Regulators’ update on Congestion Management and Balancing CRE - OFGEM SG FUI, Paris, 4th November

Balancing update of 16th of October meeting (1/3) Review of the 6 first months of BALIT. Positive feedback from both sides on the interim solution. Some transparency requirements are still not fully satisfactory: A detailed and clearer methodology for pricing bids and offers (including a concrete example) than TSOs’ proposal paper published in 2007. A clear and detailed methodology for calculating the fee. “The value of the fee was agreed 7-8 years ago between NG and RTE. However, there is no clear methodology explaining how this price was calculated.” A clear and detailed charging methodology and financial treatment methodology for the fee.

Balancing update of 16th of October meeting (2/3) Due to delays in IT development, a new target date (from Nov.2009 to Nov. 2010) for implementing the enduring solution. On NGET’s request, a feasibility study for the introduction of a 2h product will be conducted by TSOs, with particular focus on: The compatibility with the arrangements on the other French and UK borders. The additional requirements in terms of IT developments and the consequences in terms of implementation target. The conclusions of the feasibility study are expected by February 2010.

Balancing update of 16th of October meeting (3/3) Fee for the use of interconnection assets  Revised ERGEG Guidelines of Good Practice for electricity Balancing Markets Integration published in September 2009 states : « When setting up cross-border exchanges of balancing energy after interconnection gate closure, any charge on access to interconnection capacity for balancing energy shall be prohibited » In order to be compliant with ERGEG guidelines on balancing markets integration, CRE will support taking the fee out of BALIT

Congestion Management : New IFA rules (1/2) The new IFA rules entered into force the 1st of October 2009 as well as a new platform CMS for the allocation and the nomination. The objectives followed with the implementation of the new rules were the compliance with the European legislation and potential harmonisation with European borders. Main improvements of the new rules: Separation of LT, DA and intraday nominations Application of UIOSI for LT nominations and UIOLI for daily nominations allowing netting to be applied Switch to pay-as-bid auctions Introduction of an intraday allocation mechanism

Congestion Management : New IFA rules (2/2) In its formal approval, CRE highlighted that the 3 following topics are still pending and will have to be improved in the future: The lack of firmness and more exactly the impossibility for NGIL to buy energy to ensure firmness of nominated capacities. This raises two problems: Non application of ERGEG position Not compliant with article 6.2 of regulation 1228/2003: “Transaction curtailment procedures shall only be used in emergency situations where the transmission system operator must act in an expeditious manner and redispatching or countertrading is not possible ». The curtailment procedure, with a priority given to long-term nominations, could be considered as an entry barrier for small participants and a potential discrimination Article 6.2 of regulation 1228/2003 states that «Any such procedure shall be applied in a non-discriminatory manner”. The reimbursement of capacities in case of curtailment is not a compensation Article 6.2 of regulation 1228/2003 states that « Except in case of Force Majeure, markets participant who have been allocated capacity shall be compensated for any curtailment ».

Congestion Management : Next steps IFA rules: the firmness issue to be adressed Harmonisation of the capacity allocation at regional level  towards an integration of MOYLE? Towards the PCG target models: market coupling, FTRs, intraday continuous trading

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