France-UK-Ireland Electric
ity Regional Energy Market
Paper 3
CER, CRE, Ofgem, NIAUR
Cover Note concerning Reciprocal access to balancing markets in the
France-UK-Ireland (FUI) Electricity Regional initiative
October 2007
Introduction
1.
The ERGEG considers that efficient balancing arrangements are the key to a
properly functioning wholesale market.1 Enhanced cross-border balancing
exchanges should foster competition, yield a decrease in overall costs for
balancing services and maintain security of supply.
2.
Improved arrangements for cross border balancing in the France-UK-Ireland
(FUI) region was identified as one of the three priority topics to be tackled
as part of ERGEG’s Electricity Regional Initiative (ERI), along with
congestion management and wholesale market transparency
3.
ERGEG launched its first formal consultation for the FUI region in November
2006. This included a consultation on increasing reciprocal access to
balancing markets in the FUI region.
4.
A number of responses on the issue were received from a wide range of
interested parties. Almost all respondents supported the continuation of
work to introduce improved arrangements for cross border balancing in the
region.
5.
The continuing work on cross border balancing has been facilitated through
a dedicated Balancing workstream. The workstream consists of Regulators,
TSO’s and stakeholders. Two meetings were held by the regulators and a
technical workshop by the TSOs. The results of the initial consultation and
the preliminary debates in the balancing working group led to focus on the
potential ways to develop further the TSO to TSO model and implement it.
The workstream has resulted in the TSO’s 2, in conjunction with those
Stakeholders participating in the Balancing workstream, producing a further
consultation paper.
6.
The TSO’s proposal is given in the attached paper “Proposal for the
introduction of cross border TSO balancing procurement”.
7.
The paper focuses on the France-England interconnector (IFA). The other
interconnector in the region, Moyle, has not been addressed in the paper
due to the impending merger of the Irish and Northern Irish electricity
markets into a single “All Island” market. However, the arrangements
outlined in the paper have been designed to be as generic as possible so
that in time they can be applied to other interconnectors (existing and
proposed) in the region.
1
2
Conclusions of the 13th Forum of Florence
NGET/RTE
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8.
Views are invited from all interested parties.
Invitation to give views
9.
CER, CRE, Ofgem and NIAUR – the four regulators - invite all interested
parties to comment on issues raised in the attached paper, and in particular
to consider or respond to the questions raised below.
10.
Any comments should be received by November 20, 2007 and should be
sent by email to [email protected].
11.
Any questions relating to this document should in the first instance be
directed to: Gary Craig (email: [email protected], Tel 00 44 (0)141
331 6005).
Questions for comment
12.
The four regulators are particularly interested to hear views on the
following:
I. How far do the proposals contained in the paper meet the objective of
opening up balancing to all market participants, rather than relying on
the status quo where the TSO’s take on this role? Do you think that this
will promote efficiency in the operation of the markets?
II. Do you think that the TSOs’ proposal meets the fundamental principles
listed in the 3rd paragraph:
o
Increasing competition
o
Transparency and non discrimination
o
Preserving security of supply
o
Compatibility and reciprocity
o
No interconnector capacity reservation
In particular, as the arrangements will involve the TSOs continuing to
take actions, do parties consider that the TSO’s proposals on
transparency are sufficient? If not then please make further specific
suggestions.
III. Does RTE’s and NGET’s proposed methodologies for building the volume
of TSO-TSO offers provide the most efficient outcome? The TSOs are
proposing a cap on volume of 500MW that may be removed after a
testing period of 12 months. Do you consider this cap and/or period to
be appropriate?
IV. Does RTE’s and NGET’s proposed pricing methodologies for TSO to TSO
offers provide the most efficient outcome?
V. A methodology for an appropriate remuneration mechanism for use of
the IFA infrastructure for Balancing Services still needs to be elaborated
and agreed between NGET, RTE and NGIL. Do you consider that such a
remuneration scheme is relevant? How should it affect, or not affect, the
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pricing methodology and the merit order established by the TSOs when
they call balancing offers?
VI. Can you identify any concerns with the interaction between these
proposals and either the market arrangements in GB or France?
VII. Are the proposed arrangements flexible enough to allow for future
harmonisation with adjacent markets e.g. Central West?
Next Steps
13.
The regulators and TSOs will consider the responses from the consultation.
The TSOs will consider possible changes to their proposals, based on the
responses received, before moving towards implementation of their
proposals.
14.
It is likely that modifications to existing market arrangements will be
required prior to implementation. Therefore, further consultation on such
modifications may be required before final implementation.
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