Pilot framework guideline on capacity allocation mechanisms

1. Benoît Esnault (CRE) NW Region – governmental meeting 6 May 2010 Pilot framework guideline on capacity allocation mechanisms

2. Introduction • Context: need to improve the access to cross border points • Different allocation rules on the two sides of borders • Different types of capacity products • Domination of First Come First Served • More integration to the benefit of competition and security of supply • Preparation of the implementation of the third package: pilot framework guideline • CAM selected for the pilot project at the 16th Madrid Forum • Letter from the Commission received on September 22, 2009 • Consultation on the draft framework guideline launched on December 18, 2009 • Final version expected by end of March 2010 • ERGEG principles on CAM & CMP published in January 2009 & public consultation provided the basis for the pilot framework guideline

3. Target model and how to reach it • Scope of the Framework guideline: interconnection points between entry-exit zones within the EU ( ) • General principles • All market areas organized as entry-exit zones with virtual hubs • FCFS forbidden if congestion • Limited number of capacity products • Coordinated allocations throughout the EU • Auctions as preferred CAM; pro-rata allowed if conditions are not met for efficient & fair auction procedures • Towards uniform capacity allocation procedures at interconnection points throughout Europe in 2 steps: • Harmonisation of procedures at every IP: towards bundled products between market areas • Harmonisation at the EU level: same products & CAM everywhere

4. Framework guideline proposals • Improved TSO cooperation for capacity calculation and allocation • Adjustment of transmission arrangements (if necessary) • Capacity products • Harmonisation throughout Europe • Small number of products, from short term to multi-annual • Firm and interruptible products • Towards “bundled products” at IPs (1 stop shops) • Capacity allocation procedures • If no congestion, capacity is allocated as requested by shippers • Auction as standard allocation methodology • Pro-rata as interim step when necessary • Priority: same CAM on the two sides of interconnection points

5. Public consultation and next steps • ERGEG public consultation on the pilot framework guideline • 34 responses (incl. 4TSOs and 24 shippers) • Workshop held in Brussels on 2 February 2010 • Main points raised by respondents • High concern about the amendment of Existing contracts • Want more details about auction design and procedure to arbitrate in favour of pro-rata • Bundled products: concern about the elimination of trading at the border and about the interim period • Need for stakeholders’ consultation • Way forward • Discussions with ENTSOG on technical issues • Finalisation of the framework guideline by June. Last discussions on: • Implementation process of bundled products • Capacity allocation when no congestion

6. What involvement for the NW Region? • Main market in Europe and target model largely based on NW market’s potential for integration • Guidelines and codes will deeply change market conditions in the region • Important to develop a debate on target models at the level of the region • Get a feedback on patential problems and obstacles • ENTSOG is mainly led by NW TSOs • Stakeholders representatives at the Madrid Forum belong to the region • Lessons for future framework guidelines • NW region should contribute to gathering views of stakeholders • Test some proposals in the region • Try to involve the NW region in the early steps of drafting processes

7. Thank You!