1. NWE Day-Ahead Price Coupling
Joint Presentation from TSOs and PXs from the NWE Region
NWE Day-Ahead Price Coupling
NWE TSO information meeting June 27, 2012
Brussels

2. Project Scope and Exclusions
The scope of this project
The day-ahead market coupling in the NWE region in terms of a single price coupling as described in the APCA.
Full exclusions
Intraday price coupling (handled in a separate project)
Exclusions but with dependencies to NWE project
All adaptations to individual systems of the parties
the individual responsibility of the parties, not a project responsibility
Technical and functional acceptance testing of the adaptations in the individual systems of the parties
Extensions
Without being responsible for it, the project should make sure the enduring solution may allow for:
Price Coupling on SwePol via NPS
NPSs work with the local TSOs on establishing day-ahead markets in Latvia and Lithuania
The NWE solution should be extendible to other European countries/regions but the extensions itself are not in scope of this project.

3. Contractual framework (1)
The NWE APCA:
establishes the rights and obligations agreed upon between the Parties regarding their cooperation in respect of NWE Price Coupling during the Design Phase and the Implementation Phase, in particular as regards design, development, project governance and organisation, task division, deliverables, planning, Budget, funding, cost sharing and cost recovery;
aims to set forth the key principles of the cooperation between the Parties in respect of the operation of NWE Price Coupling during the Operational Phase, e.g. as regards roles and responsibilities in respect of operations, governance and decision making and the remuneration and payment of fees for the NWE Price Coupling services provided by the PXs.

4. Contractual framework (2)
general principles of cooperation
The solution and mechanisms put in place should be easily extendable and transparent, with the overall aim to facilitate a wider price coupling in the context of the integration of the European electricity markets;
The NWE Price Coupling shall be designed and developed taking into account the technical and ICT solutions adopted by the PXs in the context of the PCR Solution;
The following principles apply: best effort undertakings (unless explicitly otherwise specified in writing), active cooperation, good faith, transparent and loyal cooperation, etc.

5. Contractual framework (3)
The governance structure is the following :
(a) The NWE high level meeting (the “NWE HLM”) comprising the Parties’ chief executive officers or any other representative of a Party at executive level with all necessary power and authority to take decisions binding upon their respective entity concerning any aspect of the cooperation, which shall, only as a last resort, deal with questions where the NWE JSC cannot come to a decision;
(b) The NWE JSC comprising representatives (and substitutes) of the Parties with all necessary power and authority to take decisions binding upon their respective entity as far as the performance and implementation of this NWE APCA is concerned. The NWE JSC will, inter alia, decide on key issues of the NWE Price Coupling Design Phase and Implementation Phase
Decisions of the NWE HLM and NWE JSC are taken by unanimous consent of the respective members, and they are binding upon the Parties.

6. Contractual framework (4)
Algorithm AND Intellectual property rights
The Algorithm will comprise the PCR Algorithm developed jointly by the PCR Parties based on the internal PCR project selection of COSMOS in CWE as of June 2011 as starting point to be used for developing of that PCR Algorithm. The Algorithm shall comply with the requirements set forth in Annex 5 which may be amended by the NWE JSC. The TSOs shall validate the Algorithm against these criteria within the timeframes agreed upon by the Parties.
All subset of Parties (TSOs on the one hand, PXs on the other hand) shall remain the owners of their respective IPRs on their components, unless stated otherwise in writing.

7. Governance The NWE high level meeting (the “NWE HLM”) The NWE JSC
the Parties’ chief executive officers or any other representative of a Party at executive level.
Should have all necessary power and authority to take binding decisions
Only as a last resort, primary responsibility is with JSC
The NWE JSC
Representatives (and substitutes) of the Parties with all necessary power and authority to take decisions binding upon their respective entity as far as the performance and implementation of this NWE APCA is concerned.
Decisions based on consensus
Key aspects covered by the JSC;
Key issues of the NWE Price Coupling Design Phase and Implementation Phase
the validation of the different steps in the Design Phase and the Implementation Phase,
the preparation of the content of the discussions related to the NWE Price Coupling Design Phase and Implementation Phase with ACER, associations (such as ENTSO-E or EUROPEX), institutions and public bodies (European Commission, national governmental bodies, NRAs
Approval of, or amendment to, the budget for the Design Phase and the Implementation Phase of the NWE Price Coupling;
Entry of new Parties.

8. 1) NWE High Level Architecture
1) ATC and/or FB parameter calculation
2) Network constraints
3) Submission
Calculate Results:
1) Prices
2) Net positions 3) Flows*
*if required
Validate Results
Calculate remaining Flows*
Shipping
1) Cross PX Clearing and settlement
2) Cross Zonal Nominations
Congestion Revenue
Distribution
Receive orders
Order book aggregation
submission
Pre-coupling
Coupling
Post Coupling 8

9. 2) NWE HLA: mapping overview and generic systems
TSO Back-end systems
TSO Pre-coupling systems
PMB
TSO post coupling systems
PX post coupling systems
(Cross) PXs clearing and settlement systems
CCP/CH systems
Congestion Revenue
Distribution systems
PX IT systems
Pre-coupling
Coupling
Post Coupling 9

10. Project Organisation

11. Brief: Technical Working Group
Organization
Resources
The Working Group (WG) leader and the Task Force (TF) leaders form together the Technical Working Group
This Working Group will be setup with a ‘reading group’ with the Joint Steering Committee members, the WG leader Legal and one representative of each party. This reading group will be in copy of all communication of this WG and makes sure that the necessary feedback can be provided.
The WG will present its results and the results of the Task forces at each Joint Steering Committee meeting.
WG Leader: Corné Meeuwis
TF Leaders: 5
Procedures
Testing
Capacity
Algorithm
Shipping
Reading members: All parties
Responsibilities
Work (estimate)
High level architecture solution NWE
Inventory interfaces / data flows between TSOs & PXs
Fall back solution
Go Live plan and support
Duration: entire project until go live
Common Costs:
Deliverables
Deadlines
Reporting of planning / progress / status to the Joint Steering Committee
High level architecture solution NWE
Design of overall joint business processes, consistently with TSOs business processes and PXs business processes
Inventory interfaces / data flows between TSOs & PXs
Fall back solution
Go Live plan and support …. 11

12. Brief: Procedures Task Force
Organization
Resources
One representative of each NWE party. A party may also be representing another party. Representatives should have the necessary mandate to negotiate and agree.
This task force will be setup with a ‘reading group’ with one representative of each party. This reading group will be in copy of all communication of this task force and makes sure that the representative in the task force has the necessary internal feedback and backup to participate in the task force.
TF Leader: TBD
TF Staffing: +4 specialists
Reading members: All parties
Responsibilities
Work (estimate)
Design joint operational procedures ready for testing, based on all current procedures (CWE, Nordic, ITVC) and PCR procedures.
Design the procedures for coupling the UK
Duration: 4-6 weeks
Common Costs: md
Deliverables
Deadlines
Operational procedures for all parties and processes related to the NWE Price Coupling
Reporting of planning / progress / status to Technical Workgroup
September 2012 12

13. Brief: Testing Task Force
Organization
Resources
This Task Force might be the successor of the Procedures Task Force
One representative of each NWE party. A party may also be representing another party. Representatives should have the necessary mandate to negotiate and agree.
This task force will be setup with a ‘reading group’ with one representative of each party. This reading group will be in copy of all communication of this task force and makes sure that the representative in the task force has the necessary internal feedback and backup to participate in the task force.
TF Leader: Arthur Wetzel
TF Staffing: +2 specialists (may be different persons for technical and procedural)
Reading members: All parties
Responsibilities
Work (estimate)
Design and execute technical and procedural end-to-end tests
Duration:
design 1 month;
execution 2 months (techn.) +2 months (proc.)
Common Costs:
design 28 md
execution 42 md (test coordinator only)
Deliverables
Deadlines
Test scripts
Test planning
Individual parties
End to end testing
Test results and validation of tests
Reporting of planning / progress / status to Technical Workgroup
December 2012 13

14. Brief: Capacity Task Force
Organization
Resources
One representative of each NWE party. A party may also be representing another party. Representatives should have the necessary mandate to negotiate and agree.
This task force will be setup with a ‘reading group’ with one representative of each party. This reading group will be in copy of all communication of this task force and makes sure that the representative in the task force has the necessary internal feedback and backup to participate in the task force.
TF Leader: combined with Shipping TF
TF Staffing: +1 specialist working together with local resources
Reading members: All parties
Responsibilities
Work (estimate)
Design and implement capacity calculation and submission, as well as result validation if applicable
Specify rules and implement necessary changes for bilateral exchange and flow calculation (All areas impacted)
Assumed for UK only – Nordic, CWE, ITVC only in case of change against current arrangements
Duration: 4-12 weeks
Common Costs: md (depending on chosen solution)
Deliverables
Deadlines
Design and implementation of capacity submission processes, as well as result validation if applicable
Specification of rules and implementation of necessary changes for bilateral exchange and flow calculation (All areas impacted)
Reporting of planning / progress / status to Technical Workgroup …. 14

15. Brief: Algorithm Task Force
Organization
Resources
One representative of each NWE party. A party may also be representing another party. Representatives should have the necessary mandate to negotiate and agree.
This task force will be setup with a ‘reading group’ with one representative of each party. This reading group will be in copy of all communication of this task force and makes sure that the representative in the task force has the necessary internal feedback and backup to participate in the task force.
TF Leader: Tore Granli
TF Staffing: +2-3 specialists
Reading members: All parties
Responsibilities
Work (estimate)
Validation of the implementation of TSO requirements in respect to the algorithm.
Validation of the implementation of “optional” PX requirements in respect to the algorithm.
Duration: 6-8 weeks
Common Costs: md
Deliverables
Deadlines
Consistency check NWE requirements vs PCR
Implementation of the Algorithm
Reporting of planning / progress / status to Technical Workgroup
December 2012 15

16. Brief: Shipping Task Force
Organization
Resources
One representative of each NWE party. A party may also be representing another party. Representatives should have the necessary mandate to negotiate and agree.
This task force will be setup with a ‘reading group’ with one representative of each party. This reading group will be in copy of all communication of this task force and makes sure that the representative in the task force has the necessary internal feedback and backup to participate in the task force.
The Task Force will in principle re-use the current arrangements as much as possible and only focus on possible
TF Leader:
GB: Xavier Pinchaux
ITVC: René Müller
TF Staffing: +4 specialists
Overall
Reading members: All parties
Responsibilities
Work (estimate)
Design and/or describe (depending on whether a working solution is already in place) the Shipping arrangements for Nordic, CWE, ITVC and UK shipping,
Coordinate where necessary the implementation of new arrangements
Note that we only expect the Baltic, Inter CWE/Nordic and UK solutions to be designed, and the current Nordic and CWE solutions to stay in place.
Design and implement data flows, incl. XB nominations
Shipping
Duration: 2-3 months
Common Costs: 75 md
Data flows
Duration: depends on the specific solution
Common Costs: depends on the specific solution
Deliverables
Deadlines
Contractual frame work for Shipping
Design and implementation of the capacity submission processes, as well as result validation if applicable.
Specification of rules and implementation of necessary changes for bilateral exchange and flow calculation.
Design of solution with data flows for Nordic-CWE and GB-CWE shipping. the Current Nordic and CWE solutions are expected to stay in place
Congestion income sharing processes
Reporting of planning / progress / status to Technical Workgroup
Design: September 2012
Implementation: December 2012 16

17. Brief: Legal, Regulatory and Markets Working Group
Organization
Resources
One representative of each NWE party. A party may also be representing another party. Representatives should have the necessary mandate to negotiate and agree.
Participation in this task force will not be a common cost (participation of all parties is anticipated).
WG Leader: Tjitske Kramer
TF Leaders: 4
Ext. Comm. & Markets
Legal & Contracts
Regulatory
Shipping Financial
Participants of the other parties (if not represented already as task force leader)
Responsibilities
Work (estimate)
Review of deliverables from the Communication and Market TF, Shipping Financial TF
Responsible to handle questions / issues coming from the underlying Task Forces.
Organization and participation in the work group meetings and calls.
Reporting to the NWE JSC according to the project standards.
Duration: 9 months
PX Common Costs
Deliverables
Deadlines
Reporting of planning / progress / status of the underlying TFs to JSC 17

18. Brief: External Communication & Markets Task Force
Organization
Resources
Limited number of representatives, max. 3 to 4 persons next to the Task Force Leader.
All deliverables of this task force will be reviewed in the LRM where all parties will be present / represented.
Drafting of deliverables will be divided amongst the representatives.
Participation in this task force can be classified as a common cost (work performed by limited group of people to the benefit of all).
TF Leader: TBD
TF Staffing: +3-4 specialists
Reading members: none
Responsibilities
Work (estimate)
Build communication plan
Organize a member consultation if requested by the project
Set up and keep up to date a FAQ.
Manage press contacts and events in close coordination with the JSC
Educate market parties on working and economic value of NWE price coupling through workshop(s) and ‘member updates’.
Organize the communication to members for member testing of the NWE implementation.
Organization and participation in the task force meetings and calls.
Reporting to the LRM Workgroup according to the project standards.
Duration: 9 months
Common Costs : 60 md
Deliverables
Deadlines
Communication Plan
Members workshop(s)
Member Updates – information document to update members on the NWE implementation and possible impact on members.
Press release and text proposals for other external communication
Reporting of planning / progress / status to LRM Workgroup
TBD 18

19. Brief: Legal and Contracts Task Force
Organization
Resources
One representative of each NWE party. A party may also be representing another party. Representatives should have the necessary mandate to negotiate and agree.
This task force will be setup with a ‘reading group’ with one representative of each party. This reading group will be in copy of all communication of this task force and makes sure that the representative in the task force has the necessary internal feedback and backup to participate in the task force.
Participation in this task force will not be a common cost (participation of all parties is anticipated).
Drafting of (parts) of contracts will be divided over the task force members.
Contracts are only negotiated in the task force ( i.e. will not be re-discussed on LRM workgroup level) and will be approved by the JSC.
TF Leader: Tjitske Kramer
TF Staffing: All parties
Reading members: TBD
Responsibilities
Work (estimate)
Organization, coordination, drafting and negotiations of the all parties contracts and the attachments in accordance with the planning and the budget of the NWE project. This includes all governance arrangements between the parties or subset of parties for the operational phase of NWE market coupling.
Follow up (and if necessary participation) of the contracts of subsets of parties.
Organization and participation (or being represented) in the task force meetings and calls.
Reporting to the LRM Workgroup according to the project standards.
Duration: 8 months
Common Cost: 50 md (leader only) for the contracts part. Legal work resulting from the shipping design, depends on the specific solution.
Deliverables
Deadlines
NWE framework agreement for the Operations of NWE including attachments
Other contracts where applicable (eg. Shipping, NDA, etc.) including their attachments
Planning for contracts delivery
Progress / status report to LRM Workgroup
TBD 19

20. Brief: Regulatory Task Force
Organization
Resources
One representative of each NWE party. A party may also be represented by another party. Task force representatives must have the necessary mandate to negotiate and agree.
Participation in this task force will not be a common cost (participation of all parties is anticipated), except for the task force leader.
This task force will be setup with a ‘reading group’ with one representative of each party. This reading group will be in copy of all communication of this task force and makes sure that the representative in the task force has the necessary internal feedback and backup to participate in the task force.
Drafting of material which needs to be produced by this task force will be divided over the task force members.
Material to be prepared and agreed for regulatory purposes will only be negotiated in the task force ( i.e. will not be re- discussed on LRM workgroup level) and will be approved by the JSC.
TF Leader: TBD
TF Staffing: All parties
Reading members: TBD
Responsibilities
Work (estimate)
Organization and coordination of the documents that need to be delivered to the regulators. The task force will get most of the material delivered from other task forces or workgroups but is responsible to put the information in the right format and right formulation for regulatory purposes.
Organization of workshops/ discussions with the regulators to facilitate their decision making process, if necessary.
Organization and participation (or being represented) in the task force meetings and calls.
Reporting to the LRM Workgroup according to the project standards.
On request participation (task force leader) in the JSC.
Follow up on regulatory approvals necessary per country.
Duration: 9 months
Common Cost 75 md (leader only)
Deliverables
Deadlines
Regulatory progress reports
Project status reporting in regulatory meetings
Documents on specific topics on request of the regulators
Reporting of planning / progress / status to LRM Workgroup
Final regulatory approvals for implementing NWE before the launch
TBD 20

21. Brief: Shipping Financial Task Force
Organization
Resources
One representative of each NWE party. A party may also be represented by another party. Representatives should have the necessary mandate to negotiate and agree.
Parties can be exempted of participation if current implementation will not change.
PXs/CCPs need to be present for cross PX clearing arrangements.
Participation in this task force will can be classified as a common cost.
TF Leader: TBD
TF Staffing: TBD
Responsibilities
Work (estimate)
Financial work that springs from the shipping design for each party
Design and implementation of financial flows per party, incl. settlement, congestion rent distribution, collateral arrangement
Work out the Cross PX Clearing arrangements (VAT, customs, etc.) where applicable
Duration: depends on the specific solution.
Common Cost: depends on the specific solution.
Deliverables
Deadlines
Description of the clearing and settlement process per PX / CCP.
Description of the cross PX clearing elements and arrangements which need to be included in the contracts.
Reporting of planning / progress / status to LRM Workgroup
TBD 21

22. Global Planning

23. Communication
NWE Parties will create a public document to be published on their websites. Subtract from APCA and PID
Ready within the next few weeks
3 regulatory reports planned (first report in July)
Stakeholders meetings planned:
1. late September / early October
Information regarding status / progress / impact
2. mid December

24. Possible subjects for the Stakeholder meeting – end of September 2012
High level functional architecture and business processes of the NWE Price Coupling solution
- Overview
- What remains the same, what will change
- Where do we foresee changes for the market participants
The PCR Algorithm as part of the NWE solution
Requirements and functionalities
Changes in comparison with the current situation
NWE implementation plan
- Current status
- Test planning until go-live
Further information to the stakeholders
- Next Stakeholder meeting (probably December 2012)
- Member testing
- Further stakeholder information 24