14 th RCC meeting 10 March 2009 ERGEG European Regional Initiative Central-South Region Interconnection report: contents and implementation

Structure of the report Cross border flows in 2008 Congestion management methods Economic efficiency of congestion management methods Capacity calculation and management

Scope of the report To provide a detailed report about the usage of interconnection from technical and economical point of view; To collect in a single report different useful information for market monitoring; To help national Regulators to reach a common view about the best way to improve the congestion management within the region.

Cross border flows Data about cross border flows within the CS region and between neighbouring regions: –Missing data shall be provided by TSOs. Interconnection target w.r.t. installed generation capacity: –10% criterion proposed by European Council –Definition of installed generation capacity somehow ambiguous

Cross border flows Installed generation capacity could be intended as the generation capacity available in peak hours. It is computed as a sum of –net-capacity producing power for thermo and hydro generation (the latter are usually fully available in peak hours) –nameplate capacity multiplied by a coefficient reflecting the average available production at peak hours for wind and solar plants.

Congestion management methods Information about allocation methods of interconnection capacities on different time horizons Long and medium term –Tradability and firmness –Single auction office to be inserted –UIOSI rule Day ahead –Tradability and firmness

Economic efficiency Global figures –Comparison between actual and ex post assesment of congestion rent Theoretical rent dependent on price differential multiplied for allocated capacity Theoretical rent useful as a first step to monitor congestion management failures –Market share –Prices attributed to interconnection –Efficient usage Consistency with price differential

Economic efficiency Long and medium term capacities –Yearly and monthly auction results –Standard deviation added to monthly auction table to better monitor the auction results –Secondary market Yearly to monthly auctions Yearly and monthly to daily auctions (UIOSI) Bilateral transfers –Efficient Usage Consistency with price differentials Simultaneous nominations in both directions

Economic efficiency Day ahead capacities –Auction results Only in term of competitors No information about prices –Efficient usage Consistency with price differentials Simultaneous nominations in both directions Estimated loss due to absence of netting between long term and daily capacity Estimated loss due to absence of implicit methods Both losses based on positive portion of price differential

Capacity calculation General principles –Capacity procedure and TRM to be provided by TSO –Information about UIOSI and netting Net transfer capacity –Evolution of transfer capacity throughout 2008 Used standard deviation instead than percentiles –Comparison between transfer capacity and long and medium term offered capacities Insight on TSO actions (for example countertrading) to contain risk associated to long and medium term allocations of firm rights

Capacity calculation Costs to granting grid security –Redispatching costs for internal congestion –Counter trading and redispatching costs for interconnections –Compensations for curtailments –Compensations for auction cancellation –Capacity buying back costs –Costs sharing rules Curtailments occurred in 2008

Timetable Further observations to the report by March 13 Presentation of the report to TSOs in IG meeting on March 19 Data provided by TSOs by April 30 Approval of final report by RCC in May