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European Workgroup 1st May 2014

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Presentation on theme: "European Workgroup 1st May 2014"— Presentation transcript:

1 European Workgroup 1st May 2014

2 1. General Update

3 Code Status Update Code Current Status Implementation date
Congestion Management (CMP) Implemented 1st October 2013 (Fixed) Capacity Allocation Mechanism (CAM) CAM approved for EU wide implementation at relevant EU IPs. 1st November 2015 (Fixed) Gas Balancing (BAL) BAL approved for EU wide implementation 26th March 2014 (Commission Regulation (EU) No 312/2014 establishing a Network Code on Gas Balancing of Transmission Networks.) 1st Oct 2015 (subject to NRA approval for additional 12 months) (Fixed) Interoperability & Data Exchange (INT) In comitology. Comitology meetings postponed from 28th April and 11th July 2014, new dates TBC. Q (Estimated) Tariffs Under development. Code to be submitted 31st December 2014. Estimated earliest mid January Applicable from October 2017. Incremental Capacity Under development. Incremental Capacity to be introduced via combination of new articles in CAM Network Code and via Tariffs Network Code. Code amendment to be submitted 31st December 2014. Applicable from March 2017

4 Gas Codes Timeline

5 Road Map Notes: 1) Short term UIOLI may not be required for NTS
2) Long term capacity auctions may need to be delivered in conjunction with short term auctions

6 2. EU Code Updates

7 Gas allocations at IPs under the EU Interoperability Code

8 Background – the current GB allocations regime
The GB commercial regime has always kept ‘transportation’ and ‘energy’ responsibilities separate Shippers are allocated gas according to measured quantities Shippers use allocation agents to administer allocations on their behalf based on measured quantities - and to send allocation statements to NG 8

9 Background – Interoperability Code provisions and stakeholder views
TSOs must agree a nomination matching rule/process and for this to be included in the Interconnection Agreement (IA) ‘allocate as nominate with Operational Balancing Account (OBA)’ allocation rule envisaged, and for the allocation rule to be included in the IA* OBA favoured by IUK, BBL and supported by Gaslink – NG working with adjacent TSOs to facilitate OBAs (retaining NG’s residual balancing role) *for any IP, an OBA will be used if at least 1 TSO wants this arrangement. 9

10 Operational Balancing Account
What is an OBA? Nominates 4 Units Operational Balancing Account = (4 – 4.01) = 0.01 4.01 Units steered Across the IP Shipper TSO Allocates 4 Units GB current regime: 4.01 units would be allocated to shippers and scheduling charges apply for the 0.01 ‘steering error’ OBA regime: 0.01 is allocated to the OBA which is corrected by a subsequent physical steer of flow between TSOs

11 OBA key issues and implications
Size of steering tolerance Interactions with other aspects of the GB regime Steering tolerance breaches must be minimised in order to comply with the Interoperability Code An option in relation to breaches in steering tolerance is reversion to allocate as measured 11

12 National Grid NTS’ proposed approach (1)
An allocate as nominate regime appears to remove the need for an agent to administer allocations on shippers’ behalf …therefore, NG’s proposed approach is to perform matching / allocation process directly with adjacent TSO, as envisaged by the Code (No Agents) Shippers could continue to be able to nominate agents for other communications under UNC TPD V 12

13 National Grid NTS’ proposed approach (2)
‘De-designate’ IP allocation agents in order to enable direct TSO-TSO arrangements under ‘allocate as nominate with OBA’ National Grid NTS to liaise with Ofgem before issuing Notice to Users of intent to de-designate, with briefing note - via Joint Office National Grid NTS to ensure Notice period is sufficient (issued by Sept 2014) to enable changes by Users and Agents to their own agreements 13

14 Indicative timeline Task Timeline
Negotiate terms with adjacent TSOs to facilitate OBAs Qtr 2 – Qtr EU Workgroup discussions May – June 2014 UNC Mod raised Qtr UNC Mod development Qtr – early Qtr (subject to revised comitology dates) Liaison with Ofgem re IP allocation agents Notification of de-designation of allocation agents and briefing note sent to Users via Joint Office 14

15 Summary and next steps National Grid NTS considers that an OBA allocation regime will be required at all three IPs Changes will be required both to the Interconnection Agreements and UNC We propose to engage in parallel with our adjacent TSOs and GB shippers to agree the OBA design Interactions with other aspects of the GB regime will also be explored (e.g. constraint management, meter reconciliation) Progress update to be shared at the June European Workgroup meeting 15

16 Tariff Code & Incremental Capacity Amendment

17 European Network Code Development Process
ENTSO EU Commission ACER (ERGEG/CEER) ENTSO Work programme Agency Commission Stakeholder Consultation Stakeholder workshops Framework guidelines Stakeholder Consultation & workshops We are here Preparation of draft Network Code Commission Agency Direct link from Commission to comitology: Commission can bypass ENTSOs and ACER if it wishes e.g. gas congestion management principles Consultation Commission DECC Comitology Legally binding Network Code GB Code Change process 17

18 EU Tariff Code update ENTSOG Stakeholder Joints Working Sessions now complete ENTSOG now developing draft Code based on ACER FG and taking account of stakeholder feedback received during SJWS process Code based on published Business Rules Draft TAR NC due for approval within ENTSOG’s internal governance process by mid-May Draft Code and supporting document published end May Public Consultation on the draft TAR NC will take place from the end of May to the end of July Next Stakeholder Workshop – 25th June

19 Structure of the Draft TAR NC
Recitals General Provisions Chapter 1 Subject matter Scope Definitions Cost Allocation Methodologies Chapter 2 Link to transmission revenue Inputs Entry/exit split Selection and approval process/criteria Cost allocation methodologies Secondary Adjustments Cost allocation test Storage 19 19

20 Structure of the Draft TAR NC
Publication Requirements Chapter 3 Aims of information publication What to publish How to publish Publication of information for multiple TSOs Tariff setting year Publication notice period Reserve Prices Chapter 4 Firm standard capacity product pricing (multipliers and seasonal factors) Interruptible capacity pricing (uni- and bi-directional interruptible capacity) Revenue Reconciliation Chapter 5 Aims of revenue reconciliation Under/over revenue recovery Regulatory account Reconciliation of the regulatory account 20 20

21 Structure of the Draft TAR NC
CAM Related Topics Chapter 6 VIP pricing Bundles capacity pricing Payable Price Incremental and New Capacity Chapter 7 Publication requirements Economic test Determination of the price Final and Transitional Provisions Chapter 8 Mitigating Measures Entry into force 21 21

22 EU Tariff Code update - issues
Fixed Price vs Floating price at IPs ACER clearly states only Floating is allowed (i.e. the price paid at time of use will not be the same as price allocated in auction) Strong shipper feedback to retain option of allowing fixed price – especially for incremental capacity. Initial Draft Code from ENTSOG likely to allow both Fixed & Floating Shorthaul at IPs at risk due to loss of commodity charge at IPs NG working with ENTSOG to preserve this product Mitigation measures: shippers pushing for one-off reset of long-term capacity contracts when Code comes into effect (i.e. right to cancel contracts due to application of different pricing methodology) NG has requested ENTSOG legal team to see if Tariff Code can legally include provisions to allow this option. Standardisation of Gas Tariff Year (1 Jan vs 1 Oct) problems for GB if 1 Jan chosen (would create price volatility) For further information, please contact Colin Hamilton )

23 EU Incremental Amendment update
Incremental Amendment to CAM Code will deliver: A standardised way for market participants to flag appetite for incremental /new capacity A standardised process to ensure a minimal level of cross border TSO/NRA coordination A standardised process to establish economic viability of an incremental/new capacity project with local input parameters An integrated offer of incremental and existing capacity via CAM NC auction process Principles for Open Season Procedures in case auctions cannot be used Possibilities to adjust tariff or depreciation rate in case economic viability cannot be established in existing framework

24 EU Incremental Amendment update
Incremental Amendment being develop together with Tariff Code, thus: ENTSOG Stakeholder Joints Working Sessions now complete ENTSOG now developing draft Amendment based on ACER Guidance Document and taking account of stakeholder feedback received during SJWS process Code based on published Business Rules Draft INC Amendment due for approval within ENTSOG’s internal governance process by mid-May Public Consultation on the draft INC amendment will take place from the end of May to the end of July Next Stakeholder Workshop – 24th June For further information, please contact Colin Hamilton )

25 3. UNC Modification Plans

26 Phase 2 UNC Modifications Potential Timescales
EU Network Code Area of change Panel Submission Workgroup Development UNC Consultation Gas Balancing (BAL) Information Provision March 2014 6 Months Q SMP Buy & Sell April 2014 Nomination Process at IP’s 6 - 9 Months Q Capacity Allocation (CAM) CAM / CMP Compliant Capacity Auctions Q Q Interoperability & Data Exchange (INT) OBAs / allocations Q Interconnection Agreements/Contract Changes (facilitating Modification ) Q Data Exchange Q

27 4. Draft Modifications

28 CAM & Bacton Modifications

29 Initial Estimated Timescales CAM & Bacton UNC Modifications
raised at UNC Panel Finalise WG Report and UNC Panel Vote on Modification WG submit to development Modification Panel FMR and WG submission Development to Ofgem Draft CAM Mod shared with EU WG UNC Panel to review Modification Modification Modification WG report WG WG WG and issue to Development consultation 15 May development development 18 DEC 3 Jul 4 Sep 6 NOV EU Workgroup 1 May 20 NOV 5 Jun 7 Aug 2 Oct Consultation May 14 Jun 14 Jul 14 Aug 14 Sep 14 Oct 14 Nov 14 Dec 14 Ofgem Implementation Decision Date EU Feb 1st Nov* Workgroup *W.E.F 1st November 2015 Jan 15 Feb 15 Nov 15 CAM & Bacton Modifications 29

30 CAM UNC Modification Outline
Key features of proposal: Applicable to European Interconnection points - Bacton (IUK and BBL) and Moffat An EU set of standard capacity products for both entry and exit (yearly, quarterly, monthly, daily and within day) and cessation of Enduring Annual NTS Exit (Flat) Capacity at IPs An EU standard capacity auction calendar EU standard capacity auction designs (Ascending Clock and Uniform Price) Priority given to cross-border bundling of unsold capacity products Set aside capacity from longer term auctions for shorter term auctions at IPs Capacity originally allocated as cross-border bundled capacity can only be resold as bundled capacity on the secondary market

31 CAM UNC Modification Outline
A joint booking platform for the offer and purchase of capacity at interconnection points Charging arrangements Transitional arrangements Adapting pre-existing CMP solutions to apply to CAM products and auction processes where appropriate.

32 Bacton UNC Modification Outline
Create new points in Gemini: Bacton UKCS ASEP Bacton IP ASEP Write out to individual Shippers Ask them to decide where they want their existing Bacton rights post split to be Principle is to allocate only up to new obligated levels If aggregate requirements less than obligated, allocate in full Else second invitation – again allocate in full if below obligated level Else need to pro-rate back to obligated level (and allocate surplus to ‘other’ point) Reallocation process to run after March 2015 QSEC is allocated To be completed by September 2015 32

33 Initial Draft Timeline for Bacton Reallocation Process
Existing UNC processes RMT&TSEC and Daily auctions continue for each month Need to suspend RMT&TSEC and Daily auction for Nov at Bacton ASEP Mar 2015 QSEC auction held Need to stop Capacity Transfers at Bacton once new process begins Feb 2015 AMSEC auction held Mar 2015 QSEC auction allocated 2015 Feb Mar Apr May Jun Jul Jul Aug Sep Oct Nov New processes Write out with final reallocations, hold second process if necessary Write out with proposed reallocations, hold second process if necessary 10 days after QSEC auction is allocated Invite Users CAM implemented Inform Shippers of new ASEPs by May 2014 (if 12 months’ notice given) Inform Shippers of any new charge types or changes to invoices Second Capacity Reallocation if necessary First Capacity Reallocation 33

34 CAM & Bacton UNC Modifications - Next Steps
Request referral to a Workgroup for development Solution detail to be developed as part of workgroup Legal text will be developed and provided during the development process Better facilitates objective (g) compliance with EC Regulation Any questions? 34

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