Vienna, 24 november 2006 1 GRI SSE: work done so far 1. Assessment summary on selected...

Vienna, 24 november 2006 1

GRI SSE: work done so far

1. Assessment summary on selected transportation routes ongoing

2. Preliminary paper on hubs as regional balancing points ongoing

3. Preliminary paper on requierements to introduce a regional ongoing

OSS and E/E tariff system

4. Paper on “Long term planning on a regional level” missing

EFET welcomes the work done by regulators so far but now is time

for actual improvement on the ground


GRI SSE: one–stop-shop provider and regional entry-exit zones

One of the opportunities for better situation on the market (EFET wants

effective unbundling as soon as possible, no matter how)

Simplification of the work for traders and shippers (one counterpart)

Better overview about transit flows and investments (SSE region is facing

insufficient access to the network and in-transparent enhancement)

Ensure clear mechanism for capacity increase

EFET calls for:enhanced inter-TSO co-operation in SSE region

---> enlargement of the E/E zones, in line with European progress

harmonization of regulatory arrangements (all systems to open at same pace,

operational procedures, market-based balancing regime on regional level) and

establishment of OBAs (supporting development of liquid hubs) ---> firm deadline

for the implementation


GRI SSE: hub used as balancing point

Market based balancing more effective and positive for liberalisation than

fixed penalties

Help to increase the liquidity at the hubs in SSE and contribute to security

of supply due to more choice and offers

Allow for pooling of imbalance positions throughout bigger areas

Baumgarten and PSV (potentially) ideal mechanism for providing market

forces with a tool for network balancing

EFET seeks for developing of hubs in SSE as soon as possible Establishment of ad hoc CEGH development group (setting of timeline for

further steps and common requirements on any given hub


Boost liquidity on CEGH through:

Efficient and stable regulatory framework with respect to system access

functioning operational framework

Firmness

Balancing services

Transparency on available capacities

Transparency on prices

Availability of gas and choice of source

Tightness of bid-offer spread

Standardisation (Gas contracts EFET; others Hub)

How to have a well functioning CEGH?


Timeline – CEGH Development

Feb 07 Oct 2008Oct 07

► For Bulletin Board the decision on Market Maker (volume? spread? period? rights and responsibilities?)

► Back-up/-down services► Customer focus

OBAsphysical nomination < 1 day

lead time (now 5 days)Web based nomination

► Workshop CEGH with EFET on products

Mar 07 May 2007

► systematic offering of structured products (week ahead, month ahead) anonymous

► standardised agreements (EFETs)

► (Super-) firm market place

► CEGH takes counterpart risk and makes clearing

► International balancing via CEGH

► online intraday balancing market

► derivative trading with physical hedge/forwards

► gas exchange

► Meeting CEGH with EFET CEGH Working Group (Ressl)

Jan 2009

► Derivative trading► Regional

balancing market

Mar/Apr 07 Jan 2008

► Meeting CEGH with EFET CEGH Working Group (after 20.03)

► day ahead products► intraday products► physical nomination

< 1 day possible► web based

nomination possible

Jul 07

► Operational Market Maker

► Back up/down service

► completion of contractual specifications


… EFET view – Europe currently

V N G

E n e r g i n e t

S v e n s k aK r a f t n ä t

G T S

F l u x y s

E O N - R . T .

G R T g a ze a s t

E n a g a s

B E B

G R T g a zs o u t h

S o t e g

G a l p D E P A

E e s t i G a a s

G e o p l i n

W i n g a s

3 H - g a s z o n e sE O N -

R . T .

V N G

E n e r g i n e t

S v e n s k aK r a f t n ä t

G T S

F l u x y s

E O N - R . T .

G R T g a ze a s t

E n a g a s

B E B

G R T g a zs o u t h

S o t e g

G a l p D E P A

E e s t i G a a s

G e o p l i n

W i n g a s

3 H - g a s z o n e sE O N -

R . T .

Virtual hub (in-grid balancing point)

NBP

TTF

Huberator @Zeebrugge

Physical hub ( e.g border point)

CEGH @Baumgarten

Less liquid gas tradinglocations


European Gas market grid 2010 –allows for enhanced SoS grid

xy

The zones in detail: Zonal Spot price indicator (Hub and Gas Exchange)

0

12

4

see

3

5

Atlantic bassin LNG Spot price

LNG

LNG

LNG

Discussion: Is this possible?Zonal price differentials reflectcross-zonal interconnectivity betweenregions

Border price

Border price

Border price

Border price


Conclusion

GRI necessary intermediate step - but European market goal

Therefore need to include parts of Germany, at least the adjacent

systems to SSE, in the assessment

The introduction of legal requirements should be facts and not

discussed again in a time consuming manner

(Regional) balancing markets are key for a transparent evaluation of

the value of gas and flexibility services and boost Hub liquidity

SSE region lacks availability of gas and physical choice of supply –

authorities urged to accelerate the realisation of all projects leading to

higher choice of supply and thus security of supply, competition and

trade


Backup, not for send out


… transparent information available


… gross vs. net balancing energy


… Balancing markets cheaper than firm storage contract for TSO

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