28th may 2009, madrid xvi madrid forum

28th May 2009, Madrid

XVI MADRID FORUM

ERGEG

GGPLNG : 2009 monitoring exercise

2Madrid Forum XVI, 28th May 2009

GGPLNG – 2009 monitoring exercise

INDEXINDEX

1. Level of participation

2. Results:

2.1. General information

2.2. Tariffs and tariff methodologies

2.3. Roles and responsibilities

2.4. TPA services

2.5. Capacity allocation mechanisms (CAMs) and congestion management procedures (CMPs)

2.6. Transparency

2.7. Trading of capacity rights

3. Recommendations



NRAs’ and LSOs’ responses

NRA Country

BELGIUMCommission pour la Régulation de l'Electricité et du Gaz (CREG)

FRANCECommission de Regulation de l'Energie (CRE)

GREECEΡυθμιστική Αρχή Ενέργειας / Regulatory Authority for Energy (PAE / RAE)

ITALYAutorità per l’Energia Elettrica e il Gas (AEEG)

PORTUGALEntidade Reguladora dos Serviços Energéticos (ERSE)

SPAIN Comisión Nacional de Energía (CNE)

UNITED KINGDOM

Office of Gas and Electricity Markets (Ofgem)

TOTAL: 7 NRAs (100%)

LSO NameNumber of terminals

Country

Bahía de Bizkaia Gas (BBG) 1 Spain

ENAGAS S.A. 3 Spain

Regasificadora del Noroeste, S.A (Reganosa)

1 Spain

Planta de regasificación de Sagunto S.A. (SAGGAS)

1 Spain

ELENGY 2 France

Societé du Terminal Méthanier de Fos Cavou

1 France

GNL Italia S.p.a. 1 Italy

Terminale GNL Adriatico S.r.l. 1 Italy

Fluxys LNG 1 Belgium

Hellenic Gas Transmission System Operator S.A.

1 Greece

National Grid Grain LNG 1 United Kingdom

REN Atlantico, S.A. 1 Portugal

TOTAL: 12 LSOs, 15 terminals (86%)



Users’ responses

User Country

User 1 Italy, Spain

User 2 Spain

User 3 Spain, UK

User 4 Greece

User 5 Portugal

User 6 France, Spain

User 7 Italy

User 8 Italy

User 9 Portugal

User 10 France, Italy, Spain

User 11 France

User 12 France, Portugal Spain.

User 13 Spain

User 14 Spain

TOTAL: 14 business groups, 21 questionnaires received


2.1 Results: General information

• More than half of LSOs are also TSOs and 36% are supply undertakings as well. Only 2 LSOs report to be exclusively dedicated to managing their LNG terminals.

• 38% of users indicate that they are part of the same vertically integrated undertaking with the LSO to which the completed questionnaire applies

• Only 3 NRAs state having implemented measures to assure confidentiality and avoid competitive imbalances

• Only 17% of LSOs identified potential incompatibilities between GGPLNG and national regulations


2.2 Results:Tariffs

2.2 From your experience, the tariff regime structure...

90%

38%52%

33%

86%

38%

38%

52%

5%24%10% 14% 10%10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Contains adescription of its

objectives

Is cost-reflective Is clear in thecalculation of tarif fsand LSO revenues

Specif ies theallocation of

additional revenuesfrom congestion

Specif ies thecompetent authority

for tarif f setting

No answer providedNoYes

USERS‘ RESPONSES


2.2 From your experience, the tariff regime structure...

43% 43%

76%62%

29%

10%

19%

29%14% 19%14%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Incentivises eff icientcommercialisation and

terminal use

Is review ed taking intoaccount market evolution

Distinguishes betw eencapacity and commodity

charges

Distinguishes betw eenservices

No answer providedNoYes

43 %

2.2 Results:Tariffs

USERS‘ RESPONSES


While NRAs are generally satisfied with the degree of compliance with GGPLNG on tariffs, users believe that there is room for improvement, so an effort needs to be made concerning:

Tariff methodology transparency

Cost-reflection

Efficient tariff incentivising terminal utilisation

How to manage congestion revenues

2.2 Results:Tariffs


• Good degree of GGPLNG implementation on these issues.

• Room for improvement regarding:

Implementation of IT systems by users

Cost-reflection in penalties design

Development of a balanced framework regarding responsibilities and penalties of LSOs and users.

2.3 Results:Roles and responsibilities


4.1 Services offered in terminals

0

2

4

6

8

10

12

14

Long-termservices

Short-termservices

Firm services Interruptibleservices

Bundledservices

Unbundledservices

Nu

mb

er

of

LS

Os

no answernoyes

83%

67%

17%

75%

17%

25%

58%

8%

17% 17%

75% 83%

17%

8%

17% 17%

2.4 Results:TPA services. Services offer

LSOs‘ RESPONSES


2.4 Results:TPA services. Contracting

proccess

Standard contracts and terminal codes are being used or under definition in all the terminals

50%42%

75%

42%

4.3 How is the contracting process?

0

2

4

6

8

10

12

known by the market defined by theregulation

defined by the LSO Contracting processis defined

No time limit forsigning the contract

Nu

mb

er

of

LS

Os

no answernoyes

67%

33%

58%

8%

25%

8% 8% 8% 8%

42%

17%

50%

92%75%

92%

LSOs‘ RESPONSES


• Important degree of harmonisation and transparency when defining bundled services, which almost always include: ship reception and unloading, LNG storage and regasification capacity

• Interruptible services are not being offered in most of the cases

• 48% of users indicate that services are defined without market consultation

• 52 % of users explain that services offered do not accommodate their needs, pointing out other services required as bundled or unbundled (trucks loading, extra LNG storage…).

• Services to be defined at market request and with market collaboration, preventing distortions among terminals

• Contracting process to be clearly detailed

2.4 Results:TPA services. Services offer


• Users view of terminal code show that, 70% comply with the GGPLNG.

• Aspects that can be improved:

To include rules for secondary capacity markets

Better definition of CMPs

Tolerance levels of

services and imbalances

Liabilities

• Users identified lack of visibility

regarding available slots

GLE to analyse the need

to standardise notice periods

2.4 Results:TPA services. Terminal code and

scheduling

4.4. Notice period

31%

25%

44%

Should be 10 days or less

Should be 1 month

Other

USERS‘ RESPONSES


In general, users are satisfied with the cooperation between LSOs and TSOs

2.4 Results:TPA services. LSOs and TSOs

cooperation

4.5 Cooperation between LSO and adjacent TSOs include

90% 95%81% 81% 86% 81%

5%

5% 10%10%

10%

10% 14% 10% 5% 10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Compatibleservices

Compatibletechnical

procedures

Coordinatedcapacity

subscriptions

Coordinatedcongestion

managementprocedures

Compatiblebalancingregimes

Communicationof nominations

andrenominations

No answer provided

No

Yes

USERS‘ RESPONSES


5.2 The CAMs and CMPs currently applied in the LSO´s terminal...

52%62%

52%

24%33%

33%24%

33%

62%52%

14% 14% 14% 14% 14%

0%

20%

40%

60%

80%

100%

Were defined afterpublic consultation?

Are transparent? Are nondiscriminatory?

Are market-basedsolutions?

Facilitatedevelopment ofcompetition?

Yes No No answer provided

2.5 Results:CAMs and CMPs

LSOs‘ RESPONSES


5.2 The CAMs and CMPs currently applied in the LSO´s terminal...

14%

38% 33%43% 38%

71%

48% 52% 38% 43%

14% 14% 14% 19% 19%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Facilitate liquidtrading of capacity?

Are compatible withspot markets?

Are compatible withtrading hubs?

Provide signals tofoster efficient useof the contracted

capacity?

Provide signals tofoster investmentsin new capacity?

No answer provided

No

Yes

Only 14% of users consider CAMs and CMPs facilitate liquid

capacity trading


LSOs‘ RESPONSES



5.3 CMPs currently applied in LNG terminals?

0

2

4

6

8

10

12

Secondarycapacitymarket

Firm short termuse it or lose it

Interruptibleshort term use

it or lose it

Use it or lend it Use it or sell it Long-term useit or lose it

Restriction ofrenomination

rights

Other

Nu

mb

er

of

LS

Os

no

yes

45%

55% 55%

45%

91%

9%

100%

91%

9%

45%

55%

91%

9%

64%

36%

LSOs‘ RESPONSES


5.4 Which CMP do you prefer?

15%

76%

23%38%

12%

54%54%

12%

17

13 138%8%

1st Option 2 Option 3 Option

Options Order

Dis

trib

uti

on

of

CM

Ps

am

on

g

the

op

tio

n

nu

mb

er

of

an

sw

ers

re

ce

ive

d

for

the

op

tio

n

Restriction of renomination Rights

Use it or lend/sell it

Use it or lose it

Secondary capacity market


76% of users prefer secondary capacity markets

USERS‘ RESPONSES


Underused and/or underutilised capacity is only defined in three countries

2.5 Results:CAMs and CMPs. Antihoarding

mechanisms

5.5 Unused and/or underutilised capacity defined by the NRA or other

national authority

43%

57%

yes no

NRAs‘ RESPONSES


• Different mechanisms are applied in different terminals

• Opinions differ among stakeholders, not only on their understanding of the current type of mechanism, but also on the opportunity for developing new ones

• Market consultation is not used broadly when designing CAM and CMP. Also a majority of users consider them non market-based

• Improvements can be made developing:

Effective, simple and consistent CAM and CMP

Information provided on how mechanisms in place work

CAM and CMP compatible with liquid trading and spot markets

Clear definition of underused and systematically underutilised capacity



• User’s opinions concerning effective publication of transparency criteria, services offer, used and available capacities, tariffs, etc. indicate global recognition of an adequate transparency level

• Improvements can be made on:

Availability of slots

Penalties

Accessibility of information in English

2.6 Results:Transparency


6.1 Have you put in place services for facilitating transfer of capacity rigths ?

50%(6 LSOs)

42%(5 LSOs)

8%(1 LSO)

yes

no

no answer

While 76% of users prefer secondary

capacity markets as the best CMP,

according to NRAs, only three of the

monitored countries have established

operative secondary markets

2.7 Results:Trading of capacity rights

LSOs‘ RESPONSES


3. Recommendations

Users favour greater standardisation, wider services provision and hence, implementation of general practices at the European level

Certain degree of improvement is necessary regarding tariff structures, certain service provision, CAM/CMP definition and anti-hoarding principles

Secondary markets must be fostered for the dynamic and competitive growth of the market, responding to the most common users’ complaint

Rules to avoid congestion problems and the mechanisms to manage them must be settled under consensus-building, taking into account market’s preferences

More time would be beneficial in order to allow NRAs and LSOs the full implementation of GGPLNG provisions in their systems

In some markets the number of users is still low, so new surveys should be undertaken in the future, once market develops


Thank you for your attention!

www.energy-regulators.eu

Mark your diary for the World Forum on Energy Regulation IV

October 18-21, 2009

Athens, Greece

www.worldforumiv.info

28th may 2009, madrid xvi madrid forum

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