Code Modification Forum The Imperial Hotel, Cork Agenda 1. Review - - PowerPoint PPT Presentation

Code Modification Forum

The Imperial Hotel, Cork

Agenda

• 1. Review of minutes from last meeting dated 22nd July 2015
• 2. Review of Action Items from last meeting dated 22nd July 2015

3. EU Network Code Communications Update

‒ Consultation Calendar; ‒ Training Update; ‒ Testing Update; ‒ Voluntary Bundling & Capacity Transition; ‒ PRISMA Update – Transition from Gaslink to GNI; and ‒ PRISMA Training Update – London & Dublin.

4. Code Modification Proposals

‒ A062 – ‘Capacity Allocation Mechanisms’

2

Agenda

5. Code Modification Proposals

‒ A063 – ‘Nominations, Imbalance Charges & Allocations: EU Network Code Implementation’

6. Code Modification Proposals

‒ A065 – ‘Financial Security Policy amendments arising from introduction of Capacity Allocation Mechanisms (Regulation 984/2013) ’

7. Code Modification Proposals

‒ A066 – ‘EU Network Code Implementation: Transitional Arrangements’

8. Code Modification Proposals

‒ A067 – ‘Congestion Management Procedures’

9. Code Modification Proposals

‒ A068 – ‘Balancing: EU Network Code Implementation’

3

Agenda

• 10. Code Modification Proposals

‒ A064 – ‘Virtual Reverse Flow’

• 11. Gas Networks Ireland Update on Corrib Calorific Value
• 12. New Code Modification Proposal

‒ A069 – ‘Back-up Capacity Arrangements under new Tariffing regime’

• 13. Any Other Business
• 14. Next Code Modification Forum Meeting

‒ Wednesday 16th September 2015 ‒ The Hilton Hotel, Kilmainham, Dublin

4

1. Review of minutes from last meeting dated 22nd July 2015

5

2. Review of Action Items from last meeting dated 22nd July 2015

6

ID Action Responsibility Status

C259 The Transporter is to issue letters to all End Users requesting that they sign End User Agreements. Transporter. Ongoing. Scheduled to occur after Gas Networks Ireland (GNI) becomes the TSO. C356 The CER is to endeavour to ensure that metering errors will be addressed under the implementation of the Interoperability and Data Exchange Network Code. CER Ongoing C383 The Transporter is to consider issuing an NDM Accuracy of Forecasting Report before October 2015. Transporter The Transporter will deliver an ‘Accuracy of Forecasting’ Report by 1 October 2015. C428 Add Gas/Electricity Interactions as a standing item to the Code Modification Forum Agenda. General Ongoing

Code Modification Forum – Ongoing Actions

7

ID Action Responsibility Status

C408 The Transporter is to update the Financial Security Business Rules with the proposed changes and issue to the CER and to the CER for consultation. Transporter Closed C409 The Transporter is to ensure that the concept of an Agent acting on behalf

• f a shipper is protected in legal drafting currently in development.

Transporter Closed C421 Industry to respond to the consultation on Version 2.0 of the Financial Security Business Rules. Industry Closed C422 Industry participants are to respond on whether they would use a facility to align their exit capacity bookings with the Gas Year if it was made available. Industry Closed

Code Modification Forum – Completed Actions

8

ID Action Responsibility Status

C424 The CER is to review the A067, Congestion Management Procedures Business Rules with a view to approving same. CER Closed C427 The CER is to review the industry Reponses to the request for the Transporter to act as RRM and to issue a response. CER Closed C431 The Transporter is to submit the updated legal drafting on Part ‘C’ and Part ‘F’ of the Code of Operations to the CER for approval. Transporter Closed C432 The Transporter is to issue the Code Legal Drafting on Part D of the Code of Operations to the forum in July. Transporter Closed C433 Industry to respond to the consultation on preferences for phase 2 of the Network Codes implementation project. Industry Closed

Code Modification Forum – Completed Actions

9

ID Action Responsibility Status

C404 The Transporter is to carry out a Trading platform Feasibility Study and submit its report to the CER following Industry consultation in September 2015. Transporter Open C405 The Transporter is to propose the first set of interim measures for implementation in October 2015. Transporter Open C418 The CER is to revert at the next Code Modification Forum with an implementation date for VRF. CER Open C419 The Transporter is to reply to IOOA’s letter and to the spreadsheet IOOA submitted proposing a methodology to implement Enhanced VRF by October 2015. Transporter Open

Code Modification Forum – Open Actions

10

ID Action Responsibility Status

C429 The Transporter is to determine whether a shipper would receive a Confirmed Quantity (CQ) of 0 if one of the parties in a Double Sided Nomination (DSN) renominated and its counterparty did not. Transporter Open C430 The CER is to respond to the proposal to allow shippers to buy capacity for non- annual period concluding in September 2016 at a pro-rata annual price. Transporter Open C434 The Transporter is to: Assess the feasibility of an interim increase in the amount of VRF currently available; and explain the logic behind the current VRF rules including why shrinkage is applied to VRF, why in the case of an interruption, VRF can be interrupted to 0 and the justification for the 20GWh limitation with a worked example Look at the existing VRF product to identify if more VRF capacity could be provided in the interim period before systemisation of the Enhanced VRF product is complete and whether or not a change could be made to the current situation where the Transporter interrupts to zero. Transporter Open

Code Modification Forum – Open Actions

11

ID Action Responsibility Status

C435 The Transporter is to respond to the IOOA request seeking clarification on VRF costs. Transporter Open C436 The Transporter is to respond to a market participant query seeking confirmation that in the event that VRF nominations exceed the 3.25Gwh limit specified in the OBA, this will have an effect on forward flow shippers in the event that VRF nominations are interrupted to zero. Transporter Open C437 The Transporter is to proceed with the Code Legal Drafting to implement the changes to the Congestion Management Procedures. Transporter Open C438 The Transporter is to issue final modification report on Code Modification A068 ‘Balancing: EU Network Code implementation’. Transporter Open

Code Modification Forum – Open Actions

12

4. EU Network Code Implementation Project -Update

Code Modification Forum

13

Consultation Calendar

Activity

Jun July Aug Sept Oct Nov Dec

Workshops Code Mod Meetings Legal Drafting Part C&F Consultation Legal Drafting Part D Consultation BRs A068 Consultation Legal Drafting Part E Consultation CMP Legal Drafting Legal Drafting A, B, G, H, I Transitional Capacity Amts. Updated Financial Security BRs Noms CER approval CER approval CER approval CER approval CER approval CER approval CER approval

14

Activity

Jun July Aug Sept Oct Nov Dec

Market Assurance Moffat Agent Transition GTMS Training New Nominations Procedure Gas Day Change Implementation PRISMA Auctions PRISMA Training Updated Code

• f Operations

Consultation Key Dates

15

16

Consultation status

Business Rules

Code Mod No. Subject Consultation Status Relevant Legal Drafting A062 CAM Complete Approved Part C A064 VRF Complete Approved A063 Nominations Complete Approved Part D A065 Financial Security Complete Approved FS Policy A066 Transition Complete Approved Part C & F A067 CMP Complete Approved Part H A068 Balancing Complete Imminent Part E

17

Consultation status

Legal Drafting

Code Section Consultation CER Approval Associated Business Rules Part C & F 11 June - 1 July imminent A062, A064, A066 Part D 27 July - 14 August 28 August A063 Part E 21 August - 4 September 18 September A068 Parts, A, B, G, H, I 28 August - 11 September 25 September A067 (Part H) + All

18

• PRISMA have transferred all references to Gaslink on the platform to Gas Networks Ireland;
• All shippers formerly registered with Gaslink have now been transferred to Gas Networks Ireland;
• At the request of the TSO, PRISMA has agreed to host a Shipper training session in Dublin.
• The training will take place on the 10th September at the Hilton Hotel, Kilmainham, Dublin at

10AM.

• PRISMA have sent invitations to PRISMA registered shippers. Additional shippers wishing to

attend should respond directly to PRISMA. The PRISMA email was forwarded by Gas Networks Ireland to the Code Modification Forum.

PRISMA Update

19

• To date 11 Shippers have contacted the TSO to arrange GTMS training and these sessions are

currently being scheduled to take place in September;

• Participation in the GTMS training is obligatory. All Shippers are required to complete the training as

part of the Market Assurance process.

• All remaining Shippers should contact una.ogrady@gasnetworks.ie to arrange a suitable time to attend

the training sessions;

• XML files were issued to Shippers on 7th August 2015 to assist Shippers with validating their backend

systems readiness. If there are any queries on this, please contact the GTMS team.

GTMS Shipper Training & System Testing

20

• Following a request from industry the Transitional Capacity Arrangements will also apply to long

term Exit Capacity Bookings.

• Shippers may make a new annual booking on GTMS, and amend that Capacity booking to expire

at the end of the gas year ’15/’16. This should be completed by emailing your Key Account Manager and raising a bulletin on GTMS; ‒ Note that the last opportunity to make Long Term (Annual) capacity booking requests

• n GTMS is 05:59 on 23 September 2015.
• Bundling Requests may be submitted from 1 August 2015 but no later than 60 days prior to the

start date of the requested bundling period.

Transitional Arrangements Reminder

21

• Unbundled IP Capacity (Annual) will no longer be available for purchase on the 23rd September’15;
• Legacy Unbundled IP Capacity can be used by Shippers until 2023;
• Long Term and Short Term Capacity Bundled IP Capacity will now be available by Auction on

PRISMA;

• Bundled IP Capacity at Moffat will consist of GB Exit and Irish Entry Capacity;
• To purchase Bundled IP Capacity on PRISMA, a Registered Shipper will need to be the same legal

entity in the GB and Ireland with a common EIC code;

• Secondary Capacity trades at IPs will now only be completed on PRISMA.

Capacity Reminder

22

• Shippers that hold Bundled IP Capacity on both sides of the Moffat IP may submit Double Sided

Nominations to and or Single Sided Nominations to

• nly;
• Shippers that hold Unbundled IP Capacity on the UK side of the Moffat IP may submit a Double Sided

Nomination to

• Shippers that hold Unbundled IP Capacity on the Irish side of the Moffat IP may submit a Double

Sided Nomination to

• See FAQ document for more details on various scenarios

Nominations Reminder

5. Phase 2 Prioritisation Consultation

Code Modification Forum

23

 There were a total of 8 responses to the Phase 2 Prioritisation Consultation which closed on Friday 7th August.  The three options which respondents were asked to prioritise were:

• 1. Implementation of the enhanced Virtual Reverse Flow (VRF) Product;
• 2. Development
• f

a Balancing/Trading Platform (“Increased Liquidity Measures”); and

• 3. Access to Twynholm as an Exit Point from the Irish Gas Network via the

Gaslink\GNI Code of Operations.

Phase 2: Prioritisation Consultation Status

24

 There were a total of 8 responses to the consultation with the following results:

Phase 2: Prioritisation Consultation Status

Results First Preference Second Preference Third Preference Enhanced VRF 7 Trading Platform 1 7 Twynholm 7

25

5. Code Modification Proposals

Code Modification Forum

26

A062 – ‘Capacity Allocation Mechanism’

Code Modification Proposals

27

 Legal Drafting Consultation on Part C & Part F of the Code Of Operations closed on Wednesday 1st July 2015.  An updated copy of the legal drafting was subsequently submitted to CER with the following three changes to Part C:

• Correction of an incorrect reference to Unbundled Capacity in Part C Section 5.1.9;
• Introduction of a provision to align LDM Capacity Bookings with the gas year similar

to a provision made for Entry Capacity; and

• Application of an overrun tolerance equal to the difference between a Shipper’s IP

Allocation and its CQ on a non-OBA day, instead of calculating a variance percentage as per Section 11.3.4.  CER approval of Part C and Part F legal drafting is expected within the coming days.

Code Modification A062: Current Status

28

Effective Date of the Modification:  General: 1 October 2015 - aligned with date that new nominations procedure commences (although CAM Regulation has 1 Nov implementation date)  Individual dates are included within the Code drafting, e.g.:  last capacity booking dates under existing regime (Part C, Section 3.3.2)  dates of the first PRISMA auctions (Part C, Section 2.2.4).  Capacity Transition & Voluntary Bundling: 1 August 2015 - back-dated to align with the opening of the relevant windows for submission of requests  PRISMA Registration Process: 21 April 2015 - back-dated to align with the day that Gaslink was registered as TSO on PRISMA and was open to accepting Shipper registration requests

Code Modification A062: Current Status

29

A063 – ‘Nominations, Imbalance Charges & Allocations: EU Network Code Implementation’

Code Modification Proposals

30

 Consultation on Part D Legal Drafting closed on Friday 14th August with one response, primarily seeking clarification on a number of specific drafting provisions.  The respondents queries have been addressed directly - any queries which merit wider circulation will be included in the FAQ document  It is proposed to seek approval of Part ‘D’ by the end of August 2015.

Code Modification A063: Current Status

31

A065 – ‘Financial Security Policy Amendments’

Code Modification Proposals

32

 On the 24th July 2015 the CER issued an approval of the A065: Financial Security Business Rules and a direction to proceed to drafting the revised policy.  The CER had requested an increase in the number of days grace that a shipper would be allowed in the event that they had exhausted their existing financial security. The request was to increase the number of days from 2 to 3.  Policy drafting has commenced with a consultation draft to be issued to Industry in September.  Implementation of the new Financial Security Policy has been deferred to 2016 and will not, therefore take place with the other EU Network Code changes.

Code Modification A065: Current Status

33

A066 – ‘EU Network Code Implementation: Transitional Arrangements’

Code Modification Proposals

34

 Approval of the Legal Drafting of Parts C & F of the Code Of Operations by the CER is expected within the coming days.  The Transitional Arrangements outlined in the A066 Business Rules commenced on 1 August 2015 and will remain active until 23 September 2015.  Shippers wishing to do so may voluntarily bundle Capacity by submitting a voluntary bundling application at least 60 days prior to the effective date of the Capacity.  Shippers will have the ability to bundle capacity that is effective up to and including the end of the Gas Year 2022 – 2023.

Code Modification A066: Current Status

35

A067 – ‘Congestion Management Procedures’

Code Modification Proposals

36

 The CER approved the CMP Business Rules on 21 July 2015 and issued a direction for the Transporter to proceed with Legal Drafting.  Legal Drafting of Part H of the Code of Operations is underway, and is expected to be issued for consultation in September.

Code Modification A067: Current Status

37

A068 – ‘Balancing: EU Network Code Implementation’

Code Modification Proposals

38

 Business Rules Approval - formal approval expected in coming days,

requesting Transporter to develop legal drafting:  NOTE: CER Direction as part of approval:  First Tier Imbalance Price (FTIP) multiplier to be set at 1.0 (as opposed to 1.02 / 0.98 as proposed in business rules) until 1 April 2016  1.02 / 0.98 multipliers to be applied to FTIP as and from 1 April 2016

 Legal Drafting Consultation: Part E ‘Balancing’ -

to be issued by 21 August 2015 - 2 week consultation period to close 4 September

Code Modification A068 ‘Balancing’: Current Status

39

 All Shippers have been contacted to assess Industry views on IBP platform options  Market being researched to assess viability of various models for consideration  Feasibility Report being progressed

Trading Platform Feasibility Study: Status Update

40

Corrib Calorific Value Update

Code Modification Forum

41

Corrib CV Update August 2015

Quality Specification of Natural Gas at Entry Points

43

Corrib CV Update August 2015

• Corrib Gas CV complies to Section 1.1.1 of Part G (Technical) of the Code of Operations

stipulates the requirement re the Gas Specification; GCV must be within a range of 36.9 – 42.3 Mj/m3. Wobbe Index (Real Gross Dry) 47.2 – 51.41 Mj/m3.

• Corrib GCV = 37.78 Mj/m3 . Wobbe Index ( Real Dry Gross ) = 49.31 Mj/m3.
• Its impact depends on the proportion of ROI gas demand met by Corrib.
• As highlighted at the last Code Modification Forum on the 22nd July 2015 GNI reiterate that

Individual Shippers are required to formally convey key messages to their Customers.

44

A069 – ‘Back-up Capacity Arrangements under new tariffing regime’

Code Modification Proposals

45

Code Modification Proposal No. A069

19 August, 2015

Code Modification Proposal Presentation

Back-up Capacity Arrangements under New Tariffing Regime

Code Modification Number: A069 Proposer: Irish Offshore Operators’ Association Submission Date: 31 July, 2015

Introduction

Code Modification Proposal Title and Number Code Modification A069: Back-up Capacity Arrangements under New Tariffing Regime Proposed Implementation Date 1 October 2015 Rationale for Implementation Date To be implemented during gas year 2015/16 but backdated to 1 October 2015 Proposed sections of the Code to be Modified Part C - Capacity

• GNI is adopting a new tariffing regime using the matrix methodology from 1

October 2015

• Each entry point will consist of a primary entry tariff that is linked to that

specific entry point and an adjustment / smeared tariff that is common to all entry points - Aggregated together the primary and the adjustment / smeared tariffs give the overall entry tariff at a specific entry point.

• Producer Entry points being affected worse by the changes - Entry charges

and back-up capacity charges increasing substantially

• Propose that where a shipper has booked entry capacity and where that

shipper has a requirement to access a short term entry product at another entry point (back up capacity) due to a reduction / cessation of gas supplies at its primary entry point that the short term tariff payable by the shipper at the secondary entry point will be the daily / monthly / quarterly multiplier of the primary entry tariff for that entry point calculated under the matrix methodology and not the aggregate tariff

Rationale for Proposed Modification

Gas Year 2014/15 Gas Year 2015/16 Moffat (€/MWh) 359 425 118% Inch (€/MWh) 54 221 409% Corrib (€/MWh) 100 675 675%

• Shippers with an entry capacity booking pay an entry point tariff which

consists of a primary entry tariff intended to recover the marginal costs specific that Entry Point and an adjustment / smeared entry tariff intended to recover the Entry revenue shortfall

• In the event that this shipper requires access to short term entry capacity at

another entry point for back up reasons, this shipper should not have to pay the adjustment / smeared entry tariff twice

• Adjustment / smeared entry tariff is a shortfall recovery mechanism on the

primary tariff – shippers should not have to pay this twice

Intended Outcome of Proposed Modification

• Entry capacity costs for shippers at all entry points are increasing

substantially due to the new tariffing regime

• The cost of accessing back-up capacity for all entry points is rising
• If implemented, Shippers who have booked entry capacity at one entry

point will not have to pay the adjustment / smearing charge twice when accessing back-up capacity at another entry point

• If implemented, this will reduce the costs of accessing back-up entry

capacity at other entry points

Benefits of Proposed Modification

• Shippers at entry points accessing other entry points for back-up

reasons will end up paying the adjustment / smeared tariff twice

Consequences of Not Making This Change

• A shipper has booked entry capacity at its primary entry point
• A supply outage at the shippers primary entry point means that the

shipper needs to access short term capacity at another entry point for a day

• Since the shipper is committed to paying for its primary entry capacity,

for that day it can access the short term capacity booking at another entry point based on the primary tariff

• Moffat tariff is €425/MWh* with €214/MWh* being the primary tariff and

€211/MWh* being the adjustment / smeared tariff

• Based on the above a shipper with primary capacity booked a non

Moffat entry point will be able to purchase short term Moffat capacity for back-up reasons at 50% of the published short term tariff for Moffat (214/425)

* As per GNI Tariffing Presentation 10 August, 2015

Example

Questions ?

54

A064 – ‘Virtual Reverse Flow’

Code Modification Proposals

55

56

Action C436 - The Transporter is required to respond to a market participant query seeking confirmation that in the

event that VRF nominations exceed the 3.25 GWh limit specified in the OBA, this will have an effect on forward flow shippers in the event that VRF nominations are interrupted to zero.

A064 – Virtual Reverse Flow

Industry VRF Scenario Production & Entry Corrib online, wind & Moffat VRF Capacity 20 GWh Available VRF Capacity (winter) booked Interruption VRF interrupted late in the day

A064 – VRF & relevant Provisions of EU NC 2015/703

Relevant Provisions of EU Regulation 2015/703 Network Code on Interoperability & Data Exchange Rules – Article 6 ‘Rules for Flow Control’ Paragraph 1 (part of) “In respect of flow control, the adjacent transmission system operators shall: (a) ... (b) ensure that rules are established for steering the gas flow across the interconnection point and for minimising the deviations from the flow pursuant to the matching process;” Paragraph 3 (part of) “The quantity ...of the gas flow decided by the adjacent transmission system operators shall reflect: (a) the result of the matching process; (b) the operational balancing account correction;” Paragraph 4 “A transmission system operator may decide to alter the quantity of gas..., if this is needed, in order to: (a) comply with provisions laid down in national or Union safety legislation applicable to the interconnection point; (b) comply with requirements laid down in Emergency Plans and Preventive Action Plans developed in accordance with Regulation (EU) No 994/2010 of the European Parliament and of the Council ( 1 ); (c) react in case the operator's system is affected by an exceptional event.”

57

A064 – Virtual Reverse Flow

• VRF-related Confirmed Quantities (resulting from VRF-related nominations) arise from matching process;
• Quantity of gas flow (assuming provisions of Article 6 Paragraph 4 relating to alteration of the quantity of gas flow do not arise) determined in

accordance with Article 6 Paragraph 3 of EU Regulation 2015/703 Assume one or more VRF-related Confirmed Quantities for a gas Day and GNI considers interruption of VRF capacity to zero at the Moffat IP – two possible scenarios arise: (1) Pre 02:00 hours on the gas Day GNI’s invocation of interruption to zero of VRF capacity at the Moffat IP a practicable measure as –

• ne or more matching cycles remain for the gas Day during which Irish-side VRF-related Processed Quantities would be set to zero and all

VRF-related Confirmed Quantities would become zero on application of “lesser of” matching rule – ref. Annex G ‘Matching Process for the Purpose of the Interoperability Code’ of draft Moffat Interoperation Agreement. (2) Post 02:00 hours on the gas Day Provisions of Article 6 Paragraph 4 of EU Regulation 2015/703, in effect, precludes invocation of interruption to VRF capacity at the IP as no further matching cycle for the gas Day remain where effect could be given to such interruption – i.e. setting of VRF-related Confirmed Quantities to zero. [Note: Article 6 Paragraph 4 of EU Regulation 2015/703 provide for circumstance where a TSO may alter the quantity of gas to flow at the IP.]

58

A064 – VRF & a Non-OBA Day

Paragraph H ‘Operational Balancing Account and Allocation Principles’ Paragraph 6.2 of draft Moffat Interconnection Agreement provides for a Non-OBA Day for which shippers’ allocation quantities would not equal their Confirmed Quantities That paragraph 6.2 states – “A Day is a Non-OBA Day if: (a) the Cumulative Steering Difference at the end of the Gas Day (D) exceeds or would exceed the Steering Tolerance; and (b) the Parties, having used their reasonable endeavours, are unable to agree to allow the Cumulative Steering Difference to exceed the Steering Tolerance after the Gas Day for a period of time; and (c) on Gas Day D Gas Deficit Emergency occurred in relation to the NGG System and/or an Exceptional Event occurred which affected the ability of NGG or GNI(UK) (the affected Party) to deliver gas to or accept gas for delivery from the IP and which, in the reasonable opinion of the affected Party, occurred too late in the Gas Day to be resolved, using the constraint management tools available to that Party, before the end of the Gas Day.”

59

Any Other Business

Code Modification Forum

60

9. Upcoming Code Modification Forum meetings:

Dates Locations Wednesday 16 September The Hilton Hotel, Kilmainham, Dublin Wednesday 14 October Location TBD Cork

61

Thank you for your participation