1. 1 TITRE Update on approval processes for NWE price coupling NWE IG on DA and ID Copenhagen, 9 May 2012

2. 2 Main elements of the approval processes. The algorithm as TSOs’ new/changed method of day-ahead capacity allocation and congestion management. It will be approved on national level by some NRAs.. TSOs’ overall requirements: » TSOs define requirements to handle future EPC » No explicit approval of the list of requirements. NRAs (algorithm approval TF) check if requirements are sensible and comprehensive.. New requirements which TSOs propose to be used in specific countries/regions/borders shall be subject to national approval after public consultation. » Concerns only requirements which are currently not implemented in the respective countries/regions/borders. » For example, requirements which are implemented in COSMOS and in use in CWE already today shall not be subject to approval by CWE NRAs again. » For example, the inclusion of DC losses on in the algorithm on a specific cable » Magnitude of requirements (changes) determines need for approval. National coordination necessary. Algorithm approval – relevant elements

3. Algorithm approval – elements Elements to be approval 1) The algorithm in itself (where necessary) 2) The new requirements the TSO imposes, compared to the current (market coupling) setup this should be done in one approval 3) Auction rules / other approvals?  if crucial changes are made. TSO-NRA coordination on national level.  be aware of national specificities  unclear what changes are made, more information necessary

4. Algorithm approval – process Proposal of process. PXs/TSOs to provide a more detailed timeline for the development of NWE price coupling and algorithm. Details of different phases, Stakeholder involvement, decision on (national/regional) requirements used.. Input with more details on the PCR algorithm. NRA Task Force assessment on the algorithm summer 2012. National preparation (TSO-NRA) of the respective approval process.. Aim to facilitate a fast and coordinated approval in every country

5. 5 Thank you for your attention Thank you for your attention! www.acer.europa.eu

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7. 7 Algorithm approval process in NWE countries CountryFormal approval? Documents needed BEOnly if changes to capacity allocation mechanism - description of the capacity allocation methods and principles used (if changing compared to CWE MC) - assurance that the algorithm follows the principles set by legislation DENoN.A. DKYes- Description of new method on capacity allocation and congestion management - Background documents with (some) details of the algorithm - Feedback from Stakeholder involvement FINoN.A. FRYes- description of the functioning of the algorithm - detailed description of the market coupling functioning, the costs and the cost sharing principle, the main contracts between PXs and TSOs and information regarding the impact on capacity calculation Algorithm approval - overview

8. 8 Algorithm approval process in NWE countries CountryFormal approval? Documents needed GB*To be agreed Interconnector license holder to submit all relevant information to Ofgem for approval LUNoN.A. NLYes**Documents that provide information on the general requirements for the algorithm NONo / Yes*** Impact assessments and market participants’ opinions submitted through the Nord Pool Spot Customer Advisory Board SEYesAll documents that describes the algorithm including background material and tests of the algorithm that has been conducted Algorithm approval – overview II * Indicative only ** Depending on transposition of the Third Package into national law *** Only in case of considerable amendments related to the current algorithm

9. 9 Algorithm approval process in non-NWE countries CountryFormal approval? Documents needed PLNoN.A. ESYesdescription of the algorithm ITNoN.A. Algorithm approval – overview III