Theme 1

1

• Theme 1
• TPA Services

2
TPA Services

• What are TPA Services?
• Capacity products
• System management
• Congestion management
• What is capacity?
• Financial/Physical right to move gas from A to B
• Rigidity of right impacts product development
  and trading
• Rigid Point to Point will suffocate competition
  
• Capacity Products
• Ex-ante publication of capacities (daily basis)
• Publication of methodology for determining
  capacities
• Availability of short-term capacity products
• Availability of interruptible capacity products
  (UIOLI)
• Non-discriminatory allocation of capacity (not
  first come-first served)
• Facilitate trading/transfers of capacity
  (including within day)
• TSO must be incentivised to realease maximum
  capacity on all routes at all times.
• Sub sub
• sub

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3
TPA Services

• What is System Management?
• Administration of the system and interaction
  between parties
• Which services should be prioritised?
• Consistent allocation procedures
• Consistent units of measurement
• Consistent timings for communications
• Rapid response and notifications
• How to achieve these aims
• Interconnection agreements and OBAs
• EASEE-gas
• TSOs should be responsible for the technical
  operation of their systems. Primary objective
  should be to allow for a seamless movement of the
  commodity within and across networks.

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4
TPA Services

• What is Congestion Management?
• Where requested flows cannot be fulfilled
• Key Principles
• Capacity restrictions should be discouraged
• Capacity restrictions must be non-discriminatory
  (market based)
• Firm scale backs should be compensated
• Notification of capacities and scale backs should
  be provided
• Capacity performance should be published and
  reviewed
• Costs of scale backs must be made available
• TSOs must be incentivised to maximise capacity
  availability and limit the cost of managing
  congestion.

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5

• Theme 2
• Tariff Structure and Derivation

6
Experience increasingly proves E/E system meets
the objectives of a tariff system

• LT investment signals are appropriately addressed
  (eg UK, NL)
• As E/E easily supports hubs, TSOs also benefit
  from new hubs business opportunities (E/E and
  hub-to-hub competition)
• E/E increases liquidity which helps TSOs to
  manage efficiently their system
• If no regulator exists or its powers are still
  limited, E/E is clearly superior in ensuring
  non-discrimination and level-playing field
• With E/E, TSOs and Transcos will also benefit
  from a reduction in transaction costs
• Contradictions are not between simplicity and
  cost-reflectivity, but between right to TPA and
  common practices that prevent it

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7
Internal gas market requires to urgently address
cross-border and transit tariffs

• TSOs are expected to enhance the interoperability
  of networks in order to develop an internal
  market
• EU regulations on transit and cross-border, as
  those for power being currently debated at the
  EU, are badly needed
• Any undue discrimination to transit customers
  constitutes
• An infringement of EU Law
• Reduces liquidity and endangers balancing
• Raises a barrier to sustaining consumption growth
  and security of supply
• Any special treatment of transit tariffs (as
  compared to other national transports) needs to
  be
• Clearly stated
• Adequately justified and verifiable

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8

• Theme 3
• Balancing

9
Balancing

• Balancing Rules must be fair, non-discriminatory
  and transparent.
• Principles
• TSOs should not benefit, financially, from
  balancing the system
• Suitable degree of unbundling to ensure no
  discrimination
• Imbalance costs should equate to costs of
  balancing the system (includes market
  determination)
• Balancing rules must be clearly defined including
  methodology for pricing the imbalance (not a
  matter for negotiation)
• Information should be published and actions
  audited.
• Balancing periods maybe harmonised, but should
  not inhibit trade.
• Allocation processes must be aligned to remove
  virtual and uncontrollable imbalances.
• Flexibility services should be available e.g.
  Access to storage, linepack, and fairly priced.

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10
Balancing

• Treatment of Imbalances
• Pooling should be encouraged
• Imbalance trading should be accepted
• Provision of information
• Individual shipper imbalance updates
• TSOs estimates based on actual flows acceptable
• After the event, reporting of system imbalance
  and TSO activity.
• Balancing is not a TPA service, but a physical
  requirement. TSOs should not benefit from
  providing balancing services and its actions must
  not inhibit competition/trading.TSOs must be
  incentivised to minimise balancing costs

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11

• Theme 4
• Market Based Mechanisms such as Secondary Markets

12
An efficient secondary market relies on how
accessible the system is

• Tariff structures, terms and conditions remain
  key to ensure access and to implement a credible
  secondary market
• Both primary and secondary markets must operate
  according to truly market-based mechanisms
• Secondary markets will struggle to manage
  congestions efficiently if the design of primary
  markets is tilted and inefficient
• Giving priority to LT ToP contracts in primary
  markets handicaps other players to participate in
  the market
• Priority to LT TOP is not necessary since Gas
  Directive provides a protection in case of
  financial difficulties
• Secondary markets require TSOs to disclose
  relevant physical flows information
• There is a need to agree an objective criteria to
  information disclosure that balances
  sensitiveness with efficient utilisation

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13

• Theme 5
• Roles and Responsibilities and Security of Supply

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Theme 1 Roles and Responsibilities and Security
of Supply

• The role and responsibilities of the TSO
• Develop and maintain an efficient transmission
  system to meet demands of users
• sufficient capacity and firm rights for users
• operate the system efficiently day to day
• balance the system efficiently and appropriate
  targetting of balancing and other system
  operation costs
• manage constraints/congestion efficiently
  market based mechanisms on the day and use-it-or
  lose it services
• Non-discrimination in pricing and terms for
  capacity and balancing
• Transparency of operations, system/investment
  planning and capacity availability

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15
Theme 1 Roles and Responsibilities and Security
of Supply

• Security of supply and the TSO
• Main role of the TSO is to ensure sufficient
  transmission capacity to meet peak demands
• Provision of sufficient supply to meet demand
  should be left to the market
• Balancing regime provides incentives to market
  players to ensure sufficient gas/storage to meet
  demand
• TSOs purchases of storage/gas for operational
  purposes only (e.g. compressor trips)
• TSOs should not hold strategic reserves and no
  need for industry insurance undermines
  incentives on market players to contract forward

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16

• Conclusions

17
Conclusions

• Point-to-point
• Long term contracts
• Unbundling
• Closed open German gasmarket

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