Development of a Common Nordic Balance Settlement Baltic Electricity Market Mini- Forum 3 July 2006

Issues to adress –identify the purpose of, and possible gains of a common balance settlement system, –identify associated arrangements which may be affected by alternative solutions for common balancing, such as the working of the TSOs and Nord Pool, –examine the effects for the suppliers as well as the large customers (that may be or become active on Nord Pool), –assess the options for co-ordinated balance settlement system in the Nordic market.

Differences between the Nordic countries Purpose of balance settlement Organisational demands on balance responsible parties Collaterals and guarantees Balance plans and calculation of imbalances Metering requirements, load profile systems and demands on data systems Model for pricing of imbalances Special pricing in shortage situations Fee structure and cost-base for balance settlement Invoicing and terms of payment Measurement corrections from network owners Legal system and supervision

Comparison between countries FinlandSwedenDenmarkNorway Major cost-base differencesIncludes parts of the costs for disturbance reserves No such costs Pricing modelsTwo – price One – price Special pricing in shortage situations Yes No Number of imbalancesSingle balanceThree balances: -Production -Consumption -Total Three balances: -Production -Consumption -Trade Single balance ProfilesOne profile per customer group for non local suppliers One profile per grid, shares calculated per bal. resp. party One profile per grid, calculated per customer Number of balance responsible parties

Vision The present different systems for balance settlement shall within a few years be replaced by a common Nordic balance settlement. –It will be possible for a supplier to sell to the whole Nordic market from one legal entity and using only one system for customer management and reporting. –It will be attractive even for small suppliers and some end-users to be balance responsible parties.

Road map for the initial phase Definition and purpose of a common balance settlement Cost base Number of balances Definition of imbalance Price model for imbalances Metering value processing requirements and data systems – Road map for harmonisation

WP 2006 Balancing A) Deepen the concept of a common balance management and settlement system. B) Analyse associated arrangements which may be affected by alternative solutions for common balancing, such as the working of the TSOs information exchange and Nord Pool. C) Analyse the necessary obligations to be placed on TSOs, power exchange operators and other actors. D) Examine appropriate arrangements for regulatory oversight, including obligations placed on TSOs. Consideration should be given to the cross border nature of the alternative solutions examined and the problems caused by multiple jurisdictions. E) Analyse the consequences for different groups of actors of a common balance management and settlement system. F) Describe and analyse the different steps in the process of establishing a common balance management and settlement system.

Mode of operation Arrange a workshop together with Nordel to be held in April Arrange one or two follow up meetings during the spring 2006 in order to prepare a work plan for the work that has to be done in order to make the vision of a common balancing possible. A preliminary work plan should be completed before the ministers’ meeting in August. Prepare the work groups that will be needed to be able to carry out the work plan after the ministers’ meeting. Adapt the work plan and begin the work according to the ministers’ intentions.