Capacity Allocation Mechanisms (CAM)
Business Rules Workshop
Ashling Hotel, Dublin
2 July 2014
Agenda
1
Introduction & Background
2
CAM Business Rules: Scope
3
CAM Business Rules: Key Features
4
CAM Business Rules: Auction Process
4
Code Modification A062:
Capacity Allocation Mechanisms at Interconnection Points
Timeline
5
August 2011
ACER published Framework Guidelines
March 2012
ENTSOG Submits CAM Network Code
September 2012
ENTSOG resubmits NC based on EC Reasoned Opinion
Jan & Apr 2013
Comitology Meetings
October 2013
CAM Network Code published in EU Journal in the form
of Regulation EU 984/2013
November 2013
Gaslink / Shipper Impact Assessment Workshop
23 June 2014
Gaslink circulates Code Mod Proposal A062
27 June 2014
CAM Business Rules consultation (3 weeks - responses
due by 18 July)
2 July 2014
CAM Business Rules Workshop
1 November 2015
Implementation Date: Regulation 984/2013
CAM
CAM Business Rules:
Consultation Period
6
CAM
Agenda
1
Introduction & Background
2
CAM Business Rules: Scope
3
CAM Business Rules: Key Features
4
CAM Business Rules: Auction Process
7
CAM Business Rules:
What’s included?
 Generic capacity allocation rules and processes to apply at Irish IPs;
 Shipper Registration Process on PRISMA;
 Definition of the functions which will be performed by PRISMA as distinct from GTMS;
 Definition of Capacity products which will be available at Interconnection Points;
 Process by which Shippers may request such Capacity (submission of auction bids);
 Description of the capacity allocation methodology (auctions) applied to each product;
 Communication of auction results via PRISMA and consequent update to GTMS;
 Secondary Capacity market rules at Interconnection Points.
Subsequent Business Rules Consultations:
CAM related items
The following are not included in detail in the CAM Business Rules, but will be dealt
with by means of separate consultations:
 Congestion Management Procedures (CMP);
 Tariffs:
 minimal references to Tariffs in CAM BRs;
 CER Tariff Consultation Paper to follow;
 Transitional Arrangements:
 Phasing out of existing capacity booking arrangements
 Financial Security requirements;
 Virtual Reverse Flow (VRF):
 Full product business rules to be included in later consultation
Agenda
1
Introduction & Background
2
CAM Business Rules: Scope
3
CAM Business Rules: Key Features
4
CAM Business Rules: Auction Process
10
CAM Business Rules:
Supporting Information
Date
11
Source
Reference
October 2013
European Union
Regulation EU 984/2013, Capacity Allocation Mechanisms (CAM)
Network Code
2009 (updated in 2012)
European Commission
Regulation (EC) No 715/2009 updated with the Commission
Decision 2012/490/EU of 24 August 2012
April 2013
Gaslink
Consolidated Gaslink Code of Operations v4.0 as of 1 April 2013
23rd June 2014
Gaslink
Code Modification Proposal A062 ‘Capacity Allocation
Mechanisms at Interconnection Points’ Proposal Form
January 2014
1 May 2014
PRISMA
ENTSOG
Joint
Office
Transporters
of
PRISMA capacity platform website
ENTSOG Pilot Auction Calendar
Gas UNC Modification No. 0500:
‘EU Capacity Regulations – Capacity Allocation Mechanisms with
Congestion Management Procedures’
CAM
RECAP:
Standard Capacity
Products
Capacity Auctions
(Joint Booking Platform)
12
CAM Key Features
• Annual (up to 15 years), Quarterly, Monthly, Daily,
Within-Day
• Capacity sold via auction – level of demand
determines clearing price
• Standardised EU-wide auction calendar
Bundling of Capacity
• Entry and Exit Capacity at both sides of an IP is
‘bundled’ together and sold as a single product
Change to Gas Day
• Gas day 05:00 - 04:59 UTC (currently 06:00 –
05:59)
CAM
RECAP:
Capacity Auctions
General Information

All standard capacity products must be sold by means of Capacity Auctions
•
•

13
EU-wide auction calendar will be published by ENTSOG each year
•
Default dates/times in Regulation 984/2013 may be superseded by ENTSOG
Calendar
•
Pilot Auction Calendar published by ENTSOG in January 2014
HARMONISED! Same products sold at the same time at all IPs across EU
2 auction designs:
•
Multiple round ascending clock auction algorithm (yearly, quarterly, monthly)
•
Single round uniform price auction algorithm (daily and within-day)
CAM
Implementation Timelines:
CAM
- Auctions
- PRISMA
- Bundling
Gas Day
• When?
1 November 2015 (staggered)
• Where?
Interconnection Points
• When?
1 October 2015
• Where?
Across entire network
Capacity Product Matrix at IPs:
Product
Annual
Bundled

Unbundled
Allocation
Method

Ascending Clock
Auction
Frequency
Auction
Start
(Default)
Annual
1st Monday in
March
Product
Start Time
Impact of
CAM
1 October
LONGER
BOOKING
LEAD TIMES
(up to 15
years ahead)
1 October
Quarterly


Ascending Clock
Auction
Annual
1st Monday in
June
1 January
1 April
NEW
PRODUCT
1 July
Monthly


Ascending Clock
Auction
Monthly
3rd Monday in
month
1st of each
month
Minimal
impact
DayAhead


Uniform Price
Auction
Daily
15:30 D - 1
05:00 D
Minimal
impact

Uniform Price
Auction
[18:00 D – 1]
Hour bar + 4
from start of
Bid Window
Minimal
impact
WithinDay

Hourly
Schedule of First CAM Auctions:
Product
First Auction Date
First Capacity Effective
Date
Within-Day
31st October 2015
1st Nov 2015
Day-Ahead
31st October 2015
1st Nov 2015
Monthly
November 2015
1st December 2015
Annual
March 2016
1st October 2016
Quarterly
June 2016
1st October 2016, 1st January
2017, 1st April 2017, 1st July 2017
Bundled vs. Unbundled Capacity:
BUNDLED CAPACITY
EXAMPLE:
at Moffat, a bundled product is a single capacity product comprising:
 Gaslink Entry Capacity; and
 NTS Exit Capacity
 Shipper must be registered at both sides of IP to take part in bundled auctions on PRISMA:
 When Shipper obtains bundled capacity by means of an auction:
 Auction result means that the Shipper enters into 2 separate capacity contracts with each TSO
 Shipper will be invoiced separately by each TSO
UNBUNDLED CAPACITY
EXAMPLE:
at Moffat, an unbundled product is a capacity product comprising:
 Gaslink Entry Capacity only.
 Shipper does not need to be registered at both sides of IP to take part in unbundled auctions:
 Unbundled auctions (on PRISMA) to be held simultaneously with bundled auctions
Bundling of Capacity:
Reg 984/2013 Art. 20
Regulation 984:
- Capacity should be bundled as soon as possible
- Existing unbundled contracts should be phased out over time
TSOs
• TSOs shall bundle capacity ‘insofar as
there’s sufficient capacity available.
• Where TSO1 has more capacity
available than TSO2, TSO1 may offer
balance as unbundled.
• Unbundled may not be offered for
duration of more than one year,
unless……………..
• Unbundled is contracted for longer than
one year at other side of IP; then
unbundled can be offered to match that
period
Shippers
• Where a Shipper holds existing
unbundled capacity, a Shipper should
aim to bundled the capacity (Art. 20 (1))
• Shippers may avail of ‘voluntary
bundling process’.
• Single Shipper (EIC) to submit ‘bundling
request’ to Transporter
• Transporter and Adjacent Transporter
Approval required
• If approved, capacity is registered as
bundled
Capacity Booking Platform at IPs:
PRISMA
 PRISMA shall fulfil the function of the ‘joint web-based booking platform’ on which capacity at
IPs can be booked and traded
 Gaslink has entered into a service agreement with the PRISMA Capacity Platform
 In order for a Shipper to access capacity at an IP, it must register with PRISMA
 In order for a Shipper to access capacity at an IP, it must be approved by both TSOs at the IP
GB – RoI Capacity Bookings: Now vs. Post-CAM
Now
NTS Exit Capacity
Gemini
IP Capacity
Domestic Entry Point
Capacity (Inch & Corrib)
Exit Capacity
GTMS
Post-CAM
PRISMA
GTMS
Capacity Booking Platform at IPs:
PRISMA Registration Process
Capacity Booking Platform at IPs:
Bundled Capacity Auction Process
Available
Capacity, Tariffs,
Price Steps, FS
GTMS
Transporter
Bundled Capacity Auction Process
Publish auction
data
Run auction
View auction
Submit Bids
Adjacent TSO
PRISMA
Receive auction
results
Shipper
Compile auction
data
Available
Capacity, Tariffs,
Price Steps, FS
Compile auction
data
Update Capacity
Register
Run M + 1
Billing Process
View updated
Capacity
Register
Receive Invoices
from both TSOs
Update
Shipper’s
Capacity Info
Run Billing
Process
Publish auction
results
Receive auction
result
Receive auction
results
Tariffs:
Tariff for Bundled Auction
Auction Design
Tariff Input:
TSO 1
TSO1
Reserve
Price
TSO1
Large
Price Step
TSO1
Small
Price Step
+
+
+
+
Tariff Input:
TSO 2
TSO2
Reserve
Price
TSO2
Large
Price Step
TSO2
Small
Price Step
=
=
=
=
Auction
Tariff
Auction
Reserve
Price
Auction
Large
Price Step
Auction
Small
Price Step
Clearing Price
(TSO1 share)
Run
Auction
TSO1 Invoice
Clearing
Price
Shipper
Clearing Price
(TSO2 share)
Auction
Billing
TSO2 Invoice
Capacity Offered in an Auction:
‘Available Capacity’
Technical Capacity
Technical Capacity of the Interconnection Point
Contracted Capacity
Capacity which has already been sold in respect of the given period
Set-Aside Capacity
• 20% of unsold Technical Capacity withheld from the Annual IP Capacity Auctions
applying to Gas Years Y + 5 to Y + 15 inclusive.
• 10% of unsold Technical Capacity shall be withheld from the Annual IP Capacity
Auctions applying to Gas Years Y + 1 to Y + 4 inclusive.
+
CMP Capacity
Any Capacity which becomes available for reallocation as a result of congestion
management procedures
=
Available Capacity
Capacity which is published as available and offered in a given auction
Financial Security:
Status Summary
Product
Currently
Proposed
Comments
Daily
FS put in place after capacity
booking approval
TBD
Review needed given changing
environment for short term
bookings
Monthly
100% FS required prior to capacity
booking approval
As per
current rule
Quarterly
N/A
TBD
Annual
FS equivalent to 72 days worth of
capacity required in advance of
capacity booking approval
TBD
Review needed:
Disconnect between time of
booking and time of utilisation
Secondary Capacity
Key Concepts
• Capacity rights transfer to the Transferee (NOT assignment)
Transfer of Use
Over the
Counter (OTC)
Trade Proposal
• Obligation to pay the Transporter for the capacity remains
with holder of Primary Capacity
• Shippers enter into a bilateral agreement to trade (price and
conditions agreed) prior to initiating Trade Proposal
• Submitted by Transferor (proposal to sell) or Transferee
(proposal to buy) on PRISMA
• Requires approval by counterparty, Transporter and Adjacent
Transporter
Secondary Capacity
Process Chart
Secondary Capacity:
Back-Up Entry Capacity
Back-up Entry Capacity:
1
Original
Rationale
Current Status
a) will not be facilitated at IPs; and
b) will not be facilitated at domestic Entry Points
•
Back-up Entry Capacity was introduced to provided a form of security to Shippers
holding Capacity at production connected Entry Points.
•
Where a risk to the supply from the production connected Entry Point existed, Shippers
had a facility to book capacity at an alternative Entry Point at a reasonable cost.
•
Short term products did not exist in the Code when the Back-up Entry Capacity product
was introduced
•
Incompatible with CAM: Cannot use a bundled product as back-up for an unbundled
product
•
Superseded by newer products: Availability of short term products means that a
Shipper holding Capacity at production connected Entry Points can gain access to
capacity to cover the period of interruption. The product has not been bought since
2007.
Secondary Capacity:
Entry Point Capacity
Entry Point Transfers:
2
a) will not be facilitated at IPs; and
b) will be retained in relation to non-IPs
Original
Rationale
•
To enhance the viability of new entry points by allowing a Shipper with
an annual booking at an existing entry point the option to move the
capacity to a new entry point (which comes on stream mid-year).
Current
Status
•
Incompatible with CAM at IPs: Cannot transfer bundled capacity at
one point with unbundled capacity at another
•
Is there a demand for retention of this product at non-Ips?
Secondary Capacity:
Entry Capacity Trade Updates & Reductions
Entry Capacity Trade Updates & Reductions:
3&4
•
•
Original
Rationale
•
Entry Capacity Trade Updates and Reductions allow a Shipper to ‘recall’ capacity it has previously sold
on the secondary market
•
principal reason was to allow a Shipper who had transferred NDM Exit Capacity to cancel a Capacity
Transfer where the demands of the NDM market so required.
Current
Status
•
Principal rationale no longer holds (i.e. NDM Exit transfers no longer permitted)
•
Example: Current Gaslink rules are substantially different to National Grid rules
•
At IPs: Significantly divergent rules at an IP could render secondary market ineffective as both TSOs
must approve trades as per their own rules - without approval of both TSOs, trades will be rejected.
•
At domestic Entry Points: operating two different regimes at IPs and domestic Entry Points may not
be appropriate
•
requirement to allow ‘recall’ creates the need to restrict the trade of capacity which has already been
traded due to complexity of tracking the capacity
•
Removing the ‘recall’ facility removes this restriction, thus reducing IT complexity and facilitating the
trade of Secondary Capacity
•
Original capacity holder remains liable for payment (no change proposed)
•
BRs to propose changes in respect of IPs only - changes at non-IPs to be addressed via Mod A060
Remove Entry Capacity Trades & Updates IPs ; and
Remove restriction whereby Shippers can only Trade Primary Capacity
Agenda
1
Introduction & Background
2
CAM Business Rules: Scope
3
CAM Business Rules: Key Features
4
CAM Business Rules: Auction Process
30
Ascending Clock Auctions:
Auction Algorithm

To apply for yearly, quarterly and rolling month auctions

Several binding bidding rounds with ascending prices (starting at reserve price)

Bidders bid capacity amounts against successively announced prices (new bidding round
opened if demand > supply)

Auctions ends as soon as demand ≤ supply

Number of bidding rounds not defined, but quick convergence ensured through
different/adjustable price steps

Value of capacity can be validated bypublication of aggregated demand between bidding
rounds
Ascending Clock Auction:
Bid Process: applies to annual, quarterly, monthly
• Annual: 15 x independent auctions run
simultaneously
• Quarterly: 4 x independent auctions run
simultaneously
• Monthly: Rolling auctions each month for M+1
• Bid Window = 08:00 – 17:00 (may be over
multiple days)
• 1st bidding round = 3 hrs
• Subsequent biding rounds = 1 hr (with 1hr gap)
• Multiple bids accepted
• Bids may be amended, withdrawn within bidding
round
• Mandatory to place bid in first round
• Bid in round R+1 must be <= bid in round R
NOTE: Where aggregate capacity bids <= capacity
offered in auction, auction will end after one bidding
round, with capacity allocated at the reserve price i.e.
regulated tariff
• Automatic Bid Profile may be programmed in
advance (‘comfort bid’ function)
Uniform Price Auction:
Auction Algorithm
• To apply for daily and within day auctions
• Single bidding round
• Bidders bid capacity amounts and price
• Auctions ends at predefined point of time
• Bidders are allowed to freely review their bids until last moment
• Clearing Price = lowest successful bid price
• ALL Shippers pay the clearing price, regardless of what they bid
Uniform Price Auction:
Bid Process: applies to day-ahead & within-day
• Day-ahead Bid Window = 16:30 – 17:00 D - 1
• Results published by 17:30 D - 1 & capacity
effective at 05:00 D
• Within-Day Auction No.1: 18:00 - 01:30 D - 1
• Within-Day Auction No.2:
02:00 - 02:30 D - 1
• Subsequent biding rounds = 1 hr
• New auction each hour thereafter
• Last auction 00:00 - 00:30 D
• Results published 30 mins after close of
auction and capacity becomes effective 4
hours after start of auction
• Multiple bids permitted – each bid treated
independently
NOTE: Where aggregate capacity bids <= capacity
offered in auction, auction will end after one bidding round,
with capacity allocated at the reserve price i.e. regulated
tariff
• Automatic Bid Profile may be programmed in
advance (‘comfort bid’ function)
• Clearing Price = lowest successful bid