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1
Balancing

• Balancing services from TSOs necessary for
  system access
• Charges cost reflective, transparant,
  non-discriminatory, (and published)
• TSOs to put provisions in place (for example
  unbundling of services) to provide new entrants
  equal footing to incumbents
• Imbalance charges TSOs to be financially
  neutral
• Balancing regime no undue barrier to entry and
  trade
• TSOs to at least offer services to balance to
  all network users
• Linepack should be made available to all network
  users
• Hourly balancing regimes barrier for development
  of trade
• Balancing market necessary for development of
  trade
• TSOs to facilitate development of balancing
  markets
• Recommendations to GTE
• Convergence of regimes required for development
  of cross border trade
• Develop convergence criteria in concrete
  proposals
• Develop concrete proposals to address above
  subjects

www.efet.org
2
Storage

• Access to storage required for efficient access
  to transportation system
• Tariffs cost reflective, transparent
  (published!), non-discriminatory
• TSOs to put provisions in place (for example
  unbundling of services) to provide new entrants
  equal footing to incumbents
• Publication of available storage capacities
  required for development of trade
• Including quantities of considered strategic
  storage and PSOs
• Recommendations to GTE
• Develop concrete proposals for access to storage
• Address above tariff and transparency issues

www.efet.org
3
Capacity Management

• Entry-Exit model is the preferred by EFET
• clear and easy to handle, for transport companies
  and transport customer as well
• low transaction costs
• avoids potential pancaking
• giving clear incentive for system users where to
  enter and where to take off the gas
• giving clear incentive for system operator where
  to add additional capacity
• Path based transportation system will delay the
  competitive market
• will reduce suppliers flexibility to switch to
  alternative supply sources
• will reduce suppliers flexibility to switch to
  alternative customer delivery points
• ! Portfolio management is only partly possible !
• As retail competition develops, operators will
  struggle to respond (extreme transaction costs
  for customers)

www.efet.org
4
Congestion Management

• Entry-Exit model
• Long term purchase contracts with priority in
  principle, but
• 10-20 has to be given to new market players to
  allow start of competition at every entry point
• auction about purchase contracts including
  capacity
• distinguish between typical congestion and
  unforeseeable congestion
• typical operation planing, capacity auctions,
  market splitting,...)
• unforeseeable real-time operation (security of
  supply...), re-dispatch and counter-trading
  (depends if it is a an hourly or daily balancing
  system)
• socialising of additional costs between all
  market participants for additional capacity
• quick development of a traded secondary capacity
  market (-gt reach price transparency and market
  prices for capacity)
• additional security of supply
• Path based transportation system
• Every system customer has to make his own
  congestion management
• the system needs gas markets at least at every
  Entry-point -gt less liquidity -gt less security of
  supply
• the marginal additional capacity has to be paid
  by the marginal customer

www.efet.org
5
Transmission Tariffs Conditions

• Last year EFET commissioned a study which
  compared tariffs across Europe.
• Main findings
• tariffs are all much higher than in UK
  (benchmark)
• access is also made difficult by cumbersome
  procedures and string of contracts needed
  (pancaking)
• Lack of transparency
• Point-to- point pricing inhibits trading
  (relationship with balancing)
• short term capacity services

www.efet.org
6
Transmission Tariffs Conditions

• Since EFET study little has changed except in NL
• In NL the point to point system has been
  substituted by a modified entry-exit,
• Movement towards daily balancing
• this only happened under the pressure of a
  regulator

www.efet.org
7
Transmission Tariffs Conditions

• Apart from the level of tariffs there are other
  hurdles
• Administrative application times, number of
  contracts and consistency
• contract terms leave shipper at the mercy of p/l
  operator in terms of maintenance etc.
• Allocation often first come, first served

www.efet.org
8
Transmission Tariffs Conditions

• Some suggestions for way forward
• simplify access by introducing entry-exit type
  systems
• Increase transparency
• Anti-hoarding and short term products
• regulate transmission operators to ensure fair
  tariff levels and equal treatment
• Streamlining application
• Improved harmonisation

www.efet.org
9
Theme 4 - Interoperability EGISB

• Interoperability
• Gas Quality
• Edigas
• Harmonisation
• Interconnection
• EGISB
• EASEE
• Conclusions

www.efet.org
10
Interoperability - Gas Quality

• Change the German GCV Regulations (as per 3.1,
  p10 of GTE report). How can this be achieved?
• Wobbe incompatibility is primarily that UK max is
  below Continental. This will affect Reverse Flow
  contractual liabilities. Im not sure what can be
  done in the UK as it depends on eliminating old
  appliances!!
• HC Dewpoint. No contractual solution but
  Elgin/Franklin/Shearwater seem to have physically
  saved the day.
• Oxygen. Reverse flow issues. Transco are likely
  to change the UK spec as part of Interconnection
  Agreement package with IUK.
• GTE promised (Section 4, p13) to gather more
  detailed information, to assess
  upstream/downstream investment costs, and to
  solve some of the problems through OBAs.
  Progress? Can EFET be involved in dialogue with
  GTE on detailed points prior to next Madrid Forum?

www.efet.org
11
Interoperability - Edigas

• Initial meeting has taken place between Edigas
  Group and EFET at communication specialist level.
• successful start, common ground on interfacing
  with XML.
• work to continue.
• Edigas Group is likely to become part of an
  EASEE-gas working group on communication
  protocols, along with EFET communications group.
• Edigas needs to tackle the availability/cost of
  competitive software to users, and the ability to
  use the software to communicate between shippers
  traders as well as directly to/from the
  Transporter.
• Transporters need to offer shippers options on
  communications, eg
• Edigas for larger Shippers with complex
  portfolios,
• (cheap) Web solutions for smaller shippers.
• (Gasunie and GdF have already made progress on
  this)

www.efet.org
12
Interoperability-Harmonisation

• GTE proposed that this covers standardisation of
  things like
• Gas Day/Week/Year
• Measurement/Trading units
• Nomination/re-nomination times
• Maintenance notification
• This is work ideally suited to EASEE-gas
  workgroups to tackle, taking due account of
  existing practices and practical constraints

www.efet.org
13
Interoperability-Interconnections

• This includes Interconnection Agreements (TSO to
  TSO) and Operational Balancing Agreements (OBAs),
  again TSO to TSO.
• Do all GTE TSOs agree that they should have an
  Interconnection Agreement? (Distrigas and IUK
  dont have one)
• Do all GTE TSOs agree that they should have an
  OBA? (IUK Transco dont have one)
• Multiple Shippers either side of an
  interconnection and growth of trading mean that a
  matching procedure is necessary to ensure
  effective transfer of title. This should be part
  of the Interconnection Agreement (or assigned to
  an independent Agent, if one of the TSOs is still
  bundled).
• OBAs are welcome to eliminate flow valve
  steering noise and metering reconciliation
  adjustments. Adequate operational communication
  with Shippers is necessary when OBA balances are
  exceeded and the allocation method changes.
• Allocation services should include sub-allocation
  to counterparty level.
• Establishing Interconnection Agreements will
  highlight the commercial risks for Shippers on
  mismatching gas quality specs between TSOs (but
  probably not solve them!!)
• Interconnection Agreements OBAs should be made
  available to Shippers (GTE say Shippers are
  removed from the details of the agreement!
  Whats the big secret?).

www.efet.org
14
EUROGISB gt EASEE-gas

• Good initiative
• Fantastic name, but
• The key objective is to set up the new
  association in a manner that balances all
  industry views/interests/power, and not to lose
  time in this Task Force phase
• Concerned that some organisations think it is
  going too fast. Eurogas yesterday I am not
  sure we can support the basic principle of
  balanced voting procedures
• Demonstrable progress by the next Madrid meeting
  is essential
• There are too much hidden agendas, e.g. French
  focus instead of European focus
• Too much costs and not enough focus on getting
  started with practical work to show results to
  members
• Danger to spend too much money, no results and
  creating an expensive white cripple elephant

www.efet.org
15
EASEE-gas

• Whilst the Task Force is formulating EASEE-gas,
  workgroups should start in parallel to start to
  tackle initial topics for standardisation (this
  may be done informally through Edigas, but with
  an open invitation to participate).
• The US GISB appears to be a good model to use as
  a basis, but it needs to be adapted to suit the
  European gas industry (eg The types of sectors
  represented on the Exec Committee), but stay
  practical
• Relationship with the Power industry needs to be
  addressed - an EASEE-power could be established
  in parallel and then in the longer term, an
  integrated EASEE-energy (again successful
  initiatives have started with EFET and Edigas
  attending an ETSO meeting on node/supply point
  numbering protocols

www.efet.org
16
Interoperability EASEE-gas Conclusions

• EASEE-gas is a welcome initiative.
• It should be able to tackle many of the
  Interoperability issues.
• However EASEE-gas may not be able to solve all
  Interoperability issues voluntarily eg -Gas
  Quality specifications.
• GTE will still need to be take initiatives to
  solve such matters (and to be accountable to
  Madrid?)
• GTE should be pro-active, not re-active so that
  appropriate processes are in place as market
  opens up, in advance of shipper/traders needs.
  This will make for easier subsequent
  standardisation within EASEE-gas.
• Address also the harmonisation (and eventual
  integration) with Power processes.

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