1 warsaw, 16 october 2012 the system, that connects tnc new contract model

1

Warsaw, 16 October 2012

the system, that connects

TNC New Contract Model

2


1. Conclusion of Contracts

2. Contracted Capacity Allocation(CCA), Capacity Allocation (CA)

3. Contracted Capacity Allocation

• Auction;• Bundled Product.

3. Contracted Capacity Allocation for DAY AHEAD Services.

4. Change of Supplier.

3


Conclusion of Contracts

44 the system, that connects4

Transmission Contract

1. All transmission contracts will be framework contracts.

2. Among the transmission contracts, the interoperator transmission contract (ITC) with the SSO or DSO can be identified.

3. Each framework contract will have separate CCA or CA concerning specific points.

CACCA/CA

PPCONTRACT

Contracted Capacity Allocation (CCA) Capacity Allocation (CA)

• Physical entry/exit point • Entry/exit points

• Duration of CCA for a given point • Duration of CCA for a given point

• Type of capacity – firm/interruptible



1. Transmission contracts are concluded for an indefinite term.

2. Contracted capacity allocation (CCA) nd capacity allocation (CA) is performed for a maximum 4 years.

3. In the moment of concluding the transmission contract and submitting the financial security the right is conveyed to use the capacity on:

• the Virtual Point Gas Exchange;• OTC Virtual Point.

6


Contracted Capacity Allocation(CCA), Capacity Allocation (CA)


CCA/CA

DSO2

UGS

GAZ-SYSTEM S.A.

ONTRASTGPS

FPWYRFPWE

MFPWESSO

FPWYFC

MFPWYSSOMine

denitration

FPWE

MFPWYDSO

The Network User orders the capacity

The DSO or SSO order the capacity


CCA/CA

1. Physical entry and exit points – points with a concrete location where the quantity and quality of the gaseous fuel is measured.

2. Locations where contracted capacity allocation takes place (contracted capacity).

3. The entity authorised to the capacity at the FPWE or FPWY is called the Network User.

4. Confirmation of contracted capacity allocation is an annexe to the transmission contract or the interoperator transmission contract (ITC) - contracted capacity allocation "CCA.”

5. A Tariff fee is charged for use of the FPWE/FPWY.

6. Gas quality settlements are performed at the FPWE/FPWY.


CCA/CA

DSO2

UGS

GAZ-SYSTEM S.A.

ONTRASTGPS

Mine denitration

PWE WPWESSO

PWEPWYR

WPWYDSO

WPWYSSO

PWYFC

Virtual Point

WPWY

WPWE


CCA/CA

1. Entry and exit points take part in the transmission of gaseous fuel.

2. For the entry and exit points:a. nominations are made,b. allocation of the quantity of the gaseous fuel is performed,c. imbalancing is ascertained.

3. The entity authorised to use the entry or exit point is called the Shipper.

4. Confirmation of the right to use the give entry or exit point is the capacity allocation (CA).

5. Use of the contract points, including the Virtual Point, is free of charge.



DSOTSO

PWE

OTCGas

Exchange

PWYFC

PWYDSOExit Pointfrom DSO

An entity introducing the gaseous fuel from other transmission systems or mines that wants to sell it at a Virtual Point should:

1. Enter into a transmission contract with GAZ-SYSTEM S.A. 2. The contract entitles to capacity at the WPWEGG/WPWYGG and WPWEOTC/WPWYOTC

(CA).3. To obtain CCA/CA for FPWE/PWE.

PWYSSOPWESSO



The entity being connected to the transmission system that wants to purchase gaseous fuel at the Virtual Point should:

1. Enter into a transmission contract with GAZ-SYSTEM S.A. 2. The contract entitles to capacity at the WPWEGG/WPWYGG and WPWEOTC/WPWYOTC

(CA).3. Obtain CCA/CA for FPWYFC/PWYFC.

OTCGas

Exchange

DSOTSO

PWE

PWYFC


PWYSSOPWESSO



The entity being connected to the distribution system that wants to purchase gaseous fuel at the Virtual Point should:

1. Enter into an distribution contract with the DSO.2. Enter into a transmission contract with GAZ-SYSTEM S.A. 3. The transmission contract entitles to capacity at the WPWEGG/WPWYGG and

WPWEOTC/WPWYOTC .4. Obtain capacity allocation (CA) for the PWYDSO to the distribution zone ,

to which they are connected.

OTCGas

Exchange

DSOTSO

PWE

PWYFC


PWYSSOPWESSO



An entity that wants to transport gaseous fuel to or from the storage facility should:

1. Conclude an agreement with the SSO.2. Enter into a transmission contract with GAZ-SYSTEM S.A.3. Obtain capacity allocation (CA) for the points PWYSSO and PWESSO

OTCGas

Exchange

DSOTSO

PWE

PWYFC


SSO

PWYSSO PWESSO

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Contracted Capacity Allocation (CCA)

Auction;

Bundled Product.



1. The introduction of auction mechanisms at the connections with other gas systems in the EU, which makes it possible for the most interested entities to enter the market and may ensure the operator additional means for the development of those connections.

2. Implementation of the capacity allocation procedure via an auction based on rules resulting from the draft Network Code on Capacity Allocation (CAM NC) prepared by ENTSO’g based on Directive 2009/73/EC.

3. The simplification of the procedure of changing the seller of the gaseous fuel and increasing its efficiency for customers wanting to select a new seller.



Point Allocation Method

Physical entry points from other transmission systems, e.g:

- Lasów, Cieszyn- Drozdowicze- Włocławek/Lwówek

Auction;

1) Physical exit points to the final customer2) Physical entry points from mines3) Physical points to/from the mixing facility,

denitration facility.

Customer or entity exploiting the given structure performs

contracted capacity allocation

1. Contracted capacity allocation (contracted capacity) is dedicated separately to FPWE and FPWY.

2. The contracted capacity allocation procedure – contracted capacity allocation and the change in contracted capacity takes place in a "time window.”

3. If the demand for capacity (contracted capacity) exceeds the technical capacity, the capacity is allocated.


Contracted Capacity Allocation (CCA) - Auction

AUCTION

Period for submission of applications in capacity allocation procedure

1 March

15 March

15 May

31 May

1 working day of June

4 working day of June

30 June

TSO published information on:1. The Contracted Capacity Allocation (CCA)2. The Auction3. The Allocation by the Final Customer

The TSO published information on the capacity allocation within the auction during 5 working days from the completion of the auction

Registration on the auction platform

Submission by the participants of the procedure signed CCA along with the financial security


1. The auction is conducted on an internet platform.

2. The auction procedure ensures complete anonymity of the procedure participants.

3. The only entities that can take part in the auction are:• Those that concluded a transmission (framework) contract,• Those that were informed by Gaz-System S.A. of having exceeded the

available capacity and of the necessity of conducting the auction,• Those that registered on the website (platform) and obtained a login.

4. The auction procedure has a multi-step format.



Auction Organisation:

• The Price Tariff as the Starting Point – the object of the auction is only an auction premium;

• The prices will be called out in an offer windowuntil the total submitted quantity bids will be smaller than and equal to the quantity of the capacity offered by the TSO;

• Rising prices – increase in set price steps;

• Small and large price steps are defined for each product included in the allocation procedure;




Price Steps - determine the size of the mark-up for the tariff fee

Small Price Steps

1 cent per kWh/h

Annual Products 2

Monthly Products

Quarterly Products 0.5

0.2

Large Price Steps

1 cent per kWh/h

Annual Products 10

Monthly Products

Quarterly Products 2.5

1



If the total amount of the quantity bids is at the very start smaller or equal to the quantities of offered capacity, the capacities are sold and will be allocated respectively to all the bids made, in their full quantity at the tariff price.

Price Stage Q4

Shipper 1Available Capacity

5

4

3

2

150

150

150

150

Shipper 2 Total

1 150 150100 50



• If on the first day of the auction the quantity of the capacity in the submitted bids is greater than the quantity offered at the auction, the next offer windows will be open – each with a large step price mark-up.

• If the total quantity of the capacity in the submitted bids after closing of the offer window is equal to the offered quantity, the auction is closed. The capacity will be awarded pursuant to the quantity bids submitted throughout the duration of the offer window at a price with a mark-up in relation to the tariff price.

Price Stage Q4

Shipper 1Available Capacity

5

4

3

2

150

150

150

150 150100 50

Shipper 2 Total

1 150 200150 50



Price Stage Q4

S1avail. cap.

5

4

3

2

150

150

150

150 200

50

100

50

100

100

S2 Total

1 150 300150 150

Price Stage Q4

S1avail. cap.

4

3

2/3

2

150

150

150

150 200

50

100

100

50

40

100

140

100

S2 Total

1 150 300150 150



• The submitted bids can be replaced with new ones until each offer window is closed.

• Once the offer window is closed, the submitted bids are binding until the time another offer window opens.

• In given offer windows the quantity offers may be the same or may be reduced (down to 0) in relation to the offer directly preceding that one, however, they cannot be higher.



1. The object of the auction is the Sos fee.

2. the fee is paid monthly.3. Due to this consisting of management of contractual congestion, the TSO

charges a fee which is calculated as follows:

OZO = Sos * Mp * Twhere:OZO - fee for management of contractual congestion [PLN]

Sos - fee rate for the management of contractual congestion [PLN/(kWh/h)h]

Mp - capacity (contracted capacity) allocated within the auction [kWh/h]

T - number of hours in the settlement period [h]



• the same quantity of capacity is acquired on both sides of the point (within one transaction on a common platform) by the same entity

but

• two separate contracts with two TSOs

• two separate nominations

Exit

Entry

─ Contract─ Nomination

─ Contract─ Nomination

LasówAuction of bundled capacity



0

2012 2013 2014 2015 2016 2017 2018

The first auctions of bundled products will be held in June 2013.

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Offered for 3 quarters

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Change of Supplier


Change of Seller

1. In order to develop competition on the internal gas market, large customers that are not households should have the opportunity to select their providers, as well as sign contracts with several suppliers in order to secure their demand for gas. Such customers should be protected against non-competition clauses that are designed to eliminate competition or alternative offers. (Directive 2009/73 point 17 Preamble)

(…) Member States shall ensure that the eligible customer is in fact able2.

easily to switch to a new supplier. (Directive 2009/73 Art. 3 item 3)

3. Member States shall ensure that where a customer, while respecting the4.

contractual conditions, wishes to change supplier, the change is effected by3.

the operator(s) concerned within three weeks. (Directive 2009/73 Art. 3 item 6)


Change of Seller

Stages in the Change of Seller Process:

1. The Customer concludes a sale agreement with a new seller;

2. the Customer gives notice of termination of the sale agreement to the current seller;

3. The new seller informs the current seller and the TSO or DSO of the date when he will start selling the gaseous fuels;

4. New seller concludes transmission and distribution contracts;

5. Termination of transmission and distribution contract with current seller;

6. The TSO or DSO will collect the readings from the metering system in order to perform settlements with the current seller;

7. The TSO or the DSO shall immediately convey the metering data to the current and the new seller.


Change of Seller

1. The customer that is connected to the network is the disposer of the capacity at that point. "The capacity of the point follows the customer.”

2. This principle was expressed in point 12 of the TNC and point 16 of the DNC.

3. The conclusion of transmission contract or the distribution contract with the new seller/customer immediately renders the contract with the current Shipper ineffective at that point.

4. A change in seller only concerns exit points both in the system of the TSO and the DSO.

5. The introduction of an entry point into the distribution system – with an undefined location (group MFPWYDSO) will facilitate the change in seller process and will get rid of the current problems connected with the determination of the PWE to the distribution system.

6. The possibility of performing a partial change of Seller

DSO1 DSO2

TSO


Change of Seller

1. Each seller has the right to purchase gaseous fuels from a selected seller (Art. 4j EL; § 14 System Regulation).

2. Schedules for the Termination of Contracts

• Household customers – the last day of the month following the month in which the declaration of that customer was delivered to the energy company (re. contracts concluded after 11.03.2010);

• Final customers – the schedule specified in the contract.

3. Pursuant to the Decision of the President of the OCCP No. DOK 1/2012 of 13 April 2012, the procedure for changing the seller should include all the customers with which the trading company has signed complex contracts


Change in Seller - Costs

1. Giving notice of termination to the current seller should take place at no additional costs and compensation other than that resulting from the wording of the contract – Art. 4j item 3 EL;

2. The Customer shall be liable only for such costs and compensation as result from the wording of the contract (e.g. contractual penalties, but they cannot directly incur any costs connected with, e.g. taking the meter readings);

3. This provision does not apply to the contracts concluded before 11.03.2010 (Art. 6 amendment of 8.01.2010).

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Contracted Capacity Allocation (CCA)for One Day Contracts


CCA for One Day Contracts

1. Conclusion of transmission contract.

2. Obtaining the CA for the given point in which the one day services will be performed.

3. Submission of security.

4. Contracted Capacity Allocation (CCA) shall take place through the approval of nominations.

5. One day services are provided on the following principles:• Firm and • Interruptible.

6. Interruptible services are provided on gas level 4.



Nomination Shipper1

Contracted capacity Shipper1

Technical capacity

Nomination Shipper2

Interruptible capacity awarded



Nomination Shipper1


Technical capacity

Nomination Shipper2

Interruptible capacity awarded

Firm capacity awarded



Nomination Shipper1


Technical capacity

Additional firm capacity awarded

1. Nomination is not rejected if the Shipper1 has daily CA at that point. In this situation, firm capacity is awarded for 1 day.

2. Re-nomination during the day is possible



Nomination Shipper1


Technical capacity

Nomination Shipper2

Nomination Shipper3

Proportional reduction in relation to submitted

nominations while day ahead allocating capacity

4141 the system, that connects


Nomination Shipper1


Technical capacity

Nomination Shipper2

Nomination Shipper3

41

Firm

Interruptible



Re-nomination

Nomination Shipper1


Technical capacity

Nomination Shipper2

Nomination Shipper3

Nomination Shipper4

With re-nomination of day ahead services, only those CCA change

proportionally to the available capacity for which the re-

nomination was submitted.


Thank you for your attention

43

1 warsaw, 16 october 2012 the system, that connects tnc new contract model

Documents

capacity slide

dso sso pwy sso pwe

dso pwy sso pwe sso

capacity allocation

contract points

points pwy sso

ccaca dso

transmission contracts