP and implementing an oversubscription scheme (e.g., to facilitate the usage of non-used capacity at Badajoz) are independent issues. The former does not facilitate the latter. Slide 14 14 1. Products (7/8) capacity offered? ? Slide 15 15 1. Products (8/8) bundled capacity It is necessary to clarify that it will be progressively bundled, but it will not be perfectly bundled from the beginning unless: The corresponding entry and exit firm available capacity at both sides of an IP is offered and allocated through a single procedure. The same shipper entity is registered in both countries. Secondary market provisions are compatible and capacity can only be traded together see TSOs comments on decisions by NRAs. Draft NC: A joint Nomination procedure for Bundled Capacity, providing network users with the means to nominate the flows of their Bundled Capacity via a single Nomination. According to the future operation manual, the information to be send by shippers shall be identical. CMP provisions are harmonised. Slide 16 16 2. Definition of allocation procedure Duration of the bidding window Pre-registration: 5 working days Bidding window (submission of requests): 5 working days See tentative calendar for more details Definition of price steps No guidance from draft NC on CAM versions, though 30 price-steps were suggested in the June 2011 version To be discussed with NRAs Slide 17 17 3. Companies allowed to request The Information Memorandum for the 2015 OS between Spain and France considered as the same company those belonging to a group of companies linked via a relationship of control as defined in EC Regulation 139/2004 articles 3.2 and 3.3 The Info Memo clarified that The relationship of control between the participants in the allocation of 2015 capacities will be provided to TSOs before the capacity allocation. Ministerial Order ITC/2607/2008 stated in art. 6.3 that: la Comisin Nacional de Energa facilitar a los titulares de las instalaciones de conexin internacional con Francia, antes de la fecha de finalizacin de recepcin de solicitudes, un listado con los Comercializadores y Consumidores Directos en Mercado autorizados, incluyendo la relacin de control entre ellos, de acuerdo con la definicin del referido Reglamento comunitario de concentraciones i.e., the CNE will provide TSOs, before the deadline for capacity request submissions, the list of shippers authorised to participate in the OS, including the relationship of control between them, according to the EC Regulation on mergers. TSOs propose the same procedure, since they are not in the best position to evaluate this issue and have no role in the authorisation process. Slide 18 18 4. Information requested for pre-registration Shippers willing to participate in the process shall submit a pre-registration form within the period detailed in the calendar. TSOs shall send individual letters to shippers confirming their participation. The information requested for pre-registration will be at least the following: Network user at the Spanish side: Name of the company requesting access Address Telephone, Fax and e-mail Type of user: shipper or eligible user Network user at the Portuguese side: Name of the company requesting access Address Telephone, Fax and e-mail Type of user: shipper or eligible use SAMPLE Slide 19 19 4. Information requested for the auction The request sheet will contain at least the following information: Identification number (obtained in the pre-registration) IP for which capacity is requested Type of capacity, if relevant Capacity requested per price step Minimum amount of capacity to accept the allocation per price step Month for which the request is made SAMPLE Slide 20 20 4. Pending issues Request format Possibility to establish a Joint Allocation Office Other submission issues (postal, electronic,) Slide 21 21 5. Tentative calendar for discussion DateMilestone 7 th February 201215 th SGRI Stakeholders Group meeting 28 th March19 th SGRI Implementation Group meeting - decision on remaining points to be defined by regulators and proposed by TSOs Mid-May (in any case before 29 th May)Approval of relevant regulations in Spain and Portugal 29 th May: approx. one month before the bidding window opens TSOs notify to network users about the amount of capacity to be offered for each month for the auction 31 st May15 th SGRI Stakeholders Group meeting Presentation of all relevant materials 4 th -8 th JuneWindow for pre-registration of shippers participating in the auction 15 th JuneIndividual letters with registration confirmation for participants 25 th -29 th JuneBidding window TSOs will publish the aggregated results of the bidding information at the end of each day 5 th - 6 th JulyTSOs will publish the aggregated results of the auction, and will send individual letters to participants Slide 22 22 A Annex I FG & Draft NC on CAM provisions on VIP Slide 23 23 Virtual Interconnection Point (I) FG on CAM Article 2.4.3 Virtual interconnection point, established the following conditions for establishing a VIP The network code(s) shall set out that capacity at two or more points connecting the same two adjacent entry-exit systems is integrated into one single capacity service representing one virtual interconnection point. Transmission System Operators shall calculate the entire technical capacity of the integrated service. Virtual interconnection points have to be established no later than five years after the entry into force of the network code(s), insofar as the technical capacity resulting for the integrated service and at any virtual interconnection point shall not be lower than the sum of the previously separate bundled capacity products. Slide 24 24 Virtual Interconnection Point (II) Draft NC on CAM Where two or more Interconnection Points connect the same two adjacent transmission systems, the adjacent transmission system operators concerned shall offer the available capacities at the Interconnection Points at one Virtual Interconnection Point according to the following conditions: the total Technical Capacity at the Virtual Interconnection Points shall be equal to or higher than the sum of the Technical Capacities at each of the Interconnection Points contributing to the Virtual Interconnection Points; to the reasonable judgement of each transmission system operator concerned regarding its own transmission network, the characteristics of the transmission systems involved shall allow the establishment of Virtual Interconnection Points virtualisation of capacities; Virtual Interconnection Points shall only be established, if they facilitate the economic and efficient use of the system including but not limited to rules set out in article 16 of The Regulation; and Adjacent transmission system operators shall start the necessary analysis and, if the above conditions are met, shall establish functional Virtual Interconnection Points no later than 5 years after the entering into force of this Network Code. Slide 25 25 A Annex II Allocation procedure Slide 26 26 Allocation procedure Capacity will be allocated through volume-based cleared price auctions. The reserved price shall incorporate the regulated tariff agreed by the NRAs Capacity will be available for bidding on multiple months ahead within one bidding window. Depending on the various capacity needs shippers will be able to place bids either for each month auctioned or only for some of them. However, each month will be allocated independently. Slide 27 27 Volume-Based Cleared-Price Auction TSOs shall provide a price range of 30 price steps, starting at the reserved price P 0. Network users shall only be allowed to submit one bid per price step. All bidders shall submit a bid at price step P 0. Each bid quantity at P 1 and subsequent steps shall be equal to or less than the bid quantity at the previous price step. TSOs shall aggregate the demand per price step The clearing price is defined as price of the lowest successful bid. All successful bids shall be deemed payable by the network users at the clearing price. If the total demand exceeds available capacity at the maximum price step, at that price step the demand shall be pro-rated proportionally to the individual bid quantity. Slide 28 28 TSOs proposal for defining the final price P x shall be the highest price step for which total demand is higher than or equal to the available capacity offered. P x+1 shall be the subsequent price step. If at P x demand is equal to the available capacity offered, the auction will be cleared at P x and the whole capacity will be allocated. If at P x demand is higher than the available capacity offered, all bids at P x+1 shall be allocated, and there will be some remaining capacity. The remaining capacity shall be allocated by pro-rata proportionally to the individual bid quantity at P x. In order to apply the pro-rata, for each bidder only the capacity differential between P x+1 and P x will be taken into account. This implies that: Bids for the same amount of capacity at P x and P x+1 will not participate in the pro- rata. Bids for a different amount of capacity at P x and P x+1 will only participate in the pro-rata for the amount of capacity P x+1 P x. If additional capacity is allocated at the P x price step (i.e., if the pro-rata mechanism results in an additional allocation of capacity over the capacity already allocated at P x+1 ), the auction will be cleared at P x. If no additional capacity is allocated at the P x price step (e.g., because in the pro-rata no bid is allocated an amount equal to or higher than the minimum), the auction will be cleared at P x+1. Slide 29 29 A Annex III Interconexion capacity between Spain and Portugal: 2011 updating process Slide 30 30 Slide 31 31 Slide 32 32 Slide 33 33 Slide 34 34 Slide 35 35 Slide 36 Thank you for your attention!