CMP PROPOSAL FOR HARMONISATION 17 th IG meeting

1. CMP PROPOSAL FOR HARMONISATION 17th IG meeting Madrid 2nd November 2011

2. Responses to consultation (I) During the last SG meeting which took place on July, stakeholders were asked to provide feedback on the TSOs CMP harmonisation proposal. TSOs have received two answers. Currently this option is not feasible. Although we are working on it and some characteristics have been implemented and others are being developed. In October 2010, TIGF and Enagás has signed an Operating Manual where they agree to operate their interconnection points as one single point in a coordinated and joint way. SHIPPER 1 Total interconnection between France and Spain should be treated as VIP 1 2 80% of minimum capacity utilization would be relaxed at a first stage for OS contracts Most of the capacity between SP-FR has been contracted during the OS 3 Reasons to refuse reallocation: when capacity contract is used to supply to the electricity market In an E-E system, the exit point does not treat CCGTs differently from other customers

3. Responses to consultation (II) SHIPPER 2 Different pilots have been proposed in the 2011-2014 SGRI working plan. It is not possible to implement all these non-approved European rules at the same time, and many of them (e.g. within-day and day-ahead CAM&CMP) would impose high costs (e.g. in IT systems) which regulators have not yet clarified how they would be treated. • CAM and CMP should be developed at the same time: • secondary market, • ex-ante mechanisms (such as oversubscription and buy-back) • and only then LT UIOLI 1 The application of LT UIOLI procedures is not feasible at the moment because no LT contracts are in place in Portugal. As regards ST UIOLI procedures, again these impose high costs in IT systems and the draft CMP Guideline is subject to changes (Comitology Procedure). 2 UIOLI procedures should also be applied between Portugal and Spain 3 Process (timing, communication, deadlines…)applying each type of CMP should be coherent with the type of capacity freed up No specific problem identified and no specific proposal provided

4. CMP new proposal • In XX Madrid Forum the Commission presented the impact Assessment and draft Commission Proposal on Congestion Management Procedures. • The final text to be sent to Comitology was presented on 19th October 2011. However, it has not been published. • The CMP proposed by the Commission to include a Long-term UIOLI mechanism in line with what has been proposed by TSOs. • Some questions before we continue the work on UIOLI LT and others CMP measures: • Do we all agree with the implementation of the Long-term UIOLI as described in the last SG? Or, • How we continue from now on regarding the new document of CMP measures? Shall we follow it from now? Shall we wait for the outcome of the Comitology process?

5. Thank you for your attention!

6. Where can be applied the UIOLI procedure? NORTH NORTH SOUTH SOUTH TIGF TIGF SPAIN SPAIN • The Long-Term UIOLI procedure could be applied at the following IPs: • GRTgaz North-GRTgaz South • GRTgaz South-TIGF • TIGF-Enagás • TIGF-Naturgás Energía Transporte • The Long term UIOLI procedure will be applicable from 1st April 2013.

7. Every network user could trigger the UIOLI procedure when: there is no primary capacity available at the point in the direction requested, thus the TSO is unable to meet at least 1 duly justified request from a shipper, the network user is unable to get the firm capacity in the secondary market (either on a bilateral basis, or bulletin board, if any applied), and the period requested by the network user is higher than a season*. If all these conditions are fulfilled, the affected TSO will apply the UIOLI procedure in coordination with the adjacent TSO and under the supervision of the NRAs. The procedure is not triggered if access has not been denied to any shipper by the TSO. When is the UIOLI procedure triggered? * Season is defined according to the Information Memoradum of the 2013 OS and 2015 OS

8. How will the reduction be performed? • Daily used capacity shall be studied for the 12 previous months shipper by shipper … unless the existing shipper(s) is/are able to justify its/their behavior (see slide 7) • This proposal might be adjusted once the CAM NC has been approved. • If daily used capacity is on average less than 80% of its daily contracted capacity during: • the last winter season, • the last summer season, and • the last 12 months Winter season capacity and summer season capacity shall be released

9. If the 3 conditions previously mentioned in slide 3 are met, the amount of capacity to be released will be the following: The capacity freed up with the above rule must not be higher than the capacity requested (and thus allocated to the new entrant). The “α” factor will be adjusted upwards to ensure that the total booked capacity by all shippers is not lower at the end of the process than at the beginning of the process. Capacity will be released up to a maximum of 2 years. In the analysis of the average used capacity the capacity reduced due to maintenance works should be not taken into account. How much capacity will be released? • Reassignment = Daily Entry (Exit) Capacity Subscribed – α * Average Daily Quantities Scheduled for Offtake (Delivery) • α ≥ 1.05 (i.e. the maximum reassignment takes place when α = 1.05)

10. Main deadlines Shippers Shipper requests capacity and the 3 conditions are fulfilled Concerned and eligible shippers should agreed between themselves Shippers not accepting the reallocation justify their refusal 5 working days 5 working days 3 working days 10 working days 6 working days TSOs 2 working days TSOs will analyze the used of the existing contracts. TSO will reallocate the capacity Final reallocation decision and communication to the shippers TSOs to trigger the UIOLI procedure TSOs will inform NRAs TSOs will inform NRAs TSOs will inform NRAs TSOs will inform NRAs TSO concerned will get in touch with the adjacent TSO TSOs will communicate the outcome of the analysis to the concerned shippers and encourage them to sell the capacity in the secondary market If the requested shipper has not been able to get the capacity TSOs will trigger the UIOLI procedure TSOs will communicate the shippers the new reallocation of capacity TSOs will recalculate (if needed) andcommunicate the shippers the new reallocation of capacity

11. The reasons to refused the reallocation of capacity claimed by shippers might be one of the following: the existence of Public Service Obligation (PSO), and/or the existence of provisions in a supply or procurement contract that is in force or that is to come into force in the near future; and/or the existence of exceptional and temporary circumstances justifying why the network user may keep the capacity for which the TSOs have requested reassignment. Reasons to refuse the reallocation

12. Example 1 Initial booked capacity • IP fully booked by 4 shippers. • Total technical capacity 7,500 kWh/day

13. Example 2 • New entrant requests capacity • and … • there is no primary capacity available at the point in the direction requested, thus the TSO is unable to meet at least 1 duly justified request from a shipper, • the network user is unable to get the firm capacity in the secondary market (either on a bilateral basis, or bulletin board, if any applied), and • the period requested by the network user is higher than a season.

14. Example 3 TSOs jointly study the utilisation rates of the contracts Capacity shall be released Annual, winter and summer utilisation rates of shipper 3 and shipper 4 are below 80%

15. Example 4 Maximum reduction of capacity (α = 1.05) • Each shipper shall be reduced proportionally to the maximum utilization rate between: the annual, the summer and winter utilization rate of each shipper Maximum reduction is above the requested capacity α should be higher

16. Example 5 Final allocation of capacities • Effective reduction: α = 1.4085