Capacity allocation in natural gas transmission networks Framework Guideline (Pilot) Dr. Stefanie Neveling, ACER Workstream Co-Chair Walter Boltz, ACER GWG Chair 19th Madrid Forum, March 2011

Process on CAM Guidelines & Codes ERGEG adopts Pilot CAM FG ENTSOG develops NC NC in Comitology COM evaluates Pilot FG  requests revision June 2010 ERGEG adopts revised Pilot CAM FG Sept COM evaluates Pilot FG  invitation to ENTSOG Dec Jan End 2012 ACER consults FGACER adopts FG March 2011 June 2011 ACER opinion on NC (& revision by ENTSOG) 19th MF COM evaluates FG  invites ENTSOG to transfer Pilot into formal procedure Jan. 2012

19th Madrid Forum, March 2011 Commission‘s evaluation of ERGEG FG. COM evaluated Guideline under Art. 6(4) Reg. (EC) No. 715/2009 » Non-discrimination, effective competition, efficient functioning of the market. Issues welcomed by the Commission » Harmonised capacity products; » Bundling of capacities; » Market-based CAM.. Issues to be further elaborated » Possibility for NRA decision in some areas (CAM); » “Technical” parameters reg. bundling of capacities (timing, loss of capacities, relation to existing contracts); » Auction design (reserve price, existing capacities); » Rules for firm vs. interruptible capacities; » Harmonisation of gas day.

19th Madrid Forum, March 2011 ACER FG – General Provisions. Scope of the Framework Guideline: » Existing capacity (as calculated by TSOs) of IPs between entry-exit zones within the EU; » Existing contracts to be adopted six month after entry into force the network code; » Incremental capacity excluded, but allocation should be consistent with FG.

19th Madrid Forum, March 2011 ACER FG - Capacity Products. Definition of capacity products: » Small number of products, various durations (short term - multi-annual); » A minimum share of capacity shall be sold as short term products; » Firm and interruptible standardised products all over Europe; » Daily capacity product from 5:00 to 5:00 GMT (unless ENTSOG justifies different timing).

19th Madrid Forum, March 2011 ACER FG - Capacity Bundling. Bundled services: » Exit & Entry capacity available at every IP (no exemption possible for isolated markets) shall be integrated to allow for transports via a single allocation & nomination procedure; » Sunset clause: entire technical capacity shall stepwise be bundled until 5 years after the entry into force of legally binding network codes (default rule) – Impact Assessment; » One contractual IP for several physical IPs connecting the same zones (virtual interconnection point), after 5years if no reduction of capacity. MA1MA2

19th Madrid Forum, March 2011 ACER FG - Capacity Allocation. Capacity allocation procedures: » Auction as standard allocation methodology for firm and interruptible (implicit allocation to be allowed); » For within-day capacity FCFS or auction, but same for adjacent TSOs; » Interim period possible, but adjacent TSO’s should apply harmonised CAM method; » Regulated tariff as reserve price (if FG Tariff does not address this); » Auction revenues to be uses for different aims (e.g. lowering tariffs, removing congestion) subject to NRA approval; » Adjacent TSOs to establish common platform, eventually single EU wide platform.

19th Madrid Forum, March 2011 Cooperation with ENTSOG. Cooperation with ENTSOG is very good » Continuous discussions with ENTSOG Capacity Product Coordination Taskforce on the substance; » Monthly meetings took place.. ENTSOG and ERGEG/ACER will continue to cooperate throughout the process to develop framework guidelines and network codes;. Consultation by ACER & ENTSOG are both important  Stakeholder participation asked for!

19th Madrid Forum, March 2011 Expectations towards ENTSOG. Expectations towards ENTSOG and its Network Code development process » To closely involve stakeholders, especially regarding Breakdown of capacity services; Percentage of available capacity to be set aside for firm short term services. » To continue the good co-operation of ENTSOG and ERGEG/ACER on all levels; » To deliver detailed rules on Auction design; Bundling of products; Harmonisation of transportation contracts; Relevant communication procedure.

19th Madrid Forum, March 2011 Next steps. ACER Public Consultation on FG CAM was launched. » Deadline for submitting comments 2 May 2011; » Log in can be requested at ACER webpage ( regulator.eu). regulator.eu. Consultant will analyse impact of sunset clause as an input for the ACER Initial Impact Assessment.. Commission invited ENTSOG to start drafting the network code on CAM » Deadline for submission 27 January 2012.

19th Madrid Forum, March 2011 Thank you for your attention!