With the determination of 28 May 2008, the Bundesnetagentur introduced comprehensive new arrangements for the portfolio and system balancing energy regime for gas (GABi Gas). This is the basis on which daily balancing has been based in Germany since 1 October 2008. Port- folio balancing energy charges have been based since then on the reference prices of national and international trading markets. System balancing energy is bought by the market area manager centrally who controls its use in conjunction with the network operators.
Substitute nomination procedures
The transmission system operators offer substitute nomination procedures as far as this is technically feasible and economically reasonable, which is the case for nine of 14 TSOs. Cus- tomers who are supplied using this method are allocated to the load-metering with substitute nomination procedures customer group. Of a total of 546 recorded load-metered exit points connected to the transmission system, 94 (17 percent) are supplied using substitute nomina- tion procedures. If the TSOs are looked at individually, they supply between two and 67 per- cent of their load-metered exit points using this method. Exits points for this customer group
are supplied with feed-in from storage facilities and production facilities as a priority. In total, in the period under review the 14 TSOs had an gas offtake volume of 230,191.84 GWh received by load-metered customers. Of this total, 89,088.34 GWh came from exit points which were supplied using substitute nomination procedures. Online flow control is offered and used as a priority here, in addition to steering difference balancing at storage facilities or online rebook- ing at virtual trading points. The time delay between feed-in and offtake varies greatly between the various procedures and ranges from zero minutes up to 240 minutes, with three minutes being the usual case.
Once the GABi Gas balancing system has become established, a substitute nomination pro- cedure should no longer be necessary, since every shipper will be able to obtain suitable products in the market at short notice and in line with the forecasts. The use of flexibilities solely on account of the requirements of individual customers will lead to inefficient use, these then being withdrawn from the market.
Harmonisation of European balancing regimes
On 18 October 2011, European agency ACER published a guideline on pan-European stand- ardised balancing regimes ("Framework Guideline on Gas Balancing"). Based on this docu- ment, the European network operator association ENTSOG is currently developing a network code in line with Article 6(6) of Regulation (EC) No 715/2009. This is to be completed by No- vember 2012 and will then be adopted by the European Commission, who, as per Articles 6(11) and 28(2) of the Regulation (EC) No 715/2009, can then introduce comitology proceed- ings as per Articles 5a(1) to (4) and 7 of Decision 1999/468/EC in order to give the network code a legal basis as a guideline. In this way, the network code becomes part of Regulation (EC) No 715/2009. Transmission system operators must implement the code developed by ENTSOG within twelve months of its taking effect. Exceptions allows for the timescale to be stretched to five years, before national systems are to be adapted. Step-by-step introduction of the target model is possible to some extent. The first draft of the network code has now been submitted and is undergoing public consultation by ENTSOG.
The German balancing regime already agrees with the provisions of the draft code to a large extent. Completion of the detailed final network code by ENTSOG based on the guideline is expected in November 2012, only then will an ultimate evaluation be possible.
or via longer-term contracts. A merit order list gives the short-term VTP products (eg those obtained via an exchange) priority over all others. These network code provisions correspond with the current efforts of the Bundesnetzagentur and market area managers in terms of pro- curement of system balancing energy and standardisation of such energy products.
Nomination arrangements
The network code provides certain criteria and provisions for the content and running of nomi- nations and renominations at cross-border points. In principle, it should be possible to renomi- nate up to two hours before the end of the gas day. The German arrangements conform to the content of the draft network code.
Portfolio balancing energy prices
The network code links the portfolio energy prices to the marginal costs of the respective mar- ket area managers when procuring system balancing energy. The marginal buy price is the higher of the system balancing energy price or the weighted average market price. The mar- ginal sell price is thus the lower of these two prices. All system balancing energy transactions actually made in the respective balancing period (the gas day) are relevant, regardless of whether they are purchases or sales. A small adjustment can be made to increase or de- crease the weighted average price. The Bundesnetzagentur will adapt the system for deter- mining portfolio balancing energy prices in Germany accordingly. This approach also now suits the conditions on the German system balancing energy market.
Balancing periods and intra-day incentive mechanisms
The balancing period is the day from 6 am to 6 am. The network code makes it possible to introduce intraday incentive mechanisms if certain criteria are met. This means that the profil- ing fees that are part of the German balancing regime remain a possible incentive mechanism under the current draft. However, it should be anticipated that this point will continue to be discussed at a European level. It is thus not possible to further anticipate any need for change or the effects of these arrangements.
Neutrality mechanisms
The draft network code states that the network operators must be financially neutral. All costs and income from the balancing regime should be allocated to the network users. The decision regarding the method for calculating and distributing potential neutrality charges is up to the national regulatory authority, and also applies to the German balancing energy levy.
Provision of information
The draft network code contains information requirements for transmission and distribution system operators. TSOs are to provide shippers with the system status analogue to Annex 1
of the Regulation, their system balancing energy purchases and sales and the feed-in and offtake of a shipper. Distinctions are made between the basic case, variant one and variant two, although the latter does not match the German approach to allocation of day ahead fore- cast values for standard load profile customers in terms of the exit points not metered on a daily basis. This highly pro-competitive approach simplifies supply to household customers, and thus very effectively supports the overarching aim of stimulating competition in final cus- tomer and wholesale markets.
Under the provision of the draft network code, offtake information for industrial customers and other large-scale customers (load-metered customers) is to be supplied at least twice a day instead of only once. The time of the first delivery needs to be moved forward from 7pm to 6pm at the latest. The provisions in the draft are not yet specific enough in terms of the infor- mation requirements and their relationship to intraday incentive mechanisms, and an evalua- tion is thus not appropriate at this time.