ERGEG Public Hearing

30. June 2005

Congestion Management Guidelines

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Agenda

Regulation (EC) 1228/2003 and Congestion Management

Mini Fora on Congestion Management

CM Guidelines framework

ERGEG public consultation - principles & steps

CM Guidelines - proposed draft

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Regulation (EC) 1228/2003 and CM

Regulation (EC) 1228/2003 of 26 June 2003 on Conditions for Access to the Networks for Cross-Border Exchanges in Electricity, applies from 01 July 2004

Congestion Management -> create simple, efficient and coordinated systems in order to encourage cross border trade

Provide sufficient information to the market participants (transparency !)

Create regional markets in a first step with a common system in IEM as final objective

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Regulation (EC) 1228/2003 and CM (cont‘d)

Further key issues

Capacity calculation Security of grid operation Maximizing and netting of capacity Information transparency and firmness of capacity rights

Capacity allocation Non discriminatory, market and non-transaction based with

efficient economic signals to market participants

Usage of congestion revenues according to the Article 6

Transparency All relevant capacity & security information

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Mini Fora on Congestion Management

11th Regulatory Forum 09/2004, Mini Foraon Congestion Management were established:

“The mini-fora aim to provide a plan and detailed timetable for the introduction of at least day-ahead co-ordinated market based mechanisms, such as auctions”.

The Mini Fora have been completed in Q1/2005

Results of the Mini Fora are considered in the final version of the draft CM Guidelines

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Mini Fora: Congestion Management Method

Compatibility -> explicit & implicit auctions, zonal pricing

Explicit auctions = minimum requirement, some recent bilateral experiences and one coordinated approach

Implicit auctions -> liquid, short-term allocation with sufficient transparency and benefit to all Nordpool F-B-NL market coupling project PT-ES and ES-F market splitting NL-N market coupling (Nordned cable)

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Mini Fora: Coordination

The Mini Fora confirm the importance of coordination:

Scope from the inter/intra-regional view

Coordination of the market operators

Coordination of the market participants, TSOs, regulators

Components & details Coordinated capacity calculation Nomination & assignment Closing times & timeframes Pricing / Products Organisational issues and institutional arrangements

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Mini Fora: Roles & Responsibilities

TSOs -> responsible for operational security

Market operations to be designed in such a way that the TSOs can enable them in compliance with the operational security

Commercial capacity allocation can be performed by different actors

EC & regulators -> supervision, monitoring

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Mini Fora: Legal Issues

Some level of regulatory control needed for each CM activity:

Capacity calculation

Bidding into explicit / implicit auctions

Capacity allocation

Obligation for generators to provide information

Transparency

Merchant lines

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Mini Fora: Transparency

Key condition for market to work, needed among other things for:

Establishing a level playing field especially for new entrants

Market actors for their planning and decisions

Efficient pricing

Regulatory control

Development of the European market

Regulators‘ access to relevant regional information

Generators‘ data (fundamental -> iterative approach !)

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CM Guidelines Framework

Provide economic efficiency and promote competition

Maximize available capacity

Provide transparency

Allow secure network operation

Ensure broad revenue neutrality

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ERGEG public consultation until 24 June 2005

ERGEG submission of final draft to EC -> EC decision on proceeding with comitology

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ERGEG Public Consultation (www.ergeg.org)

Basis for the ERGEG policy recommendations to the EC as required in Commission decision of 11. November 2003 (2003/796/EC)

Consult whom: Consult full range of all interested parties at all levels Make consultation proposals widely known (Internet)

Consult when: ERGEG annual work programme, request for advice from EC Discussions at an early stage, sufficient time to consult

Respond how: Consideration & public responses to inputs received Publish all formal proposals and advice to EC

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CM Guidelines Proposed Draft - Highlights

(Key amendments to the draft of 09/2004)

General provisions Regulatory powers & responsibilities Cross-border exchange of information

Definition of „market based“: only explicit or implicit auction

Minimum requirement: at least coordinated explicit auction

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CM Guidelines Proposed Draft - Highlights (cont’d)

(Key amendments to the draft of 09/2004)

Specification what is meant by „coordination“ Capacity calculation Allocation Dealing with loop-flows Nomination Timeframes & closing times Products

Further focus on liquid, short-term, intra-day operations & trade with migration path in that direction and provisions for necessary monitoring by the regulators