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CRE proposal on how to allocate capacityCRE proposal on how to allocate capacityaccording to the Joint Enagas, TIGF and GRTgaz investment according to the Joint Enagas, TIGF and GRTgaz investment

plansplans

ERGEG GRI South, 4th IG Meeting Madrid, September 17, 2007

Dominique JAMMEDirector, Gas Infrastructure and Networks Directorate

Commission de Regulation de l’Energie

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Introduction

• The TSOs’ joint investment plans to to 2010/2011 and 2015 include a number of large projects

• How will the capacity resulting from these projects be allocated?

• Investments that have been approved and still need to be approved call for different processes

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Contents

•Investments that have been approved

•Investments that have not been approved

•Timeline

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Guyenne phase 1

• This project will increase capacity between TIGF and GRTgaz South zones• Investment is already underway and will be completed by end 2008• Winter capacity will increase as shown below (in GWh/d) *

GRTgazS

TIGF

+15 +240

*summer capacity will also increase but is not shown in order to keep the diagram as simple as possible – the same technique is used on subsequent diagrams

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Larrau phase A and B

• This project will increase capacity between Spain and France at Larrau• Almost all investments required are on the Spanish side and have been

approved• Small investment needed on French side – likely to be approved this year• Physical winter capacities created by the project are shown below (in

GWh/d)• Capacity will become available in 2009/10

+18..5+110 TIGF

Enagas

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How to allocate capacity - process

• No approval process needed: capacity can be sold right away; this process is linked to the reduction in the number of balancing zones in France

• In France, process used is called an “Open Subscription Period”

• OSP will be used to market Guyenne 1 capacity• We propose that OSP also be used for Larrau A and B

•Joint OSP by Enagas/TIGF based on joint memorandum•Two bundled entry/exit products in Spanish and French direction•Bids capped at common Enagas/ TIGF capacity value •Pro-rata mechanism in case demand >available capacity

Publication of information memorandum

Open subscription period: all bids considered

simultaneous

Capacity allocationand signature of

contracts

Residual capacity sold on FCFS basis

t=0

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How to allocate capacity - timing

• Guyenne 1 capacity must be marketed in December 2007•Already announced in CRE consultation for the 2009 tariff•Capacity must be allocated well ahead of start of 2009 new access regime

• Larrau A/B OSP also in December 2007?•Would help shippers book capacity all the way from Spain to GRTgaz South •But OSP will require a lot of preparation•Guyenne and Larrau products are different•Guyenne 1 will be sold in 4-year bundles – is Spain prepared to market Larrau A/B capacity under the same form?

• We think an OSP in March April 2007 would be more realistic

• But we have nothing against December 2007 if TSOs can work quickly enough

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How to allocate capacity - planning

• If the Larrau A/B OSP is to start on time, meetings must be set up immediately to tackle key issues:

• A possible timeline is proposed in CRE’s paper• Several meetings may be necessary on each issue• Are there legislative issues to tackle?

Issue Participants

Products and allocation rules Regulators and TSOs

Timing and organisation of OSP TSOs

Interface agreements TSOs

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Contents

•Investments that have been approved

•Investments that have not been approved

•Timeline

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Guyenne phase 2 and 3

• This project will further increase capacity between TIGF and GRTGaz South• It will require investments in France that have not yet been decided by the

TSOs nor approved by CRE• The winter capacity in GWh/d created by the project is shown below• This capacity could come online in 2009/2011

GRTgazS

TIGF

+240 +65

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Larrau phase C

• This project will further increase capacity between Spain and France at Larrau

• The project will require investments in Spain that have been decided but also investments in France that have not yet been decided

• The winter capacity in GWh/d created by the project is shown below• This capacity could come online in 2011

+65+55

TIGF

Enagas

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Midcat

• This project could further increase capacity between France and Spain via•the reinforcement of the French Artère du Rhone•the creation of a new interconnector to the east of Larrau

• The investments required in Spain have been approved subject to approval of investments in France

• The investments required in France have not yet been decided• The winter capacity created by the projectis shown below (in GWh/d)• This capacity would come online in 2015

+ 230 + 180

Potentially, intermediate compressionstations and debottlenecking north of Artère du Rhone could create even more capacity (Midcat phase 2)

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How to allocate capacity - process

• To approve substantial investments like the ones mentioned in this section, CRE needs to be confident that there will be demand for the underlying infrastructure

• In France, this is done via an open season as described in the GGPOS

t=0

Consultation with users

Publication of information

memorandum

Investment approval based

on economic test

Bidding period

Capacity allocated, contracts

signed

Can be seen as a « conditional »

OSP

Main difference relative to an OSP

process

Particularly useful as product is new

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How to allocate capacity – timing and planning

• Larrau C: after the Larrau A/B OSP, which we see as a test

• Guyenne 2/3: in parallel with Larrau C so that shippers can book capacity from Spain all the way to GRTgaz South

• Long term commitments for shippers: bidding period must be at least 2-3 months

• Bidding could start in mid April 2008, with contracts signed in July 2008

• Midcat: must first see results of Larrau C + Guyenne 2/3 OS

• Midcat OS could start in 2S 2008 and be run in parallel with OS for additional GRTgazS-N capacity

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Contents

•Investments that have been approved

•Investments that have not been approved

•Timeline

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Timeline

Larrau A/B OSP Guyenne 2/3 + Larrau C OS

Oct-Nov 07 Meetings on products, allocation rules, timing, organisation, interface agreements

Dec 07 Guyenne 1 OSP Meeting on OS-specific issues

Dec 07-Feb 08 Additional meetings, preparation of info memorandum

Additional meetings, consultatio with shippers, preparation ogf info memorandum

March 08 Memorandum published, beginning of Open subscription period

Beg. April 08 Capacity allocation, contracts signed

Mid April 08 – June 08

Memorandum published, beginning of bidding period

July 08 Capacity allocation, contracts signed

• A possible timeline for the period up to July 2008 could be:

• Option. Larrau A, B, C plus Guyenne 2-3 together: April-June 2008