XV Madrid Forum, 6 and 7 November 2008 Capacity Allocation and Congestion Management Rules for Storage Mr. Walter Boltz ERGEG’s Gas Focus Group (GFG)

2 XV Madrid Forum, 6 and 7 November 2008 Background  Improvement of storage access conditions  Most European storages fully booked  Poor transparency  Entry barrier for new entrants  Capacity hoarding  What happened?  ERGEG GGPSSO since March 2005  After Monitoring the GGPSSO twice incomplete implementation identified  Development of specific Guidelines for storage on CAM and CMP  ERGEG Work Programme 2008: enhancement of these guidelines  ERGEG GST TF 2008  Survey on CAM/CMP and Secondary Markets  Questioning of NRAs, SSOs and storage users  Current way of development, design, acutal use and effects of the system regarding CAM/CMP and Secondary Markets

3 XV Madrid Forum, 6 and 7 November 2008 Response Rate to Questionnaires  Response rate NRAs: 67%  12 NRAs out of 18 ERGEG member states with storage capacity  Response rate SSOs: 56%  29 SSOs (18 GSE and 11 non GSE members) out of 52 SSOs addresses  most answers lacking from German SSOs (but 65% of the wgv in Germany covered)  64% of the wgv of EU member states covered  Response rate storage users: 17%  30 responses (Wholesaler, Trader, regional companies) out of 186 company addresses  Little response from Industrial costumers and Distribution companies

4 XV Madrid Forum, 6 and 7 November 2008 Applied CAM - Answers SSOs  Developing CAM  For 80% of SSOs the main customers are affiliated companies  SSOs report to consult with customers (but mainly affiliates)  For 27% of countries (NRA answers) no legal requirements for CAM  No specific legal requirements on the design of CAM

5 XV Madrid Forum, 6 and 7 November 2008 Preferred CAM - Answers Storage Users (to 75% integrated with SSOs)

6 XV Madrid Forum, 6 and 7 November 2008 First come first served  On average 49% of the capacity is booked by affiliates  with FCFS 80% of capacity is booked out by affiliates  On average the refusal rate was 24%  Applying FCFS the refusal rate was 34% compared to 0% regarding CGWC  On average 20% of the capacity is locked in contracts longer than 5 years  Applying FCFS 68% is locked in contracts longer than 5 years Preliminary conclusions  FCFS applied by an integrated SSO prefers the affiliate  Does FCFS treat new entrants and incumbents equal?

7 XV Madrid Forum, 6 and 7 November 2008 Capacity goes with the costumer (CGWC)  Effective, because no refusals of capacity requests  On average 38% of the SSOs have available capacity in 2009  With CGWC 100% of SSOs have available capacity in 2009 Preliminary conclusions  The capacity allocation has to take into account the flexibility already available in the portfolio of a shipper  Does CGWC treat new entrants and incumbents equal?  Enough capacity for other storage purposes has to be assured  On average 62% of the SSOs also offer unbundled firm products  With CGWC 33% of the SSOs offer unbundled firm products

8 XV Madrid Forum, 6 and 7 November 2008 Applied CMP (contractual congestion) - Answers SSOs Developing CMP  in case of 67% there are no special legal requirements for CMP  therefore in most cases no regulatory intervention in case of discriminatory behaviour possible As CMPs are applied in different combinations, it is not possible to give the corresponding wgv

9 XV Madrid Forum, 6 and 7 November 2008 Preferred CMP by storage users

10 XV Madrid Forum, 6 and 7 November 2008 Secondary Markets  36% of NRAs – requirements on a legal basis for a common trading platform (only a small number has to place ALL trades)  in 64% development of a common platform voluntarily  BUT users trade among themselves, SSOs do not get any information  have to be facilitated to optimize the use of capacity -incentives for storage users to use bulletin boards -appropriate legal measures -obligation for SSOs to improve and enhance the platform according to consumers/market needs

11 XV Madrid Forum, 6 and 7 November 2008 CMP – Key questions  Definition of a congestion management procedure: (1)First step: making capacity available (2)Second step: reallocation  How effective are the CMP regarding capacity release as some CMP still lacking the practical test?  How capacity, traded on “secondary market”, is really made available and transparent ?  Are “interruptibles” equal to other CMP?  How can a practicable UIOLI be designed in the storage market?

12 XV Madrid Forum, 6 and 7 November 2008 Preliminary conclusions  CAM/CMP applied by integrated SSOs shall be designed in a non-discriminatory way and shall facilitate competition  FCFS applied by integrated SSOs prefers the affiliate  Obligation for storage users to facilitate trades on secondary markets are needed  How can “unused capacity” in case of UIOLI be defined?  In some countries a preferential CAM to affiliates takes place

13 XV Madrid Forum, 6 and 7 November 2008 Next steps  Assessment of different CAM and CMP  in a discussion paper for public consultation planned  by defining preconditions under which market situations the various mechanisms are appropriate  regarding the requirements for CAM and CMP stated in the GGPSSO  Based on assessment and the outcomes of the public consultation GGP on CAM & CMP to storage will be drafted

14 XV Madrid Forum, 6 and 7 November 2008 Further information is available at Thank You !