CAM PROPOSAL FOR HARMONISATION 15 th SG meeting

1. CAM PROPOSAL FOR HARMONISATION 15th SG meeting Madrid 7th February 2012

2. 1 Regulators’ views

3. DECIDED

4. 2 Points to be defined by regulators

5. REMAINING POINTS TBD by NRAs

6. 3 Points to be proposed by TSOs

7. REMAINING POINTS TO BE PROPOSED by TSOs

8. 1. Products (1/8) – capacity offered • TSOs have been asked to detail “the capacity to be offered by each TSO through the auction on a similar format to the table below”

9. 1. Products (2/8) – existing capacity • The following tables below show the technical, booked and available capacity on the Spanish side.

10. 1. Products (3/8) – existing capacity • The following tables below show the technical, booked and available capacity on the Spanish side.

11. 1. Products (4/8) – VIP implementability • Technical capacities at the border between Spain and Portugal were reviewed by Enagás and REN in 2011 (see Annex III). • Any capacity product offered to the market should built on the capacities already agreed. • Firm capacity from Spain to Portugal at Badajoz is 134 GWh/d. This is fully booked in the long term as of 7/2/2011. • Firm capacity from Spain to Portugal at Tuy is 40 GWh/d in Summer, 30 GWh/d in Winter. This capacity, partially available, is firm but subject to operational conditions on the Spanish side. • Enagás view is that capacities from Spain to Portugal are of different nature and, therefor, they cannot be aggregated and undifferentiated. Enagás believes that if a VIP was created, there would not be a single firm capacity service at the VIP from Spain to Portugal. • Moreover, current procedures already ensure that commercial capacity at Tuy can be used if there is physical availability at Badajoz, regardless the operational conditions are met or not (see slides on interconnection capacity).

12. 1. Products (5/8) – VIP implementability Enagás identifies the following challenges to establish a VIP: • Need to adapt the regulatory framework (and IT systems) in Spain and Portugal to make it possible to book and nominate capacity at the VIP. • If capacities at Tuy were considered interruptible, need to clarify: • Whether or not this is consistent with the FG on CAM, which estates that the creation of a VIP should not result on a reduction of technical capacity (see Annex I). • Consequences for already firm but conditioned capacities at Tuy. • Consequences for other firm but conditioned capacities anywhere else in the Spanish system. • Whether interruptible capacity could be booked before all firm capacities had been booked. • How to define a tariff based on the probability of interruption. • If capacities at Tuy were aggregated and undifferentiated (all sold as firm with no operational conditions), need to clarify the responsibility of TSO if capacity is interrupted – given that it is known that certain operational conditions have to be met.

13. 1. Products (6/8) - Oversubscription scheme? • Enagás would not recommend to impose an obligation to offer an amount of firm capacity higher that the technically available amount of firm (non-conditioned) capacity. • This would in fact be an “oversubscription” scheme, which would require a “buy back” scheme to avoid interruptions of firm capacity, whose implementation in the Spanish and Portuguese systems would be complex and potentially very expensive. • Creating a VIP and implementing an oversubscription scheme (e.g., to facilitate the usage of non-used capacity at Badajoz) are independent issues. The former does not facilitate the latter.

14. 1. Products (7/8) – capacity offered? ?

15. 1. Products (8/8) – bundled capacity • It is necessary to clarify that it will be progressively bundled, but it will not be perfectly bundled from the beginning unless: • The corresponding entry and exit firm available capacity at both sides of an IP is offered and allocated through a single procedure. • The same shipper entity is registered in both countries. • Secondary market provisions are compatible and capacity can only be traded together – see TSOs comments on decisions by NRAs. • Draft NC: “A joint Nomination procedure for Bundled Capacity, providing network users with the means to nominate the flows of their Bundled Capacity via a single Nomination.” According to the future operation manual, the information to be send by shippers shall be identical. • CMP provisions are harmonised.

16. 2. Definition of allocation procedure • Duration of the bidding window • Pre-registration: 5 working days • Bidding window (submission of requests): 5 working days See tentative calendar for more details • Definition of price steps • No guidance from draft NC on CAM versions, though 30 price-steps were suggested in the June 2011 version • To be discussed with NRAs

17. 3. Companies allowed to request • The Information Memorandum for the 2015 OS between Spain and France considered as the same company those belonging to “a group of companies linked via a relationship of “control” as defined in EC Regulation 139/2004 articles 3.2 and 3.3” • The Info Memo clarified that “The relationship of control between the participants in the allocation of 2015 capacities will be provided to TSOs before the capacity allocation.” • Ministerial Order ITC/2607/2008 stated in art. 6.3 that: “la Comisión Nacional de Energía facilitará a los titulares de las instalaciones de conexión internacional con Francia, antes de la fecha de finalización de recepción de solicitudes, un listado con los Comercializadores y Consumidores Directos en Mercado autorizados, incluyendo la relación de control entre ellos, de acuerdo con la definición del referido “Reglamento comunitario de concentraciones” i.e., the CNE will provide TSOs, before the deadline for capacity request submissions, the list of shippers authorised to participate in the OS, including the relationship of control between them, according to the EC Regulation on mergers. • TSOs propose the same procedure, since they are not in the best position to evaluate this issue and have no role in the authorisation process.

18. 4. Information requested for pre-registration • Shippers willing to participate in the process shall submit a pre-registration form within the period detailed in the calendar. • TSOs shall send individual letters to shippers confirming their participation. • The information requested for pre-registration will be at least the following: • Network user at the Spanish side: • Name of the company requesting access • Address • Telephone, Fax and e-mail • Type of user: shipper or eligible user • Network user at the Portuguese side: • Name of the company requesting access • Address • Telephone, Fax and e-mail • Type of user: shipper or eligible use SAMPLE

19. 4. Information requested for the auction • The request sheet will contain at least the following information: • Identification number (obtained in the pre-registration) • IP for which capacity is requested • Type of capacity, if relevant • Capacity requested per price step • Minimum amount of capacity to accept the allocation per price step • Month for which the request is made SAMPLE

20. 4. Pending issues • Request format • Possibility to establish a Joint Allocation Office • Other submission issues (postal, electronic,…) • …

21. 5. Tentative calendar for discussion

22. A Annex I FG & Draft NC on CAM – provisions on VIP

23. Virtual Interconnection Point (I) FG on CAM • Article 2.4.3 “Virtual interconnection point”, established the following conditions for establishing a VIP The network code(s) shall set out that capacity at two or more points connecting the same two adjacent entry-exit systems is integrated into one single capacity service representing one virtual interconnection point. Transmission System Operators shall calculate the entire technical capacity of the integrated service. Virtual interconnection points have to be established no later than five years after the entry into force of the network code(s), insofar as the technical capacity resulting for the integrated service and at any virtual interconnection point shall not be lower than the sum of the previously separate bundled capacity products.

24. Virtual Interconnection Point (II) Draft NC on CAM Where two or more Interconnection Points connect the same two adjacent transmission systems, the adjacent transmission system operators concerned shall offer the available capacities at the Interconnection Points at one Virtual Interconnection Point according to the following conditions: • the total Technical Capacity at the Virtual Interconnection Points shall be equal to or higher than the sum of the Technical Capacities at each of the Interconnection Points contributing to the Virtual Interconnection Points; • to the reasonable judgement of each transmission system operator concerned regarding its own transmission network, the characteristics of the transmission systems involved shall allow the establishment of Virtual Interconnection Points virtualisation of capacities; • Virtual Interconnection Points shall only be established, if they facilitate the economic and efficient use of the system including but not limited to rules set out in article 16 of The Regulation; and • Adjacent transmission system operators shall start the necessary analysis and, if the above conditions are met, shall establish functional Virtual Interconnection Points no later than 5 years after the entering into force of this Network Code.

25. A Annex II Allocation procedure

26. Allocation procedure • Capacity will be allocated through volume-based cleared price auctions. • The reserved price shall incorporate the regulated tariff agreed by the NRAs • Capacity will be available for bidding on multiple months ahead within one bidding window. • Depending on the various capacity needs shippers will be able to place bids either for each month auctioned or only for some of them. However, each month will be allocated independently.

27. Volume-Based Cleared-Price Auction • TSOs shall provide a price range of 30 price steps, starting at the reserved price P0. • Network users shall only be allowed to submit one bid per price step. • All bidders shall submit a bid at price step P0. • Each bid quantity at P1 and subsequent steps shall be equal to or less than the bid quantity at the previous price step. • TSOs shall aggregate the demand per price step • The clearing price is defined as price of the lowest successful bid. All successful bids shall be deemed payable by the network users at the clearing price. • If the total demand exceeds available capacity at the maximum price step, at that price step the demand shall be pro-rated proportionally to the individual bid quantity.

28. TSOs proposal for defining the final price • Px shall be the highestprice step for which total demand is higher than or equalto theavailable capacity offered. • Px+1 shall be the subsequent price step. • If at Px demand is equalto theavailable capacity offered, the auction will be cleared at Px and the whole capacity will be allocated. • If at Px demand is higher than theavailable capacity offered, all bids at Px+1 shall be allocated, and there will be some remaining capacity. • The remaining capacity shall be allocated by pro-rata proportionally to the individual bid quantity at Px. In order to apply the pro-rata, for each bidder only the capacity differential between Px+1 and Px will be taken into account. This implies that: • Bids for the same amount of capacity at Px and Px+1 will not participate in the pro-rata. • Bids for a different amount of capacity at Px and Px+1 will only participate in the pro-rata for the amount of capacity Px+1 – Px. • If additional capacity is allocated at the Px price step (i.e., if the pro-rata mechanism results in an additional allocation of capacity over the capacity already allocated at Px+1), the auction will be cleared at Px. • If no additional capacity is allocated at the Px price step (e.g., because in the pro-rata no bid is allocated an amount equal to or higher than the minimum), the auction will be cleared at Px+1.

29. A Annex III Interconexion capacity between Spain and Portugal: 2011 updating process

36. Thank you for your attention!