Autorità per l’energia elettrica e il gas

Gas Regional Initiative – Region South-South East

Minutes of the 10th Stakeholder Group Meeting, 5th of May 2011, from 10:30 to 17:00, Hosted by AEEG at Piazza Cavour 5, I-20121, Milan

Participants:

First name / Last name / Company/Organisation
Antonio / Altrocchi / AEEG
Francesco / Cariello / AEEG
Massimo / Ricci / AEEG
Ales / Osrajnik / AGEN
Nicolas / Peugniez / BOG
Marta / Dente / BP Italia
Mario / Weinstabl / CEGH AG
Hrvoje / Brlecic / Croatian Energy Regulatory Office
Riccardo / Rossi / E.ON Energy Trading SE
Monica / Immovilli / Edison SpA
Elisa / Rondella / Edison SpA
Ilaria / Conti / EFET
Konstantin / Heiller / Energie-Control Austria
Markus / Krug / Energie-Control Austria
Gerhard / Langeder / Energie-Control Austria
Michael / Schmöltzer / Energie-Control Austria
Nina / Grall-Edler / Energy Community
Maciej / Ciszenski / Energy Regulatory Office
Piotr / Podworski / EuRoPol Gaz
Milos / Pavlik / eustream
Milan / Sedlacek / eustream
Stanislaaw / Brzeczkowski / GAZ-SYSTEM S.A.
Luka / Slavec / GEOPLIN d.o.o. Ljubljana
Jani / Setinc / Geoplin plinovodi d.o.o.
Marko / Ilersic / Geoplin plinovodi d.o.o.
Manuela / Gusmerotti / GME
Jiri / FILIPPI / Ministry of Industry and Trade
Martin / Kolar / NET4GAS s.r.o.
Vaclav / Vocilka / OMV Gas
Julita / Capala / PGNiG
Dimitrios / Lelovitis / RAE - Regulatory Authority for Energy
Paolo / Di Benedetto / SNAM Rete Gas
Francesco / Menditti / TAG GmbH
Rudolf / Starzer / TAG GmbH
Giuseppe / Peluso / Trans Austria Gasleitung GmbH

1Welcome

Mr. Cariello welcomed the participants and informed the SG that one of the main objectives of this SG meeting will be the preparation of a roadmap requested as by the European.

Mr. Ricci also welcomed the SG and gave a brief update on the recent developments; a new balancing system shall be introduced to make market entry for traders easier. There is also a new law on storage capacity (introduced at the end of April). 3bcm of storage were completely allocated to industrial customers. 1.7bcm are already available to the customers, the rest will be available within the next 3-4 years. Together with this procedure, a new allocation mechanism for allocation storage capacity has been introduced.

Mr. Schmöltzer welcomed the participants and presented the agenda. He informed the participants that the previous day, particular questions have been presented to the SAP and a discussion has been started in order to prepare the Energy Work Plan. This discussion shall be continued in the SG meeting and should consequently deliver a sound and detailed energy roadmap in order to send it to the European Commission and ACER.

-The agenda of the 10th SG meeting has been approved

-The minutes of the 9th SG meeting have been approved.

2Updates

Mr. Schmöltzer asked the SG participants whether there are significant developments in the countries represented that can be shared with the Stakeholder Group.

Austria

The draft of the new gas law has been approved by the ministerial council but not yet by the parlament. The “Exproprietation Clause” of the draft has not been accepted yet, hopefully it will be approved until summer. In Austria there will be one Entry/Exit zone with one market area manager to coordinate the 3 TSOs in hte market zone. Physical trading activities will hence be transferred to the virtual trading point. Regarding unbundling provisions, the Austrian law foresees all 4 versions, although there is a trend towards the ITO model.

Since 1st of April, new storage facilities have gone online. Due to the high increase at the “Speicher Haidach” – facility there are additional storage volumes available, unfortunately not linked with the Austrian grid system yet.

Mr. Starzer asked about the start of the discussion of the Market Rules – it has been delayed due to the delay of the adoption of the natural gas act.

Mr. Vocilka informed the SG that OMV Gas put into operation a new compressor station at Penta West in Neustift, now there are physical reverse flows possible.

Slovenia

The 3rd package has not been implemented yet but the new energy law is in its finalizing phase. Mr. Osrajnik said that it might be issued at the end of this year. Currently working the Slovenian Regulator is working on several important projects, together with the TSO and the Ministry of Economy, particularly dealing with the Risk Assessment which has to be completed by 3rd December of this year. The NRA is also currently issuing new balancing rules.

Mr. Ilsersic added that the TSO is currently increasing the capacity in the backbone of the gas system.

CzechRepublic

Mr. Filippi briefed the SG that the implementation of the Third Package progresses similar to Austria. Currently it is “In Reading in the Parliament”. Concerning the Risk Assessment, the Ministriy wants to charge all market players with their contribution of the assessment. By the end of November it should be ready.

For the unbundling provisions the ITO model has been chosen.

Poland

In Poland, currently two acts are in preparation (Electricity and Heating / Gas act). The Gas act has been sent out by the Ministry of economy for public consultation until mid of July.

The TSO Gaz-System will implement the provisions in different phases. The Transit pipeline’s network code will be implemented as an ISO system.

The connection to the German system will probably be increased at the beginning of next year.

Italy

Also in Italy the government has proposed the draft law which at present is still under Parliament evaluation. Concerning unbundling for SNAM Rete Gas, the ITO model has been selected. The new draft law foresees a double regime for access to storage: priority is given to shippers serving residential customers for modulation services having regulated access to storage; possible additional amount of storage capacities may be destined to industrial customers under negotiated access. Nevertheless after the Parliamentary phase, it seems this new norm may be amended by the government.

Slovakia

In Slovakia, discussion is going on, it is one of 25 countries that have not completed the implementation yet. There has only been a plan for a formal reading in the Parliament (Planned finalization and approval in the second half of the year). The Unbundling provision foresees either the OU or ITO model. The TSO, eustream, currently focuses on more practical work, such as the Hu-Sk Interconnector, with a high political priority. Also a Virtual Trading point will be implemented as soon as possible, although secondary legislation not in place yet.

Greece

Mr. Lelovitis informed the participants that recently the political decision was reached to implement all provisions in one piece of law, which is still at the stage of public consultation yet. There will be no law in place before summer.

Revythoussa LNG is now fully operational with an increase of 40% of the use of the terminal. The construction of the 3rd tank has been approved. Only 30% of the capacity had been utilized so far. Discussions are on their way between the Greek authority and foreign investors on how to exploit the Greek gas opportunities.

Croatia

Mr. Brlecic informed the SG that Croatia also has the obligation to implement the legal requirements of the 3rd Package. The Second Package is already on its way to full implementation. The new tariff system will soon be in place (implemented by next gas year next October). The new interconnector with Hungary has also been finished with an additional import capacity of over 6,5 bcm per year. Now connectors with Slovenia and Hungary are in place, the one with Hungary will be bidirectional. Although the Open Season has not attracted any interest, there might be more interest in the future through the BiH interconnector and the Krk LNG project.

Energy Community

Mrs. Grall-Edler informed the participants of the meeting that the Energy Community will adopt the 3rd package by October this year. The Implementation will follow later on. This will be conducted by the Secretariat, so all powers moving from the EC to the ECS, and all powers form ACER go to the ECRB. Being members of ENTSOE and G is the main reason for TSOs to implement the 3rd Package. Thus the TSOs have to be certificated.

Another priority project in the Energy Community is the Krk LNG project. Important will be the coordination of exemption decisions between the EU and non EU Countries with regards to the Southern Corridor pipelines, so Mrs. Grall-Edler.

Infrastructure projects

Mr. Schmöltzer informed the SG about several infrastructure projects: The coordination on South Stream has been started by the EC last year. Right now, there has not been any request for a TPA exemption (respectively for an unbundling exemption), Currently, all countries that are involved participate in the meetings. It is important to bring the IGAs into accordance with the European laws. Only the Austrian and the Slovenian IGA are in accordance with the European law at the moment.

South Stream will have finalized the feasibility study before the summer then there will be more insights which countries are included alongside the Route.

Mr. Vocilka emphasized that it is important to treat all projects of the Southern Corridor in the same and in a non-discriminatory way.

Mr. Pavlik added that the new infrastructure competes with the existing infrastructure, which is fully regulated.

Coordination meeting with ACER

Mr. Heiller informed the participants about the First Coordination meeting with ACER, under new conditions. All lead regulators from ERI and GRI were present. In the afternoon session of the coordination meeting, workshops dedicated to the electricity and the gas regions had been held.

The most important issues included the future involvement of the Member States’ ministries as well as the preparation of an energy road map. (In paragraph four of the conclusions of the energy summit in Brussels on February 4th it is stated that the IEM shall be achieved by 2014)

The open problem nevertheless is the target model – There is already on for electricity, but for gas, it is currently designed and will be finalized in the coming months.

3Gas Target model

Mr. Krug informed the Stakeholder Group about the ongoing discussion on the gas target model. Currently there are not more than 1-5 markets that are functioning. The model can be found under the slides of the Meeting Guide.

4Energy Work Plan 2012-2014

Mr. Krug concluded the presentation and informed the SG that by summer the GRI SSE contribution to the European Energy Road Map 2012-2014 shall be finalized so that the public’s view can be presented by the Madrid Forum end of September of 2011.

Mr. Cariello went through the stimulus questions that should spark the discussion and challenge the audience:

  1. Is it realistic to have one fully integrated market area in the region?
  2. In which MS of the region a fully functioning wholesale market can be established by 2014?
  3. Alternatively, with which MS a closer integration would be necessary to achieve a functioning wholesale market? What will be the impact of merging market areas (eliminating capacity booking on some IPs)?
  4. Which pilot projects to start with in order to establish this closer integration?
  5. Who is involved in the pilot project?
  6. Who is taking the lead in these pilot projects?

The answers to these questions was collected right here and in written till 27 May. After that a draft European Work Plan will be circulated in order to present it to the EC by end of June.

Mr. Starzer added that in the Austrian Natural Gas Act, the Entry Exit model will be introduced in Austria and at the same time there are ideas popping up about merged Entry/Exit zones. Mr. Schmöltzer replied that this will in anyway be a step-by-step process.

Mt.Brzeckowski asked whether it will be cheaper or the same price as the German system. The question is whether the end user price shall become cheaper or whether the target is to increase the liquidity. He also emphasized that the new infrastructure is exempted from TPA. Only the old infrastructure is under TPA.

Mr. Krug replied that the target is to increase liquidity and thus lower the energy price itself.

Mr. Rossi added that more liquidity will immediately lower the prices.

Mr. Ilersic emphasized that the issue of national wholesale markets should still be included in the European Energy Work Plan. It is important to let the users chose, which market to buy from.

Mr. Krug replied that the national wholesale markets are in place, but there are no opportunities to trade on a regional level.

Mrs. Grall-Edler added that the same discussion is on the way in electricity in the Energy Community. Some markets are probably too small and do not fulfil the liquidity criteria. Therefore it is not a question of wanting to be a wholesale market but being one or not.

Mr. Pavlik added that there might not be a proper algorithm behind the criteria defining “functioning wholesale markets”.

Mr. Weinstabl added that there are several benefits from regional markets. But there are several questions open.

Mrs. Rondella asked how these pilot projects may comply with the FG. As for the IP Arnoldstein/Tarvisio TSOs, both sides are asked to implement the FG and at the same time, pilot projects shall be implemented.

Mr. Cariello replied that this is an open issue, there is the 3rd package, then there is the Energy Council, asking to implement the IEM by 2014. The only way we see is to have a parallel process. Because if one waits for the 3rd package to be implemented there will not be enough time to achieve the IEM by 2014. The voluntary process should try to go in parallel with the Framework Guidelines. There is already a certain consensus on particular topics. Through learning by doing – through trying to put in place the different projects, it is possible to move ahead in line with what is happening at a European level. When the Package is in place, it might be much easier to design the internal market.

Of course all countries would prefer to have first the established entry exit zones and then continue with the work.

Mr. Brzeckowski replied that as long as there is congestion at the IPs, it will be difficult to create regional Entry/Exit zones. Further, from a regulatory point of view it might be necessary to increase the economical aspect of IP capacity investment. More hardware is needed and this shall be regarded by the regulators.

Mr. Cariello added that of course it is necessary to consider the IP congestion, nevertheless, the aim is to find out on how to allocate the IP capacity more efficiently, establish a functioning allocation mechanism.

Mr. Rossi added that the target by 2014 is ambitious, but at least the Road Map can improve. It is also important to have common balancing rules and it will be necessary to find out how to harmonise them.

Mr. Ilersic replied that into the presented target model the option “National Markets” should be integrated. He added that it is comparable to highways – although it is possible to drive via the highways, there should still be the opportunity to take the local roads to go there.

Mr. Schmöltzer concluded that this option is there anyways, thus it is not necessary to regulate this on a European level. This can be done on a national level – one can still pursue that on a national level as well.

Mr. Pavlik added that the VTP in Slovakia might proceed even quicker than it would be foreseen in the Energy Work Plan. Maybe it can be stated in the Work Programme that Austria and Slovakia will be establishing their own VTPs.

Mr. Weinstabl replied that it might be useful to have some sort of cooperation between the VTPs with regards to balancing zones - a big open point would be under which law falls the trading point that is serviced by two VTPs.

Mr. Ilersic informed the participants that there will also be an entry-exit system implemented in Slovenia.

Mr. Schmöltzer invited all participants to provide all their comments and their remarks which will be contributing to the Energy Work Plan.

On Monday 9th, the initial draft will be sent out for the remarks of the SG. Deadline for comments are requested by 27th of May.

5Potential Pilot Projects

a) IP Arnoldstein:

Mr. Menditti presented the IP Assessment project and the current status. TAG GmbH intends to offer day ahead transportation capacity on a interruptible basis. Interruptible Day-ahead capacity shall be offered via web application within 5:30 pm of the gas day. The day-ahead transportation capacity will be offered on an hourly basis. The invitation to participate in an auction will be sent out via email. The Auction will be executed in one round. One lot could be around 1,000 Cm³/h.

SNAM replied that they will discuss this issue with the TSO – it will be necessary to match these characteristics with the requirements or the balancing regime.