Minutes
UK – Republic of Ireland – France REM
6th SG
NG Offices, Sellindge, 4th July 2008
MINUTES
1
Agenda
The agenda was as follows:
Agenda Topics
Accompanying documents
1. Opening and Welcome
10.45
[Ofgem/NG]
Update on Current Progress in FUI
2. General Update on Workstream progress
[Ofgem]
3. Update on Congestion Management & Balancing
[RTE/NG]
4. Update on Tariffs
[NG]
5. Update on Single Irish Electricity Market (by telecall)
[CER]
6. Open floor to discussion
7. IFA Overview, Performance Report & Investment
[NG/RTE]
Break at 13 :15 for lunch / non-technical tour (two groups alternate)
The Future of Interconnection and the FUI region
13.45
8. FUI electricity region: Which kind of market integration are we
looking for?
[CRE]
9. Britned Update
[NG]
10. Future Interconnection Update
[Imera]
11. Views on GB-Continent: Interconnection & FUI Region
[NG]
12. Open floor to discussion
13. Any other business
[Ofgem]
14. Next meeting / Close
[Ofgem]
Coach transfer to Ashford International available from 15:45
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Minutes
2
Opening, Welcome and General Update on progress
Martin Crouch (Chair, Ofgem) welcomed participants to the 6th Stakeholder Group Meeting.
He emphasised that the Regional Initiatives should be viewed in context with the progress made in
the third package – the ERI represents one of the vehicles for change in EU energy markets. In
ERGEG, questions have been asked about whether the RIs are delivering and whether we need
changes to the form of them. He commented that there is potential to change the way the RIs
work, if it is decided that this is necessary.
Giles Stevens of Ofgem then proceeded to give a short, general update on the progress
within the various FUI workstreams. He noted that there has been a lot of work done since the last
SG and that we were now on the cusp of delivering good results.
3
Congestion Management
Vince Hammond of National Grid gave an update on the Congestion Management
workstream. He indicated that the contract for the provision of software for the new Capacity
Management System (CMS) was very close to being awarded. General areas within the access
rules have also been identified and cover allocation, secondary trading, nominations, curtailments
and invoicing. Product testing is expected to begin in March 2009, with commercial operation
anticipated for the second quarter of 2009. An IFA users forum is anticipated in July 2008.
Questions from stakeholders were then invited. These questions covered areas including
allocation of capacity between long-term and daily auctions (What will be the split between these
different timeframes products?), curtailments (Why will it be only a 100% reimboursment of
capacity and not full spread compensation or a caped full spread compensation?), number of
intraday auctions (Electrabel express their wish to have a continuous trading in intraday) and UIOLI
between day-ahead and intraday. On auction rules, NG indicated that they intend to send the
auction rules around to the regulators and IFA Users for comment when ready and they think this
is likely to be in Autumn 2008.
4
Balancing
John Prime of National Grid then proceeded to give an update on progress in the Balancing
workstream. An illustration of the new TSO-TSO system was presented along with a recap of the
original timetable. It was reported that the timetable for the Hybrid solution had slipped, following
the discovery that some of the French balancing market rules need to be revised. The hybrid
solution is now expected to be implemented after RTE proposal of new French balancing market
rules expected in December 2008. They need to be approved by CRE, which is expected to be in
January 2009. The final, enduring solution is still expected to be operational in Autumn 2009.
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Minutes
More questions from stakeholders then followed. It was asked how realistic the new
timetable is and National Grid replied that they believe it is. Questions also included the interaction
between CRE and RTE on rule changes and the compensation for the use of interconnector
assets.
5
Tariffs
John Prime then went on to give a short update on the position on TNUoS charges. It was
explained that the current tariff system is being considered (for generation only) by a cross-industry
working group as part of the Ofgem Transmission Access Review. No questions were forthcoming
from stakeholders.
6
All-Island Single Electricity Market
Michael Tutty of CER then provided an account of early experiences on the All-Island Single
Electricity Market (SEM) that has operated in Northern Ireland and Ireland since late 2007. The
presentation covered background, basics of the market design and experiences in the SEM so far.
It was noted that there has been increased interest from investors since the separate markets
merged.
Stakeholders asked questions on the presence of traders/non-physical asset owners in the
market. Michael Tutty replied that he would be happy to see them getting involved, with the
suggestion of a secondary market trading desk being set up. Another question was asked on
whether there was a timeline to move to within-day price setting. CER indicated that this was not
currently in progress, although they do recognise it is something that needs to be done in the
future.
7
IFA Overview
Simon McVeigh of National Grid providing an update on the performance of IFA. This was
partly for information and partly to provide background before the tour of the Sellindge site that was
occurring over lunch. An account of curtailments in 2007, along with reasons for them, was
presented.
The point was made the National Grid are still committed to considering future
investment and maintenance of previously-built lines, in order to ensure reliability for users.
Questions from stakeholders in this section included the potential impact of new technology
on operating costs, which NG is looking into. Electrabel asked if a new converter circuit could be
built to provide greater security.
8.
Which kind of market integration are we looking for? – CRE Presentation
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Minutes
Christophe Gence-Creux of CRE then presented on obstacles to regional market integration
in the FUI region. It was noted that, despite a growing consensus at the European level to
implement a “target” congestion management method, based on harmonised explicit auction rules
for long term timeframes, implicit auctions in the day-ahead timeframe and implicit and continuous
trading in the intraday platform, the current development in the FUI region were somehow
disapointing. Among the main impediments to the implementation of this “target” congestion
management method, CRE particularly mentioned:
- the important differences of market designs between the different countries participating to
the FUI region leading to a complete absence of true regional scope in this region;
Furthermore, according to CRE, these differences of market designs constitute the main
reason why discussions on market coupling have not yet started in this region, while it is
one of the main priorities in the other ERIs.
- the IFA status from the British side (i.e. merchant line), which makes difficult, for instance, to
improve the firmness of capacity rights and nominations, while a common position has
been reached at ERGEG’s level regarding this issue. CRE also mentioned the very specific
treatment of losses on IFA, which is due to the status of IFA and which constitutes another
example of impediment towards a harmonized explicit auction platform.
On the other side, CRE noted that the FUI region’s TSO-TSO model for developing cross-border
balancing trade would be a very important achievement for this region and, more generally, for the
Regional Initiative ERGEG’s process.
Questions and comments from stakeholders were wide-ranging and covered many of the
items raised in the presentation. NG commented that IFA congestion management revenues are
published. Also, although other ERI regions have the aim of implementing the target Congestion
Management system described by CRE, the FUI region was the first to offer a tender on a new
Congestion management system, something that required considerable time and resources. The
new system was seen to be the quickest system, that was consistent with EU law, which could be
implemented. The importance of viewing the status of the IFA as a difference rather than barrier
was discussed. On market coupling, National Grid commented that they were monitoring
developments on other interconnection projects closely and that they wanted to deliver something
useful for users.
9.
Britned
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Minutes
Damian Bach of National Grid then provided an update on the Britned interconnector project.
Background to the project was presented, along with an approximate timetable for delivery. The
1GW link is currently expected to become operational in early 2011. It was also commented that
Britned intends to offer the possibility of using both implicit and explicit auctions to sell capacity in
the various timescales, since both comply with EU regulation.
Following questions, the regulated and merchant line options were discussed, with the
Britned due to be a merchant line that has an exemption from EU law.
10. Imera
Rory O’Neill of the Imera group, gave a presentation on the Imera group and future
interconnector investment projects they are looking to get involved with. They aim to invest in
merchant interconnector lines in Europe and to gain exemptions from EU law. Projects being
investigated include lines running between Ireland and GB, GB and France and France and
Ireland.
As EU exemptions only apply to use of congestion revenues, it was asked what Imera was
planning in terms of allocation of capacity – what type of auctions would be used, for example?
Rory O’Neil responded by saying they would choose whatever system that stakeholders wanted.
11. Next meetings
Following concerns, Ofgem agreed to send an update to the SG on progress over the
summer. Ofgem also agreed to collect SG comments on the timing and frequency of
meetings. It was suggested that the next SG meeting could occur near the end of 2008, when
more significant progress was due to be made.
12. Summary of all ongoing and outstanding action points
Action
Who
Update SG members on progress made over the summer
Ofgem
Collect comments on the timing and frequency of future
meetings from SG members
Ofgem
5/5
When
Outcome
Early-Autumn
Ongoing
ASAP
Ongoing