Confidential 1

NWE/PCR Update

AESAG Meeting1 February 2012

Confidential 2

PCR PXs - common solution proposal• The objective is twofold:

– To deliver NWE for the end of 2012 (target date);– To secure the 2014 roadmap.

• The PCR PXs have agreed on the following solution:– Joint development of PMB (PCR Matcher/Broker) for the launch of NWE

target 2012;– Parallel development of PCS (current version of PCS upgraded with

Nordic requirements) as possible solution for the launch of NWE target 2012 until sufficiently clear whether needed or not.

• No later than May, it will be decided which system will be used for the NWE launch.

• In case PCS is used at the start of NWE, a second step will be needed to replace PCS by the PMB.

3

Development activities

• Two blocks of development activities are needed to follow the parallel development. – Upgrade of PCS:• PCS remains centralised;• NWE requirements are supported;

– Implementation of PMB :• Decentralised PCR solution;• NWE /PCR requirements are supported;• Joint design/analysis phase involving all PXs during

February

Confidential

4

PX Technical PlanningFeb 201

2

Mar 201

2

Apr 201

2

May 201

2

Jun 201

2

Jul 201

2

Aug 201

2

Sep 201

2

Oct 201

2

Nov 201

2

Dec 201

2

Q1 2013

Q2 2013

Design phase

Development PMB // PCS

Test preparation

Algo Sys. test

Integration & Procedural Tests **

PXs readinessDec 2012Procedures **

Contingency

* Pending planning validation of PX local system provider** Requires coordination with TSOs planning

+ In case the Implementation of PCS in NWE is decided due to delays in PMB development

PMB // PCS System Tests

Algorithm industrialisation

PX local systems adaptations *

PX local systemssystem Tests

PXs integr. tests

Market Validation

Algo interface frozen

Algo fully industrialised

Algo requirements & specs frozen

Go live system selection

Finalise Development PMB+

Tests PMB+

PXs ReadinessJun 2013

Confidential

5

NWE PX Budget

Confidential

PCR Common Costs 60% of PCR common costs (design and implementation)

2,430,000 €

60% PMB development 300,000 €NWE share of PCR Common Costs** 2,730,000 €

NWE Design phase (November 2011-February 2012)*

Local cost EPEX Spot 140,000 €

Local cost NPS 250,000 €

Local cost APX-ENDEX 190,000 €

Total Design Phase 580,000 €

* Cost of this phase are estimated and need to be evaluated at the end of the period** Remaining share (40%) paid by other PCR parties*** Open issue whether a PCR Common Cost

IT systems PMB Integration and support 1st year 200,000 €PCS*** 200,000 €IT (hosting, hardware, MPLS…) 150,000 €Adaptation Trading Systems 350,000 €Shipping Solution 150,000 €

Project staff and logistics

Project members NWE (15 FTE, 11 months) 2,970,000 €

Travel costs 156,000 €Contracts

Contracts adaptation 150,000 €Contingency

Staff contingency (15 FTE, 3 months) 810,000 €IT contingency (15%) 204,000 €

Total Implementation phase 5,340,000 €

Total cost NWE / PMB 8,650,000 €

Project members for NWE implementation of PMB, contract, travel and additional work 2,200,000 €

Total cost NWE / PCS + PMB 10,850,000 €

Step 2 - in case of sequential approach

NWE Implementation phase

PCR System Choice Update• At November AESAG, PXs described a parallel approach being taken to procure the

PCR matcher/broker (PMB) system– OMIE/GME/APX-ENDEX/Belpex to undertake a tender process with 5 preselected suppliers– EPEX/NPS to request quote for modification of existing system used in CWE

• Tender process completed on time: 3 high quality proposals received (9 Jan), one recommended (24 Jan)

• PXs informed NWE TSOs that they would prefer to select a single PMB system provider

• Exchange of EPEX/NPS proposal and the 3 shortlisted proposals from the tendering process; recommendation by APX/BPX/OMIE/GME

• In order not to delay the NWE implementation by end of 2012– APX-ENDEX/Belpex, OMIE and GME will proceed with selected service provider to start the analysis

phase (which we need anyway, no obligation for development yet) starting immediately. EPEX/NPS will participate in analysis phase

– EPEX/NPS will proceed with parallel analysis phase for a solution based on the existing system used in CWE with minimal changes to be triggered in May if needed. APX-ENDEX/Belpex will participate too

25/11/2011 6

Confidential 7

Next stepsTo start the NWE project in a proper way and to comply with the planning

presented, the following steps (including some PCR steps) have to be tackled:

1. Design of pre-coupling (ATC handling) and post-coupling (Shipping agent mechanism) NWE TSOs;

2. Clarification of the specification on Nordic flows calculation (for the algorithm) by end of January and Nordic functionalities for PMB//PCS during February PXs;

3. Clarification and agreement on fallback procedures Joint;4. Finalise PMB provider selection PXs;5. Finalisation of the PCR agreements (including governance and other terms) PXs;6. Interim agreement if needed (including governance and other terms for use the

system in the interim) PXs;7.Finalisation of the NWE APCA and the cost recovery mechanism Joint NWE;8.Start the NWE project organisation (i.e. appoint joint PMO) Joint NWE.

Heavy workload...

Confidential 8

Back-up slides

Confidential 9

HLFA – PMB (only NWE PXs shown for simplicity)

Confidential 10

HLFA - PCS