Transparency Workstream Gas Regional Initiative North West Region By: Cemil Altin Workstream Leader Bonn Workshops 8-9 February 2007 NRA logo

Transparency Workstream Gas Regional InitiativeNorth West Region

By: Cemil AltinWorkstream Leader

Bonn Workshops 8-9 February 2007

NRA logo

2 GRI – North West RegionBonn Workshops, 8-9 February 2007

NRA logoBackground

• North West identified transparency as a priority area of work

• The North West RCC issued a questionnaire to market participants in November. Also published on ERGEG website

• 26 Responses were received, 7 of which were confidential. Non-confidential responses on the ERGEG website

• Many respondents only commented on one or two parts of the questionnaire but a number of respondents provided responses on all areas

• A “facilitation paper” for this session has been prepared and circulated by the RCC alongside a “data appendix”


NRA logoPurpose of this session

• Discuss the responses to the questionnaire

• Discuss the key issues that arise

• Discuss what the possible next steps should be

• Important opportunity for all stakeholders to express their views


NRA logoThe questionnaire and responses (1)

• Responses received from TSOs, SSOs, shippers, traders, customers, suppliers

• Respondents were asked a number of questions relating to transparency:

• To identify the information needed along the “value chain” (e.g. transmission, storage, LNG, gas hubs etc

• Whether the use of guidelines can help improve the implementation of existing transparency requirements under the Gas Regulation

• What the best way of securing the provision and consistency of information would be

• Whether there was a need to review the less than 3 rule with regards confidentiality of information

• How to ensure that commercial confidentiality can be maintained without impinging on market transparency

• Whether there are any examples of best practice that could be identified and if so any reasons why it could not be rolled out across Europe

• TSOs were also asked to provide information on the way in which they define/measure certain information on capacity as required under the Gas Regulation


NRA logoThe questionnaire and responses (2)

Some key issues emerging:

There is a lack of effective compliance by TSOs against the transparency requirements in Regulation 1775/2005 (and also of storage operators against the GGPSSO)

The scope and nature of the data across the market could be improved

The frequency of data provision could be improved

The way in which information provided could be improved

The consistency of information provided across the market could be improved

Rule of 3 Issues were raised over its application and its use to constrain

transparency


NRA logoConsistency Questionnaire

• Consistency of information on capacity published by TSOs

• The initial analysis shows that there are some differences in the way in which information on capacity is being defined and measured

• This includes differences in the definition of maximum technical capacity – i.e. level of firm capacity or equipment specifications


NRA logoGuidelines and securing the provision and consistency

Guidelines

• A number of respondents suggested that guidelines would be useful

• They could include requirement to publish raw data

• They would could improve the consistency/harmonise transparency requirements across the Region and Europe

• A smaller number suggested there was no need for additional guidelines and arrangements should be left to the market

Securing the provision and consistency of information

• Binding commitments

• Effective unbundling

• Voluntary guidelines/arrangements

• Base level of information

• Arrangements between customer and service provider


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• Points raised by a large number of respondents suggesting ‘rule of 3’ should be reviewed:

• Where the rule reinforces the position of the dominant incumbent

• No exemptions for aggregated flows

• Publication of parties requesting non-publication and final decisions resting with the competent authority

• Enforcement should be improved

• Smaller number of respondents argued no need to review rule of 3 – it maintains appropriate balance between confidentiality and transparency

Rule of 3


NRA logoExamples of best practice

• A number of respondents indicated that the level of transparency in the UK could serve as a good example – including for Transmission, LNG storage and off-shore

• GTS in the Netherlands was also highlighted as providing good transparency


NRA logoSome themes and questions

Themes

• Market participants think greater transparency is needed to improve the way the gas market operates – compliance against existing “mechanisms” & possibly “new information”

• General feeling that less than 3 rule could be “improved”



Questions

• What should be done to improve TSO compliance with Regulation 1775/2005 ?

• What information is still needed in each area of the market ?

Gas Storage Hubs LNG Interconnector Balancing

• Who should be responsible for providing it ? And should they also be responsible for the consistency of the presentation of the information ?

• What can be done to improve the consistency of the level of data provided by each of the operators ?



• Is there a TSO or operator or country in the region whose examples of best practice in transparency could be rolled out across Europe ?

• What possible solutions are there where the application of the rule of 3 is having a detrimental affect on the market ?

• Is it sensible to develop an information template as is required under the gas balancing guidelines for all areas ?

• Are there quick wins in each area that could be targeted in the short term ?

• Is a regional one-stop-shop website viable in the medium or long term ?


NRA logoPossible ways forward?

• For discussion

• Development of Action Plans to help meet the issues raised by respondents to the questionnaires to improve the level of transparency• What/scope/frequency of information

• Timeline for making changes etc

• Potential quick wins

• Consultation with stakeholders

• Rule of 3:• Possibility publishing aggregated data

• Development of code of practice/guidelines for better application of rule of 3

• Best practice• An inventory of best practice that could be “rolled out” on a wider basis



• For discussion

Consistency of capacity information:

ERGEG undertaking work on the calculation of capacity – including the possibility of developing high level guidelines for TSOs on how capacity should be calculated

Possible Options • the information received from the questionnaire on consistency of

information could be fed into this process• Or TSOs could work together within the GRI North-West region to

develop better consistency in the definition of information that is made available to the market



• Who should do what?• RCC

• IG

• SG

• Enabler Group


NRA logoInformation Summary Tables

The following summary tables should not be seen as a wish-list that should be delivered by market operators but rather an indication or guide to the information that market participants think is necessary to help underpin an effective and efficient gas market.


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Interconnector information requested 1 Frequency Importa

nce Booked & Available entry and exit capacity over a 20 year period Monthly EssentialBooked and available interconnector entry and exit capacity over a 1 year period Daily EssentialDaily aggregate flows including flow direction D+1 Essential

Hourly flowsHourly, Real

Time Essential

Availability of unused capacity

Hourly/Daily (dependant

on Balancing Regime Essential

Constraints/Interruption of flow Real Time EssentialGas quality Real Time EssentialHistoric usage pattern - aggregated entry and exit of interconnector capacity (3 years historical period) Daily ImportantTariffs for transport capacity packages capacity prices (inc. auctions/secondary markets) EssentialTariff calculator Important


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Interconnector information requested 2 Frequenc

y Importan

ce

Capacity allocation procedure Important

Booking rules and booking status Real Time

Anti-hoarding procedures

Re-utilisation procedures Maintenance and planned outage schedule over a 3-year period ASAP EssentialImproved information relating to the level of firmness of capacity being offered. This information needs to include historical data and a statement from the TSO about the expected percent of days being interrupted Essential

An internet-based system that allows market participants to book or bid for capacity and buy/nominate any unused or unsold capacity Essential

Details of interconnector, name, owner and operator etc Essential


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Storage information requested 1 Frequenc

y Importan

ce Booked injection, withdrawal and working gas capacity over a 20 year period Monthly EssentialAvailable injection, withdrawal and working gas capacity over a 20 year period Monthly EssentialBooked injection, withdrawal and working gas capacity over a 1 year period Daily EssentialAvailable injection, withdrawal and working gas capacity over a 1-year period Daily EssentialMonth ahead forecasts of injection and withdrawal rates (or ratchets) where rate is affected by total reservoir pressures Month-1 EssentialEntry/Exit Capacity (kWh/h, m3/h) Daily End of day stock levels Day+1 EssentialInput and output flows Real Time DesirableDescription of the service provided by the storage owner or SSO, including technical characteristics and available parameters depending on the type of storage services EssentialRules for booking and using the storage and contract details


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Storage information requested 2 Frequen

cy Importance All Tariffs and tariff calculator Yearly Booking Status Daily

Aggregate regional/national info for confidential dataReal Time -

Daily Filling Level ASAP EssentialEmbedded storage as System Storage ASAP Essential

Maintenance and planned outage schedule over a 3-year period

At least 6 months in advance Essential

Unplanned outagesWithin an

hour

Current actual nominations / utilisation ratesEvery 3-4

Hours EssentialHistoric usage pattern (aggregated injection and withdrawal of storage capacity)

Daily, for last 3 years Important

Grid Connection point ImportantCapacity expansion plan ASAP


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Hubs information requested Frequency Importance Imbalance price mechanism Daily / Hourly Standard contract between hub operator and players Daily ImportantStandard trading terms with clear fee structure Daily / Hourly Trade procedures (with required guarantees to access) Daily EssentialCapacity/congestion allocation mechanism Daily ImportantPresence of a clearing process and hedging products Organisation of trade (electronic, phone, fax e.t.c) Daily EssentialElectronic bid/offer system Offered flexibility service Daily DesirablePipeline connections between hubs Daily DesirableExchanges/Brokers

Physical and financial products


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Balancing information requested 1 Frequency Importance

System offer and System bidsReal time /

h+1 Essentialinformation on current flows at main interconnection points (border flanges, interconnectors)

Real time / h+1 Essential

Day ahead demand forecasts regularly throughout the day should be provide for a given balancing zone together with the level of uncertainty associated with such forecasts. Real Time Accurate measured volumes (allocations) Capacity trades (where relevant to the hub and where not separately shown by the TSO) Daily / Hourly EssentialIndications of individual shipper system balance EssentialBalancing status of user Real time Essential

information on line packReal time to

h+1 Essential

Balancing rulesWhen

Changed EssentialTolerance levels Daily Cash Out prices: System Marginal Prices (Buy/Sell) - SAP Explanation of all intervention by TSO to establish balance in the market (quantity, price, location and reason) Daily/hourly Essential

Calculations of imbalance chargesWhen

Changed Essential


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Balancing information requested 2

Frequency Importance

Cost reflectiveness of imbalance chargesWhen

Changed EssentialAbility to calculate likely balancing or cash out penalties or payments based on clear rules for the balancing and cash out regime EssentialQuality conversion capacity, availability and advance notice of interruptions where high and low-cal system are connected through quality conversion Daily Essential

Total demand volume evolution incl. HubsDaily / Hourly

Total supply volume evolution incl. HubsDaily / Hourly

Efficient secondary market for flexibility products Daily ImportantTransmission principles Daily EssentialLegal basis Daily EssentialContractual terms Daily EssentialBack up availability Daily EssentialSufficent flexibility products Daily Essential


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LNG Information Requested 1 Frequency Importance

Available capacity at LNG regasification terminals Daily Essential

Booked berthing slots (1-3 month Schedule Daily - Weekly Important

Flow of regasified LNG into pipeline network Daily Important Daily updated information of name, size and origin of cargoes Daily Important Daily updated and historical information on send-out (flows from terminal to transmission system) Daily Important Send out rate and discharge rate for each capacity holder Daily Essential Clear rules on capacity allocation, availability of slots and prices Important Volume in storage tanks Desirable Aggregated flows on a regional basis Real Time service portfolio Essential service and contract conditions Essential Quality of LNG offered from a given source Monthly Essential


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LNG Information Requested 2 Frequency Importance Regasification capacity in import terminals not exempted from TPA Monthly EssentialTariffs for services, Regasification tariff in import terminals not exempted from TPA Monthly EssentialMechanism to enable shippers to indicate interest in buying/selling capacity Daily DesirableLNG quality impact on price Monthly ImportantTechnical Characteristics of facility ImportantCapacity expansion plans ImportantMaintenance plans ImportantEurope up to UK standards

Documents

Transparency Workstream Gas Regional Initiative North West Region By: Cemil Altin Workstream Leader Bonn Workshops 8-9 February 2007 NRA logo