Code Modification Forum Ashling Hotel, Dublin Wednesday, 31 - - PowerPoint PPT Presentation

Code Modification Forum

Ashling Hotel, Dublin Wednesday, 31 January 2018

Agenda (1 of 2)

1. Review of minutes from last meeting 2. Review of Action Items from last meeting 3. General Items Update 4. GNI Scheduled Maintenance Update

• 5. Code Modification Proposal

‒ A083 Interruptible Capacity at Non IP Entry Points 6. Intra-day Nomination Patterns and Profiles

• 7. Code Modification Proposal : A086 –Intra-day Nomination Incentive Framework
• 8. Balancing

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Agenda (2 of 2)

• 9. VRF Tariffing Structure
• 10. Gas Electricity Interaction
• 11. BrExit and ROI Gas Market
• 12. Transparency Data
• 13. Code Modification Proposal A087- Implementing a new framework for Suppliers to contract their own payment

channels for PPM customers 14 Code Modification Proposal A088 – Implementing a Capacity Conversion Service for Shippers 15 AOB Next Code Modification Forum Meeting

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1. Review of minutes from last meeting

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2. Review of Action Items from last meeting

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ID Action Responsibility Status Priority C530 Release revised Version 5.02 of the Code of Operations which reflects any outstanding Code Modifications approved by the CER subsequent to the 1St October 2015 Transporter Open High C538 Transporter to continue consultation process surrounding intra-day nomination patterns and profiles Transporter Open High C539 Transporter to further provide timelines of next steps to further review and consult on potential amendments to cashout prices and tolerances, after finalisation of the tender process to secure a Trading Platform Service Provider. Transporter Open Medium C548 Industry to provide its views on potentially amending the 2Nd tier imbalance multipliers (75% and 125%) previously introduced via Code mod A074 Industry Propose to close High

Code Modification Forum – Open Actions (Slide 1 of 2)

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ID Action Responsibility Status Priority C543 Transporter to consider feedback from Shippers concerning the proposal agreed with the parties to the Bellanaboy Administration Agreement before notifying the parties to send the required instruction letter to GNI Upstream Operator(s) Propose to close High C552 Transporter to circulate a draft Bilateral Contract for industry consultation Transporter Open High C553 Industry to provide feedback on draft Bilateral Contract, once circulated Industry Open High C554 Industry to provide response(s) specifying any fundamental changes to the key principles of the Proposed Amended VRF Business Rules and specifying how much booked capacity would be available Industry Propose to close High C555 Transporter to issue individual intraday data to Shippers to help them evaluate impact of Transporter’s Proposal Transporter Propose to close High C557 Transporter to review proposal to appoint a Residual Shipper for intraday nominations Transporter Propose to close Medium

Code Modification Forum – Open Actions (Slide 2 of 2)

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3. General Items Update

Code Modification Forum

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Code of Operations 5.02

• Version 5.02 will be released in due course, to reflect:

‒ Code Mods A071, A079, A080, A081 and A082 (all of which have been approved by the CRU).

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4. GNI Scheduled Maintenance Update

Code Modification Forum

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Network Maintenance Update

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Location Nature of Works Planned Timings (Subject to change) Duration (days) Entry/Exit Points Affected Impact on flows at entry/exit points affected

• 1. Upstream Operator Maintenance

GNI have been advised of the following scheduled Maintenance Upstream of Entry Points:

2017/ 2018 GNI Proposed Maintenance Days

Maintenance Programme Gas Year 2017/2018 Date Duration Entry Points Commentary 7th Feb 2018 1 day Corrib Not required 1 day Inch Not required 9th May 2018 1 day Corrib Not scoped yet. 1 day Inch ILI run between Inch, Lochcarrig Lodge and Caherlag. Date to be finalised with pigging contractor/Odorant tank refill at Inch. Zero flow whilst this takes place. 4th Jul 2018 1 day Corrib Fuel gas skid connection at Cappagh South. May not affect flow 1 day Inch Not scoped yet 12th Sep 2018 1 day Corrib Not scoped yet 1 day Inch Not scoped yet

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Note: Dates and maintenance programme may be subject to change

IT Maintenance Update

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Nature of Works Planned Timings (Subject to change) Duration (days) Systems Affected Nothing to report

Please note the above works/timings/duration are subject to change

6. Code Modification Proposal A083: ‘Interruptible Capacity at Non IP Entry Points’

Code Modification Forum

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Action Item C543: Transporter to consider feedback from Shippers concerning the proposal agreed with the parties to the Bellanaboy Administration Agreement before notifying the parties to send the instruction letter to GNI

• No Industry feedback received
• GNI have notified Bellanaboy Administration Agreement parties that it is awaiting instruction letter

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A083: Update from Upstream Operator

6. Intra-day Nomination Patterns and Profiles

Code Modification Forum

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Outline of proposed GNI Modification

• At check points during the gas day (11:00, 17:00, 23:00) a shippers portfolio Nomination Imbalance position will

be recorded.

• A tolerance will be applied at each point
• E.g.

A shipper has 24 units of Aggregate Exit Nomination at 11:00. ‒ Deemed flow at Exit = (24 units * 6hrs/24hrs) = 6 units ‒ Total Entry Nomination = 4 units ‒ Apply a 10% tolerance: Adjusted Nomination Imbalance Position

• Nomination Imbalance Position = (6 * 90 %) – 4 = 1.4 units

‒ The Adjusted Nomination Imbalance Position at the 3 time checks will be added ‒ The total for the day will be multiplied by [SAP] * [x%] ‒ The amounts for each day in a month will be invoiced at month end.

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Impact if Code Mod was applied in November / December 2017

• Assume 10% Exit Tolerance and charging of 5% of SAP
• November

‒ 8 shippers would have received charges ranging from €365 to €148k ‒ Total charges: €334k ‒ 92% of charges attributable to 3 shippers

• December

‒ 5 shippers would have received charges ranging from €17 to €124k ‒ Total charges: €162k ‒ 96% of charges attributable to the same 3 shippers

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Action Item C556 – Transporter to issue individual intraday data to Shippers to help them evaluate impact of Transporter’s Proposal

GNI has furnished relevant Shippers with this data

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Transporter to review proposal to appoint a Residual Shipper for intraday nominations

GNI Response

• No legal concept of ‘Residual Shipper’
• Shipper cannot purport to make nominations/renominations to gas to which it has no title
• INFR applies so if a ‘Residual Shipper’ nominated gas early in a Day this could not be zeroed out later in the day

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Industry Response to GNI Presentation at CMF Meeting at CMF Meeting

• n 6 December 2017 including A086 Code Modification Proposal

IOOA Response IOOA are broadly in support of GNI’s initiative in this area. They consider the first step is to reduce the second tier imbalance multipliers . They query whether this proposal constitutes zipping on a six hourly basis. They consider and comment on the three scenarios in the GNI presentation. They note that the check point calculations consider metered exit flows and not metered entry flows and that the tolerance should be applied to the overall nomination. They state that the Proposal does not clarify how nomination lead times will apply and how such lead times will influence the

• Proposal. They look forward to working with GNI in the development of the Proposal to resolve the intra-day nomination

profile issue. Aughinish Alumina Response Aughinish Alumina agree with the Proposal. They state that it is not an unreasonable request for Shippers to nominate at entry at least what they have flowed at exit , three times a day cont/

Industry Response to GNI Presentation at CMF Meeting at CMF Meeting

• n 6 December 2017 including A086 Code Modification Proposal (cont’d)
• They believe the 1O% tolerance is sufficient and that the aggregate adjusted nomination imbalance position

should be (SAP) *(25%)

• They do not agree with the sentiment that the 25% second tier imbalance charge is causing late nominations

which is a separate issue Energia Response

• It is a general response to a specific issue
• It exposes gas –fired electricity generators to an increased risk of financial penalty for events outside their control

and as such serves no purpose

• No evidence has been presented that the increased multipliers have affected Shipper behaviour
• While there is a risk of the imbalance arrangements being gamed by certain Shippers it is unclear that the

Proposal addresses the issue or is an appropriate or proportionate response

• The issue of Shipper behaviour is a complex matter and should be the subject of a holistic review and not a

piecemeal and /or kneejerk modification

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Code Modification Forum

8. Balancing

Industry to provide its views on potentially amending the 2nd Tier imbalance multipliers (75% and 125%) previously introduced via Code Mod A074

• IOOA urge a reconsideration of the current imbalance multipliers on the basis that;
• They were increased to address a unique event at Corrib which is no longer relevant
• Reducing the imbalance multipliers would incentivise more timely nominations
• CRU did not set out basis for the multiplier change
• They were contrary to to Art.19.3 of EU Network Balancing Code
• They were not in line with those proposed by EU Network Balancing Code
• Bord Gais Energy were broadly in favour of lowering the second tier imbalance multipliers but it should be

done on a gradual basis where Shippers were aware that their continued good behaviour would be rewarded with further decreases

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Code Modification A089 – Changes to Daily Imbalance Charges: Second tier Imbalance Price

• Proposal to revert to pre- Code Mod. A074 Second Tier Imbalance Multipliers .
• Rationale of CRU

Transporter View GNI consider that the existing Second Tier Imbalance Multipliers could be somewhat relaxed reflecting improved Shipper behaviour. A further relaxation could be considered in the medium tier. Any relaxation

• f the Second Tier Imbalance Multipliers should be strictly on the basis that they will revert to Code Mod A071

levels if Shipper behaviour disimproves

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Action item C552 –Transporter to circulate a draft Bilateral Contract for Industry

Main Provisions:

• Adopts with stated variations IBP 2015 Trading Terms which align with Balancing Gas Sales/Purchase

Agreements

• Principal variations:

1. GNI will always submit relevant IBP Nomination 2. Counterparty must submit a corresponding Nomination within 1 hour 3. If purchase/sell trade does not result in relevant physical adjustment to system within 2 hours of initial Nomination the counterparty is in breach 4. The Counterparty will be in breach if its portfolio is not in balance at end of day

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Industry to provide feedback on draft Bilateral Contract ( Trading Platform Transactions Agreement), once circulated

• GNI welcome all Industry comment on the Trading Platform Transactions Agreement up to

COB on 16th

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Provisional Expected Timeline for Outstanding Steps to be completed, prior to TSO participating on TP

2017 2018 Q2 Q3 Q4 Q1 Q2 Q3 Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul GNI CGI EBI

Go Live

FS Business Readiness - contingent on timelines above Trading Platform Tender Trading Platform TP Contract Training GTMS FDS Build & Test Close

Hypercare

Bi Lateral Contract

Requirem ents

• Action Item C547: Transporter to issue a Gantt chart of provisional expected timelines in terms of the outstanding

steps to be completed, prior to the TSO participating on an IBP Trading Platform.

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Code Modification Forum

• 9. Proposed Amended VRF rules

VRF – Main Features

• Interruptible VRF Capacity will only be offered as a daily product at the Moffat IP.
• Available via Day Ahead Daily Interruptible VRF Capacity Auction. The VRF auction will be of 30 minutes duration, and

will commence at 15:30 D-1.

• Renomination window will run from 16:00 D-1 to 02:00 D.
• The Bookable VRF Capacity to be made available at the Daily Interruptible VRF Capacity Auction will be equal to the ROI

Forward Flow Nominations excluding the TSO’s balancing buys, shrinkage and stock gas requirements.

• Timestamping – in an interruption Shippers’ VRF CQs will be scaled back, based on capacity booking timestamp as

applied in reverse order, i.e. last in first out. In an interruption, Shippers with the same timestamp will be reduced pro- rata to their booked capacity.

• A Shipper requesting additional capacity when there is none available will no longer cause an interruption and will be

given a Partial Interruptible Capacity Allocation (PICA) if the request is partially met.

• A shipper should be billed for the total of their Active Capacity i.e. their Booked VRF Capacity, whether that Capacity is

booked via the Daily Interruptible Capacity Auction or via an Overnomination and whether it is utilized or unutilized on a Day.

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Action Item C554 – Industry to provide response(s) specifying any fundamental changes to the key principles of the Proposed Amended VRF Business rules and specifying how much booked capacity would be available

• IOOA queried the proposed higher level of VRF capacity available on a day-ahead basis than the forward flow

nominations at that time.

• GNI have met with IOOA in relation to this query

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Code Modification Forum

• 10. Gas and Electricity Interaction

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Code Modification Forum

• 11. BrExit and ROI Gas Market

Brexit – In the News

• On Monday last, ministers from the remaining 27 member states formally adopted

conditions for a transition deal that requires the UK to accept EU laws, with no say, for two years after Brexit

• Michel Barnier, the EU’s chief negotiator, said that the subsequent phase of detailed trade

talks would only begin as expected in March if the UK first made clear what it wanted.

• Those terms add to the acute pressures building on Mrs May as she seeks to set out her

longer-term strategy for Brexit while facing the revolt by Tory Eurosceptics against a transition that, they say, leaves Britain a “vassal state”.

• For info the House of Lords published a ‘Brexit: energy security’ on Monday 29th January

which can be found here

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• 12. Transparency Data

Code Modification Forum

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Code Modification Proposal : A088- Implementing a Capacity Conversion service for Shippers holding mismatched Unbundled Capacity on one side

• f IP

Proposal Provisions;

• Shipper with mismatched Unbundled Capacity at one side of an IP notifies GNI of its situation
• Shipper acquires equivalent Bundled Capacity at Auction
• GNI then reduces the Shippers Unbundled Capacity and does not invoice the Shipper for this capacity

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Code Modification A087-Implementing a new framework so that Suppliers contract their own payment channels for prepayment meter customers

History of PPM Market

• GNI assumed existing position in the PPM framework when the market was very different i.e only one supplier

(BGES) in the market and approx. 30k customers using PPM

• When PPM introduced, it was decided that GNI were best placed to ensure a smooth integration of the overall

solution and infrastructure on behalf of the market

• As a result, GNI agreed to procure the FO element of the solution in an attempt to “jump-start” the uptake of

prepayment services

• While the contractual set- up of the PPM solution and the overall market made sense at that time, the market

has changed considerably

• The PPM market today involves:
• 7 Suppliers with another Supplier entering the market in the coming months
• 106k PPM customers with approx.33% choosing to use a prepayment meter
• growth of approx. 6k new PPM customers each year

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Code Modification A087

Front Office Contracts

• The Front Office provides a service to gas suppliers and gas customers i.e. it facilitates customers topping-up

(vending) and it collects money from customers to be subsequently re-distributed to the relevant gas supplier

• GNI do not pay the front office for the service it provides , suppliers pay the front office providers
• Suppliers have the contractual relationship with gas customers yet GNI procure the front office service on behalf
• f suppliers and gas customers

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Code Modification A087

Reasons for new framework

• GNI contend that it should not be within the remit of the DSO/TSO to procure this service on behalf of Suppliers
• GNI have already put in place two front office service providers that suppliers already have a relationship with
• The obligations contained in the direct agreements between the suppliers and the FO providers are identical to

the ‘support services’ set out in the contracts between the FO providers and GNI

• Suppliers should be free to contract with whatever payment providers they can reach a commercial agreement

with and GNI should not be involved in these negotiations

• Suppliers already have contracts with FO providers for Electricity PPM

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www.cru.ie

Security of Supply Regulation 2017/1938

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• Entered into force on 1st November 2017. Replaced 994/2010 Regulation.
• Emergency Plans, Risk Assessments etc will continue to exist – update every 4 years.
• New provision - Solidarity/Compensation mechanism Art .13
• Exceptional circumstances, member states can request solidarity to allow gas to continue to flow to protected

customers.

• Solidarity measure shall be taken as a last resort.
• Member States to agree these arrangements by 1st October 2018.
• CRU/GNI/DCCAE developing mechanism to meet regulation requirements.

Code Modifications - Live

Number Title of Proposal Proposer Status A085 Profiling of Gas Flows at Entry Points IOOA Live A086 Intra-day Nomination Incentive Proposal GNI Not yet issued A087 New Framework for Suppliers in PPM Market GNI Live A088 Capacity Conversion Service GNI Live A089 Changes to Daily Imbalance Charges-Second Tier GNI Live

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1.

Upcoming Code Modification Forum Meetings

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CMF Dates 2018 Location

7th March 2018 (Wednesday) Cork 2nd May 2018 (Wednesday) Dublin 13th June 2018 (Wednesday) Cork 8th August 2018 (Wednesday) Dublin 26th September 2018 (Wednesday) Cork 29th November 2018 (Wednesday) Dublin

Thank you for your participation