OS 2015: Allocation Rules
Proposal by TSOs
11th SG meeting
Paris
16th March 2010
General overview

For the Second Phase (2015 capacities), TSOs propose to maintain the
same allocation rules, including options and allocation stages.

Some minor amendments have been introduced in order to take into
account that:
 Different pricing options might be introduced according to the CRE’s proposal.
 The allocation will be performed for different capacity options, not only for the
full development case.
 The calendar proposed is slightly different (not starting at the beginning of a
season).
The allocation process will be separately performed for different capacity
scenarios and, if relevant, pricing options.
As a consequence, a number of allocations will be produced. There will be only
one valid allocation, which will be chosen by regulators according to ex ante
defined rules contained in the Economic Test.
Capacity scenarios and pricing options, if accepted, will be described in the
Information Memorandum.
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General overview
SECOND PHASE
May-July 2010
BINDING REQUESTS
2015 Capacities
SINGLE ROUND
1st Allocation Stage:
• Initial allocation
2nd Allocation Stage:
• Step 1: Minimum capacity requirement
check
3rd Allocation Stage:
• Re-allocation of freed-up capacities
• Step 2: Coordinated requests check (Flat
Capacity Allocation)
Application of
priority rules
Submission of
requests for the
First Round
Application of
priority rules
Capacity freed up
Provisional
allocation after 1st
Allocation Stage
Provisional
allocation after 2nd
Allocation Stage
(minimum capacity
allocation
guaranteed)
May 2010
Final allocation
June 2010
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General requests: types and duration
 Multiannual and multiseasonal request:
 Requests may be made either for multiannual capacity, or for multiseasonal
capacity.
 Multiseasonal and multiseasonal capacity cannot be requested through a
single Application Form.
Capacities are now being reconsidered and, as a consequence, seasonal capacities
might be reduced to those available at Biriatou (4 GWh/d in Summer in IP1 and 3.2
GWh/d in Summer in IP6 ).
If agreed, multiseasonal capacities could be removed from the OS, thus simplifying
the procedure.
If removed from the OS, seasonal capacities would be offered on a short-term basis.
4
General requests: types and duration
 Starting date (date from which the shipper requests the
commencement of the service.):
 For all multiannual capacity requests, the starting date will be the 1st day of the
referred month.
 For all multiseasonal capacity requests, the starting date will be either the 1st
day of a summer season (1st April. i.e. 04/YYYY) or the 1st day of a winter
season (1st November, i.e. 11/YYYY), depending on the availability of
multiseasonal capacity at each IP.
It will not be possible to specify a different starting date in the capacity request,
except in the case of multiseasonal capacity requests covering the first winter
period (2015/2016), for which the starting date will be 1st December 2015, i.e.
12/2015. The duration of the first winter period will be equal to 4 months instead
of 5 months.
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Capacity requests: types and duration
 Duration (period covered by the capacity request):
 Multiannual capacity requests will have a minimum duration of 13
months and maximum duration of 244 consecutive months.
 Multiseasonal capacity requests will have a minimum duration of 2
consecutive winter or summer seasons and a maximum duration
of 20 consecutive summer seasons or 21 winter seasons. They will
be made for complete winter or summer seasons.
 The period covered by the capacity request (“Duration”) must start not
earlier than 1st December 2015 and must end not later than 31st March
2036.
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Capacity requests: capacity data
 Amount of capacity requested:
 It will be constant at each Interconnection Point for the whole duration, under each
pricing option.
 Minimum capacity required to accept the allocation:
 If the minimum capacity required to accept the allocation, under a pricing option, is not
reached by the shipper through that request at an IP after the 1st Allocation Stage, no
capacity will be allocated to the shipper for that capacity request at that point (under
that pricing option). In case of coordinated requests, no capacity will be allocated to the
shipper for the coordinated capacity requests at the coordinated points.
 Requests for capacity at the same IP submitted through different Application Forms will
be treated independently in order to apply the “Minimum capacity requirement check”.
 Maximum amount of capacity requested at an Interconnection Point:
 The aggregation of amounts of capacity requested by a single shipper or by a group or
companies (relationship of control as per EC Regulation 139/2004) through more than
one Application Form, under each pricing option, must be equal to or lower than 100%
of the total amount of capacity offered at that IP in any given month or season.
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Capacity requests: capacity scenarios

The allocation process, under each pricing option (if relevant), will be
performed for different capacity scenarios. These will be clearly defined
in the Information Memorandum.

There will be a minimum of three capacity scenarios: one associated to
MidCat, one associated to Biriatou, and the capacity scenario which
combines both options.

The relevant scenario in order to determine the “Maximum amount of
capacity (that can be) requested at an Interconnection Point” will be the
combined one taking into account the full development of MidCat and
Biriatou.

Should there be more than one capacity scenario for MidCat (e.g. MC1,
and MC2), the total number of scenarios will increase. The allocation would
then be performed for all individual scenarios and the possible combination
of them (e.g. MC2+B, MC1+B, MC2, MC1, and B).

There will be only one valid allocation, which will be validated and
approved by regulators according to ex ante defined rules contained in
the Economic Test.
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Capacity requests: pricing options

At the 13th IG on 17th February, the CRE presented a proposal to
consider different (or a range of) pricing options for MidCat, applicable
to the entry charge in France.
 90 €/MWh/d/y  Relevant entry charge in France.
 140 €/MWh/d/y  Maximum entry charge in MidCat (+50 €/MWh/d/y premium
over other pipeline entries).

The CNE rejected the idea of having a price “premium” in MidCat over
the rest of entry points in France.

TSOs, as a group, neither support nor reject the idea of having different
pricing options. Moreover, TSOs do not have a full understanding on how
this would work, or if the price proposed is a maximum, or a constant
premium over the relevant price for other entry points in the future.

What follows is a proposal on how different pricing options could be
adapted to the existing rules, should different pricing options be
introduced in the process.
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Capacity requests: pricing options

Pricing option: relevant price for the entry charge in France for which the
capacity request is made. Two pricing options are envisaged, consistent
with CRE’s proposal:
Entry charge in France
Pricing option

α
90
β
140
Shippers must indicate the capacity they would like to request at each
Interconnection Point, and the minimum capacity required to accept the
allocation, under each of the possible options.
Amount of capacity
requested
Pricing option

(€/MWh/d/y)
Minimum capacity required to
accept allocation
α
MWh/day
MWh/day
β
MWh/day
MWh/day
A separate allocation process would be run for each of the pricing options.
Making a request per pricing option, instead of a single request valid for a range
of prices, increases the probability of passing the test at the lowest price.
If a single capacity request was made, valid for a range of prices, then effective
demand would be reduced to the relevant demand for the highest price.
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Allocation options

Independent and Coordinated allocation options.
Only applied in the case of multiannual capacity requests (multiseasonal requests
will always be treated independently).
 Independent Allocation per Point (OPTION A): Each capacity request will be
treated independently during the allocation process.
 Coordinated Allocation (OPTION B): A coordinated allocation of capacity
between two or more IPs is accepted.

Capacity requests at the coordinated points will be referred to as the “coordinated
requests”. Coordinated request is defined as a capacity request whose capacity
allocation is only accepted by the shipper(s) if the “minimum capacity required to accept
the allocation” is reached at other Interconnection Points.

All possible combinations of Interconnection Points will be accepted.
 Types of coordination under OPTION B:
 Option B.I. Non-flat Capacity Allocation: The allocation of different amounts of
capacity at each coordinated point is accepted
 Option B.II. Flat Capacity Allocation: The same amount of capacity will be allocated
at the coordinated points at the end of the Single Round. Note that under this option both
the amount of capacity requested and the minimum capacity required to accept the
allocation must be equal at all coordinated points.
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Coordinated points

All possible combinations of Interconnection Points will be
accepted.
 TSOs propose to lift previous restrictions on coordination possibilities.
 Shippers might be interested in booking capacities along the whole route
only if capacity allocation in both directions is guaranteed.
 Some shippers participating in the First Phase might have obtained an
“unbalanced” allocation between points and some “unlikely” combinations
might be now interesting for them.
 Lifting the restriction does not pose any major problem.
 The experience of the First Phase shows that, anyway, most of request
are independent.
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Booking of capacities
North → South
NORTH
Capacity
bookings
in France
Capacity
bookings
in Spain
4
SHIPPER 3
5
SHIPPER 2
4
5
3
SOUTH
2
TIGF
SHIPPER 1-FRA
6
2
3
6
1
1
SHIPPER 1-SPA
SPAIN
South → North
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Booking of capacities
 Up to four shippers (Shipper 1-SPA, Shipper 1-FRA, Shipper 2 and
Shipper 3) may request capacity though a single Application Form,
making, under each pricing option, up to six capacity requests in total
(one at each IP) :
 Capacity at IP1: will be booked by Shipper 1-SPA (Spanish network) by Shipper
1-FRA (TIGF network)
 Capacity at IP2: will be booked by Shipper 2.
 Capacity at IP3: will be booked by Shipper 3.
 Capacity at IP4: will be booked by Shipper 3.
 Capacity at IP5: will be booked by Shipper 2
 Capacity at IP6: will be booked by Shipper 1-SPA (Spanish network) and by
Shipper 1-FRA (TIGF network).
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Priority rules
FIRST PRIORITY: EARLIER DATE OF “STARTING DATE OF THE SERVICE”.

Capacity requests will be first ranked granting higher priority to capacity requests with
an earlier date of ”starting date of the service”, being 1st December 2015 the earliest
possible date (or 1st April 2016 for multiseasonal capacity for winter seasons).
SECOND PRIORITY: LONGER DURATION.

Capacity requests with the same starting date will be ranked granting higher priority
to capacity requests of longer duration.
 Multiannual capacity requests with a duration equal to or higher than 124 months
will be granted the highest priority between capacity requests with the same starting
date.
 Multiseasonal capacity requests with a duration equal to or higher than 10
seasons will be granted the highest priority between capacity requests with the
same starting date.
PRO RATA ALLOCATION

Allocation of capacities between capacity requests with the same level of priority will
be made on a pro-rata basis taking into account the amount of capacity requested.
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Allocation Stages

1st Allocation Stage: Initial Allocation

Capacity requests will be treated independently at each Interconnection Point

The amount of capacity allocated to each shipper for each capacity request, at each IP, will be
constant for whole period covered by the request.
SECOND PHASE
May-June 2010
BINDING REQUESTS
2015 Capacities
SINGLE ROUND
1st Allocation Stage:
• Initial allocation
2nd Allocation Stage:
• Step 1: Minimum capacity
requirement check
• Step 2: Coordinated requests check
(Flat Capacity Allocation)
Application of
priority rules
Submission of
requests for the
First Round
Capacity freed
up
Provisional
allocation after 1st
Allocation Stage
3rd Allocation Stage:
• Re-allocation of freed-up capacities
Application of
priority rules
Provisional allocation after 2nd
Allocation Stage (minimum
capacity allocation guaranteed)
16
Final allocation
Allocation Stages

2nd Allocation Stage:
 Step 1: minimum capacity requirement check. If the minimum amount is not reached at an

IP after the 1st Allocation Stage, the request will be withdrawn from the process and the
capacity will be freed up. In case of OPTION B (Coordinated Points) all coordinated requests
will be withdrawn from the process.
Step 2: coordinated request check. In the case of Flat Capacity Allocation (Option B.II.) if the
minimum amount of capacity specified at each Coordinated Point has not been reached, the
provisional capacity allocation after the 1st Allocation Stage at each point might be reduced to
ensure that the maximum flat capacity is achieved between all Coordinated Points. Part of the
capacities provisionally allocated after the 1st Allocation Stage might be freed up
SECOND PHASE
May-June 2010
BINDING REQUESTS
2015 Capacities
SINGLE ROUND
1st Allocation Stage:
• Initial allocation
2nd Allocation Stage:
• Step 1: Minimum capacity
requirement check
• Step 2: Coordinated requests check
(Flat Capacity Allocation)
Application of
priority rules
Submission of
requests for the
First Round
Capacity freed
up
Provisional
allocation after 1st
Allocation Stage
3rd Allocation Stage:
• Re-allocation of freed-up capacities
Application of
priority rules
Provisional allocation after 2nd
Allocation Stage (minimum
capacity allocation guaranteed)
17
Final allocation
Allocation Stages

3rd Allocation Stage:
A 3rd Allocation Stage will be performed to re-allocate capacity freed up during the 2nd Allocation
Stage.
The following requests will be considered during the 3rd Allocation Stage for the allocation of freed-up
capacity:

Independent requests qualified during the 2nd Allocation Stage to participate in the 3rd Allocation
Stage.

Coordinated requests under Option B.I. qualified during the 2nd Allocation Stage to participate in
the 3rd Allocation Stage.
SECOND PHASE
May-June 2010
BINDING REQUESTS
2015 Capacities
SINGLE ROUND
1st Allocation Stage:
• Initial allocation
2nd Allocation Stage:
• Step 1: Minimum capacity
requirement check
• Step 2: Coordinated requests check
(Flat Capacity Allocation)
Application of
priority rules
Submission of
requests for the
First Round
Capacity freed
up
Provisional
allocation after 1st
Allocation Stage
3rd Allocation Stage:
• Re-allocation of freed-up capacities
Application of
priority rules
Provisional allocation after 2nd
Allocation Stage (minimum
capacity allocation guaranteed)
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Final allocation
Thank you for your attention!