IFE-CASC long term auctions Project status

IFE-CASC long term auctionsProject status

Implementation Group Meeting - Lisbon, 3-12-2013

1. Initial Project perimeter

2. Initial Project planning

3. Project Status

4. Potential Impacts on the SWE coupling project

5. Ways forward - Options

Plan

2

Project perimeter

CASC will manage yearly and monthly auctionsRTE will keep managing daily auctions (untill coupling)REE will keep managing intraday auctions

PROCESS Now Target

Long Term

Yearly REE ► CASC

Monthly Rte ► CASC

Secondary market Rte ► CASC

Nominations Rte ► REE

DailyAuctions Rte ► Rte

Nominations Rte ► REE

IntradayAuctions REE REE

Nominations REE REE

RteREE

REE Rte

3

Planning (as for July 2013*)

6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11

2012 2013

IT developments

Contracts

IFE and HAR rules

GO LIVE : November 2013

Comfort letters

Consultation

Design, IT specifications

Forum

MoU signature

Common testsRTE / REE / CASC

Comfort letters

demand

Submission for approval

Regulatory approvals

4*as for Regional Roadmaps, go-live was initially scheduled for mid-2012

Work already carried out

•Letters of comfort received from regulators / Spanish ministry

•Design of auctions•IT specifications•Signature of MoU

•Public consultation of HAR including France-Spain border•Public consultation of IFE rules for short term timeframes•Forum with market parties

•IT developments started (RTE-REE)•IT developments expected to be ready for common testing from 1st October

5

Milestones - Regulation

•Submission of HAR and IFE rules to regulators July 2013•the approval time is 4 months in some countries, and the HAR needs to be approved in all involved countries

•HAR 2.0 have been submitted in all involved countries, except for SpainHAR 2.0 have been downgraded to a 1.1 version, excluding French-Spanish border but keeping all other relevant evolutions. REE has contributed to HAR 1.1 (e.g. rules now clarify that approval can be issued by NRAs and/or relevant ministries)

HAR 1.1 approved in France, CRE requesting coordination between RTE and REE to submit Harmonized Auction Rules

•Spanish Operational Procedures Work in progress, to be submitted by July 2013 (?)

•High level Spanish regulation (Ministerial order 4112/225) Evolutions needed by November 2013, out of TSOs responsibility

6

Milestones - Contracts

•Cooperation Agreement REE-RTE Need updates, work in progress

•Service Level Agreement REE-RTE-CASC or RTE-CASC Work in progress, template and procedures ready

•CASC shareholdership issue•Different perceptions of the situation•Rules of internal order of CASC: principle of equality of treatment for TSOs •Not a prerequisite for the finalisation of the project, it can be implemented in a second step. CASC has no control over Auction Rules.

7

Milestones - IT

•Finalization of the test Master plan July

•IT developments started

•Internal tests RTE: May-July REE: (?)

•Common tests REE-RTE-CASC Scheduled for :October-November, but not performed yet. Only tests between RTE and CASC have been succesfully carried out

8

Interactions with SWE coupling project

DELAY of IFE-CASC project

•Day-ahead Coupling SWE

•Interdependencies between the two projects exist

•Same IT tools and regulation are impacted by the two projects, therefore:

•Need to keep the sequence (1) IFE-CASC, (2) coupling SWE, otherwise, IT development cycles and regulatory evolutions sequence hugely impacted;

•Simultaneous go-live of the two project non-feasible (operational and IT constraints).

9

• Scenario 1 : long-term auctions project is implemented by february-march 2014 No major impacts on SWE coupling

• Scenario 2 : long-term auctions project is delayed of few months SWE coupling delayed of appoximately the same period

• Scenario 3 : long-term auctions project is not implemented before the SWE coupling SWE coupling no earlier than end 2014 (new IT cycles, costs…)

Agreement for avoiding scenarios 2 and 3

Impacts on SWE coupling : scenarios discussed with projet partners and Regulators

10

• A modification of the perimeter of the IFE-CASC project is currently being discussed between REE, RTE and CASC, in order not to impact the SWE coupling

• These solutions must be coherent with IT, legal, fiscal, regulatory and timing constraints (i.e. : no impacts on SWE coupling)

• Possible solutions :

A. CASC as Service Provider of both RTE and REE, using HAR

B. CASC as Service Provider of both RTE and REE, using adapted IFE Rules

C. REE keeps performing yearly auction, RTE outsources monthly auctions (and Resales, UIOSI, management of reductions…) to CASC, using adapted IFE Rules

Ways-forward

11

• REE and RTE would keep control of auction rules

• REE could become CASC shareholder in a second step

• In line with Regional Roadmaps

• In line with Market needs

• Contracts almost finalized

• Public consultation already carried out, approval already obtained in all other involved countries. Need of fast approval in Spain and France – Need of updating Ministerial Order

• Need of updating Royal Decree ?

• Outsourcing to CASC cost-efficient (transparency regulation…), CASC offer in line with comfort letters

Solution A – CASC as service provider and HAR

12

Solution B – CASC as service provider of RTE and REE and specific IFE rules

13

• REE and RTE would keep control of auction rules

• REE could become CASC shareholder in a second step

• Delegation to CASC by RTE and REE should be similar to the delegation clauses of HAR

• Moderately in line with Regional Roadmaps and Market needs (no HAR, but yet single platform for long term rights)

• Contracts almost finalized

• Need of new Public consultation – Need of updating Ministerial Order. New rules should include evolutions needed for SWE coupling.

• Outsourcing to CASC cost-efficient (transparency regulation…), CASC offer in line with comfort letters

Solution C – CASC managing only monthly auctions and secondary markets + specific IFE rules

14

• REE and RTE would keep control of auction rules

• REE could become CASC shareholder in a second step

• Delegation to CASC by RTE should be similar to the delegation clauses of HAR

• Not in line with Regional Roadmaps and Market needs (no HAR, nor single platform for long term rights)

• Need of new Public consultation – Need of updating Ministerial Order. New rules should include evolutions needed for SWE coupling.

Possible implementation plan

15

Sept Oct Nov Dec Jan Feb March April

Operational activities

IT developments

Testing activities

Regulatory evolutions

New project perimeter definition

Approval

RTE internal testing

RTE-CASC testing

RTE-REE-CASC testing

New IT developments

(C)

Public consultation

(B and C)

Rules modifications(B and

C)

Submission for

approval

Approval

GO-LIVE

SWE Full Coupling Go live

window

•Planning is extremely tight•1 month contingency may be needed for Regulatory approvals (go-live in March for April auction)

2013 2014

• RTE supports option A : CASC as service provider and use of Harmonized Auction Rules

• Options B and C could be implemented too in order not to delay the SWE Coupling

• Option C should be considered and agreed as a temporary solution

• Decision needs to be taken in the next days, otherwise the SWE coupling will be impacted

• Guidance is therefore expected today from NRAs

Conclusions

16