1. Allocation of capacities

2. 2 Allocation of Capacities Determination of capacities Calculation of pipeline capacities is based on the physical laws governing transmission -Mathematical function of pipeline design parameters: distance, diameter, roughness of steel, pressure differentials etc -Pressure differentials themselves are determined by offtakes from and deliveries into the system: Offtakes mainly driven by temperature Deliveries mainly driven by commercial decisions of shippers Conclusion: Capacity is subject to system dynamics and has restricted information value

3. 3 Different capacity models - Notional path model - Guarantee of capacity on notional path (A  B) - No operational congestion management - Importance of transits through the system - Applied in most countries in Continental Europe - Entry/exit model - Capacity at specific entry/exit points - Disconnection of entry and exit - Applied in the UK (pool based, i.e. nationwide hub) and with restrictions in Italy - Need for operational congestion management - Limited transits - Large number of end users supplied by one TSO (UK) Allocation of Capacities

4. 4 = commercial flows = physical flows

5. 5 Allocation of Capacity Allocation of capacities - Principle Non-discrimination and transparency - Notional path model First come - first served Priorities e.g. for public service subject to national legislation Allocation process often standardised and subject to defined internal rules and procedures Entry/exit model Auction or first come first served In UK auctioning of entry capacity subject to rules approved by Ofgem

6. 6 auctions first come-first served Mix or not decided Capacity Allocation

7. 7 Allocation of Capacity Procedures for the allocation of capacities Non-discrimination - Notional path model First come first served In some systems priorities e.g. for public service Allocation process often standardised and subject to defined internal rules and procedures - Entry/exit model Auction or first come first served In UK auctioning of entry capacity subject to rules to be approved by Ofgem

8. 8 Allocation of Capacity (Italy) Initial capacity allocation 1 Allocation to existing Long Term Contracts 2Pro Rata Allocation to new contracts 3Shipper’s Confirmation and re-allocation 4Final contractual quantities “First Come-First Served” for residual capacities

9. 9 Allocation of Capacity (Italy) Allocation of residual capacities (1) -Publication of residual capacity for the booking in the current Thermal Year in the first ten days of every month. -shippers send demand by registered mail within the first day of the previous month of the starting service for annual and or seasonal interruptible capacities including useful information -classification list on the basis of sending date of the registered letters

10. 10 Allocation of Capacity (Italy) Allocation of residual capacities (2) -assignment of such capacities within the first 10 days of the month and information of shippers by fax Thermal Year in the first ten days of every month. -shippers send demand by registered mail within the first day of the previous month of the starting service for annual and or seasonal interruptible capacities including useful information -classification list on the basis of sending date of the registered letters -assignment of such capacities within the first 10 days of the month and information of shippers by fax

11. 11 Allocation of Capacity (UK) Auctioning Process for Entry Capacity Monthly firm capacity is allocated by pay-as-bid auctions Additional firm and interruptible capacity is allocated on a daily basis using pay-as-bid-auctions Congestion Management if Transco has oversold capacity or for other reasons, i.e. cancel interruptible capacity or buy back firm capacity

12. 12 monthly firm add. firm interruptible interrupted and buy back interrupted actual flow atd. expected flow for d1 at d-1 d 1 d 2d 3 NTS Entry Capacity Allocation add. firm

13. 13 Allocation of Capacity (UK) Allocation of Exit Capacity NTS Exit Capacity is primarily allocated to shippers by reference to the levels of registered supply point capacity Shipper’s capacity levels are adjusted automatically if shippers gain or lose customers in the LDZ

14. 14 Allocation of Capacity (Netherlands) Transport protocol (1) Step 1:Shipper makes an application for transport conditions at Transport Services Step 2:Transport Services ask for information about the availability of the transport capacity requested from the Asset Management unit Step 3:The Asset Management unit determines whether the transport capacity requested is available Step 4:The Asset Management unit answers Transport Services concerning the availability of the transport capacity

15. 15 Allocation of Capacity (Netherlands) Transport protocol (2) Step 5:Transport Services draws up the transport condi- tions for the shipper Step 6:The shipper orders the transport capacity Step 7:Transport Services the order of the transport capacity to the Asset Management unit Step 8:The Asset Management unit determines whether the transport capacity requested is available Step 9:The Asset Management unit answers Transport Services concerning the availability of the transport capacity

16. 16 Allocation of Capacity (Netherlands) Transport protocol (3) Step 10:Transport Services confirms the order of the transport capacity to the shipper and informs about the allocation rules Step 11:Shippers at the relevant entry- and exit-points are informed about the change in the allocation process

17. receipt examination reply max. 12 working days negotiations Gas Transport Management Dispatching capacity check implementation Invoicing implementation possible contract signed Capacity Allocation in Germany /Ruhrgas

18. 18 Allocation of Capacity (Germany / Ruhrgas 1) General principle: First come –first served If more than one application at the same time and capacity is scarce: information of all applicants about -capacity available -capacity requested -number of applicants and invitation to applicants to give a binding offer about the capacity to be committed up to a certain date

19. 19 Allocation of Capacity (Germany / Ruhrgas 2) If available capacity after binding offers is sufficient capacity is allocated to the applicants according to their binding offers If available capacity after binding offers is insufficient capacity is allocated on a pro rata basis to the applicants to avoid systematic overbooking.