2nd IG-Meeting

Preparation of the Coordinated Physical Transmission Right (PTR)

Allocation Scheme for the CEE – Region

Vienna

12.07.2006

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Commitment of 8 TSOs from CEE-Region

Common willingness of 8 TSOs to improve allocation system: Bring better in line commercial and physical load flows

(PTR allocation) Coordinated Capacity Forecast Firmness and netting as far as possible from the view of

secure grid operation Foundation of an independent auction office One stop shop, direct bids between all countries involved

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Time schedule5th April – High Level Meeting:

HLM decision of 8 TSOs to establish two Working Group for further development.

2nd May: 1st coordination Meeting of WG chairmen

19th May: 1st WG – Meeting Flow Based Allocation

24th May: 1st WG – Meeting Coordinated Auctioning

14th June: 2nd coordination Meeting of WG chairmen

20nd June: 2nd WG – Meeting Flow Based Allocation

26th June: 2nd WG – Meeting Coordinated Auctioning

7nd June: 3rd coordination Meeting of WG chairmen

11th July – High Level Meeting:

Presentation of common Working Group report to HLG and HLG decision.

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Current Status

Working Group „Flow Based Allocation“ – chaired by PSE Development of concept of flow based mechanism – PTDF and Border

Capacities Investigate necessary preconditions and environment Common network model and common data

Working Group „Coordinated Auction“ – chaired by APG Prepare new approach of commonly owned, independent and transparent

auction office Auction rules for flow based allocation Principles for distribution of revenues

WGs work together, chairs coordinate frequently their work

Joint presentation

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Principles of Design of CEE Auction Office

Joint the same amount of shares of the AO for each TSO the same rights of access to and control of the AO for each TSO

Independent AO with full legal rights No subsidiary of a TSO

Transparent Towards national authorities and market participant (clear and

easily accessible market information) auction rules and results Toward the AO shareholders (clear and easily accessible

information for monitoring) business process

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General procedures for PTR auctions

PTR Auctions

TSOs

PTR Holder

Secondary Market

SchedulingSupport

RiskManagement

“online”

BCsPTDF-coordination

PurchaseData

SaleData

System DataPTDF, ABCs, Base Cases,

Auction Results(historical, actual)

Auction Participants

Auction Entities

AO:AO:

IT-relatedIT-related

AO: AO:

Customer relatedCustomer related

Proposed structure is also open for further developments (e.g. OMC)

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Concept of Common Grid Model for capacitycalculation by an Auction Office

Capacity Forecast based on Secure grid operation as first priority Flow based method Daily forecast for border capacities provided by common

centralised body Final decision remains with the responsible TSO Not considering preventive measures to increase capacities (in

order to save reserves for necessary re-dispatch during real time trading)

Sensitive data should be updated periodically (e. g. wind and hydro generation)

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Decisions from HLG

Principle support of the HLG for further investigation on PTR-auctions and on a centralised calculation of a grid model, capacities and PDTF matrix

Principle support to provide data – as far as they are available

General agreement on the content of a common Position Paper

Decision on a preliminary optimistic time table (implementation scenario)

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PTR Allocation - Challenges on technical parameters calculation

New centralised approach of common calculation activities necessary (while responsibility for SoS remains with the individual TSOs)

Higher complexity of the calculation process (more parties involved – not only regional, huge amount of data,…)

If adopted to the specific region strongly affected by external regions creates „ chicken and egg story”

More complex information of the offered capacities for market participants (ABC plus PTDF)

In contradiction with present UCTE rules on scheduling has to be modified

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Position Paper: preliminary Time Table (optimistic)

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Phase 6

1) Signing Position Paper

1) Continuation of WGs tasks’ (with support from “scientific” consultant)

2) Draft concept of technical parameter calculation

3) Fixing the principles of distributing the auction incomes

4) Finishing of concept of scheduling support (and impose UCTE to modify OH P.2)

5) Finishing of elaboration of legal framework

6) Adaptation and finishing of Business Plan

Identify issues for Regulators for market harmonisation

1) Board approval on concept/methodology of technical parameter calculation

2) Implementation design of technical parameter calculations (contract)

Acceptance of Regulators on principles on revenue distribution

Notification EC Merger regulation

Approval of Regulators on the concept of technical Parameter calculation

1) Acceptance of implementation design

2) Foundation of CEE-AO

3) Finishing of Auction Rules

4) Tender for IT

Approval of Regulator on Auction Rules (and on Multilateral Agreement)

1) IT-installation

2) AO staff recruiting

3) Testing phase (Trial operation)

Operationalisation of CEE-AO – Starting Phase

August 2006

Nov 2006 Dec 2006 Q1/2007Q2&Q3/2007

Q4/2007*

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Support and decisions from Regulators

Support concerning market harmonisation

Approval of costs for establishing and running a common AO before establishing the entity.

Support according to possible obstacles due to the EC Merger Regulation 139/2004.

Acceptance of principles on revenue distribution

Approval of Regulators on the concept of techn. Parameter calculation

To proceed with the process according to the shown time table support and decisions from Regulators are necessary!

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Outlook

Serious time constraints Capacity forecast (common grid model, IT etc.) Data to asses external effects from adjacent regions Decisions in Supervisory Boards of TSOs necessary Legal procedure according EC Merger Regulation 139/2004 Future Guidelines not entered into force until now Changes in scheduling nomination procedure necessary (UCTE OH) Approval of regional regulators for financing the CEE-AO

Preparation to prolong current solution (AO: CEPS) with changed auction rules – but to change to new system as soon as possible

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Challenging exercise, but all participating TSOs are giving their highest commitment to it and are stating their

willingness to make a further step forward to a transparent market integration in the CEE region.