Market coupling for Baltic Cable Paul Giesbertz 5 th Stakeholder Group Meeting Northern Europe ERI 26 May 2010, Copenhagen

Contents –Past activities since 2008 –Status of Market Coupling Results of first days of market coupling How does it work Open issues on market coupling –Other issues

Past activities since 2008 –Baltic Cable AB has been ready to implement market coupling on voluntary basis since 2008 –Start of EMCC market coupling in 2008 was halted before Baltic Cable could join. Baltic Cable had a valid agreement with EMCC and was about to start market coupling as soon as the functionality was proven. –EMCC relaunched in Nov 2009 –Agreement Baltic Cable – EMCC for Market Coupling had to be renewed and was signed on 9 April –Market coupling started on May 10 (delivery date: May 11) with satisfactory results so far

Results day 1 (May 11) HourATC SE-DEATC DE-SEFlow SE-DEFlow DE-SEPrice spread No adverse flows (negative price spreads) Ramping constraint ATC is restricted by SvK

Results day 2 (May 12) HourATC SE-DEATC DE-SEFlow SE-DEFlow DE-SEPrice spread No adverse flows (negative price spreads) ATC is restricted by SvK Ramping constraint High flows (and losses) but no revenues

Results day 3 (May 13) HourATC SE-DEATC DE-SEFlow SE-DEFlow DE-SEPrice spread Some hours with adverse flows (negative price spreads)

Status of market coupling – How does it work? (1) –Baltic Cable is nominating capacity to EMCC each morning. The capacity is fully firm (financial consequences for Baltic Cable) even if capacity is curtailed by Transpower or in case of outage. –EMMC buys and sells at the power exchanges on behalf of Baltic Cable –Baltic Cable remains owner of capacity; EMCC makes market coupling available –Baltic Cable is balance responsible to TSOs –Baltic Cable buys power for losses

Status of market coupling – How does it work? (2) –Baltic Cable is part of the ”cut 2 optimisation” –Baltic Cable receives congestion rents minus fees to be paid to EMCC –Baltic Cable has option to stop market coupling directly if CWE-EMCC market coupling leads to improper market results –SvK will delete the variable transmission fee

Status of market coupling - Open issues for future (1) –Solutions for deadband (to avoid that costs of losses are higher than congestion rents) Market coupling started with a 0% deadband, but EMCC will introduce deadband ultimately –Capacity restrictions imposed by TSOs in intra- day domain (only German side) restrictions in intra-day domain have increased over last year. Baltic Cable might be forced to reduce capacity, anticipating possible restrictions by TransPower.

Status of market coupling - Open issues for future (2) –Technical limitations of Baltic Cable not yet fully modelled in market coupling process Minimum flow requirement of 60 MW Flow change limitations: max 560 MW after change of flow direction –Full detailled transparency of functioning of market coupling mechanism not assured due to Intellectual Property rights?

Other issues for future –Capacity restrictions imposed by TSOs SE-side: will hopefully improve as result of self commitments of SvK in EC-case DE-side: restrictions in intra-day domain have increased over last year. Our view is that current practice is in conflict with Art 1.7 of Congestion Management Guidelines. –Ramping constraint (600 MW/hour) Not clear whether these constraints are justified But, more importantly, if they are justified TSOs should solve them. –New merchant cables to Sweden seem to require dominant involvement of SvK Is this compliant with EU legislation?

Thank you!