Business model for the upcoming Rules for Gas Transport (RfG), Version 12.0

Transcription

1 Business model for the upcoming Rules for Gas Transport (RfG), Version

2 Table of Contents 1. Introduction Commercial configuration Contract structure Contracts Allocation of capacity contracts Capacity booking The sale of balance service agreements Trading Link4Hubs Register of Players Nominations Nomination Renomination Entry and transit nominations BNG transition point nomination Exit zone nomination Storage nomination Gas transfer facility nomination NPTF nomination Matching procedures for the entry, transit, storage and GTF-points Matching at the NPTF point Allocation Entry allocation BNG entry point allocation Transit allocation Exit zone allocation Storage allocation GTF allocation NPTF allocation Balancing Crisis levels and emergency supply Invoicing/Fees Terms of payment Data corrections Reconciliation Data transfer...28

3 1. Introduction Energinet.dk Gastransmission, being the national Transmission System Operator (TSO), has prepared this concept description of the Danish gas market for the shippers, gas suppliers, distribution companies, storage companies, adjacent transmission system operators, regulators and other interested parties and market players. This is the so-called business model of the Danish transmission system for the upcoming Rules for Gas Transport, Version The purpose is to provide a coherent but simple description of the framework and main principles and mechanisms in the Danish gas sector. Compared to the current RfG 11.0, the new issues in RfG 12.0 are: The current auction mechanism - volume-based, cleared-price auction algorithm - is used for annual, quarterly and monthly capacity auctions of both firm and interruptible capacity at the two interconnection points Ellund and Dragør. More information about the new mechanism can be seen in the Model paper for the allocation of capacity at the interconnection points and at Nybro in the Danish natural gas transmission system from 1 October 2012 New booking deadlines for capacity at Nybro are introduced At all entry and transit points, in the exit zone and at the BNG entry point, yearly, monthly and daily capacity are offered and, from the 1 October 2012, quarterly capacity will also be offered. A quarter commences at on the first gas day of the relevant quarter, ie at on 1 January, 1 April, 1 July and 1 October Weekly capacity products - both firm and interruptible capacity products - are removed for all entry and transit points, exit zone and BNG entry point Introduction of a new model for security of supply (2012 model). More information is given in the model paper of 16 March 2012: Security of gas supply A new model effective from October Various minor changes. 2. Commercial configuration The Danish transmission system is commercially configured as an entry-exit system comprising: Three entry points (Nybro, Ellund and Dragør) One BNG entry point One exit zone, comprising: o Six allocation areas, each with a variable number of consumer portfolios (consumer portfolios define a group of either daily metered sites (DMS) or non-daily metered sites (ndms) for each supplier in one allocation area) 3

4 o Three direct sites with three large power plants connected direct to the transmission network (Avedøre II, H.C. Ørstedværket and Skærbækværket) Three transit points (Nybro, Ellund and Dragør) One virtual gas transfer facility point (GTF) One virtual transfer point supporting the Nord Pool Gas exchange (NPTF) One virtual transfer point supporting the cross-border service Link4Hubs (L4H) Two physical storage points (Stenlille and Lille Torup). Each of the storage points has one entry and one exit point. The Danish entry-exit model with (only) one exit zone requires aggregated data for each gas supplier at each allocation area level (via the consumer portfolios). Therefore, the individual metering and consumer data below the supplier level are not known to Energinet.dk Gastransmission. However, the distribution companies shall provide such data, if relevant for Energinet.dk Gastransmission, ie in relation to emergency interruptions. Capacity (measured in gross calorific value per hour) is purchased via one or more contracts (overlapping in time): Entry capacity is booked for each entry point (Nybro, Ellund or Dragør) BNG entry capacity is booked at the BNG entry point Exit zone capacity is booked for the entire zone (Denmark) covering transmission to (i) all six allocation areas and thus all consumer portfolios, and (ii) the three direct sites Transit capacity is booked for each transit point (Nybro, Ellund or Dragør). 4

5 Shippers are responsible for transport, balancing and trading in the transmission system, whereas gas suppliers are responsible for consumer management in the distribution network. A gas supplier can have one or more shippers supplying one consumer portfolio. Likewise, the end-consumer at a direct site can have more than one shipper. The end-consumers supplied direct at the direct sites are their own gas suppliers. Finally, a consumer can have more than one supplier, cf. the regional rules. Until 1 October 2012, the shippers will also be responsible for paying a fee for emergency supply to Energinet.dk Gastransmission, when transporting gas to the exit zone. This will change. After 1 October 2012, the distribution companies will take over the role of collecting the emergency supply payment from the end consumer, and they will then transfer the payment to Energinet.dk Gastransmission. 3. Contract structure The gas market is controlled by a set of contracts concluded between the market players. This chapter focuses on contracts concluded between Energinet.dk Gastransmission and the shippers. 3.1 Contracts Each shipper must be registered (see chapter 3.7) by signing a shipper s framework agreement with Energinet.dk Gastransmission, which includes: Credit approval for transport, balance settlement, capacity transfers (CTF), balance transfers (BTF) and reconciliation plus the transmission fees and charges. Credit approval is based on a credit limit requested by the shipper, and a credit evaluation is made by the insurance company, according to which Shippers will either (fully or partly) be covered by an insurance or shall provide security. Registration in the Register of Players (including) o master data details describing the shipper as a customer with Energinet.dk Gastransmission, and o status information, including information on which suppliers (consumer portfolios and direct sites) the shipper is prepared to deliver gas to Test and approval of EDI-communication [Edig@s, CSV, telefax] (see chapter 10) In relation to the shipper's framework agreement, the following types of commercial contracts may be concluded by the shipper: Entry capacity contracts (separate contracts for each of the three entry points). The entry capacity contract can be concluded for either firm, interruptible or both firm and interruptible capacity (see chapter 3.2) BNG entry capacity contracts 5

6 Exit zone capacity contracts (one pooled capacity for the exit zone covering all allocation areas and the direct sites) Transit capacity contracts (separate contracts for each of the three transit points). The transit capacity contracts can be concluded for either firm, interruptible or both firm and interruptible capacity (see chapter 3.2) Balancing service agreements (BSAs) (see chapter 3.4) Transfers of firm and interruptible capacity rights, balance margin and/or natural gas. At present, no transmission entry or exit capacity contracts have been concluded for the two storage points. Capacity to and from the storage facilities is therefore only a matter for the storage customer and one or two of the storage facility owners (Storage System Operators - SSOs). 3.2 Allocation of capacity contracts Energinet.dk Gastransmission decides how the shippers will purchase capacity either in connection with an auction or by use of the First Come First Served (FCFS) Principle. Energinet.dk Gastransmission will notify the shippers of which mechanism will be used for allocation of capacity Allocation by auction At the transit and entry points at Ellund and Dragør, yearly, quarterly and monthly capacity contracts will be allocated based on auction results, and the volume-based, cleared-price algorithm will apply. The volume-based auction is a simple, single-round type of auction, in which a bidder indicates the demand at each price step. The bids are aggregated after the closure of the bidding window, and the price will be the first price step in which there is no excess demand. If there is no excess demand at P0, it means that the capacity is not sold out. Any remaining capacity will move forward to the next relevant auction. The auctioning dates can be seen in the auction calendar published at Energinet.dk's website well ahead of the start of the gas year. The allocation mechanism is also described in the Model paper for the allocation of capacity at the interconnection points and at Nybro in the Danish natural gas transmission system from 1 October Contract periods offered at an auction Capacity allocated via an auction is offered for a given capacity period of: one year (12 consecutive months) starting at 06:00 on 1 October one quarter starting on the first gas day of a quarter, ie at 06:00 on 1 January, 1 April, 1 July or 1 October. 6

7 one month starting on the first gas day of a calendar month. Capacity allocated via an auction cannot comprise a period of days falling in two consecutive calendar months Allocation by the First Come First Served (FCFS) principle Capacity is allocated via FCFS at the various entry and transit points mentioned in the following sections Nybro For capacity allocated via FCFS at the entry and transit point at Nybro, the following applies: The yearly capacity product can only be purchased as a capacity contract for 12 consecutive months starting at 06:00 on 1 October. The quarterly capacity product can only commence on the first gas day of a quarter, ie 1 January, 1 April, 1 July and 1 October. The monthly capacity product can only be purchased from the beginning of a calendar month and can only commence on the first gas day of a month. The daily contracts can be purchased for up to six consecutive gas days Exit zone and BNG entry For capacity allocated via FCFS at the exit zone and BNG entry, the following applies: Yearly, quarterly and monthly capacity contracts can be purchased up to 3 months before the commencement of the contract period. The annual capacity product can only be purchased from the beginning of a calendar month and can only begin on the first gas day of a month. The quarterly capacity product can only commence on the first gas day of a quarter, ie 1 January, 1 April, 1 July and 1 October. The daily contracts can be purchased for up to six consecutive gas days Elllund and Dragør Capacity allocated via FCFS at the entry and transit points at Ellund and Dragør: The daily contracts can be purchased for up to six consecutive gas days, and the capacity contracts cannot apply to a period of days falling in two consecutive calendar months Generel information about capacity contracts All contracts concerning the exit zone require the registration of a player relationship with a consumer portfolio in the exit zone. In special cases, e.g. technical tests of new industrial facilities or power plants daily capacity can be requested according to longer time limits. The capacity for each shipper for each entry point, BNG entry point, transit point or the exit zone will always be equal to the sum of all of the shipper's signed contracts covering the point or zone in question on the relevant gas day. 7

8 The shippers can combine capacity contracts purchased direct from Energinet.dk Gastransmission or from another shipper via the Capacity Transfer Facility (CTF): Capacity Daily capacity Monthly capacity Quarterly capacity Annual capacity Time Contracts for entry, transit, exit zone and BNG entry capacity are not interdependent. Shippers only trading at the storage point, on the GTF or on the NPTF are not required to buy capacity in the transmission system. Energinet.dk Gastransmission has the right to enforce compulsory buy-back of unused capacity according to a use-it-or-lose-it ("UIOLI") procedure. Energinet.dk Gastransmission may do this in cases when a shipper s request for firm capacity has been denied due to another shipper s hoarding of capacity Firm and interruptible capacity Firm capacity is offered when it is available and interruptible capacity is offered at one probability level; Interruptible level 1 capacity. See the illustration below: 8

9 The interruptible products are under revision by Energinet.dk Gas transmission with a view to focusing on increasing harmonisation and simplicity. If offered, interruptible level-2 capacity will be available as daily capacity. The exact capacity limits may change from time to time, and firm capacity and interruptible level-1 capacity are available at Energinet.dk Online. If the requested firm capacities are not physically available in an FCFS order, the shipper s capacity order is met by a capacity offer comprising interruptible capacity. The distribution between firm and interruptible level-1 capacity in Energinet.dk Gastransmission s capacity offer depends on the total amount of capacity booked in the requested/ordered capacity period by all shippers as well as the amount of capacity physically available according to Energinet.dk Gastransmission in the actual period. This means that the capacity order that cannot be met fully with firm capacity may contain: a. Firm capacity in periods when this is available b. Interruptible level-1 capacity in periods when the amount of firm capacity available is none or less than the amount of capacity ordered by the shipper. The capacity at the entry and transit points will be offered in the following two steps: Firm capacity Interruptible level-1 capacity (and interruptible level-2 capacity if offered as daily capacity). Interruptible capacity will not be offered if it is considered that no interruptible capacity will be available. Capacity at the entry points will be offered as follows: Ellund: the offered capacity may depend on the amount of capacity sold at the transit point at Ellund Dragør: the offered capacity does not depend on the amount of capacity sold at the transit point. 9

10 3.3 Capacity booking The auction schedule and the deadlines for capacity booking via FCFS are described in the following section Auction At the transit and entry points at Ellund and Dragør, yearly, quarterly and monthly capacity contracts are allocated by auctioning. The auctions for yearly and quarterly capacity will be held between and on a specific date before the start of the gas year, see the auction calendar on Energinet.dk's website. The auctions for monthly capacity will be held on a specific day between and 15.00, usually during the third week of the month before the month to which the offered capacity applies, see also the auction calendar on Energinet.dk's website FCFS principle The entry and transit points at Nybro: Yearly, quarterly and monthly booking of capacities must be made between and on specific dates. For further information, see the Nybro-FCFS calendar at Energinet.dk s website the dates will correspond with the auction calendar. A booking of daily capacities comprising up to six consecutive gas days must be made before on the gas day before the start of the capacity period and up to five gas days prior to the commencement of the capacity period. The capacity contract cannot apply to a period of days falling in two consecutive calendar months. The entry and transit points at Ellund and Dragør: A booking of daily capacities comprising up to six consecutive gas days must be made before on the gas day before the start of the capacity period or up to five gas days prior to the commencement of the capacity period. The capacity contract cannot apply to a period of gas days falling in two consecutive calendar months. The exit zone and the BNG entry point: Yearly, quarterly and monthly capacities, or capacity for periods of another duration calculated in multiples of 1 month, must be ordered before on the gas day before the commencement of the capacity period and up to three months before the start of the capacity period. A booking of daily capacities comprising up to six consecutive gas days must be booked before on the gas day before the start of the capacity period and up to five gas days prior to the commencement of the capacity period. 10

11 3.3.3 Booking procedure Capacity bookings can be made in accordance with the booking procedure. These orders are submitted to Energinet.dk Gastransmission and concluded at Energinet.dk Online. As a default procedure, the Manual Procedure may be used only if the booking procedure is not available. With the manual procedure, the agreements are concluded by the shipper sending the order by , fax or letter to Energinet.dk Gastransmission Prioritisation of orders An order submitted according to the booking procedure is processed by Energinet.dk Online immediately after it has been approved by the shipper. Such orders will have priority compared to orders approved later in time according to the booking procedure and orders booked according to the manual procedure which may have been received but not yet processed by Energinet.dk Gastransmission. Orders received by fax or letter according to the manual procedure are processed subsequent to orders received by or orders approved via the booking procedure. Orders submitted according to the manual procedure are processed in the order in which they are received by , fax or letter. The manual procedure may also be used as a fall-back procedure if the booking procedure is not available. 3.4 The sale of balance service agreements Energinet.dk Gastransmission has a global maximum amount of balance margin flexibility, which can be sold as balance service agreements. They will reflect the actual amount of flexibility that is available physically to Energinet.dk Gastransmission for sale on the gas market. The amount offered is based on available linepack and Energinet.dk Gastransmission s available storage capacity. The amount is published on Energinet.dk Gastransmission s website. Balance service agreement orders can be concluded in accordance with the booking procedure. These orders are submitted to Energinet.dk Gastransmission and concluded on Energinet.dk Online The sales mechanism applying to balance service agreements Balance service agreements will be sold on an FCFS basis. If there is an excess demand for balance margin in a particular month, Energinet.dk will annul the FCFS mechanism and instead allow all shippers who have ordered balance service via the FCFS mechanism to bid for it at an auction. The auction mechanism is a so-called "uniform-price auction algorithm" ("Balance Margin Auction"). The floor price will be published in Energinet.dk Gastransmission s price list, no price steps will be provided and the shipper may submit up to 10 bids on Energinet.dk Online. Before a deadline specified by Energinet.dk Gastransmission, the shippers shall send their bids by specifying the requested amount of balance margin and the price per kwh. The sum of bal- 11

12 ance margin requested by each shipper cannot exceed the total amount of flexibility offered by Energinet.dk Gastransmission. After the auction, the bids will be ranked after the highest bid price, and the bids will be met until the total amounts of bids are equal to the total amount of balance margin. All the bidders who have their bids met will pay the market clearing price. 3.5 Trading Energinet.dk Gastransmission facilitates trading in the Danish transmission system, both on the secondary marked and on bilateral basis. Shippers can use Energinet.dk Gastransmission s bulletin board to advertise for a counterpart on the BTF, CTF and GTF. On the bulletin board, shippers find contact information regarding other shippers regarding the Danish gas market and place bids for sale or purchase. Energinet.dk Online gives the shipper the possibility to execute transfers online up to 30 minutes before the mandatory nomination at on the day before the gas day Balance Transfer Facility (BTF) The BTF allows shippers to transfer balance margin. Both assigned balance margin (follows as standard for all exit capacity contracts) and separately purchased balance margin (balance service agreement) can be transferred via the BTF Capacity Transfer Facility (CTF) Two shippers can transfer all - or part of - their capacity rights from one of the shippers to the other on the secondary capacity market. This option is called Capacity Transfer Facility (CTF). The CTF also applies to daily capacity, and all contracts can be divided into daily portions and be transferred as such Gas Transfer Facility (GTF) Two shippers can transfer gas from one shipper to the other at the so-called Gas Transfer Facility (GTF). The GTF is a part of the daily nomination procedure for each shipper, and it is therefore possible to trade gas both before and on the gas day according to nomination and renomination (see chapter 4.7 regarding the nomination options) Nord Pool Transfer Facility (NPTF) Nord Pool Gas (in the following NPG) offers shippers the opportunity to carry on continuous and anonymous trade on a Danish gas exchange. The trading products offered are: day-ahead, within day, swap, balance of month, weekend and month ahead. All trades at NPG Exchange are anonymous and cleared by NPG. The NPG Exchange is open for trade all trading days between and 15:00. 12

13 Sales Clearing Purchase To support trading on the NPG exchange, Energinet.dk Gastransmission offers the Nord Pool Transfer Facility (NPTF), which is a virtual trading point in the Danish transmission system. Gas traded at the NPG Exchange can only be transferred via NPTF. More information is available on NPG's website Link4Hubs Link4Hubs is a cross-border gas transfer service. It provides a virtual gas link between the hubs in the transmissions system in the Netherlands, Germany and Denmark. The purpose of this service is to allow shippers to transfer gas via a virtual pipeline between their portfolios in each of the three countries. This way, the shippers will have gas available for trade in their portfolios and can trade it on the hubs. The service is offered on a firm and day-ahead basis. HUB GTF HUB TTF HUB Gas Pool The service is a one-click service. The underlying processes of capacity booking in two or three countries and nomination of contracted capacity for transfer of gas from one point to another are merged into one click. The entire operation is managed by one joint cross-boarder service platform. Therefore, the shipper will not need to make an individual nomination or a capacity booking in relation to this product. The amount on offer for transfer is displayed for each route at the platform every week-day morning. It is bookable from to (LET) and available for the following gas day. This service has been developed in close a cooperation between Gasunie Deutschland, Gas Transport Services and Energinet.dk Gastransmission. It is designed to facilitate cross-border commodity trade, ie on the national gas exchanges. 13

14 3.7 Register of Players New players wishing to act as shippers, storage customers or gas suppliers must be registered in the Register of Players. They do so by signing a contract with Energinet.dk Gastransmission. Biogas producers are registrered by the distribution companies in the Register of Players. In the Register of Players, the following information is listed: Register of Players o master data details describing the player and his roles as gas supplier, biogas producer, shipper and/or storage customer on the Danish gas market In case the shipper wishes to transport BNG in the Danish Natural Gas System, the master data includes the GLN for the relevant BNG Transition Point and the address of the BNG producer which Energinet.dk Gastransmission receives from the relevant Distribution Company. o status information including information on the shipper(s) that the gas suppliers (have agreed to) use for delivery of gas to each of their consumer portfolios and the direct sites and the relationship between a shipper and a BNG production portfolio. Test and approval of EDI-communication (see chapter 10 ). Energinet.dk Gastransmission registers relationships between shippers and gas suppliers and or BNG transition points in the Register of Players as informed by the shipper and the gas supplier via their status information at Energinet.dk Online. This includes confidential information as to which gas supplier (consumer portfolios) supplies gas to a particular shipper, and from which shippers a particular gas supplier receives gas. In case of inconsistency in the information received from the shippers and the gas suppliers, Energinet.dk Gastransmission will take action to clarify this. The consumer portfolios and direct sites accepted by the shipper define the points for which the shipper must nominate gas deliveries, and to which Energinet.dk Gastransmission must allocate gas deliveries. The establishment of a player relationship regarding a BNG production portfolio is conditional on Energinet.dk Gastransmission verifying the relationship between the BNG Transition Point and the relevant Shipper. A Shipper may have a Player Relationship with several BNG Production Portfolios, and several Shippers may have a relationship with one and the same BNG Production Portfolio. A registered Player Relationship means that the Shipper shall nominate the expected offtake for each Consumer Portfolio or BNG Production Portfolio as soon as these are activated, and that subsequent Allocation to the Shipper shall be based on the offtake of the Consumer Portfolio or BNG Production Portfolio For more information see chapters 4 and 5 on nomination and allocation. 14

15 4. Nominations 4.1 Nomination On a daily basis, the shipper must submit nominations for all relevant points by for the following gas day. The gas day commences at on any day and ends at on the following day. Nominations must be stated in energy (kwh) based on Gross Calorific Value. All nominations must contain 24 hourly values per gas day. Nominations must be submitted for the following points when the relevant contracts are established (see chapter 3): Entry points (for each shipper code pair) Exit zone (for each consumer portfolio and/or direct site) Transit points (for each shipper code pair) BNG entry point (for each BNG transition point) Storage points (for each shipper code pair). The storage customer must submit one storage nomination to the storage company with which the storage customer has capacity. If the storage customer has concluded contracts with both SSOs, he must nominate separately for both storage points Gas Transfer Facility/GTF (for shipper code pair) Nord Pool Transfer Facility/NPTF (for shipper code - nomination is optional for shippers). If Energinet.dk Gastransmission has not received nominations in the exit zone by 14.00, the validated nomination values from the previous gas day will be used. 4.2 Renomination Every full hour during the hours from before the gas day to on the gas day, the shipper can change his nomination by sending a renomination to Energinet.dk Gastransmission. Energinet.dk Gastransmission will start the renomination procedure every full hour. The lead time from renomination deadline to approved renomination before the gas day/execution on the gas day is two hours. Energinet.dk Gastransmission accepts only 24 hourly values for all renomination cycles even for renominations made on the gas day. However, only values for the remaining hours of the gas day will be processed. Renomination for one or more hours changes the original value submitted in the nomination before the gas day by or via a renomination submitted later. 15

16 Accordingly, a renomination received, for instance, before on the gas day will be executed before and will only affect the hours of the remaining gas day ( ). See the illustration below: Nomination GAS DAY (D-1): Time GAS DAY (D): Time Timeline (06:00): Gas Day (D-1) begins (14:00): Nomination before the Gas Day (D) (16:00-18:00): Matching with adjacent systems (Before 18:00): Shippers will receive a confirmation (Before 21:00): A renomination is is send (23:00): The renomination is is in effect for the remaining 7 hours of the Gas Day (23:00-06:00) Shipper receives a confirmation (03:00): Last renomination (06:00): Gas Day (D) ends On execution of a renomination, the shipper receives a confirmation. In addition, the shipper receives a confirmation if the most recently confirmed values of the (re)nomination have been changed indirectly by the counterpart in the adjacent system or due to physical constraints. The shipper will also be notified by an error alarm if the nomination is not executed. Manual back-up is not possible, so errors must be corrected by the shippers by sending new corrected renominations in a later renomination round. 4.3 Entry and transit nominations In the adjacent systems, each of the shipper s counterparty shippers must submit nominations at the entry and transit points by combining a shipper code pair (cf. chapter 4.3.1) In relation to interruptible capacity, Energinet.dk Gastransmission will always: a. Give higher priority to its shippers nominations and renominations of firm capacities than to nominations and renominations of interruptible level-1 capacity b. Give higher priority to nominations and renominations of interruptible level-1 capacity than to nominations and renominations of interruptible level-2 capacity (if interruptible level-2 is offered as daily capacity). If several shippers have bought interruptible capacity, and the nominations exceed the available capacity, Energinet.dk Gastransmission will divide the available capacity in excess of the firm ca- 16

17 pacity level according to the pro rata principle between the shippers nominations of their interruptible level-1 capacities. If all nominations of firm capacities and interruptible level-1 capacities are met, Energinet.dk Gastransmission will divide the remaining capacity between the shippers nominations of their interruptible level-2 capacities according to the pro rata principle if interruptible level-2 capacities are offered. Before and on the gas day, Energinet.dk Gastransmission matches the entry and transit nominations with Svenska Kraftnät at Dragør, with DONG Energy at Nybro, with Gasunie Deutschland(GUD) at Ellund and with DONG Storage and Energinet.dk Gas Storage at the storage points. Energinet.dk Gastransmission is responsible for matching at Dragør, Nybro and at the storage points. The approved nominations sent to the shippers are based on the result of the matching procedures with the adjacent system operators. QA check: The sum of nominations of each shipper for each entry point is checked against the shipper s capacity for the specific entry point, including contracts transferred via the CTF The nominations for a transit are checked for each shipper for each transit point, including contracts transferred via the CTF The nominations are checked against the corresponding nominations in the adjacent system. The nominations will be reduced if: They exceed the shipper s capacity The corresponding nominations in the adjacent systems are lower (the lesser of rule). See the definition above. They expose Energinet.dk Gastransmission to an unacceptable credit risk, eg due to (risk of) imbalances exceeding the shipper s balance margin The physical deliveries are severely reduced The physical deliveries contain off spec gas Shipper code pairs A shipper code pair consists of two sets of shipper codes. The shipper code combination indicates the gas flow direction - which shipper transports gas into and out of the Danish transmission system or injects and withdraws gas to and from the storage facilities. The Danish shipper codes are assigned by Energinet.dk Gastransmission, DONG Storage and Energinet.dk Gas Storage. Shipper Codes in the adjacent systems are assigned by the TSOs of the individual systems. At all Energinet.dk Gastransmission s entry, transit and GTF points, the shipper codes are flexible. This means that the shipper can change the combination of a shipper code pair without giving prior notice to Energinet.dk Gastransmission. 17

18 Reduction principle in a shipper's nominations In the event of Energinet.dk Gastransmission reducing the Shipper s total nominations for several shipper code pairs at the entry and transit points, the reduction can be made in accordance with the following two principles: Proportionately. The nominations will be reduced by the same proportionate share for each shipper code pair. Prioritised. The nominations will be reduced so that nominations for shipper code pairs based on the shipper code stated last will be reduced first. This information shall be given to Energinet.dk Gastransmission along with the daily nominations. 4.4 BNG transition point nomination For each particular BNG transition point the Shipper must forecast the quantities of BNG, expressed in kwh/hour, that are requested to be delivered every Hour of the following Gas Day. 4.5 Exit zone nomination Exit zone nominations are relevant for the consumer portfolios and the direct sites. The main reasons for this level of detail are: 1. The transmission system operator requires this level of geographic detail to optimise and balance the daily operation of the network, including injection/withdrawal of gas from the two storage facilities 2. The transmission system operator requires this level of detail to secure the supply to the network in case of an emergency situation, ie in case of reduced capacity, emergency and force majeure situations 3. In cases where a gas supplier has more than one shipper, Energinet.dk Gastransmission may use the nominations to divide the gas supplier s consumer portfolios between the corresponding shippers. The shipper must submit one nomination for each of his consumer portfolios in the exit zone relating to the shipper and one nomination for each direct site. QA check: All exit zone nominations made for each consumer portfolio belonging to a shipper are aggregated to the exit zone level. The aggregate sum and the potential nominations to the direct site relating to the same shipper are checked against the capacity booked for the exit zone, including contracts transferred via the CTF. 18

19 4.6 Storage nomination At each of the storage points, the shipper must submit one nomination for each shipper code pair to Energinet.dk Gastransmission. The counterpart at the storage point (the storage customer) must submit one nomination for each shipper code pair to the relevant storage owner. If the storage customer has concluded contracts with both SSOs, the storage customer must submit nominations separately to each storage owner. The storage customer needs to be assigned a shipper code from the relevant SSO for nomination to be possible. If the relevant storage shipper code is mentioned first in the combination, the nominated amount of gas will be withdrawn from the relevant storage facility. If Energinet.dk Gastransmission s shipper code is mentioned first in the combination, the nominated amount of gas will be injected into the relevant storage. An overview of the gas flow: DLxxxxx-DSxxxxx: Withdrawal from Stenlille storage facility DSxxxxxx-DLxxxxxx: Injection into Stenlille storage facility LTxxxxxx-DSxxxxxx: Withdrawal from Llille Torup storage facility DSxxxxxx-LTxxxxxx: Injection into Lille Torup storage facility Before and on the gas day, Energinet.dk Gastransmission matches the storage nominations with DONG Storage and Energinet.dk Gas Storage at the storage points. The matching for a specific shipper will be performed for each shipper code pair, which means that the nominations for injection and the nominations for withdrawal are matched separately. Energinet.dk Gastransmission does not make any validation of the nominations except for the matching. The validation of the nominations in relation to the use of the storage facilities is performed by DONG Storage and Energinet.dk Gas Storage. The approved nominations sent out to the shippers and storage customers are based on the result of the matching. 4.7 Gas transfer facility nomination The nomination procedure for GTF has changed. In future, nomination will be performed by use of shipper code pairs. For GTF nomination, both shippers must submit a nomination to Energinet.dk Gastransmission, and they will be matched. Please see the illustration below. Shipper A (DS000123) has agreed to transfer gas to Shipper B (DS000321). The two shipper codes are combined to make up the correct shipper code pair, indicating the direction of the gas flow: DS DS (Shipper A transfers gas to Shipper B) 19

20 The codes must be entered into Energinet.dk Gastransmission's nomination tool in the right combination. Shipper A adds the shipper code pair DS DS to his nomination tool, and in a similar manner shipper B will add the contract name DS DS to his nomination tool. The nominations will be reduced if: The corresponding nominations from the matching shipper are lower (the "lesser of rule). 4.8 NPTF nomination The shippers do not need to nominate separately for the NPTF because of the the exchange is always right rule, cf If, however, the Shipper wishes to nominate, he can send a nomination to the NPTF point ("Shipper Nomination") along with other nominations. 4.9 Matching procedures for the entry, transit, storage and GTF-points When Energinet.dk Gastransmission receives a nomination for the entry, transit, storage or GTF point, the system operators match the nominations. The nominations are compared hour by hour with information from the counterparty system operators. If, in a given hour, there is a mismatch between the nominations, the lesser of rule applies: The lesser of rule is a mechanism using the lowest of the two compared nominations. The matching procedure in the Danish system is based on the intention of the shipper. If a situation occurs in which only one shipper (named Shipper A) submits a renomination, this renomination will be compared to the last nomination or renomination submitted by the corresponding shipper in the adjacent system (named Shipper B). Thus, if the original nomination from Shipper B, during an earlier renomination, is reduced as a consequence of a mismatch and the use of the "lesser of" rule, the original nomination from Shipper B becomes effective if shipper A sends an increased renomination for the relevant hour. 20

21 The matching principle is illustrated below: The Danish border Shipper A Shipper B Nomination Nomination Matching Lesser of rule Approved nomination Approved nomination Renomination 250 Matching Shipper B s intention The result is considered as the matched nomination and is a part of the QA check described below Matching at the NPTF point On the final and binding completion of a gas trade executed at the NPG Exchange, NPG shall perform the NPTF matching in accordance with the the-exchange-is-always-right rule and send the matching result to Energinet.dk Gastransmission. Energinet.dk Gastransmission must inform the shippers of the accepted NPTF nominations. The above matching result performed by NPG and received by Energinet.dk Gastransmission will apply even if the shippers have nominated different or no volumes to Energinet.dk Gastransmission at the NPTF. 5. Allocation Energinet.dk Gastransmission needs a valid nomination from each shipper to run the allocation procedure. Allocations are stated in energy (kwh) based on gross calorific value (GCV). Allocations are performed in a daily cycle and a monthly cycle. The daily allocation is based on daily data, and the monthly allocation is based on validated data and used for invoicing. 5.1 Entry allocation The entry allocations are set as equal to the approved and matched nominations, cf. 4.3 above. 21

22 5.2 BNG entry point allocation The BNG Transition point will be allocated a quantity of Natural Gas each Hour corresponding to the sum of the metered value at the BNG Metering Point relating to the relevant BNG Transition Point. If a BNG Transition Point supplies Natural Gas to two or more Shippers, the Metered Quantities must be distributed between the Shippers on the basis of the Allocation principles agreed with the Shippers in question. In case two or more Shippers are supplied by the same BNG Transition Point, the Shippers shall jointly inform Energinet.dk Gastransmission of the Allocation principle agreed between them. 5.3 Transit allocation The allocations in the transit points are set as equal to the approved and matched nominations, cf. 4.1 above. 5.4 Exit zone allocation The allocation for a direct site is set as equal to the flow metered at the site converted to energy. In case of delivery from more than one shipper, the energy is divided between the shippers according to the allocation rule applicable for the specific direct site. The allocation for one consumer portfolio (with DM consumers) is calculated as the sum of all the hourly meter readings for the supplier's DM consumers in a given allocation area. The allocation for the consumer portfolio (with ndm consumers) is calculated as the supplier's share of the total ndm consumption for the specific allocation area: The daily residual consumption for all ndm consumers in the allocation area is defined as the difference between all gas delivered to the distribution area (a number of MR stations) and the sum of all gas consumed by DM consumers in the allocation area. The hourly residual for the allocation area is calculated from the daily residual via a 'key' to 24 hourly values. The 'key' is defined as 24 values, each describing an average hourly consumption in per cent of the total average daily consumption. The 'key' is published on Energinet.dk Gastransmission's website. The 24 hourly residuals are distributed on the individual suppliers via the monthly calculated market share of the individual gas suppliers. The market share (of ndm consumers for each allocation area) is the supplier s consumers' expected yearly consumption (EYC) divided by the sum of all consumers' EYC for the allocation area in question. EYC is defined as the consumers consumption the preceding year. If a gas supplier has several shippers for each consumer portfolio, Energinet.dk Gastransmission will distribute the above allocation based on an agreed principle. The default principle is pro rata based on the shippers' approved nominations. The distribution companies forward information on the consumer portfolio level (DM and ndm consumption for each gas supplier portfolio) to Energinet.dk Gastransmission. 22

23 Via the Relation Table (stored in the Register of Players), Energinet.dk Gastransmission can sum up the total DM and ndm consumption to a shipper level. The Relation Table links all gas suppliers via their consumer portfolios in each distribution network to one (or more) shipper(s). The shipper is allocated these sums. The allocation for one shipper (for DM and ndm portfolios) is calculated as the sum of all the consumer portfolios in all the allocation areas supplied by the shipper. 5.5 Storage allocation The storage injection and withdrawal allocations are set as equal to the approved storage injection and withdrawal nominations for each of the storage facilities, cf. 4.6 above. 5.6 GTF allocation The GTF allocation is set as equal to the matched nomination, cf. 4.9 above. 5.7 NPTF allocation The NPTF allocation is set as equal to the matched nomination, cf above. 6. Balancing Balancing is performed at a nationally pooled level for the gas day for each shipper based on the following principles: Imbalances are calculated and balanced for each shipper. The calculations are imbalances between: o energy delivered at the entry points, BNG entry point, withdrawn from the storage facility, and received from other shippers via the GTF, NPTF or L4H, and o energy allocated to the exit zone (including direct sites), transit points, storage injection and deliveries to other shippers via the GTF, NPTF or L4H. The tolerated imbalance margins are calculated on a daily basis and based on each shipper s combined exit zone capacity on the day in question with a flexibility of plus/minus 3 per cent of the shipper's accumulated daily exit zone capacity Shippers that deliver BNG at the BNG entry point are given free Balance Margin corresponding to plus/minus 15 per cent of the individual shipper's accumulated daily BNG entry point capacity. Balance service agreements with Energinet.dk Gastransmission and transfers of balance margin from one shipper to another by means of Energinet.dk Gastransmission s balance transfer facility (BTF) can be used to expand the band within which the shipper s imbalances are allowed to vary free of charge. 23

24 The impact on the energy-balance figures caused by differences between the daily (nonvalidated) data stream and the monthly (validated) data stream will be settled at a neutral balance gas price in accordance with Energinet.dk Gastransmission s "no punishment" principle. The neutral gas price is also used to settle the imbalances at the expiry of an agreement. 7. Crisis levels and emergency supply As of 1 October 2012, a new emergency supply model will take effect in accordance with EUregulation No. 994/2010 concerning the security of gas supply. The new security of supply model introduces 3 new crisis levels given by the regulation: Early warning: when there is concrete, serious and reliable information that an event may occur which is likely to result in significant deterioration of the supply situation and is likely to lead to the alert or the emergency level being triggered Alert: when a supply disruption or exceptionally high gas demand occur which result in significant deterioration of the supply situation, but the market is still able to manage that disruption or demand without the need to resort to non-market measures Emergency: in the event of exceptionally high gas demand, significant supply disruption or other significant deterioration of the supply situation and all relevant market measures have been implemented but the supply of gas is insufficient to meet the remaining gas demand so that non-market measures have to be additionally introduced with a view, in particular, to safeguarding the supply of gas to protected consumers. It should be noted that supply disruptions can happen at both the alert and the emergency levels. The fundamental difference is that, at the emergency level, all relevant market measures have been implemented but the supply of gas is insufficient to meet the remaining gas demand so that additional non-market measures have to be introduced. If a crisis situation occurs, Energinet.dk will notify all shippers. If the early warning or the alert level are being triggered, the natural gas will still be transported and distributed as in the normal state of operation, but Energinet.dk Gastransmission may increase the incentive-based balancing charges to Balancing Gas - step 2. Furthermore, at the alert level, Energinet.dk Gastransmission may activate hyper-interruptible contracts with consumers at major consumption sites who have chosen to accept an interruption of gas supply after 3 hours and up to 72 hours in return for financial compensation, see below. If the emergency level is being triggered, the gas supply to the protected consumers will still be continued for a period of up to 60 gas days, as today. However, the non-protected consumers will be interrupted after a 3-day warning period. Protected consumers are defined as (i) all household consumers, (ii) enterprises with an annual consumption of less than 2 million m³ gas, (iii) essential social services and (iv) district heating installations, provided that these installations are not able to switch to other fuels. 24

25 Energinet.dk Gastransmission may also activate 3 days' interruptible contracts with consumers at major consumption Sites who have chosen to accept an interruption of gas supply within 72 hours and continue to be interrupted for up to 72 hours in return for financial compensation. The biggest consumer sites with an annual gas consumption of more than 2 million Nm3 have the option to become interruptible: hyper-interruptible at the alert level and/or 3-day interruptible at the emergency level. These consumer sites will be required to reduce the offtake in an alert or an emergency situation and will get a compensation for this service (or part of it). The process of changing to being an interruptible consumer site is divided into two phases. The first phase is a prequalification round, in which the consumer sites assign to Energinet.dk Gastransmission their master data and pay an entry fee. The second phase is a tender round resulting in a sealed-bid auction. Energinet.dk Gas transmission will prepare the prequalified consumer sites for the auction by assigning each consumer site a maximum capacity (K1) and an expected offtake in January and February based on the average of the previous three years. The prequalified consumer sites will be asked to send in offers regarding hyper-interruptible and 3-day interruptible supply to Energinet.dk Gastransmission specifying the potential capacity reduction at the consumer site (in relation to the assigned maximum capacity at the consumer site K1) in alert and emergency situations and the price for this capacity reduction. Energinet.dk Gastransmission will compare the various offers in a sealed-bid auction. Energinet.dk Gastransmission will then conclude contracts with the consumers with the lowest price bids, who can ensure the necessary amount of interruptibility both with regard to capacity and total reduced volume. 8. Invoicing/Fees The tariffs are based on a capacity component and a variable component. The tariffs are published on The contract model involves one tariff for the entire exit zone and potentially multiple (three) entry tariffs, one tariff for the BNG entry point and multiple (three) transit tariffs. For the use of the new cross-border service, the prices are published on Energinet.dk Gastransmission s website and on the platform for the new cross-border service. The nomination fees are invoiced if the allocation in the exit zone or at the BNG entry point deviate by more than +/- 20 per cent from the approved nomination for the exit zone or the BNG entry point in all hours of the gas day. Capacity overrun fees are invoiced if the shipper's exit zone allocation exceeds 102 per cent of his exit zone capacity. This also applies at the BNG entry point. The capacity overrun fee is based on a No punishment" principle (NPP), which is identical to the NPP principle regarding balancing gas. In general, this principle relates to a situation in which the daily and invalidated allocation differs from the validated allocation after the month. In such cases, the principle ensures that the shipper does not pay an incentive fee due to misleading data. 25