Warsaw, 16 October 2012

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Warsaw, 16 October 2012

the system, that connects

New Gas Market Model in TNC

1. Easier entrance on the gas market for new entities.

2. Gas trading no longer associated with a physical location on the network.

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3. Separation of physical entry and exit points, i.e. enabling gas transport from physical entry points to virtual point and from virtual point to physical exit points.

4. Gas system use rules simplified.


Premises of the new TNC

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3 the system, that connects

Virtual Point

1. The TNC introduces a 'virtual point' – without a concrete location that makes gas trade possible between customers inside the transmission network.

2. Gaseous fuel is the product on offer at the virtual point – E high methane gas.

3. Nitrified natural gas (Lw) will not be available at the virtual point.

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1. The TNC regulates cooperation between the TSO and the Polish Power Exchange (POLPX).

2. Possibilities of selling and purchasing gaseous fuel on the exchange at market driven prices and in complete observance of anonymity of transactions.

TSO Cooperation with POLPX

3. A sales agreement concluded on the Gas Exchange is valid, effective between the Parties that concluded it and is performed by the TSO.

4. In the event of no physical possibilities of performing the agreements, the TSO executes agreements using balancing instruments.

the system, that connects4

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1. Change in the duration of the gas year in order to adapt to EU solutions and consequently to facilitate commercial transactions(Gas Year = Oct. – Sept. instead of Jan. – Dec. calendar year).

2. The gas day effective as of 1 July 2012 lasts from 6:00 am until 6:00 am the next day.

The Gas Year

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1. Supported by a series of gas facility and equipment tests, a change in the admissible gas quality parameters (WI) to adapt to the amended Polish Standards and to enable import of new, more calorific gas via the LNG terminal.

Wobbe Index

2. The scope of WI variables for the E group gaseous fuel introduced by the new draft TNC is 45.0 – 56.9 MJ/m3.

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Implementation Schedule for the TNC, DNC and the TSO and DSO Tariff

15/10 15/08

Storage Service Rules Update

02/11

01/12/2012 Implementation of TNC, DNC/SSRand Tariffs of TSO/DSO/SSO

24/07/2012Approval of TNC and publishing in ERO Bulletin 15/09

1) Start of works on the DNC 2) publishing the DNC for consultation

3) submission of remarks & comments to the DNC 4) Works on final draft of DNC after end of consultation process

01/10

Approval

DNC

TSO and DSO and TSO and SSO contain ITC, and order contracted capacity allocation for the terms: 01.12.2012-31.12.2012

TSO/Shipper: Change in existing transmission contracts into Framework Contracts with

CCA/CA

Contracted Capacity Allocation PP for DSO and SSO for the terms: 01.12.2012-31.12.2012

Application for Capacity Allocation CA

Works on TSO Tariff

Application Verification Submission of application in TSO capacity allocation procedure

Capacity allocation for term of 01.01.2013-30.09.2013

Capacity allocation for WPWYGG, WPWYOTC, WPWYOSP,

WPWYOSD, WPWYOSM

24/09

1. Calculation of Tariff rates for TSO,2. Works on the Tariff and calculation of Tariff rates of DSO/SSO

30/08 14/11

ApprovalTariffs of TSO/DSO/SSO

04/09 30/09

77the system, that connects

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the system that connects

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Trading Company

Customer

Domestic Extraction Import LNG

Gas Sources

TransmissionStorage

Distribution

Polish Gas Market Model

the system that connects9

Trading Company

Customer

Domestic Extraction Import LNG

Gas Sources

TransmissionStorage

Distribution



1. Trading company is currently responsible for the entire gas transport process from the entry point to the customer, including to the final customer that receives the gaseous fuel.

a) Agreeing Transport Routes

b) Ordering contracted capacity at entry and exit points at the TSO; DSO and SSO, including ordering contracted capacity at interconnectors.

2. Problem with establishing the quantity of gaseous fuel off-taken by the customers of a given trading company in a given distribution zone.



Cooperation with SSO

SSO

TSO

Pumping capacity Off-take capacity

Storage capacity

PWY PWE

1. At present, in order to use the storage service a market participant has to: conclude a transmission contract and reserve contracted capacity a the exit and entry point

with the TSO; conclude a storage services contract specifying the pumping capacity and the off-take capacity.

2. No certainty available that the capacity at PWY/PWE at the TSO and the capacity at the SSO will be the same.

3. The TSO suggests that the SSO who will determine the capacity at PWY and PWE through the connection agreement to the storage facilities, to order capacity at the connection of both systems and make it available within storage services.


1. The change in the conditions for cooperation with the distribution system operators and storage system operators will make it easier for customers to perform gas transmission between transmission systems and distribution and storage systems.

2. Only the DSO and SSO will purchase capacity at physical point connecting their systems with the GAZ-SYSTEM S.A. transmission system.

3. Simplification of the rules for purchasing capacity at TSO/ DSO and SSO connections, simplified allocation rules for quantities of gaseous fuel.

Change in Principles for Cooperation with the DSO and SSO

DSO DSO

TSOVirtual Point

SSODSO1

DSO2

TSO

Entry Entry

Exit to DSO1

Exit to DSO2

ExitExit

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DSO DSO

TSOVirtual Point

3. The gas transport route to the final customer will be agreed between the SSO, DSO and TSO. The DSO and SSO will reserve at the TSO contracted capacity (capacity) at the connection to both systems. The DSO will be responsible for exceeded capacity.

Change in Principles for Cooperation with the DSO and SSO

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1. According to EP, the operators are responsible for the development of the transmission, distribution and storage system infrastructure – TSO, DSO, and SSO, respectively.

2. The DSO and SSO determine the size of the demand for capacity at interconnectors concluding connection agreement, and then the ITC.


Ordering contracted capacity takes place at physical entry points to the transmission systems and at the physical exit points to the final customer from the distribution (or transmission) system.

DSO DSO

TSO

FPWETSO FPWETSOVirtual Point

Virtual Point


DSO DSO

TSO

FPWETSOFPWETSOWPWY

Virtual Point

The transport of gaseous fuel to the Virtual Point (Gas Exchange, OTC Market)


DSO DSO

TSO

FPWETSOFPWETSOWPWE

FPWYFC

PWYSSO

Virtual Point

The transport of gaseous fuel from the Virtual Point to the final customer of the the storage system facility.


DSO DSO

TSO

FPWETSOFPWETSO

FPWYFC

PWYSSO

WPWE

WPWYDSO WPWYDSO

Virtual Point

The transport of gaseous fuel from the Virtual Point to the distributoin zone (via the Virtual Exit Point to the distribution zone), which customers are connected with.


FPWETSO

(Import, Mine)FPWYFC

(Final Customer)

Shipper1 Shipper2

Sold-100

Bought+100

Virtual Point

Shipper1: +100

Shipper2: -100

Balance: 0 Balance: 0

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Trading on the Gas Exchange


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GAZ-SYSTEM S.A.:

+100

FPWETSO


(Final Customer)

Shipper1 Shipper2

Sold-100

Bought+100

Virtual Point

Shipper1: 0 Shipper2: -100

Balance: -100 Balance: 0


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GAZ-SYSTEM S.A.:

-100

FPWETSO


(Final Customer)

Shipper1 Shipper2

Sold-100

Bought+100

Virtual Point

Shipper1: +100

Shipper2: 0

Balance: 0 Balance: +100


Settlements

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DSOTSO

PW

PWE

Transmission fee Entry

Transmission fee Exit

Distribution fee

PWY/PWE PWY

TSO TSO DSOShipper(trading company)

Shipper(trading company/

final customer)

DSO

Transmission fee

PWYFC

TSO Shipper(trading company)


Settlements

SSOTSO

WPW

PWE

Transmission fee Exit

Storage services fee

Storage Services Package

PWE/PWY

TSO SSO SSO Shipper(trading company/

final customer)

PWY/PWE


Thank you for your attention

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Warsaw, 16 October 2012

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Transcript of Warsaw, 16 October 2012