TITRE 27/06/2012NWE day-ahead IG meeting, Brussels

Update on NWE lead regulators’ letter of comfort

Thomas MüllerBundesnetzagentur

. Lead Regulators, Dera and BNetzA, received request for letter of comfort from NWE day-ahead TSO Steering Committee Chair May 10th by email

. Comfort requested in particular regarding

» support to the NWE Price Coupling project and its goals

» agreement to governance, cost-sharing and cost-recovery, algorithm and budget

» TSOs ability to recover reasonable, transparent and auditable costs incurred and shared as outlined in the letter in accordance with applicable national legislation/regulatory framework

. Informal conference call May 24th to clarify details on cost-sharing and budget

. Further explanation of the budget and information about increase in budget received by email June 1st

. Dera reported about the status of the letter during last AESAG meeting

BackgroundBackground

. NWE Lead regulators, sent a letter of comfort by email to the NWE day-ahead TSO Steering Committee Chair on 22nd June

» Support to the NWE Price Coupling project and its goals

» Acknowledgement of governance principles

» Principles on Governance might need depending on final Governance Guideline

» APCA should be sent to NWE lead regulators and be transparent to general public to ensure stakeholders’ acceptance and support to the project

» Draft budget of € 11.437.700 seems to be reasonable

» NWE regulators’ understand that this assumes a go live with PMB coupling solution end of 2012

» In case of further significant budget increase Lead Regulators should be informed together with an explanation for the increase immediately. In particular in case of any contingency cost

Letter of Comfort (I)Letter of Comfort (I)

» Comfort that cost-sharing principle outlined in the letter is acceptable

» Acceptance does not constitute premature fixation on any future cost sharing agreements

» Costs eligible to be considered for recovery need to be reasonable, efficient, transparent, and auditable in accordance with national procedures

» Two observations:

• Reservation to cost statement with regard to Fingrid due to pending court case in Finland

• For Great Britain, Ofgem assumes that costs fall on the same basis as proposed by National Grid for the “GB Hub”, unless otherwise agreed (i.e. falling on the interconnector licensees rather than transmission licensees)

» Agree to use COSMOS as a starting point for the algorithm

» Transparency and stakeholder involvement during development stage are essential for regulators in order to ensure market support

Letter of Comfort (II)Letter of Comfort (II)

. NWE regulators trust on commitment of companies to do their best effort in order to achieve operational NWE price coupling by end of this year

. Lead regulators await to receive signed APCA

. National procedures on cost recovery and algorithm and requirements approval

. TSOs should get in contact with their respective national regulator with respect to national procedures

. NWE regulators urge to involve stakeholders and keep as much information as possible public and transparent

Conclusion and next stepsConclusion and next steps

Thank you for your attention!

www.acer.europa.eu

. Cost sharing principle outlined in the NWE day-ahead Steering committee letter, i.e. TSOs will reimburse

» 100 % of each PXs past and ongoing expenses for the project during the design phase,

» 75 % of each PXs expenses during the implementation phase of the project capped at the budget as detailed below, and

» that these reimbursements will be shared between the TSOs by 2/25 per TSO and 1/25 for CREOS.

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Backup: Cost-sharing proposalBackup: Cost-sharing proposal