template guidelines

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GRI SSE EFET RECIT Model - Recapitulation

• EFET presented a vision on a Regional
  Independent System Operator model at the IG SSE
  GRI meeting in Maribor
• EFET believes that this model will effectively
  provide market integration in a swift manner
• Proposed model does not try to find a new
  solution for design of the European gas market,
  it is more likely an interpretation of the draft
  of 3rd package published by EC in September 2007
• The model as such would be fully neutral and
  compatible with all types of unbundling of TSOs
  (OU, national ISO) ---gt the political decision
  on structure of the TSOs would not have
  influence on the processes and interactions
  determined in the model
• Two key results are awaited from this model
• Reducing of the existing market areas through
  establishment of Regional Independent System
  Operators
• Enabling all stakeholders of gas industry to take
  part in the drafting of binding documents on
  topics that affect parts of the industry (market
  rules for future European gas market)

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GRI SSE EFET RECIT Model

• The first aspect derives from the finding of
  Sector Inquiry where it was stated that a
  decent market size is a prerequisite for increase
  of liquidity (through diversity of source,
  routes, storages, players)
• Additionally a bigger market area with flow
  optimisation based on regional ((intra)/inter-nati
  onal) coordination will improve security of
  supply in the relevant region
• A stronger R_ISO might be able to better compete
  against third party take over bids
• The merging of the market zones with now
  different operational, technical and commercial
  (balancing) rules, will implicitly optimise
  cross-border trade and enhances market entry
  opportunities (bigger customer potential)
• Establishment of clear regional governance for
  the R_ISO backed by a consistent and stable
  regulatory framework with a strong European
  approach will overcome pure national interests
  and also increase investment incentives.

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Potential regional market development with
determining of the short term index prices
Border price

• xy

(Spot) price index
0
2
R_ISO xy
Border price
1
Atlantic bassin LNG Spot price
R_ISO 3
R_ISO 1
LNG
3
5
4
R_ISO 4
see
Border price
R_ISO 5
LNG
Border price
LNG
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GRI SSE Decision making process concerning EU
Grid Code
Policy and legislation
EC,European Council, EU Parliament
Policy
ERGEG/ Agency

Easee-Gas
Draft EU-Grid Code
Secondary Legislation If empowered
GTE
EFET
OGP
IFIEC
Eure lectric
..
Regional regulatory Board
Consultation process on the EU-Grid Code
Execution Monitoring Controling
R_ISO
R_ISO
Operative
TO
TO
TO
TO
TO
TO
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GRI SSE EFET RECIT Model role of market
players

• The model propose clear definition and separation
  of the task and responsibilities of particular
  market players
• R_ISO
• Management of capacities in the Regional Gas
  Grid
• Balancing services implementation of market
  place for them
• Long-term planning
• Drafting of the grid standard transportation
  contracts following the framework agreed within
  EASEE-gas
• Facilitation of a secondary market platform for
  trading and secondary markets for capacity
• Dispatching centre
• Collection of E/E fees and redistribution to the
  relevant TO
• TO
• Maintenance of transmission pipelines in
  accordance with the R_ISOs standards
• Compute and announce the available capacity to
  the R_ISO
• Enter into contract on exchange data with others
  TO and R_ISO
• Contribute to long-term adequacy

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GRI SSE EFET RECIT Model role of market
players

• Regulatory level EU/regional monitor, approve,
  enforce
• To ensure convergence between the regulatory
  principles and practices
• To approve the long term plans, methodology for
  calculation of tariffs
• To approve Regional Grid Code based on European
  Grid Code chapters(regional appendix)
• Easee-Gas
• Procedures for a coherent and common grid access
  to the EU
• Drafting of the grid standard transportation
  contracts
• Harmonisation of Invoicing and payments
• Harmonisation of Balancing rules / charges
• Defining of data format of communication
• Defining codification method
• Defining and agreeing on quality specification
• Harmonisation of trading arrangements
• ENTSO (GTE)
• Setting up of the Inter-TO compensation model
• Preparing of the ten Year Statements on system
  enhancement
• Ensuring closer communication and coordination
  among TOs best dispatch
• Agreeing of the minimum safety and maintenance
  requirements
• Agreeing standardized methodology for capacity
  calculation

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GRI SSE EFET RECIT Model Comments received

• Stakeholder consultation on the paper on RECIT
  model was taken, the deadline was 10 January 2007
• Comments from following parties has been received
  so far
• EC proposal is fully in line with 3rd package
• CEER supportive, asks for more details
• OGP rather supportive, wants to avoid
  inefficient structures and more detail on the
  economies
• Eurelectric supportive
• Eurogas rather supportive, question on
  investment
• GTE rather negative, does not want to make
  effort in regional initiative before 3rd package
  ready
• OMV Gas rather negative, asks for impact
  assessment

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Barriers to enter national markets in the SEE

• Austria
• Lack of transit capacity
• Not harmonised rules for transit and domestic use
• Incumbent has the advantage of good knowledge
  about the market
• OBAs at Baumgarten etc missing
• Hub Baumgarten not virtual point yet

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Barriers to enter national markets in the SEE

• Hungary
• Different transit and domestic use regime
• Calculation of the capacity rights (80 Ukraine,
  20 HAG)
• No capacity without customer
• No firm capacity at the border
• Still partly regulated market (possibility for
  the customers to switch from free prices to
  regulated), partly different transportation
  tariffs
• No market based balancing regime (in case of
  offering optional gas for balancing purposes the
  provider gets higher tolerance)
• No confidence in the market as the rules are
  changing very often
• Incumbent has the advantage of good knowledge
  about the market

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Barriers to enter national markets in the SEE

• Czech Republic
• No free storage (fully booked by incumbent),
  negotiated regime in spite of nearly monopolistic
  position of incumbent
• No market based balancing regime (as wished by
  the traders)
• No transparency prices, usage of capacity
  (traffic lights)
• Incumbent has the advantage of good knowledge
  about the market

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Barriers to enter national markets in the SEE

• Italy
• Not enough storage capacities available to free
  market participants
• Limited transport capacity to Italy
• No market based balancing regime which would give
  price transparency and free up storage capacities
• Incumbent has the advantage of good knowledge
  about the market
• Not enough liquidity at the virtual trading point
  PSV
• A lack of transparency and data availability
  (measurements, etc..)

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Barriers to enter national markets in the SEE

• Germany
• To many market zones with different regimes,
  capacities are scarce
• Balancing regimes with different tolerances and
  extreme differences between payments for
  excessive and missing gas ---gt no free market for
  balancing
• Potential cross subsidisation of short term
  contracts via long term contracts
• Only interruptible capacity available
• Setting up of the tariffs for transit pipelines
  (Ferngasunternehmer) not cost based as a
  competition is postulated ----gt no evidence for
  this assumption to market users
• Incumbents have the advantage of good knowledge
  about the market