Consultation as part of more capacity

The Consultation

On the basis of the results from the market survey in 2015, the transmission system operators (more capacity TSOs) involved conducted technical studies to define offering levels that are to be auctioned in the 2017 annual auction on the primary capacity platform PRISMA. In the meantime the more capacity TSOs have drafted preliminary agreements that, among other things, enable transport customers (TCs) to ensure that the necessary capacities are also actually offered in the annual auction, taking into account the reservation ratios.


What is the consultation procedure?

The four-week consultation process will begin on 5 August 2016. Market players have until 2 September to state their position in German or English at contact(at)more-capacity.eu. Following the consultation process, the final standard contracts will be published on the website of the more capacity TSO in question. 


What issues will be the subject of the consultation?

The consultation process will deal with the preliminary agreement and the Supplementary Terms and Conditions of Business for allocating new technical capacities


Why preliminary agreements?

The results of the market survey more capacity establish that there is a need for additional transport capacities and so expansion of the network at selected market area boundaries of the GASPOOL market area. In order to supply them in the requested period of time and also to ensure that existing capacities are marketed first in the ongoing process and then new technical capacities, it is necessary for preliminary agreements to be concluded between transport customers and the more capacity TSO in question.

Conclusion of a preliminary agreement on the capacities required for economic network expansion will give transport customers and the more capacity TSOs the security they require that the desired capacities will be offered or requested in the annual auction. 

Supplementary Terms and Conditions of Business round out conclusion of the entry and exit contract for new technical capacities and so will also be part of the consultation process. 


How will the capacities be allocated under the preliminary agreements?

In order to ensure cost-effective and efficient expansion and operation of the network, existing capacities must first be offered and only then new technical capacities. The demand form based on the annex to the preliminary agreement will be used for the more capacity TSO and transport customer to coordinate the capacity to be booked. In allocating capacities, the more capacity TSOs will ensure that transport requirements will first be met by existing capacities being booked out at a market area boundary. If, due to a lack of reported requirements, a more capacity TSO cannot ensure that its existing capacity is booked out at a market transition point, it will report the shortfall to the more capacity partners who operate at the same market area boundary. The more capacity TSOs will then divide up the requirements reported to them among each other until all existing capacities at the same market area boundary have been allocated under the preliminary agreements. If multiple transport customers have reported their requirements to a more capacity TSO, these requirements will be transferred on a pro rata basis to one of the more capacity TSOs operating at the same market area boundary. The ratio of a transport customer is calculated as follows:

TSOMA: TSO at the same market area boundary
n = number of transport customer who have reported requirements

A transport customer’s requirements for new technical capacities from a more capacity TSO are then calculated by the difference between the total capacity requirements reported by it, the existing capacities to be booked and the capacity transferred to another more capacity TSO at the same market area boundary: 

Each more capacity TSO allocates a transport customer’s requirements for new technical capacities to the offering level of new technical capacities defined by it. If demand for new technical capacities from a more capacity TSO is higher than the respective offering level, the TSO will distribute its offering of new technical capacities on a pro rata basis over the inquiries it has received from all transport customers. The reference value for pro-rata distribution is the initially reported total capacity requirements of all transport customers, with the result that the new technical capacities allocated to the transport customer are calculated as follows:

Every more capacity TSO reserves the right to adjust its offering levels accordingly if deviations in demand are foreseeable. 

If a transport customer’s requirements for new technical capacities cannot be fully met by a more capacity TSO, it can request new technical capacities again from another more capacity TSO at the same market area boundary. The transport customer will also use the demand form to report its requirements again. 

The demand form with its coordinated existing capacities and coordinated new technical capacities is an annex to the preliminary agreement.


How is the preliminary agreement formed?

Following the coordination process, the more capacity TSO will send the transport customer the preliminary agreement with its annexes. The transport customer signs and returns the preliminary agreement with its annexes to the TSO in question.

The preliminary agreement is concluded when it is countersigned by the more capacity TSO. After all preliminary agreements have been concluded, the more capacity TSO will publish the aggregated results for each network point on www.more-capacity.eu.


When and how will the auctions be held?

The auctions for existing capacities and new technical capacities will be held in parallel as part of the annual auction in March 2017. New technical capacities will be marketed in coordination with foreign interconnection partners, where possible for a period of 25 years as of commissioning of the infrastructure created for them. After preliminary agreements on the required capacities have been successfully concluded, the more capacity TSO in question can offer different offering levels, depending on the border crossing point. 

The transport customer is obliged to submit initial bids to at least the amount agreed in the respective preliminary agreements. If multiple offering levels are offered, the transport customer undertakes to submit initial bids for all the offering levels offered by the more capacity TSO in question in the first round of the auction. Under the preliminary agreements, the transport customer is obliged in further annual and the subsequent quarterly auctions to submit initial bids for those capacities that cannot be marketed through the specification of reservation quotas in the 2017 annual auction. 

The rights and obligations of the parties are stipulated in Supplementary Terms and Conditions of Business  for new technical capacities.

Following the annual auction, the more capacity TSO will decide as part of an economic analysis which offering level is to apply to any expansion.