TSOs aim to link bundled and unbundled gas capacity

Miriam Siers

21-May-2015

Industry bodies will work towards allowing existing unbundled gas capacity to be tied into new bundled products under rules which come into force in November 2015, to tackle fears shippers would have to pay twice for chunks of capacity.

The European Network of Transmission System Operators for gas (ENTSOG) and the European Federation of Energy Traders (EFET) had released some ideas to prevent and resolve double charges for cross-border capacity at the beginning of May, to be discussed at a workshop in Brussels held on Wednesday.

Shippers across several European gas hubs have been worried about paying twice for cross-border capacity when bundled capacity sales come into force under the capacity allocation mechanism (CAM) rules (see ESGM 16 February 2015). After CAM is implemented, shippers will no longer be able to book cross-border capacity separately on both sides of a border. This will be a problem for shippers who have already bought unbundled capacity at one side of a border before the rules come into force. For some companies, this could mean paying again for long-term capacity contracts agreed on more than eight years ago.

There was a general consensus at Wednesday’s workshop that there needs to be a way to combine unbundled capacity products into bundled capacity products, Jan Ingwersen, business area manager at ENTSOG, said on Wednesday evening. The finer details on how to do this will be hammered out at a further workshop on 30 June.

The industry bodies will aim to introduce ways to combine unbundled products with bundled capacity by November while still complying with the CAM code in its current form.

Ingwersen said the new solutions, once agreed, would not be included in the network code and therefore would not be binding, but transmission system operators (TSOs) were committed to implementing the changes.

Congestion management

Another issue discussed at Wednesday’s workshop were the problems that arise when two sides of a busy gas interconnection point use different congestion management tools under current EU rules.

The network code for congestion management procedures for natural gas interconnectors came into force in October 2013. The rules were designed to solve contractual cross-border transport capacity congestion by ensuring capacity can be booked more efficiently.

Issues arise if at one congested interconnection point, an oversubscription and buy-back mechanism is applied on one side, while a day-ahead use-it-or-lose-it tool is applied on the other (see ESGM 20 May 2015). The oversubscription tool makes available firm capacity on an incentive basis for TSOs by selling more space than technically available, while the use-it-or-lose-it tool makes available extra firm capacity by limiting possibilities for day-ahead renominations.

This would mean for the TSO applying the use-it-or-lose-it tool, applying a restriction for renominating down could only be done if the other TSO restricted the renomination right for the respective user. The second TSO will not have any legal basis for limiting a renomination right. Also, having two separate mechanisms in place at some connections may conflict with the CAM bundling rules when they come into force.

Following Wednesday’s workshop, Ingwerson said stakeholders prefer to find a way to make the two methods co-exist, rather than changing the congestion management rules to enforce just one method across TSOs in Europe.

As the issue is largely a theoretical problem and most interconnectors are not as congested as they were two years ago when the rules began, ENTSOG, and the Agency for the Cooperation of Energy Regulators will work together to propose a working solution to the issue.

The congestion management solutions will also be discussed at the June meeting. miriam.siers@icis.com

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