Lessons from open seasons between France and Spain

Lessons from open seasons between France and Spain Regulator’s perspective Benoît Esnault Commission de Régulation de l’Energie (CRE) North West region - IG meeting Den Haag, September 21, 2010

Economic test and capacity allocation in open seasons Capacity offer – Estimation of shippers’ needs (non binding phase) – Different steps Allocation – Below X%, No investment – Between X and 100%: capacity requests allocated – Above 100%: pro-rata until X% of next step 2

OS between France and Spain A complex design OS 2013 – 2 steps of development (Larrau and Biriatou) – 5 IPs with allocations in 2 directions – Economic test: only at the border between France and Spain, focus on the level of allocation OS 2015 – – 2 steps of development at the border (Perthus and Biriatou) Investment decisions in France (artère du Midi, artère du Rhône) 6 IPs with allocations in 2 directions 3 possible physical development scenarios for Mid. Cat (MC 0, MC 1 and MC 2), – 2 possible physical development scenarios for Biriatou (B 0 and B 1), – 4 feasible combinations between them (MC 2+B 1, MC 2+B 0, MC 1+B 0, and MC 0+B 0). 3

Issues related to capacity allocation Defining investment triggers leads to complex decisions – 2013: Biriatou not realised in spite of high capacity requests from ES to FR – 2015: Decision to invest if all the capacity is allocated in 1 direction only ("worst case") – 2015: several steps of development and 6 possible levels of tariffs Towards a kind of long term auctions 2013 Biriatou not built 4

Lessons from the past procedures (1/2) Efforts to comply with GGPOS – Information memorandum – Non binding phase (2015) – Information on tariffs Difficulties – Providing full visibility on tariffs and market organization was impossible – Design of the “economic test” to decide on the investment – Synchronized allocation along “corridors” requested by Spanish shippers Addressing the political dimension (security of supply) is necessary from the beginning 5

Lessons from the past procedures (2/2) Uncertainty of the outcome – In spite of imperfection of procedures, high binding capacity requests in 2013 from Spain to France, but application of the economic test Biriatou not agreed – But economic crisis led to insufficient requests in the 2015 OS Midcat rejected and Biriatou agreed Key role of GRI South in coordination – Many meetings and information of the market – Good cooperation among 4 TSOs, NRAs and support from governments Experience = key for properly designing procedures Complexity grows rapidly with the number of IPs at stake 6

Thank you ! benoit. esnault@cre. fr