Allocation Rules Martin Apko CAO Central Allocation Office GmbH

1. Allocation Rules Martin Apko CAO Central Allocation Office GmbH 30 February 2009, CEE Implementation Group, Vienna

2. Content • Participation in Allocation Process • Collaterals • Products • Secondary Market • Allocation Algorithm • Emergency procedures • Settlement • Transparency • Additional Features

3. Participation in Allocation • Registration • signed registration form • extract from commercial register • contact details • Confirmation of the registration by CAO constitute the contract between CAO and registered entity. • Entity is identified by unique EIC code (usage of more EIC codes is not allowed) • Access to CAO IT • user registration • qualified electronic certificates for encrypting and signature of data • Collaterals

4. Collaterals (I/II) • Rating • ? “BBB-” (S&P) or “Baa3” (Moody’s) or “BBB-” (Fitch/IBCA) or higher – represents 5 000 000 EUR of Credit Limit • Bank guarantee • any bank with the required rating • requirements specified by AR • Deposit • on the account of CAO • on the escrow account of Allocation Participant

5. Collaterals (II/II) • Credit Limit • sum of all collaterals valid for an individual allocation process • credit limit is utilized by not paid invoices and bids submitted into the system • unutilized credit limit defines if the bids will be accepted for evaluation or not: • in case of daily auction bids – maximum value is checked on the input to the system • in case of yearly/monthly auction bids – preliminary evaluation is used to identify allocation participants whose bids will be excluded due to insufficient collaterals

6. Products • Technical parameters calculation done on the base load basis • Standard products • yearly • monthly • daily • Block products • to be defined by CAO staff • flexible • Bids can be satisfied also only partially – divisible bids. • Result of the allocation is right to use the capacity (PTR) identified by source CA, sink CA

7. Secondary market (I/II) • Supported activities • Transfer • Resell • valid for yearly & monthly PTRs • on self-service basis via CAO IT • Transfer • possible for paid PTRs • by D-2, auto-rejection if not confirmed by transferee • slicing is possible as regards time (hourly basis) and volume (MW) • all rights and obligations (with exception of payment for the allocation of PTR) are transferred

8. Secondary market (II/II) • Resell • possible for paid PTRs • into monthly allocation (base load), slicing is possible as regards volume (MW) • into daily allocation, slicing is possible as regards time (hourly basis) and volume (MW) • compensation for holder of PTR is equal to the allocation price determined in the relevant monthly/daily allocation process, however the compensation may not exceed the original payment for reservation of PTR

9. Allocation Algorithm • Social welfare maximization principal applied • see presentation of Mr. Todem

10. Emergency procedures (I/III) • In case of emergency situation or to avoid the emergency situation TSOs may apply curtailment of PTRs via CAO • Following criteria has to be considered in such case: • What is the duration of the emergency situation (e.g. How long it will take to replace the damaged network element)? • When the information is available to TSOs? • Trade off between accuracy of the curtailment and time of notification to the market.

11. Emergency procedures (II/III) • Curtailment of Allocated PTRs • applicable in cases when TSOs identify necessity of curtailment longer time in advance or curtailment will be applicable for several days • usage of all allocated PTRs is taken into account • the highest price bids from yearly and monthly allocation up to the level of allocated PTRs are evaluated with use of the allocation algorithm taking into account actual/updated grid conditions • CAO inform allocation participants about curtailment

12. Emergency procedures (III/III) • Curtailment of Nominated PTRs • applicable in cases when TSOs identify necessity of curtailment shortly before the daily allocation or just during the calculation of daily Available Maximum Flows – i.e. after the nomination gate closure • nominations submitted by market participants to TSOs are taken into account (including netting) • the highest price bids from yearly and monthly allocation up to the level of nominated PTRs are evaluated with use of the allocation algorithm taking into account actual/updated grid conditions • CAO inform allocation participants about curtailment • TSO confirm curtailed transmission schedules to market participants

13. Settlement • Reservation of PTRs • yearly – 12 equal installments (in advance) • monthly – 1 invoice (in advance) • daily – all daily allocations within calendar month (1 invoice ex-post) • Resell • invoice issued by allocation participant • all resells within calendar month (1 invoice ex-post) • Curtailment • invoice issued by allocation participant

14. Transparency • Technical data • Available Maximum Flows • Export/Import limits • PTDF matrix • Market data • specification of the deadlines and product • Requested PTRs • Allocated PTRs • Number of participants • List of bids without identification of the bidder (bidding curve)

15. Additional Features • Notice Board • communication platform supporting the secondary market • Balancing Services • delivery of cross-border balancing services is allowed on several borders in CEE region • to allocate transparently capacity for this purpose (and set the price for such capacity), PTRs allocated within the standard allocation process may be notified to be used for balancing services provision