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France-UK-Ireland (FUI) Region 5th Stakeholder Group (SG) 26 th November 2007, London

France-UK-Ireland (FUI) Region 5th Stakeholder Group (SG) 26 th November 2007, London. Interconnector Operator (ICO) Update Simon McVeigh (NGIL) Jean-Gabriel Valentin (RTE). IFA Capacity Management System User Interface.

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France-UK-Ireland (FUI) Region 5th Stakeholder Group (SG) 26 th November 2007, London

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  1. France-UK-Ireland (FUI) Region5th Stakeholder Group (SG)26th November 2007, London Interconnector Operator (ICO) Update Simon McVeigh (NGIL) Jean-Gabriel Valentin (RTE)

  2. IFA Capacity Management SystemUser Interface • The new system is proposed to be the sole commercial interface for Users for all IFA activity, including: • Conducting auctions • Users’ Mid-Channel Nominations (MCNs) • All general communications (results, ICEs, specifications, curtailments, general queries/notices etc) • IFA will require a single Mid-Channel Nomination • unlike current practice of nominating identical MCNs to both TSOs • Access to be via web-based format (secure, reliable, and using ETSO ECAN protocols)

  3. IFA Capacity Management SystemNext Steps • Dec 07 Tenders invited • March 08 Contract award • *September 08 Product testing • *October 08 Commercial operation *note – chosen Supplier capability will determine precise Go-Live date. • In spring 08 a further User workshop will be held to update Users on business process and interface issues.

  4. IFA Capacity Management SystemProject Timescales 25 Jun 07 Plan Commencement 2 Jul 07 Plan Assumption – Regulatory ‘Go’ 9 Oct 07 Actual – Regulatory ‘Go’ 26 Nov Dec 07 Mar 08 Oct 08 * Revised estimates based on Supplier Pre-Qual responses Progress Plan Plan Changes

  5. Potential Harmonisation Aspects • Losses • Firmness • Settlement • Interconnector Transfer Limits (ITLs) • Use of I/C Fee

  6. IFA Mid Channel Nomination (MCN) 2000 MW Capacity F2E & E2F GB Market Firm Connection e.g. 1976 MW French Market Firm Connection e.g. 2024 MW 1.17% Loss 1.17% Loss RTE Assets NGIL Assets LossesPotential Harmonisation Aspects 4 x 500MW Circuits (Poles 1 – 4) Operated as 2 pairs of 1000MW (Bipoles 1 & 2)

  7. LossesRelevant Issues • GB Market ≠ French Market • GB: Market Participants responsible for losses • Fr: RTE pass through all losses (except IFA) to consumers • Direct Current ≠ Alternating Current • AC: System line loss small in meshed network • DC: System conversion losses notable • NGET (TSO) ≠ NGIL (ICO) • NGIL (Interconnector Licence) not permitted to trade energy; cannot mitigate or pass through energy exposure • NGET (Transmission Licence): to take on losses for another BSC party is not resolving an imbalance issue in GB Market; outside Licence

  8. IFA Nomination? F2E Only? Both directions? Capacity offered? IFA Nomination? E2F Only? Both directions? Capacity offered? RTE Assets NGIL Assets LossesPotential Options IFA Mid Channel Nomination (MCN) 2000 MW Capacity F2E & E2F 1.17% Loss 1.17% Loss

  9. LossesPotential Options • GB Market ≠ French Market • Harmonise GB & French market arrangements? • Direct Current ≠ Alternating Current • Appropriate to consider harmonisation of IFA with other French AC borders? • NGET (TSO) ≠ NGIL (ICO) • Consider varying NGIL’s Interconnector Licence / NGET’s Transmission Licence? • Users already factor losses into the value of IFA capacity • Purpose of harmonisation?

  10. LossesConclusion • No change proposed to current losses arrangements on IFA

  11. FirmnessPotential Harmonisation Aspects IFA (Direct Current) • ATC = NTC = Rating • F2E = E2F Capacity • No Security Standards • No circuit redundancy • Reconcile at 100% • Force Majeure 100% Other French AC Borders • ATC ≤ NTC < Rating • F2x ≠ x2F Capacity • Security Standards applied • Full circuit redundancy • Reconcile at 110% • Force Majeure 0%

  12. Current Compensation PracticesETSO Survey

  13. Compensation Force MajeureETSO Survey

  14. FirmnessRelevant Issues • IFA Risk ≠ Risk on Other French AC Borders • No European Grid Code to cover DC IFA • UCTE Handbook covers Other French AC Borders • Appropriate to consider harmonisation in FUI region? • NGET (TSO) ≠ NGIL (ICO) • Firm NGIL-NGET Connection to Firm GB Market • NGIL (Interconnector Licence) not permitted to trade energy; cannot mitigate or pass through energy exposure • NGET (Transmission Licence): to take on risk for another BSC party is not resolving an imbalance issue in GB Market; outside Licence

  15. FirmnessOptions • IFA Risk ≠ Risk on Other French AC Borders • Consider harmonisation across ETSO • Network Access & Congestion Management Task Force • NGET (TSO) ≠ NGIL (ICO) • Consider varying NGIL’s Interconnector Licence / NGET’s Transmission Licence? • Who is best placed to mitigate curtailment? • Curtailment is typically in increments of 500MW • Curtailment is proportioned across all User MCNs

  16. NACM Task ForceFirmness • Sub-group to Task Force led by E.On • Several interconnections to be studied • IFA, IFB, IFD, P-Cz, D-P, D-DW, B-NI, D-NI, D-CH • Analyse curtailments for 2006 CY data • Classified as caused by: • Internal AC Network • Interconnector assets

  17. IFA Curtailment Commentary* AC Borders Asset related maintenance/faults have not curtailed cross-border capacity because of Security Standards (UCTE Handbook) therefore redundancy in interconnection capacity Unplanned Trips/ Reductions Short-Notice Planned Outages Annual Outages * Discrete curtailment events shown (not duration) Switching transitions 500MW / 1000MW not listed individually Firmness Study on Interconnectors Draft Curtailment Data 2006

  18. FirmnessSummary • CM Guideline • Optimisation of firmness • Combination of Firm & Non-Firm capacity allowed • Medium-Term Harmonisation Potential • ETSO NACM Task Force • Short-Term Harmonisation Potential • Firm & Non-Firm capacity • Include as option for settlement functionality in CMS specification • Consult IFA Users on combination of Firm/Non-Firm capacity

  19. Settlement & InvoicingTarget Availability

  20. IFA Current Products invoiced individually, with different payment terms Products offered/invoiced at Target Availability, reconciled on last payment Considers Users’ cash flow against IFA service delivery Equivalent to 100% compensation IFA User Proposal Consolidated monthly invoices for all products, harmonised payment terms Products offered at 100% availability, reconciled monthly for outturn Considers Users’ cash flow against IFA service delivery Equivalent to 100% compensation Settlement & InvoicingCurrent & Proposed

  21. IFA Current ITLs set after D-1 nomination ITLs do not impact Users’ Interconnector Entitlement (ICE) at D-1 ITLs can restrict Users’ ability to re-nominate intraday if MCN < ICE IFA Proposal ITLs set after D-1 nomination, before Intraday allocation ITLs will not impact Users Interconnector Entitlement (ICE) at D-1 CM Guideline (applying UIoSI/ UIoLI) will ensure MCN = ICE Clarification underway regarding ITLs for intraday capacity Intraday Transfer Limits (ITLs)Current & Proposed

  22. Use of Interconnector FeeSO-SO Trades • NGET (TSO) ≠ NGIL (ICO) • NGIL cannot subsidise NGET, or vice versa • NGIL must levy a fee for ‘Use of Interconnector’ capability post gate closure • Options for Fee basis • Market-based • Associate with retro-direction D-1/intraday auction clearing price? • Associate with arbitrage value? • Non-market-based • Is there a market to participate in, post gate closure? • Product (I/C capability) is variable by nature – how to value? • No change proposed to current arrangements

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