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Madrid, 19th February 2014

21st SG Meeting

South Gas Regional Initiative

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Agenda10:30-10:35 I. Opening

I.1 Welcome

I.2 Agenda and minutes of the last meeting (for approval)

10:35 – 12:30 II. Capacity Allocation Mechanism

II.1 2014 OSP ST between France and Spain (for information by TSOs)

II.2 Status of regulatory framework to develop auctions in the Region (for

information by Regulators)

II.3 Arrangement for the first auction (for information by TSOs)

II.3.1 Using PRISMA: training session, shipper’s registration.

II.3.2 Auction details for yearly products: capacity offered, bidding

rounds, price steps, contracts, etc.

12:30-12:50 III. Congestion Management Procedures

III.1 Supervision of CMP implementation in the SGRI (for information by

Regulators)

12:50-13:10 IV. Iberian Gas Hub: update on the study on models for integration of the Spanish

and Portuguese gas markets (for information by Regulators)

13:10-13:30 V. Next NC implementation (for discussion)

V.1 Balancing and Interoperability: implementation priorities (for information

by TSOs)

13:30-13:50 VI. Infrastructures:

VI.1 2013 South Gas Regional Investment Plan (GRIP) (for information by

TSOs)

VI.2 Regulators’ opinion on 2013 GRIP (for information by Regulators)

13:50-14:00 VII. AOB and next meetings

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II. Capacity Allocation Mechanisms

Area of work Responsible Starting Deadline

OSP France-Spain: annual allocation of short-term capacities

TSOs Nov. (yearly) Dec. (yearly)

CAM harmonisation proposal PT-SP NRAs-TSOs Jan. 2011Jun. 2012

(COMPLETED)

CAM harmonisation proposal in the whole region NRAs-TSOs Jan. 2012 Dec. 2013

Set up a common TSO Allocation Platform: Roadmap and Implementation

TSOs Jul. 2012 Dec. 2014

II.1. 2014 OSP ST between France and Spain

II.2. Status of regulatory framework to develop auctions in the Region

II.3. Arrangement for the first auctionII.3.1 Using PRISMA: training session, shipper’s registration. II.3.2 Auction details for yearly products: capacity offered, bidding rounds, price steps, contracts, etc.

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II. Capacity Allocation Mechanisms

II.1. 2014 OSP ST between France and Spain

(for information by TSOs)

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II.2. Status of regulatory framework to develop

auctions in the Region

(for information by Regulators)

II. Capacity Allocation Mechanisms

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II. CAM

• Spain:

a CNMC Circular has been approved on 12 February. It will be published in the BOE (Bulletin Official of the State).

“Circular 1/2014, de 12 de febrero de 2014, de la Comisión Nacional de los Mercados y la Competencia, por la que se establecen los mecanismos de asignación de capacidad a aplicar en las conexiones internacionales por gasoducto con Europa”

• France:

a CRE Deliberation has been approved on 13 February.

“Deliberation of the Commission de Régulation de l’Énergie of 13 February 2014 on rules for the progressive implementation of the European network code on the allocation of gas transmission capacity at interconnection points between entry-exit systems”

• Portugal:

The Information Memorandum elaborated by Spanish and Portuguese TSOs, in coordination with NRAs, was submitted to Public Consultation.

ERSE will approve the document and will be published by the end of this week

“Coordinated implementation of the Network Code on Capacity Allocation Mechanisms. Information Memorandum. January 2014”

II.2. Status of regulatory framework to develop auctions in the Region

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II. Capacity Allocation Mechanisms

II.3. Arrangement for the first auction (for information by TSOs)II.3.1 Using PRISMA: training session, shipper’s registration. II.3.2 Auction details for yearly products: capacity

offered, bidding rounds, price steps, contracts, etc.

(for information by TSOs)

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III. Congestion Management Procedures

III.1. Supervision of CMP implementation in the SGRI

Area of work Responsible Starting Deadline

CMP harmonisation in the whole region NRAs-TSOs Oct 2012 Oct.2013

CMP harmonisation in the whole region (including UIOLI firm ST)

NRAs-TSOs Oct 2012 Jul. 2016

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III. Congestion Management Procedures

III.1. Supervision of CMP implementation in the SGRI

(for information by Regulators)

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III. Congestion Management Procedures

The ACER Monitoring Report on CMP implementation is in process, according to CE Decision of 24 August 2012 : To check the legal implementation of CMPs (implementation deadline was 1 Oct

2013) To receive TSO data on contractual congestions and occurrences for each applied

CMP, that resulted in an offer of capacity, in order to elaborated the ACER Congestion Report – the publication is expected by the end of February.

For those objectives, an online survey was launched by ACER/TF CAM:

TSOs answer the questions by mid February. NRAs will review the answers and complete their part by the end of February. The responses will be analysed and evaluated. The Report on CMP implementation will be finished by May/June.

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IV. Developing hub-to-hub trading in the South region

IV.1. Iberian Gas Hub: update on the study on models for integration of the

Spanish and Portuguese gas markets (for information by Regulators)

Area of work Responsible

Starting

Deadline

Hub development NRAs-TSOs-stakeholders

Jan.2013 Dec. 2013

Hub-to-hub gas trading in the region NRAs-TSOs-stakeholders

Jan.2014 Dec.2014

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IV.1. Iberian Gas Hub: update on the study on models for integration

of the Spanish and Portuguese gas markets

0. GENERAL OBJECTIVE

. In order to assess the feasibility for the development of a gas hub, the study analyzes different aspects of the current gas market situation in Spain and Portugal, including prices in the gas market, as the most important factors.

. The study covers three different models for Iberian gas market integration, comparing the advantages and disadvantages for each model.

Market Area Model.

Trading Region Model.

Market with Implicit Capacity Allocation.

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1. The Market Area Model (full integration)

Market Area A

Country A

Country A Country B

Market Area AB

Cross-border market

area

National market

area

Final customers (A)

Final customers (B)

VP

Final customers (A)

VP

Features. The adjacent transmission and distribution networks situated in the same geographical area (and well interconnected) are forged into a single entry/exit system.. The market area includes all gas transmission and distribution systems of participating countries (one single market area).. The market area enables a single wholesale market with a single virtual point.. The market region has a single balancing system (with a single balancing entity and balancing rules).

IV.1. Iberian Gas Hub: update on the study on models for integration

of the Spanish and Portuguese gas markets

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2. The Trading Region Model (full integration, except balancing)

Country A Country B

Trading Region AB

End userzone A

End userzone B

Final customers (A) Final customers (B)

VP

Features:

. The adjacent transmission and distribution networks that are situated in the same geographical area and that are well interconnected are forged into a single entry/exit system with a single virtual point.

. The Trading Region has two end-user balancing zones. The balancing in each end-user zone is performed according to the respective national rules (imbalances are managed by the national balancing entities).

IV.1. Iberian Gas Hub: update on the study on models for integration

of the Spanish and Portuguese gas markets

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3. Common Wholesale market with implicit allocation of capacity

Features:

. A certain amount of the interconnection capacity is reserved for implicit allocation.

. In this model, gas trade and allocation capacity are assigned simultaneously via a gas exchange (or a gas trading platform).

. The implicit allocation mechanism will allocate cross-border capacity on the basis of the bids and offers to buy and sell gas on a functioning gas exchange on either side of the border. Thus, capacity allocation (and gas flow) will follow the market signals.

Market participants make “bids” and “offers” for

buying or selling of gas

Interconnection capacity is being reserved for

implicit allocation

The implicit mechanism matches those bids and

offer with the highest price differences

Capacity is automatically assigned once a trade is made until cross-border capacity is sold out or prices have converged

IV.1. Iberian Gas Hub: update on the study on models for integration

of the Spanish and Portuguese gas markets

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4. Preliminary evaluation of the models

Market Area Model Trading Region Model Wholesale market with implicit allocation of capacity

•Requires substantial legal and regulatory alignment among Spain and Portugal (implementation will take many years).

• Requires very good interconnection capacity.

• Can be considered a long term objective for the Iberian Market.

•Requires substantial legal and regulatory alignment among Spain and Portugal.

• Requires very good interconnection capacity.

• Co-habitation of one single virtual point with two end-user balancing zones (possibly with different balancing rules) is really a challenge.

• Can be applied with limited interconnection capacity (the markets will decouple when the interconnection capacity is fully used).•Does not require a high level on harmonization of national legislations (implementation can be faster).• Will directly promote market liquidity in the common Iberian gas hub.• Can be a first step for the Iberian gas market integration.

IV.1. Iberian Gas Hub: update on the study on models for integration

of the Spanish and Portuguese gas markets

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V. Next NC implementation

V.1. Balancing and Interoperability: implementation priorities (for information by TSOs) (for discussion)

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VI. Infrastructures

Area of work Responsible

Starting

Deadline

Regular update and publication in CEER website of project status of OS 2013 and 2015

TSOs-NRAs Dec. (yearly) Jun. (yearly)

Drafting of the South Regional Investment Plan 2012 TSOs Jul. 2011Jan. 2012

(COMPLETED)

Feedback to ENTSO-G on contents and methodology of the regional investment plan

NRAs Jan. 2012Jul. 2012

(COMPLETED)

Input to ENTSO-G for the Community-wide TYNDP 2013

TSOs Jan. 2012 Apr. 2013

Creation of a working group in the region in order to test the process of PCI identification

NRAs -TSOs Mar. 2012 March 2013

Drafting of the South Regional Investment Plan 2014

TSOs Jan. 2013 Apr. 2014

VI.1 2013 South Gas Regional Investment Plan (GRIP)VI.2 Regulators’ opinion on 2013 GRIP

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V.1. 2013 South Gas Regional Investment Plan (GRIP)

(for information by TSOs)

VI. Infrastructures

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VI.2. Regulators’ opinion on 2013 GRIP

(for information by Regulators)

VI. Infrastructures

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VI.2. Regulators’ opinion on 2013 GRIP

• The Draft 2013 South GRIP was submitted to Public Consultation until

20 Jan 2014.

• The Regulators in the Region adopted their Opinion on 30 Jan: General comments

Data on demand and regional supplies are referred to 2011 (updated with 2012 is recommended).

Some wording clarifications and sources references in figures/tables. Consistency in the scenarios considered: further description.

Demand forecast Welcome the revision of the demand forecast taking into account the

current economic situation in the Region. It would be useful to have a clear picture on the overall demand trends.

Comments on: Supply, Infrastructure, Capacity Subscription (data revision is advisable) and Economic aspects (more data on cost of the foreseen projects)

VI. Infrastructures

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Next meetings:• 27th IG meeting: 28 March - telco• 28th IG meeting: 30 April - telco• 22nd SG meeting: 21 May

VII. AOB and next meetings - 2014

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