Gas Regional Initiative North West Region - Draft Framework Guidelines Capacity Allocation Mechanisms BNetzA/CRE Pre-Comitology Meeting Bonn – 26 May 2011

2 Pre-Comitology Meeting Bonn – 26 May 2011 Introduction  CAM selected for the pilot project at the 16th Madrid Forum  Letter from the Commission received on 22 September 2009  Consultation on the draft framework guideline launched on 18 December 2009  Final version adopted on 10 June 2010  CAM context: need to improve the access to cross border points  Different allocation rules on the two sides of borders  Different types of capacity products  Domination of First Come First Served  More integration to the benefit of competition and security of supply  Letter from the Commission requesting improvements sent on 9 September 2010  Final version of the pilot framework guideline released on 10 December 2010

3 Pre-Comitology Meeting Bonn – 26 May 2011 Requests from the Commission  The Commission asked for a revision of the Framework Guideline according to Article 6(4) of Regulation 715/2009  “The draft FG does not in all aspects contribute to non discrimination, effective competition and the efficient functioning of the market”  Three months as from September 9  Requests  More harmonisation: market based mechanisms only  Clarification of technical points and contractual issues  Reduce the role of regulators  Issues to be further elaborated  “Technical” parameters reg. bundling of capacities (timing, loss of capacities, relation to existing contracts)  Auction design (reserve price, existing capacities)  Rules for firm vs interruptible capacities  Harmonisation of gas day

4 Pre-Comitology Meeting Bonn – 26 May 2011 Amendments: Role of NRAs and bundling 1.Highest possible degree of harmonisation and minimisation of the role of NRAs  The pilot FG was amended in that direction  NRAs will still have room for decision since the NC cannot cover all potential operational arrangements (Gas Regulation, Article 13(1)) 2.Bundled products  Clarification of ”virtual interconnection points”: capacity at two or more points connecting two adjacent entry-exit systems is integrated into one single capacity service  Virtual interconnection points should not lead to a reduction of capacity  Implementation within 5 years but  Sunset clause: how to organize the bundling of capacity within existing contracts by 5 years after the entry into force of the code: definition of a “default” rule

5 Pre-Comitology Meeting Bonn – 26 May “Sunset clause”  Mandatory bundling of all the technical capacity within five years for shippers  Priority to voluntary agreements  Default rule: if no agreement, TSOs are entitled to split the bundled capacity between original capacity holders proportionally to their capacity rights  Should not entitle contracting parties to cancel supply contracts  A specific impact assessment is going to be launched on the sunset clause and the default rule Amendments: Bundling and sunset clause

6 Pre-Comitology Meeting Bonn – 26 May Auctions as the standard allocation mechanism  Definition of a standard design with possible exemptions  Anonymous and online based auction procedures 5.Reserve price: decided by the FG on tariffs but reference to “regulated price”  Potential over revenues from auctions shall be affected to reducing tariffs, reduce congestions or to incentivise TSOs to maximise capacity offer  Interim period: alternative allocation procedures and duration to be decided by comitology Amendments: Auctions and reserve price

7 Pre-Comitology Meeting Bonn – 26 May 2011 Amendments: new capacity, interruptible, gas day 6. Allocation of capacity yet to be built: auctions not sufficient  Incremental capacity excluded from the scope of the pilot FG  However processes for allocating incremental capacities should be consistent with this pilot FG 7. Clarification of the rules that apply for firm and for interruptible capacity  Priority to firm capacity: interruptible shall not restrict the use of firm capacity  Auctions are the single target model for both  Procedures regarding interruptions will be standardized 8. Clarification of the need for a common gas day  Standard duration for the gas day starting at 6 CET  Further evaluation by ENTSOG left open

8 Pre-Comitology Meeting Bonn – 26 May 2011 Way forward  ACER consultation (completed)  Evaluation of comments (ongoing)  Launch of an impact assessment of the “sunset clause” and the default rule  Questions about the potential impact of the “sunset clause” and the associated default rule: analysis of the legal issues as well as the economic and strategic aspects  Study by an independent consultant sponsored by the regulators  ACER final decision on CAM (Summer 2011)  ENTSOG works in Network Code (until Feb 2012)  Assessment of Network Code by ACER (3 months)  Comitology Procedure (mid/end 2012)

9 Pre-Comitology Meeting Bonn – 26 May 2011 Thank You!