Contractual situation and capacity utilisation analysis at TIGF s interconnection points

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Morgan Dickerson
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1 DIRECTION DEVELOPPEMENT COMMERCE Pau, 2 June 213 Département Tarification Economie Régulation DDC Contractual situation and capacity utilisation analysis at TIGF s interconnection points 1- Context The European Commission adopted on 24 th August 212 a decision amending point 2.2 of Annex I of Regulation (CE) n 715/29 on conditions for access to the natural gas transmission networks relating to congestion management procedures in the event of contractual congestion. The CMP Annex introduces four mechanisms aimed at avoiding situations of contractual congestion: Oversubscription and buy-back scheme Surrender of contacted capacity UIOLI Long term Firm day-ahead UIOLI The oversubscription and buy-back scheme is aimed to offer additional capacities beyond the technical capacity at an interconnection point on a firm basis. To calculate these additional capacities, the CMP Annex specifies that: In determining the additional capacity, the transmission system operator shall take into account statistical scenarios for the likely amount of physically unused capacity at any given time at interconnection points. It shall also take into account a risk profile for offering additional capacity which does not lead to excessive buy- back obligation. The oversubscription and buy-back scheme shall also estimate the likelihood and the costs of buying back capacity on the market and reflect this in the amount of additional capacity to be made available. In the Public Consultation on the implementation of the CMP Annex, CRE considers that the implementation of the oversubscription and buy-back scheme should be based on a risk analysis for each IP and for each type of capacity product. On all the points characterised by physical congestion and thus, by a high risk of buying back the capacity, the financial risk borne by the TSO could be very high comparing to the benefits of using this mechanism. This risk analysis should be part of a dynamic process and updated regularly. Finally, CRE indicates that the application of this mechanism on 1 st October 213 will be based on the specific study to be carried out by the TSOs in June 213 on each concerned IP (PIR Midi, Larrau and Biriatou in the case of TIGF). 1/15

2 This document aims to determine the contractual and physical congestion situation at the interconnection points of the TIGF network. This analysis will allow deciding whether it is pertinent or not the implementation of the oversubscription and buy-back mechanism at the concerned IPs. 2- Introduction It needs to be highlighted that since 25 many different actions have been taken to limit congestion in the TSOs networks in France. New infrastructure aimed to increase entry and exit capacities has been developed. The UIOLI mechanism for the commercialization of unused subscribed capacity was incorporated into the transport contract. The implementation of the UBI mechanism allowing shippers to subscribe unsold daily capacities as well as not nominated subscribed capacities. All these measures will be completed with the capacity surrender mechanism as from 1 st October 213. In this context, the implementation of an additional mechanism to avoid contractual congestion such as oversubscription and buy-back must be carefully studied in order to avoid an unneeded or financially risky application. The oversubscription and buy-back mechanism is effective only in situations of contractual congestion without the appearance of physical congestion. In cases where the physical flows reach frequently the technical capacity, the allocation of additional capacity could lead to a too high financial risk for the TSO caused by excessive amounts of buy-back. In the following points of the document the subscription and utilisation levels of the marketable capacities over the last two years are studied (from 1 st April 211 to 31 st March 213) as well as the evolution of the technical capacity in the next years. The following TIGF interconnection points are analysed: PITT GRTGAZ SUD, PITT LARRAU and PITT BIRATOU. 2/15

3 3- PITT GRTGAZ SUD The interconnection point between the TIGF and GRTgaz Sud zones does not present a situation of contractual congestion during the analysed period. The subscription level exceeds 8% of the marketable capacity only during the summer season for Entry capacities. The rest of the time and as regards Exit capacities to GRTgazSud, subscriptions are around 5% of the marketable capacity. Physical flows in this point do not allow identifying a situation of frequent physical congestion. There are only 1 days a year where the physical flows exceed 9% of the technical capacity. It should be noted that, according to the results of the 213 Open Season, infrastructure developments have been conducted on the network increasing the Entry capacity to 51 GWh/d in summer and to 375 GWh/d in winter as from 1 st April 213. The level of marketable Exit capacity was multiplied by 3 (from 8 GWh/d to 255 GWh/d). This recent increase of the technical capacities does not enable having sufficient perspective and a clear view of the level of use of the infrastructure for the next year. In addition, the marketing of capacities at the interconnection with GRTgaz will be stopped on 1 st April 215 with the establishment of the common PEG. Therefore, the implementation of the oversubscription and buy-back mechanism at the PITT GRTGAZ SUD would be unnecessary and useless. Firm Entry marketable and subscribed capacities 4 PITTE GRTGAZ SUD 35 3 MWh/j à C Capacité ferme commercialisable Capacité ferme souscrite A/S Capacité ferme souscrite M 3/15

4 Firm Exit marketable and subscribed capacities 9 PITTL GRTGAZ SUD MWh/j à C Capacité ferme commercialisable Capacité ferme souscrite A/S Capacité ferme souscrite M Interruptible Entry marketable and subscribed capacities 2 PITTE GRTGAZ SUD 15 MWh/j à C 1 5 Capacité interruptible commercialisable Capacité interruptible souscrite A/S Capacité interruptible souscrite M 4/15

5 Marketable capacities / physical flows MWh/j à 25 C PITT GRTGAZ SUD Capacité commercialisable Entrée Ferme Capacité commercialisable Sortie Ferme Capacité commercialisable Entrée Interruptible Flux physiques Physical congestion occurrence - Entry PITTE GRTGAZ SUD Ocurrence en jours % 6% 11% 16% 21% 26% 31% 36% 41% 46% 51% 56% 61% 66% 71% 76% 81% 87% 93% 99% % de utilisation physique 5/15

6 Physical congestion occurrence - Exit 2,5 PITTL GRTGAZ SUD 2 Ocurrence en jours 1,5 1,5 % de utilisation physique Evolution of marketable capacities MWh/j à C avril-11 mai-11 juin-11 juillet-11 août-11 septembre-11 octobre-11 novembre-11 décembre-11 janvier-12 février-12 mars-12 PITT GRTGAZ SUD avril-12 mai-12 juin-12 juillet-12 août-12 septembre-12 octobre-12 novembre % été + 15% hiver décembre % janvier-13 février-13 mars-13 avril-13 mai-13 juin-13 juillet-13 août-13 septembre-13 octobre-13 novembre-13 décembre-13 janvier-14 février-14 mars-14 avril-14 Capacité ferme commercialisable - Entrée Capacité ferme commercialisable - Sortie Capacité interruptible commercialisable - Entrée 6/15

7 4- PITT LARRAU The Larrau France-Spain interconnection point presented a high level of contractual congestion during the analised period. Subscriptions were most of the time close to 1% of the marketable capacity between 211 and 213. Regarding the physical flows, only flows to Spain have been observed in the last two years. The analysed data shows a situation of recurrent physical congestion with a high level of congestion. Physical flows overrun technical capacity more than 5% of the analysed days. As in the case of the interconnection with GRTgaz, as a result of the 213 Open Season, capacities at PITT LARRAU were increased significantly. Entry capacity was multiplied by 3 and exit capacity has been increased by 65% as from 1 st April 213. As part of the implementation of the CAM network code, in 214 capacity marketing at the Spanish border will be carried out through auctions on PRISMA platform. Capacity will be auctioned at a virtual interconnection point (VIP) to be created early 214. This virtual interconnection point will include marketable capacity at PITT LARRAU and PITT BIRIATOU. This new capacity marketing methodology with higher levels of marketable capacity (combining the two interconnection points) together with the technical capacity increase at Larrau from 213 make impossible the elaboration of a reliable statistical analysis. Moreover, this does not allow the elaboration of a solid forecast of shippers behavior and capacity utilisation levels. For the above stated reasons, TIGF considers that in the current situation the implementation of the oversubscription and buy-back mechanism on 1 st October 213 at the France-Spain border would expose the TSO to a too high financial risk as a result of the uncertainty of the buy-back requirements. The implementation of this mechanism as from 1 st October 214 will be reviewed in the contractual and physical congestion annual analysis to be conducted in June /15

8 Firm Entry marketable and subscribed capacities 6 PITTE LARRAU 5 MWh/j à C Capacité ferme commercialisable Capacité ferme souscrite A/S Capacité ferme souscrite M Firm Exit marketable and subscribed capacities PITTL LARRAU 1 8 MWh/j à C Capacité ferme commercialisable Capacité ferme souscrite A/S Capacité ferme souscrite M 8/15

9 Interruptible Entry marketable and subscribed capacities 5 PITTE LARRAU 4 MWh/j à C Capacité interruptible commercialisable Capacité interruptible souscrite A/S Capacité interruptible souscrite M Marketable capacities / physical flows MWh/j à 25 C PITT LARRAU Capacité commercialisable Entrée Ferme Capacité commercialisable Sortie Ferme Capacité commercialisable Entrée Interruptible Flux physiques Note: The technical capacity overruns observed can be explained by the physical operational management of interconnections with Spain, particularly in the context of a specific agreement with the adjacent operator (OBA). 9/15

10 Physical congestion occurrence - Entry There was no physical flow at PITT LARRAU during the analysed period. Physical congestion occurrence - Exit 6 PITTL LARRAU 5 Ocurrence en jours % 5% 34% 39% 44% 49% 55% 6% 67% 73% 78% 83% 88% 93% 98% 13% 18% % de utilisation physique Evolution of marketable capacities PITT LARRAU MWh/j à C % + 65% avril-11 mai-11 juin-11 juillet-11 août-11 septembre-11 octobre-11 novembre-11 décembre-11 janvier-12 février-12 mars-12 avril-12 mai-12 juin-12 juillet-12 août-12 septembre-12 octobre-12 novembre-12 décembre-12 janvier-13 février-13 mars-13 avril-13 mai-13 juin-13 juillet-13 août-13 septembre-13 octobre-13 novembre-13 décembre-13 janvier-14 février-14 mars-14 avril-14 Capacité ferme commercialisable - Entrée Capacité ferme commercialisable - Sortie Capacité interruptible commercialisable - Entrée 1/15

11 5- PITT BIRIATOU The Biriatou France-Spain interconnection point presents no contractual congestion since winter 211 in the Spain-France flow direction. As regards Exit capacities, only firm capacities are sold in summer seasons. In the summer 212 all marketable capacities were subscribed. Physical flows observed demonstrate the absence of physical congestion for exit capacities even if capacity utilisation is much larger than entry capacity. On the other hand, in the Spain-France flow direction, the physical flows exceeded 9% of the technical capacity more than 1% of the time. Capacity at PITT BIRIATOU will also be developed as a result of the 215 Open Season. As from 1 st December 215 entry capacity will be increased to 65 GWh/d in summer and 6 GWh/d in winter. An offer of exit interruptible capacity will be added to the currently proposed firm capacity bringing the total capacity level to 6 GWh/d. As explained for the PITT LARRAU, marketing of capacities at PITT BIRIATOU in 214 will be done through auctions on a VIP gathering Larrau and Biriatou capacities. This new capacity marketing methodology with higher levels of marketable capacity (combining the two interconnection points) together with the technical capacity increase at Larrau from 213 make impossible the elaboration of a reliable statistical analysis. Moreover, this does not allow the elaboration of a solid forecast of shippers behavior and capacity utilisation levels. For the above stated reasons, TIGF considers that in the current situation the implementation of the oversubscription and buy-back mechanism on 1 st October 213 at the France-Spain border would expose the TSO to a too high financial risk as a result of the uncertainty of the buy-back requirements. The implementation of this mechanism as from 1 st October 214 will be reviewed in the contractual and physical congestion annual analysis to be conducted in June /15

12 Firm Entry marketable and subscribed capacities 6 PITTE BIRIATOU 5 MWh/j à C Capacité ferme commercialisable Capacité ferme souscrite A/S Capacité ferme souscrite M Firm Exit marketable and subscribed capacities 12 PITTL BIRIATOU 1 MWh/j à C Capacité ferme commercialisable Capacité ferme souscrite A/S Capacité ferme souscrite M 12/15

13 Interruptible Exit marketable and subscribed capacities 5 PITTL BIRIATOU 4 MWh/j à C Capacité interruptible commercialisable Capacité interruptible souscrite A/S Capacité interruptible souscrite M Marketable capacities / physical flows MWh/j à 25 C PITT BIRIATOU Capacité commercialisable Entrée Ferme Capacité commercialisable Sortie Interruptible Capacité commercialisable Sortie Ferme Flux physiques 13/15

14 Physical congestion occurrence - Entry 16 PITTE BIRIATOU Ocurrence en jours % 6% 11% 16% 21% 26% 31% 36% 41% 46% 51% 56% 61% 66% 71% 76% 81% 86% 91% 96% % de utilisation physique Physical congestion occurrence - Exit PITTL BIRIATOU 12 1 Ocurrence en jours % 19% 26% 31% 36% 41% 46% 51% 56% 61% 68% 74% 85% 1% % de utilisation physique 14/15

15 Evolution of marketable capacities PITT BIRIATOU % 25 MWh/j à C avril-11 juin-11 août-11 octobre-11 décembre-11 février-12 avril-12 juin-12 août-12 octobre-12 décembre-12 février-13 avril-13 juin-13 août-13 octobre-13 décembre-13 février-14 avril-14 juin-14 août-14 octobre-14 décembre-14 février-15 avril-15 juin-15 août-15 octobre-15 décembre-15 février-16 avril-16 juin-16 août-16 octobre-16 décembre-16 février-17 Capacité ferme commercialisable - Entrée Capacité ferme commercialisable - Sortie Capacité interruptible commercialisable - Sortie This English version is a non binding document For the original document please refer to the French version. 15/15

Annex 1. of 19 July Page 1 of 10

Annex 1. of 19 July Page 1 of 10 Requirements for the structure and content of the report for the cost allocation assessment according to Article 5 of Regulation (EU) No 2017/460 and the final consultation according to Article 26 of Regulation