Allocation Rules Martin Apko CAO Central Allocation Office GmbH 30 February 2009, CEE Implementation Group, Vienna

 Participation in Allocation Process  Collaterals  Products  Secondary Market  Allocation Algorithm  Emergency procedures  Settlement  Transparency  Additional Features Content

 Registration signed registration form extract from commercial register contact details Confirmation of the registration by CAO constitute the contract between CAO and registered entity. Entity is identified by unique EIC code (usage of more EIC codes is not allowed)  Access to CAO IT user registration qualified electronic certificates for encrypting and signature of data  Collaterals Participation in Allocation

 Rating ? “BBB-” (S&P) or “Baa3” (Moody’s) or “BBB-” (Fitch/IBCA) or higher – represents EUR of Credit Limit  Bank guarantee any bank with the required rating requirements specified by AR  Deposit on the account of CAO on the escrow account of Allocation Participant Collaterals (I/II)

 Credit Limit sum of all collaterals valid for an individual allocation process credit limit is utilized by not paid invoices and bids submitted into the system unutilized credit limit defines if the bids will be accepted for evaluation or not: o in case of daily auction bids – maximum value is checked on the input to the system o in case of yearly/monthly auction bids – preliminary evaluation is used to identify allocation participants whose bids will be excluded due to insufficient collaterals Collaterals (II/II)

 Technical parameters calculation done on the base load basis  Standard products yearly monthly daily  Block products to be defined by CAO staff flexible  Bids can be satisfied also only partially – divisible bids.  Result of the allocation is right to use the capacity (PTR) identified by source CA, sink CA Products

 Supported activities Transfer Resell valid for yearly & monthly PTRs on self-service basis via CAO IT  Transfer possible for paid PTRs by D-2, auto-rejection if not confirmed by transferee slicing is possible as regards time (hourly basis) and volume (MW) all rights and obligations (with exception of payment for the allocation of PTR) are transferred Secondary market (I/II)

 Resell possible for paid PTRs into monthly allocation (base load), slicing is possible as regards volume (MW) into daily allocation, slicing is possible as regards time (hourly basis) and volume (MW) compensation for holder of PTR is equal to the allocation price determined in the relevant monthly/daily allocation process, however the compensation may not exceed the original payment for reservation of PTR Secondary market (II/II)

 Social welfare maximization principal applied  see presentation of Mr. Todem Allocation Algorithm

 In case of emergency situation or to avoid the emergency situation TSOs may apply curtailment of PTRs via CAO  Following criteria has to be considered in such case: What is the duration of the emergency situation (e.g. How long it will take to replace the damaged network element)? When the information is available to TSOs? Trade off between accuracy of the curtailment and time of notification to the market. Emergency procedures (I/III)

 Curtailment of Allocated PTRs applicable in cases when TSOs identify necessity of curtailment longer time in advance or curtailment will be applicable for several days usage of all allocated PTRs is taken into account the highest price bids from yearly and monthly allocation up to the level of allocated PTRs are evaluated with use of the allocation algorithm taking into account actual/updated grid conditions CAO inform allocation participants about curtailment Emergency procedures (II/III)

 Curtailment of Nominated PTRs applicable in cases when TSOs identify necessity of curtailment shortly before the daily allocation or just during the calculation of daily Available Maximum Flows – i.e. after the nomination gate closure nominations submitted by market participants to TSOs are taken into account (including netting) the highest price bids from yearly and monthly allocation up to the level of nominated PTRs are evaluated with use of the allocation algorithm taking into account actual/updated grid conditions CAO inform allocation participants about curtailment TSO confirm curtailed transmission schedules to market participants Emergency procedures (III/III)

 Reservation of PTRs yearly – 12 equal installments (in advance) monthly – 1 invoice (in advance) daily – all daily allocations within calendar month (1 invoice ex-post)  Resell invoice issued by allocation participant all resells within calendar month (1 invoice ex-post)  Curtailment invoice issued by allocation participant Settlement

 Technical data Available Maximum Flows Export/Import limits PTDF matrix  Market data specification of the deadlines and product Requested PTRs Allocated PTRs Number of participants List of bids without identification of the bidder (bidding curve) Transparency

 Notice Board communication platform supporting the secondary market  Balancing Services delivery of cross-border balancing services is allowed on several borders in CEE region to allocate transparently capacity for this purpose (and set the price for such capacity), PTRs allocated within the standard allocation process may be notified to be used for balancing services provision Additional Features