France-UK-Ireland (FUI) Region5th Stakeholder Group (SG)26th November 2007, London

Interconnector Operator (ICO) Update

Simon McVeigh (NGIL)Jean-Gabriel Valentin (RTE)

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)

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.

IFA Capacity Management SystemProject Timescales

Task Duration

Prepare Supplier Pre-Qualification 1 week (25 - 29/6)

Arrange Regulators/ICOs meeting to agree way forward (deferred)

4 weeks

(2 – 31/7)

Supplier Pre-Qualification 3 weeks (31/7 – 21/8)

Re-arrange Regulators/ICOs meeting. Agree ICO response.

3 Weeks

(22/8 – 11/9)

Regulators additional request for information and ‘go-ahead’.

4 Weeks

(12/9 – 9/10)

Prepare ITT & System Req’ments 6-8 weeks (10/10 – )

Issue ITT -

ITT Period 5-6 weeks

Assess Tenders and Approve 6 weeks

Contract Award -

System Delivery 21-29 weeks *

Users’ systems/interface mods. 21-29 weeks *

Industry testing 3-4 weeks

Go-Live -

Mar 08

25 Jun 07 Plan Commencement

Oct 08

Plan Progress

9 Oct 07 Actual – Regulatory ‘Go’

26 Nov

2 Jul 07 Plan Assumption – Regulatory ‘Go’

Dec 07

* Revised estimates based on Supplier Pre-Qual responses

Plan Changes

Potential Harmonisation Aspects

2000

2000

500

1200

11002700

2700

2400

1400

3000

870

2400

* Summer 2007 NTC values, as provided by RTE to ETSO

2000

2000

500

1200

11002700

2700

2400

1400

3000

870

2400

* Summer 2007 NTC values, as provided by RTE to ETSO

• Losses

• Firmness

• Settlement

• Interconnector Transfer Limits (ITLs)

• Use of I/C Fee

LossesPotential Harmonisation Aspects

NGIL Assets RTE Assets

IFA Mid ChannelNomination (MCN)

2000 MW CapacityF2E & E2F

1.17% Loss 1.17% Loss

French MarketFirm Connection

e.g. 2024 MW

GB MarketFirm Connection

e.g. 1976 MW

4 x 500MW Circuits (Poles 1 – 4)Operated as 2 pairs of 1000MW (Bipoles 1 & 2)

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

LossesPotential Options

IFA Mid ChannelNomination (MCN)

2000 MW CapacityF2E & E2F

IFA Nomination?F2E Only?Both directions?Capacity offered?

IFA Nomination?E2F Only?

Both directions?Capacity offered?

1.17% Loss 1.17% Loss

NGIL Assets RTE Assets

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?

LossesConclusion

• No change proposed to current losses arrangements on IFA

FirmnessPotential Harmonisation Aspects

2000

2000

500

1200

11002700

2700

2400

1400

3000

870

2400

* Summer 2007 NTC values, as provided by RTE to ETSO

2000

2000

500

1200

11002700

2700

2400

1400

3000

870

2400

* Summer 2007 NTC values, as provided by RTE to ETSO

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%

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RCOLOURS CODE

110 % auction price

100 % auction price

No compensation

Othercompensation

No curtailment / notransmission rightsallocated

No ex-ante allocation

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110 % auction price

100 % auction price

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Othercompensation

No curtailment / notransmission rightsallocated

No ex-ante allocation

Current Compensation PracticesETSO Survey

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100 % auction price

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Compensation Force MajeureETSO Survey

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

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

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

Firmness Study on Interconnectors Draft Curtailment Data 2006

0

5

10

15

20

25

30

B-NL D-DW D-NL D-CH D-F P-Cz P-SL P-VE SL-P IFA

Interconnector Network

Annual Outages

Short-Notice Planned Outages

Unplanned Trips/Reductions

IFA Curtailment Commentary*

* Discrete curtailment events shown (not duration) Switching transitions 500MW / 1000MW not listed individually

AC Borders

Asset related maintenance/faults have not curtailed cross-border capacity because of

Security Standards (UCTE Handbook) therefore redundancy in interconnection capacity

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

Settlement & InvoicingTarget Availability

Monthly

Products

Direction Target

Availability (%)

Actual

Availability (%)

April E2F 95 94.5

F2E 95 95.0

May E2F 95 98.6

F2E 95 98.5

June E2F 90 89.8

F2E 90 90.2

Product Direction Target

Availability (%)

Actual

Availability (%)

Quarter 2

(Apr-Jun)

E2F 93 94.0

F2E 93 94.6

Settlement & InvoicingCurrent & Proposed

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

Intraday Transfer Limits (ITLs)Current & Proposed

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

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