Partial decoupling on 7th June 2019Incident investigation report

MESC 17th September 2019

Rafael Gómez-Elvira González NEMO Co-chair

SDAC – organisational and contractual hierarchy

SDAC Operation of the Single Day-Ahead Coupling as set forth in CACM and according to the DAOA (Single Day-Ahead Coupling Operations Agreement) involving NEMOs and TSOs

MRC/SDAC 4MMC/SDAC Operating under MRC procedures (within DAOA/ ANDOA) involving only MRC NEMOs and TSOs

Operating under 4M MC Master Agreement and 4M MC procedures involving only 4M MC NEMOs and TSOsRegional arrangement A

Regional arrangement B

Regional arrangement CWEOperating under: Local arrangements and procedures involving only CWE NEMOs and TSOs

The decoupling incident on 7th June 2019 only affected MRC, not the 4M MC. It was the first decoupling incident after 1948 successful couplings.

Local arrangement and procedure

The incident was handled by applying the MRC procedures (DAOA/ ANDOA) and the regional/local procedures (fallbacks), which are annexes to the above agreements. The investigation did not detect any gaps in those procedures; however it was discovered that the timings were not fully followed causing problems later in the process.

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Decoupling on 7th June 2019What happened?

• Due to IT problems at EPEX, preventing the exchange to submit their order book to the MRC within the procedural timings, CWE and EPEX GB partial decoupling was declared

• The following borders were affected:– CWE internal borders – CWE external borders

• The “nearly” full decoupling was a consequence of the geographical location of the decoupled NEMO. No different procedural arrangements could have produced a different outcome.

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Note: MRC areas with same colours stayed coupled, borders labelled with were decoupled

Decoupling on 7th June 2019Outcome of investigations in root cause and incident management (1/2)

• The root cause was a defect in the Trading System of EPEX enabling an unsupported order to be entered by one of its market participants.

• This led to technical issues on EPEX side, that prevented the participants to submit their orders and which could not be resolved in time to meet the critical deadline of the Partial Decoupling at 12:40.

• The local problem was outside the control of other NEMOs/TSOs. • In the attempt to avoid the decoupling and minimize impacts on the

market participants, the agreed procedures (especially timings) were not fully followed on 07/06: − The partial decoupling declaration was postponed by 9 minutes,

following information from EPEX that local IT issues were being solved.

− Finally the issue could not be solved within these 9 minutes. This led to a further chain of events where subsequent processes were triggered too late.

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Decoupling on 7th June 2019Outcome of investigations in root cause and incident management (2/2)

• Following the partial decoupling of CWE and GB from MRC, – Shadow auctions for cross-zonal capacity were run by JAO For DE-DK2 and NL-NO: Due to the 9 min delay, Shadow Auction

results were received too late by market participants making it impossible to consider allocated capacity when bidding at Nord Pool.

Local auctions were run by EPEX for each local national market area.

• Further IT issue at EPEX stemming from the technical issues experienced in the morning resulted in publication of erroneous market results in its local auctions. The results were only calculated based on a part of the order books. Therefore, EPEX had to cancel the published results, recalculate and publish final results at 15:38 (instead of 14:45 according to CWE procedure) and therewith after the 15:30 nomination deadline:

– Some TSOs managed moving the deadline to 17:00 allowing market participants to nominate based on the final local market results.

– Other TSOs could not adjust the 15:30 deadline, meaning that market participants had to nominate without knowing the market results.

– In either case TSOs received information necessary for security calculations too late and/or in an inconsistent way

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Decoupling on 7th June 2019Communication with market during incident

• As part of the MRC process, the following joint communication towards the market was made:

– 12:20 risk of partial decoupling and opening of shadow auction window– 12:49 partial decoupling declared– Between 12:51-13:01 results of shadow auction were published– 13:20 further delay in market results

Decoupling on 7th June 2019Lessons learned and investigation report (1/2)

Lessons learned • Incidents do happen and parties must learn from them. Incident

management procedures are in place and constantly improved based on operational experience.

• Ensuring the integrity of IT systems utilized by individual Parties in the joint SDAC process is utterly important, monitoring centralized mapping of risk areas and centralized reporting of integrity testing to be evaluated.

• Leading principle: procedures must be followed, as they are designed for the purpose to maintain the functioning of the market even in case of (partial) decoupling. Any derogation, even with good intention, can induce cascade consequences on other processes. If procedures are deemed too stringent, they should be reviewed.

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Decoupling on 7th June 2019Lessons learned and investigation report (2/2)

Lessons learned (continuation)• Improvements of procedures are currently being looked at:

– Adjust fallback procedures and deadlines to ensure they hold and can be met by all parties including market participants in exceptional circumstances.

– Some extra time could be allocated to the ordinary process (calculation of market results) and deadlines to trigger partial and full decoupling could be postponed by overall 10 minutes without endangering other processes. Advanced assessment among the Parties is ongoing on the matter.

– Shadow auction process timing is being reviewed and reinforced.• Training of operators (of NEMOs and TSOs) focusing on decoupling

situations across MRC must be improved.• There is a need of better preventive communication and training for

market participants. • Ensure all affected NEMOs and TSOs are invited to incident committee.

Investigation ReportA thorough report is about to be finalized for regulators and stakeholders.

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SDAC - MNAs update

MESC 17th September 2019

Rafael Gómez-Elvira GonzálezCo-chair of the SDAC JSC

Overall planDec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2020

JSC

Lega

l:DA

OA

ICG

OPS

COM

PCR

CWE

Nor

dic

Hans

aPo

lish

Balti

cIB

WT

NRA

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05

29 13 27

MRC TestTesting plan

Procedures adaptationMRC Test

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11 05 05

Into force

Scanned signature

28/03

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Approval proc.17 08

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Testing plan

Procedures adaptation

COBRAcable

Elia ext. Cons.

Italian BZs ElecLinkNEMOLink

31 COBRAcable

CWE MNA

Nordic MNA

Two additional cables FR-GB

Harmon. Min max price

Hard Brexit16

Implementation plan

Procedures adaptation

Testing

System adaptation

Procedures adaptation Regional Testing

System adaptation

Procedures adaptationImpact

assessment

10/20

02/07

Nov

Nov

Approval SEC methodologies

Monitoring of approved SEC and CCM

Go-Live windowProposed Go-Live mechanism: MNA project by MNA project, SEC implementation

TSOs: amended proposal for SEC methodologies

Transition into new governance

Legend:

CallMeeting ProcessDDDD

CompletedDD

Partially completedDD

MissedDD

DD Go-Live

Contingency

Impact assessment System adaptation

Procedures adaptation

Testing

Impact assessment

?System adaptation

Procedures adaptation

?System adaptation

Procedures adaptationTesting

09

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27Meeting with EC and NRAs

on MNAs