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Background

Gas Regional Initiative North West Region Balancing workstream Workstream leader: Cemil Altin (Ofgem). Background. North West region identified gas balancing as a priority area of work

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Background

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  1. Gas Regional InitiativeNorth West RegionBalancing workstreamWorkstream leader: Cemil Altin (Ofgem)

  2. Background • North West region identified gas balancing as a priority area of work • The North West RCC issued a questionnaire to market participants on gas balancing in November. Also published on ERGEG website • ERGEG also published its final guidelines for good practice for gas balancing (GGPGB) in December after open/transparent consultation – sets out guidance to NRAs/TSOs on design of gas balancing mechanisms • 18 responses were received to the North West RCC gas balancing questionnaire. All non-confidential responses are on ERGEG website • A “facilitation paper” for this session has been prepared and circulated by the RCC alongside a “data appendix”

  3. Purpose of this session • Discuss the responses to the questionnaire • Discuss the key issues that arise • Discuss what the possible next steps should be • Important opportunity for all stakeholders to express their views

  4. The questionnaire and responses • Responses received from TSOs, shippers and traders • Respondents were asked to identify for interconnection points that they use issues associated with interaction between gas balancing mechanisms: • Balancing periods • Nomination/re-nomination regimes • The way allocations are derived • How imbalances are calculated • Tolerance levels and services offered • Market mechanisms in place for balancing • The information provided either side of the connection point • Respondents asked to rate difficulty caused by the issue (from 1 for “not difficult” to 5 for “extremely difficult”)

  5. The questionnaire and responses • A number of respondents did not provide ratings in all instances or different figures for the same issues depending on the interconnection point • Table below summarises scores given by respondents

  6. Some observations on the responses • A significant number of the problems identified by respondents appear to relate to operation of gas balancing mechanism within a specific country rather interaction between mechanisms e.g.: • The way allocations are derived • The way imbalance prices are calculated and/or lack of liquid, market based mechanisms • Some problems were identified in the interaction between “networks” e.g.: • Differences in nomination/re-nomination arrangements between National Grid & IUK can lead to missed trading opportunities & reduced liquidity • Some problems were also identified with the interaction between networks within a particular country e.g.: • Differing tolerance levels in Netherlands • Different arrangements across Germany • There are differences in the level, way and frequency of information provision between connected systems – this appears to give rise to problems of risk management/ability to take effective balancing actions/could give lead to barriers to entry

  7. Some themes and questions Themes • There are some distortions and complexities caused by the way balancing mechanisms interact • There are problems in managing risk effectively and efficiently in some gas balancing mechanisms • There are differences in the level, scope, method of information provision between gas balancing mechanisms

  8. Some themes and questions Questions • What are the key areas of interaction between gas balancing mechanisms? • How do these interactions impact on the ability of market participants to manage risk? • Do these interactions lead to barriers to entry/trade? • Do any barriers impinge disproportionally on smaller players? • What can be done to manage the interactions more effectively? • What could be done to improve the level, scope, consistency of information provided under balancing mechanisms? • Are there any countries in the North West region where the problems of gas balancing are particularly acute? • If so, what could be done about them?

  9. Possible ways forward? • For discussion • Application of the ERGEG GGPGB – to improve the operation of gas balancing mechanisms within each country • Development of information templates for gas balancing – in consultation with stakeholders to improve transparency and therefore ability to manage risk within/across balancing mechanisms • Development of 2 case studies on gas balancing interactions – to explore in more detail the interactions between balancing mechanisms • Who should do what? • RCC • IG • SG • Enabler Group

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