Pilot framework guideline on capacity allocation in natural gas transmission networks

Walter Boltz, Chairman ERGEG Gas Working Group 18 th Madrid Forum 28 September 2010

Invitation by the Commission to draft FG on CAM

• • • Pilot FG on CAM shall describe: General principles and the scope and level of

TSO cooperation

allocation.

in capacity • In particular the

joint/coordinated offering of capacity

on IPs of borders and/or systems (e.g. nature, and level of bundling of products), the

optimisation of available capacity

by enhanced operational coordination, the

harmonisation of transportation contracts and codes

, and

relevant communication procedures

.

A reasonably small set of

capacity products

to be offered to network users, • Set

framework for harmonisation

of the range of capacity products to be developed and applied

by all EU TSOs

, the nature and

level of bundling

of such products, and the contents, structure, and duration of harmonised capacity contracts, including possible quotas Relevant procedures and tools for

booking procedures

• Including the

timeline

to be followed (e.g. number of rounds per product, requesting periods, reaction time), the

details of the allocation mechanisms

to be applied (e.g. auction, OSW, FCFS), and the facilitator (e.g. booking platforms) 18th Madrid Forum, 27-28 September 2010 2

Target model for the European gas market - I

• Need for an overall European target model • FGs / NCs are the ideal instrument to define detailed rules on specific matters and enable market integration • A conceptual model should be the tool to quickly solve the Gordian knot of European gas market integration • Work Programme 2011 • Broad involvement of stakeholders • Call for evidence will be launched this autumn 18th Madrid Forum, 27-28 September 2010 3

Target model for the European gas market - II

• General principles • All market areas are organized as entry-exit zones with virtual hubs • Reduction of market areas to as few as technically and economically feasible, based on physical characteristics rather than political boundaries • Facilitation of hub-to-hub trading 18 th Madrid Forum, 27-28 September 2010 4

Experiences with process

• Huge interest of stakeholders in • FG itself, as well as in • process for developing FGs and NCs • Transparency and sufficient information of stakeholders necessary • 3 years plan is an important step in this direction • Need to have sufficient up-to-date information (as far as possible) • However, danger to overburden stakeholders with too many activities at the same time 18 th Madrid Forum, 27-28 September 2010 5

Cooperation with ENTSOG

• Cooperation with ENTSOG is very good • Continuous discussions with ENTSOG Capacity Product Coordination Taskforce on the substance • Monthly meetings took place • Both, ERGEG and ENTSOG, benefit from the fruitful discussions • ENTSOG and ERGEG will continue to cooperate throughout the process to develop framework guidelines and network codes 18 th Madrid Forum, 27-28 September 2010 6

Stakeholder interest

• ERGEG public consultation on the pilot FG was finished by 26 February • More than 100 participants in public workshop • 37 responses received (more than 230 pages) • All received responses have been evaluated • Informal "ad hoc" expert group to provide expert support during the development of FGs.

• 11 experts coming from the different stakeholder groups and regions of Europe • very fruitful discussions • Framework guideline has been published by ERGEG on 17 June • FG has been submitted to the Commission together with an evaluation of all responses • Commission will invite ENTSOG to develop network codes (12 months) 18 th Madrid Forum, 27-28 September 2010 7

Lessons learnt

• Stakeholders show much more interest in the work on FGs than they did in our non-binding work.

• We need to do as much preparatory work as possible prior the official invitation by the EC. • PC needs to last at minimum 2 months (in reality many stakeholders ask for extension of the deadline), which leaves at the maximum 4 months for incorporating the comments of the market and streamlining the framework guideline.

• The drafting team need to have enough human resources to fulfil the six months deadline.

• Internal approval processes need time.

18 th Madrid Forum, 27-28 September 2010 8

Expectations towards ENTSOG

• ERGEG’s expectations towards ENTSOG and its network code development process • To be pro-active • To closely involve stakeholders, especially regarding • Breakdown of capacity services • Percentage of available capacity to be set aside for firm short-term services • The capacity allocation methodology used at each IP • To continue the good co-operation of ENTSOG and ERGEG on all levels • To deliver a good piece of work • Auction design • Bundling of products • Harmonisation of transportation contracts • Relevant communication procedure 18 th Madrid Forum, 27-28 September 2010 9

18 th Madrid Forum, 27-28 September 2010

Thank you!

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