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Capacity Allocation Concepts

The natural gas transmission system operators of Romania, Hungary, and Austria are considering jointly conducting a binding open season procedure to offer new or incremental cross-border transmission capacity at the Romanian-Hungarian border and the Hungarian-Austrian border in both flow directions. They are conducting a public market consultation to survey potential capacity allocation methods. Three potential methods are described: annual capacity auctions using ascending clock auction (Method 1); a sequential auction design with bundled capacity products and conditional bids across years and interconnection points (Method 2); and annual auctions like Method 1 but with the possibility of cancelling preliminary results if minimum capacity amounts are not reached (Method 3). Market participants are asked to provide feedback on these methods and their preferences through a questionnaire

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57 views5 pages

Capacity Allocation Concepts

The natural gas transmission system operators of Romania, Hungary, and Austria are considering jointly conducting a binding open season procedure to offer new or incremental cross-border transmission capacity at the Romanian-Hungarian border and the Hungarian-Austrian border in both flow directions. They are conducting a public market consultation to survey potential capacity allocation methods. Three potential methods are described: annual capacity auctions using ascending clock auction (Method 1); a sequential auction design with bundled capacity products and conditional bids across years and interconnection points (Method 2); and annual auctions like Method 1 but with the possibility of cancelling preliminary results if minimum capacity amounts are not reached (Method 3). Market participants are asked to provide feedback on these methods and their preferences through a questionnaire

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mayalasan1
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We take content rights seriously. If you suspect this is your content, claim it here.
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Capacity Allocation Concepts in the RO-HU-AT Open Season Procedure

for Public Market Consultation

Dated 3 February 2016

1. Introduction

Natural gas transmission system operator companies SNTGN Transgaz SA, FGSZ Zrt. and Gas Connect
Austria GmbH consider to jointly conduct a binding open season for the booking of new or
incremental cross-border transmission capacity at the Romanian-Hungarian border and the
Hungarian-Austrian border, in both flow directions. The preparatory process is supported by the
respective national regulatory authorities, i.e. ANRE (Romania), HEA (Hungary) and E-Control
(Austria). All involved TSOs published the same survey electronically either via an electronic form or
as a downloadable document.

The deadline for the submission of answers is 22 February 2016, 16:00.

2. Scope of the Public Market Consultation

The preparations for the open season procedure have already begun and the above mentioned
parties wish to survey the market in a non-binding way about the possible capacity allocation
Methods to be applied in the procedure.

Any other details of the possible open season procedure (e.g. exact timing, quantity of offered
capacity, tariffs, legal terms applicable to capacity contracts, financial securities etc.) are out of the
scope of the present Public Market Consultation.

3. Potential Capacity Allocation Methods

The parties consider three possible ways (Methods) of capacity allocation, which, in their
assessment, fit into the current European legislative framework.

Participants of the survey are kindly asked to fill in the questionnaire, where general questions are
asked and to evaluate the proposed Methods according to their perceived merits.

For the new capacity, an amount at least equal to 10 % of the technical capacity will be set aside and
offered no earlier than the annual quarterly capacity auction according to Article 8 (8) CAM NC.

For the sake of the example, a 15-years booking period is assumed when describing the Methods.

SNTGN Transgaz SA ● FGSZ Ltd ● Gas Connect Austria GmbH


1
Capacity Allocation Concepts in the RO-HU-AT Open Season Procedure
for Public Market Consultation

Dated 3 February 2016

3.1. Method No.1.

Method No.1. denotes regular yearly capacity auctions using ascending clock auction algorithm as
per Regulation 984/2013/EU.

 Offered contractual capacity product: yearly bundled capacity product at each IP in both
directions (1 October-1 October) at Csanápalota (RO>HU) / (HU>RO) and at
Mosonmagyaróvár (HU>AT) / (AT>HU).
 Conditional bids: no. Capacity products are offered in independent, single-year products,
where no conditional bids can be made between certain years or across the offered
interconnection points.
 In total, 60 capacity auctions (1 auction per IP per flow direction per year) are envisaged to
be organised.
3.2. Method No.2.

Method No.2. denotes capacity auctions using e.g. ascending clock, uniform price or pay-as-you bid
auction algorithm but a matrix of ex ante conditions are built in, resulting in a sequential auction
design.

 Offered contractual capacity product: yearly bundled capacity product for 2 IPs, in both flow
directions (1 October-1 October) at Csanápalota (RO>HU) / (HU>RO) and at
Mosonmagyaróvár (HU>AT) / (AT>HU).
 Conditional bids: yes. Capacity products are offered in three, subsequent capacity allocation
rounds.
 Allocation round I:
o A single batch made of 15 single-year product is allocated simultaneously for the two
interconnection points. It means that within 1 allocation procedure, all 15 yearly
bundled capacity products per flow direction on both interconnection points are
allocated.
o In total, 1 capacity auction per flow direction is organised.
 Allocation round II:
o Subject to capacity available after allocation round I. In case all of the capacities are
allocated in round I., no more allocation rounds shall be organised.
o Only single-year products are allocated, but simultaneously for the two
interconnection points. It means that within 15 separate allocation procedures,
individual yearly bundled capacity products are allocated within the same procedure
on both interconnection points.
o In total, up to 15 capacity auctions per flow direction are organised.
 Allocation round III:
o Subject to capacity available after allocation round II. In case all of the capacities are
allocated in round II, this allocation round shall not take place.
o In total, up to 30 capacity auctions per flow direction are organised.

SNTGN Transgaz SA ● FGSZ Ltd ● Gas Connect Austria GmbH


2
Capacity Allocation Concepts in the RO-HU-AT Open Season Procedure
for Public Market Consultation

Dated 3 February 2016

3.3. Method No.3.


 Yearly capacity auctions as described in Method 1 above; i.e.:
 Offered contractual capacity product: yearly bundled capacity product at each IP in both
directions (1 October-1 October) at Csanápalota (RO>HU) / (HU>RO) and at
Mosonmagyaróvár (HU>AT) / (AT>HU);
 In total, 60 capacity auctions (1 auction per IP per flow direction per year) are envisaged to
be organised;
 If aggregate demand in one auction is greater than the capacity on offer in this auction;
capacities shall be allocated on the basis of the highest individual bidder commitment in all
auctions conducted throughout the period of 15 years at IP Csanápalota and IP
Mosonmagyaróvár;
 All auction results submitted to the system user shall be regarded as preliminary and non-
binding;
 In case that the minimum amount of capacity for the economic viability of project has not
been reached via the application of the allocation mechanism the preliminary and non-
binding bookings shall be cancelled by the TSO;
 Bidders shall receive preliminary results and shall be entitled to step back from their interest
documented until a predefined date (final allocation) without the obligation to give reasons
for this decision.

4. Questionnaire

4.1. Would you support a possible capacity allocation design other than those described in Regulation
984/2013/EU, i.e. ascending clock algorithm or uniform price algorithm?
 Yes
 No
 N/A

If yes, which?

SNTGN Transgaz SA ● FGSZ Ltd ● Gas Connect Austria GmbH


3
Capacity Allocation Concepts in the RO-HU-AT Open Season Procedure
for Public Market Consultation

Dated 3 February 2016

4.2. Do you have any preference between auction algorithms, e.g. ascending clock, uniform price or
pay-as-you bid?
 Ascending clock algorithm
 Uniform price algorithm
 Pay-as-bid
 I have no preferred auction algorithm

If you have any preference, please state your reason.

4.3. In case of Method No. 2, which batch of single-year products would you prefer, e.g. 5, and/or 10
and/or 15 years?
 5-year batch
 10-year batch
 15-year batch

4.4. Would you allow conditional bidding during the open season procedure?
 Yes
 No
 N/A

4.5. If conditional bidding during the open season procedure is allowed, which type of conditionality
would you deem necessary?
 Booking across a number of years
 Booking across different interconnection points
 Minimum quantity
 Other: (please specify)

4.6. Would you prefer ex ante or ex post conditionality in the open season’s capacity allocation
design? Please state your reasons.

SNTGN Transgaz SA ● FGSZ Ltd ● Gas Connect Austria GmbH


4
Capacity Allocation Concepts in the RO-HU-AT Open Season Procedure
for Public Market Consultation

Dated 3 February 2016

4.7. Do you have any comment on the above mentioned Methods?

4.8. Would you have a preference for any of the above mentioned Methods?
 Method 1
 Method 2
 Method 3
 None of these
 I have no preference

If you have any preference, please state your reason.

SNTGN Transgaz SA ● FGSZ Ltd ● Gas Connect Austria GmbH


5

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