Framework Guideline is the path to energy regulators’ target model for gas capacity allocation
The European Regulators Group for Electricity and Gas (ERGEG) has submitted to the European Commission its first-ever Pilot Framework Guideline, on Gas Capacity Allocation Mechanisms (CAM). The European Network Transmission System Operators in Gas (ENTSOG) have 12 months (from the time the Commission formally invites ENTSOG) to draft the corresponding network code which may become legally binding (via comitology).
“Today is an historic milestone for the new EU energy regulatory framework. After full stakeholder consultation of the proposal, the framework guideline on gas capacity allocation demonstrates ERGEG’s commitment to a speedy implementation of the 3rd Package ahead even of the formal deadlines. This framework guideline is critical for an integrated EU gas market,” commented Lord Mogg, Chair of the European energy regulators.
Under the 3rd Package network codes should be developed across 12 gas areas (and the same in electricity) by the network bodies on the basis of framework guidelines set by the Agency for the Cooperation of Energy Regulation (ACER). Since ACER cannot formally act until 3 March 2011, the European Commission invited ERGEG to act as if it were the new Agency in preparing a framework guideline on gas capacity allocation, mirroring the procedure in Regulation 715/2009.
At the Florence Forum on 10-11 June 2010, the European Commission invited stakeholders’ comments to the 3-year plan for framework guidelines and network codes in electricity and gas, to which regulators and network bodies are committed.
ERGEG developed a target model “or long-term vision” for the EU gas market. It focuses on trades concentrated at virtual hubs and facilitating cross-border trading between them, thus benefitting market liquidity. The framework guideline on gas capacity allocation allows a step-by-step approach towards this target model.
According to Walter Boltz, ERGEG Vice Chair and head of the gas working group, that the framework guidelines, once applied, “should help integrate markets and enhance hub-to-hub trading by harmonising the way capacity is offered and marketed at interconnection points. It will help overcome current difficulties such as different allocation rules on the two sides of borders, different types of capacity products and the domination of the First Come First Served (FCFS) principle which is wholly inappropriate, especially if congestion exists.”
The framework guideline on gas capacity allocation (a) addresses the scope and level of TSO cooperation in capacity allocation (b) sets out the framework for harmonising capacity products and (c) sets out the tools to be applied for capacity booking procedures, the details of the allocation mechanisms to be applied (e.g. auction, pro rata FCFS), and the facilitator (e.g. booking platforms) to be used.