1 September 2017 GAS PRE-MARKET ENTRY REPORT SPAIN

Transcription

1 1 September 2017 GAS PRE-MARKET ENTRY REPORT SPAIN 1

2 Table of Contents 1 Legal framework Gas infrastructure Transmission Liquefied Natural Gas Storage Distribution Access to Network services Registration as a commercialicer Application procedure Application requirements Wholesale activity requirements End-consumer supply requirements Other considerations TPA services access Auctions for Interconnection capacity with Spain Interconnection Agreement VIP Ibérico (ES-PT) Interconnection Agreement VIP Pirineos (ES-FR) Requirements to participate in auctions Access to hub services Registration as an agent or delegated entity at MIBGAS Guarantees management Market operation Fees Third Party Access framework Third party access tariffs LNG terminal tariffs Underground storage tariff Entry to Network and Transmission and Distribution (Conduction) tariffs Annex 1. Regulated services included within the scope of TPA in Spain Annex 2. Technical Capacities in the Spanish-Portuguese VIP IBERICO AND Spanish-French VIP Pirineos Interconnection Agreement

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4 1 Legal framework In Spain, the Ministry of Industry, Tourism and Digital Agenda (MINETUR) 1, is responsible for the economic regulation of the energy markets and planning energy activities. The natural gas sector comprises of a set of regulated and unregulated activities ranging from unregulated gas supply and commercialization activities, to fully regulated operations of gas infrastructure. The natural gas sector is overseen by the Comisión Nacional de Mercados y Competencia (CNMC) 2. The energy market regulator also plays an advisory role to the Ministry to establish tariffs and regulations for the returns of the regulated activities. CNMC derives its income from third-party access (TPA) tariffs charged to electricity and natural gas consumers and not from the General State Budget. CNMC also cooperates with regulated entities such as the Gas System Operator (GTS) 3, transporters and gas distribution companies, especially with regard to wholesale and retail market rules and supervision. The Directorate-General for Energy Policy and Mines (DGPEM), an entity dependent on the Ministry, is mandated to implement and develop the government s policies regarding energy planning and the exploitation of geological resources. As such, the DGPEM is the responsible entity for granting licenses and other administrative authorizations concerning energy-related activities, such as gas commercialization. The Corporación de Reservas Estratégicas de productos petrolíferos (CORES), constituted at the heart of the gas system operations, assists the Ministry with managing the energy sector s security of supply. In this regard, CORES plays a monitoring role for security of supply, compulsory gas stocks, and also regarding diversification, which is enforced through inspections and audits. In addition, CORES has an informative and advisory function vis-à-vis the Ministry, which is the entity that can potentially impose significant sanctions if a company does not follow its obligations in this matter. The core legal framework for the natural gas sector is provided by European Union (EU) regulations and national laws implementing EU Directives aiming to harmonize the legislation governing EU natural gas sector overall. The natural gas industry in Spain is essentially regulated by Ley de Hidrocarburos 34/1998 (Law 34/1998) 4, which implements Directive 98/30/EC of the European Parliament and the Council updated by-law 12/2007. Directive 2009/73/EC, concerning common rules for the internal natural gas market, has also been implemented into Spanish law through Real Decreto Ley (RDL) 13/2012 of March 2012, which transposed the Directive, including additional unbundling provisions

5 In 2012, two different companies were formed, Enagas Transport, SAU as TSO and Enagas GTS SAU as the Spanish Gas System Manager 5. Some of these aforementioned regulatory dispositions relate to TPA tariffs methodology, Transmission System Operator (TSO) accreditation, provision of balancing services, network security and the assessment of TSOs investment plans. Since then, ongoing updates have been passed to accomplish full implementation of the EU Directives. In this sense, the regulatory framework of the natural gas sector in Spain already incorporates a substantial part of the common rules for the internal energy market established by the EU's Third Legislative Package. Spain has gradually achieved the complete phase out of the end-consumer regulated tariff market and the full introduction of liberalization, enabling consumers to choose from whom to buy gas. Since July 2008 the regulated end-consumer pricing has disappeared, and only the last-resort tariff (LRT) scheme remains available for residential and commercial customers. Since 1 July 2009, LRT is only applicable to customers with consumption of less than 50,000 kwh/year and supplied from a 4 bar pressure grid or lower. The relevant national and supranational legislative acts can be found via a data base ENAGAS offer via (advanced search recommended). 2 Gas infrastructure The whole Spanish transmission and distribution networks stretch over 82,000 km across Spain with average growth rates between 6% and 8% over the last years. The network consists of 7 main axes, as shown in the figure below. The Eastern axis, Barcelona Cartagena. The Central axis, Huelva-Basque Country (Huelva/Madrid doubled). The Western axis (Ruta de Plata or the Silver route ), Badajoz-Oviedo. The Ebro axis Tivissa-Oviedo. The Northwest Spanish-Portuguese axis, Santander-Tuy. The Al-Andalus-Extremadura pipeline: Tarifa Badajoz. The Balearic pipeline (connecting the Eastern Axis with Ibiza and Mallorca). 5 Royal Decree (RD) 12/2011 was modified the 1998 Hydrocarbons Law and required Enagas to segregate their transport activity from their role as System Operator. 5

6 Figure 1: Spanish gas system infrastructure. Source: There are currently six interconnections with neighboring pipeline systems. The Maghreb pipeline that brings gas from Algeria is connected with the network at Tarifa (via Morocco). There is an additional pipeline from Algeria connecting at Almeria in the south, and there are two connections with France at Col de Larrau (used mainly for imports) and Biriatou (that allows exports into France). There are also two connections with the growing pipeline system in Portugal at Badajoz and Tuy where approximately threequarters of total gas flowing into Portugal comes through Spain. The Spanish gas system is also connected to seven LNG regasification terminals (Barcelona, Cartagena, Bilbao, Huelva, Sagunto, Mugardos and El Musel 7 ). Spain s total import capacity is around 88 bcm/year. This figure does not yet include the mothballed LNG terminal at El Musel that could provide an additional 7 bcm/year of import capacity in a matter of months. Comparing the possible import capacity with the less than 30 bcm total demand in 2013 and with forecasted demand of about 35 bcm/year, excess import capacity will be a relevant issue affecting the Spanish gas infrastructure utilization in the foreseeable future. Moreover, recent upgrades have increased interconnection capacity between France and Spain through Irún by up to around 2 bcm/year in both directions, in addition to the existing 5 bcm/year capacity through Larrau (see Annex 3). If the Midcat project in the Northeast is completed, further additional exporting capacity of about 7.4 bcm/year from Spain to France would be This plant is currently mothballed. 6

7 added. Finally, a third pipeline connecting Portugal and Spain through the Northern border in Zamora is currently being considered. 2.1 Transmission The national transportation system consists of a comprehensive network of highpressure pipelines totaling about 12,000 km including 283 km of offshore gas pipelines, 416 metering stations and 20 compression stations as of The entire network operates eight balancing zones, and the Spanish transmission system has four designated entry points two Virtual Interconnection Points (VIP) with Portugal and France, as well as the Maghreb and Medgaz entry points. Each LNG terminal, the underground facilities as a whole and the balancing point (PVB) 8 point make up for the rest of balancing zones. The figure below shows this (LNG El Musel is not shown.): Figure 2: Spanish gas map of balancing points. Source: Author With regards to the interconnection with Portugal, specific procedures have been established and applied by REN 9 and Enagas regarding the optimization of the available firm capacity at the so called Virtual Interconnection Point (VIP) at the Portuguese border. This virtual point (i.e., VIP Ibérico) has been fully operational since November The VIP integrates the two relevant physical points on the Portuguese-Spanish border, Campo Maior-Badajoz and Valença do Minho-Tuy, and serves the commercial purpose of allocation of natural gas capacities for the market agents involved. Similarly, regarding 8 Punto Virtual de Balance (PVB) 9 REN is the Portuguese System Operator 7

8 the French border, Enagas and TIGF 10 committed to developing available capacity at the two existing physical interconnection points between Spain and France, Irún-Biriatou and Larrau, as a single VIP, called VIP Pirineos. The development of gas interconnection capacity between France and Spain has been a priority for integrating the Iberian Peninsula with the rest of Europe. Recently, capacity has been increased on the basis of long-term commitments taken by shippers through the open seasons of 2013 and Since 1 January 2017, the import capacity in this international connection has increased in 60 GWh/day during winter period and 50 GWh/d during summer. 2.2 Liquefied Natural Gas Spain has six operating regasification plants. At the end of 2014, they had a total LNG storage capacity of about 3.6 m3lng with a maximum emission rate of 7.8 m3(n) per hour or approx. 68 bcm per year. See Table below. Emission capacity Storage capacity Date online Owner 2015 (m3(n)/h) (m3lng) (1st LNG tanker) Barcelona 1, Enagas Huelva 1,35 619, Enagas Cartagena 1, Enagas Bilbao BBG El Musel 0, Enagas Sagunto Saggas Mugardos 0, Reganosa Total Capacity 7, Table 1: Spanish LNG terminals operations Source: Authors/ Since 2008, all LNG terminals apart from Mugardos have been expanded and the total regasification capacity has increased despite the decline in gas demand. The LNG terminal in Mugardos located on the Atlantic coast is the only LNG terminal in which Enagas has not a stake and is operated by Reganosa, S.A. In all the other LNG terminals, Enagas operates an LNG reception, storage and regasification concession, subject to a regulated activity regime. On the Canary Islands, Granadilla in Tenerife and Arinaga in Gran Canaria are being developed. Both will have m3lng of storage and m3 (n) of emission capacity per hour but as of February 2017, their construction had not yet begun. Enagas Transporte owns both projects. The contractual commitment of Spain s LNG regasification terminals averaged 33% as of December These low utilization rates reflect the declining demand for natural gas in Europe and lack of re-loading opportunities due to lower prices in Asia. Spain has the largest LNG regasification capacity in the EU which accounts for around 34% of the EU total 11. However, due to the rather low interconnection capacity, Spain s spare LNG 10 TIGF is the operator of the gas transmission network in France at the north side of the France- Spain border. 11 The European Union s regasification capacity totaled 201 bcm in

9 capacity is of limited use outside the Iberian Peninsula, regardless of gas market conditions. 2.3 Storage Gas is stored in conventional underground storage facilities (UGS) which connect to a gas station allowing gas injection or withdrawal into or from the transmission network respectively. Enagas operates the three main underground storage facilities in Spain, with a combined working gas capacity of 4.1 bcm, a total injection capacity of 22.7 m3 (n)/d, and a withdrawal capacity of 31.5 m3 (n)/d. See the table below. Storage capacity (mcm) Dynamic deliverability (mcm/day) 2015 Total Injection Extraction Serrablo (Aurin and Jaca wells) 820 4,0 7,0 Yela ,0 15,0 Marismas 686 4,1 4,1 Gaviota ,6 5,8 Total ,7 31,9 Table 2: Spanish Underground storage operations Source: Authors/ Out of the four sites, three are depleted gas fields: Gaviota (offshore, Basque country), Serrablo (Huesca) and Marismas (Huelva), and one is a saline aquifer, i.e. Yela (Guadalajara). Marismas is owned by a subsidiary of Gas Natural Fenosa and is outside the regulated system. The other three are owned by Enagas Transporte. The total working volume of Spain s underground gas storage has strongly increased since 2008 (when only Gaviota and Serrablo were operational). This and the decline in gas demand has helped increase the share of gas storage working capacity in total gas demand from 6% in 2008, to around 12% in 2016, a percentage lower than the EU average of around 20%. With regards to further expansions, the plan to increase UGS capacity at Gaviota has been abandoned for the time being due to the decline in gas demand. Moreover, the 1.9 bcm Castor offshore UGS project that was commissioned in April 2012 has been suspended in view of the induced seismicity and until conclusions arising from new studies become available. 2.4 Distribution The distribution network is composed of medium and low-pressure pipelines and serves the residential, commercial and small and medium-sized industrial sectors. Gas distribution activities are carried out on the basis of administrative authorizations. Natural gas distribution is provided by a large number of regional distribution operators under a regulated redistribution scheme. The main players are Gas Natural SDG S.A. Group, EDP Group (now Nature Investments), Redexis Group, Madrileña Red de Gas S.A., Gas Directo S.A. and Distribución and Gas Extremadura S.A. 9

10 3 Access to Network services 3.1 Registration as a commercialicer Natural gas sales and trading in Spain is a liberalized activity that may only be carried out by designated gas suppliers called commercialicers. Accordingly, any company with the intention to carry out gas sales and trading activities in Spain is required to be formally licensed as an authorized gas trader, i.e. Comercializador Mayorista or/and Comercializador Minorista, with the latter subject to specific obligations for end-user services. Commercialicers can either be registered as free market commercialicers i.e. developing wholesale and end-user sales activities and/or as last resort tariff (LRT) suppliers 12. Supplies under this later scheme are only possible from authorized retailers such as distributors that cannot supply gas to other non-lrt customers in the liberalized market. Free market commercialicers have the right to access to third party gas networks to satisfy customers demand through sales agreements negotiated at market-based prices. The DGEPM is the Government s administration body responsible for awarding gas commercialization rights to operate within the gas sector in Spain. 3.2 Application procedure Companies wishing to act as commercialicers of natural gas must notify in writing prior to the commencement of market activity and through the DGEPM, their testimony fulfilling all the requirements set by the Resolución de 3 de mayo de 2010 adapting RD 197/ spelled out in the official application forms. Once the authorization is granted, the Ministry will communicate the decision to the CNMC and CORES, including a copy of the company s declaration. It is important to note that, at any time, both the Ministry and the CNMC can request the relevant commercialicer to supply additional accreditation regarding their applications. The figure below shows the different steps in the commercialicer s licensing process. 12 The last resort tariff scheme (LRT) in Spain is only available to small residential and commercial customers. 13 The Regulation can be downloaded via: pdf 10

11 Figure 3: Different steps in the commercialicer s licensing process. Source: ENAGAS Application requirements The registration application must include the full name of the applicant, mentioning the name or business name, the tax identification number, company address for the head office, company address in Spain, if it exists, telephone, fax and address. In addition, application forms need to be accompanied by the following information depending on the required license either for wholesale activities or additionally for enduser supplies: 3.4 Wholesale activity requirements The requirements to be fulfilled by future wholesalers to attain the right to buy from and sell to other wholesalers, are the following: In the case of non-spanish companies, the company needs to show, that its legal form and business purpose are not limited with regards to gas sales and trading activities. In the case that the company is a non-eu national and the country is not offering reciprocity in similar cases, it will be necessary to apply for an additional administrative authorization granted by the Ministry. The ministry s response in this case could be conditioned on and subject to a previous consultation report from the CNMC. In the past, the ministry s and regulator s practice showed that companies based in Switzerland, for example, were treated equally or similarly to EU national companies. Testimony showing compliance with the relevant legislation on unbundling of operations according to Hydrocarbons Law 34/ Demonstrate technical capability to perform gas sales and trading activities. Although initially this was considered rigorously, after RD 197/2010, this requirement can be fulfilled by preparing a concise description of the firm s gas 14 /Ingles/index.html

12 sales and trading experience, current capabilities including the company s IT systems description, in which markets operates, future expansion plans, etc. According to our experience, the description does not need to be very comprehensive, but it has to be convincing. It is important to note that the most relevant reference to guarantee that the company meets the Ministry s technical requirements is to refer and comply with Spanish System Norms, i.e. NGTS and its Detailed Protocols as shown in Orden ITC/3126/2005. Demonstrate the economic and financial health of the company in order to perform gas sales and trading activities. Similar to technical capabilities, since 2010, this requirement has been relaxed and at the moment no formal bank guarantees are needed for compliance. According to our sources, a detailed description of typical transactions, volumes and current/expected scope of trade will be sufficient to comply. Interestingly, the initial requirement for 2 M equity capital is no longer essential. 3.5 End-consumer supply requirements In addition to the requirements for wholesale activities described above, the following preconditions are required to develop further customer sales activities: A bank guarantee may be required from the applicant. The Ministry will determine the amount, the beneficiary and under which circumstances the guarantee can be executed. Confirm after-sales customer service capabilities through a specific telephone line number to be specified and an address also to be specified. Show/confirm that there are sufficient natural gas supply agreements in place with relevant gas suppliers to meet expected customers demand needs. These supply agreements should guarantee a safe supply to customers and avoid restrictions other than those arising from extraordinary situations. The Ministry will have special consideration for an efficient diversification of supplies from different sources. 3.6 Other considerations Applicant signing the referred application form will also add a copy of the company s power of attorney document showing the signatory s role and 12

13 authorizations. For the companies registered outside Spain, a bilingual (English- Spanish) power of attorney copy will be attached to the document. In any case, it is not necessary for the company to be registered in Spain. In 2013 the Ministry proposed a detailed methodology to establish financial guarantees for end-users suppliers (not for wholesale trading) which did not become binding legislation yet. The main points in this proposal are the following: o Through the relevant TPA service provider, i.e. distributors, the commercialicer will provide a bank guarantee (through the Spanish Caja General de Depósitos) for the equivalent of 45 days of the previous year s total sales. o In the case of new commercialicers, the bank guarantee will be based on the expected TPA charges through the distribution grid over the following year and will be reviewed every quarter during that first year. o The regulator, i.e. the CNE, will develop a standard contract including under which situations the bank guarantee could be executed. Apart from the supply of natural gas or LNG to other wholesalers or/and to endusers, Commercialicers licence to operate includes the right to operate and use TPA services independently, i.e. regasification, pipeline transportation, LNG and pipeline gas storage and distribution services. With regards to taxes, generally, no value added taxes are generated during wholesale transactions unless there is a final customer sale or purchase. In this sense, all wholesale operations are value added tax-free (IVA in Spanish fiscal legislation). The application for the license is made on behalf of the legal representative, and it is granted for an indefinite period. The examination of and effectiveness of the registration license does not come with a cost. License registration ends due to expiration (company liquidation, bankruptcy, cessation of activity, etc.) 4 TPA services access The access to the TPA services 16 is regulated and it is based on transparent and nondiscriminatory principles, according to the Directive 2009/73/EC of the European Parliament and Council.This Directive also establishes common rules for the single 16 Third Party services available within the Spanish gas system. See: See Ingles/index.html 13

14 natural gas market and the conditions for access to the natural gas transmission networks. Access to natural gas transportation services in the Enagas network is allowed only after registration as a licensed commercialicer by the DGEPM. Confirmation of the registration is issued through a document called Listado de Comercializadoras de Gas Natural, issued by the CNMC, and usually updated every month. In the future, the process to request access to gas infrastructure will be performed through IT communication systems specifically designed by Enagas. The chart below shows all main processes involved after Ministry s registration. Figure 4: Main IT operating systems involved for access to the Spanish gas system. Source: ENAGAS 17 The sequence of IT requirements prior to capacity contracting authorization are the following: Request an e-token and sign the acquisition of a digital certificate contract for the identification and authentication of users. The contract shall be signed by the DSI 18 department of Enagas and the shipper. The e-token is a USB authentication DSI Enagas IT department 14

15 mechanism required for accessing the systems Portal SL-ATR 2.0, MS-ATR, SL-ATR and SCTD. It should be requested by to Request for accessing the systems Portal SL-ATR 2.0, SL-ATR and MS-ATR and signing the access and utility contract with DSAO 19 of Enagas. The request shall be sent by to Technical accreditation which certifies the technical capacity to exchange XML files using web services or through the application. This is an indispensable condition for the exchange of data through SL-ATR. The request shall be sent to by attaching the Technical Accreditation Request that is available in Portal SL-ATR 2.0. The figure 14: Summary of requirements to be followed by new commercialicers for registration. Source: ENAGAS 20 Perhaps one of the key technical issues leading to successful access to gas infrastructure is the accreditation test and the formal certification by the System Manager, i.e. Enagas. Once final certification has been granted a formal request for TPA capacity contracting can be done. The figure below shows the acreditaion and cerification processes. 19 DSAO Enagas Operation Services and Systems department 20 Ingles/index.html. Established in Royal Decree 197/2010: pdf 15

16 Figure 5: Accreditation and certification processes. Source: ENAGAS 21 Additional registrations on the PRISMA platform 22 and MIBGAS System 23 are also necessary for commercialicers willing to be active on these platforms. Having a valid license with Enagas and accepting PRISMA s general terms and conditions are preconditions for subscribing to the PRISMA platform Established in Royal Decree 197/2010: 22 Access to the PRISMA platform is available via the following link: 23 Access to the MIBGAS system available via the following link. - MIBGAS 16

17 It is worth mentioning that the regulatory framework provides a mechanism to allocate available capacity in case of congestions. As a result of the second additional provision of the RD 984/2015, through the Resolución de 2 de Agosto de 2016 de la Secretaría de Estado de Energía, a framework agreement for accessing Spanish gas system facilities has been developed. This agreement includes clauses about the relation between parties such as capacity products available for booking, general conditions for the provision of services, measurement, guarantees, secondary capacity market, invoicing and payment, suspension management of capacity services and its consequences, and the extinction of the framework agreement. This framework agreement is endorsed through the signature of the framework agreement accession document, approved in the same resolution. A comprehensive set of procedures related to capacity booking processes can be found at: /Procedimientos_vigentes_de_contratacion_de_capacidad. 4.1 Auctions for Interconnection capacity with Spain The commercial gas flows on interconnection points between Spain and Portugal or France are of special relevance and are subject to the existence of available capacity and to the payment of regulated cross border transit tariffs. In particular, the cross-border transmission tariffs are a very sensitive part of the market framework since they can create a cost barrier between gas traders on either side of the border. CNMC, REN, and TIGF regularly seek comments from agents on the way forward for cross border tariffs harmonization. Market agents that trade gas in different transmission systems shall be registered with each transmission system operator on each side of the border, i.e. REN, TIGF and Enagas, and are subject to specific obligations like programming the gas flows to mobilize in each relevant point of the system in advance, keeping adequate gas stock levels in gas infrastructures and paying tariffs for the use of system infrastructures and services and for unbalances. 4.2 Interconnection Agreement VIP Ibérico (ES-PT) As TSOs, Enagas Transporte, S.A.U., and REN Gasodutos, S.A., are the parties responsible for the management of capacity offered at the VIP Ibérico, and to announce available capacity to be offered at the annual yearly capacity auction for the next capacity period starting in October. In line with the Network Code Capacity Allocation Mechanism, Spain offers harmonized products (the same values on both sides of the border) for annual, quarterly, monthly capacity as well as daily and within-day products via auctions on the PRISMA capacity platform. The products offered at the VIP are allocated to the same market agent on both sides of the border in a market-based process. In order to participate in auctions at Spanish-Portugese IPs, shippers must be registered as licensed shippers in the Portuguese system. The requirements and procedure to get the license are detailed by the DGEG. 17

18 In addition to the registration at DGEG, shippers must fulfill all obligations arising from regulatory provisions in force regarding shipper s obligations in respect of the Gas System at any time. In addition, shippers must have signed the Transport Contract with REN- Gasodutos in order to participate in the auctions ( Contrato de Uso da Rede Nacional de Transporte de Gás Natural ), and must have a valid financial guarantee. These financial guarantees are detailed in the document above, the general terms and conditions of which are available at REN s ATR platform, at: Interconnection Agreement VIP Pirineos (ES-FR) Since March 2014, Enagas and TIGF have gradually allocated capacities at the French- Spanish border according to the rules outlined in the CAM network code. Since November 2015, Enagas and TIGF have organized all the requested auctions under the CAM network code. Therefore, capacity will no longer be allocated via the FCFS principle (First Come, First Serve). The auctions are carried out for firm and interruptible products, where applicable, as well as for bundled and unbundled products. The auctions carried out by Enagas and TIGF The virtual interconnection point (VIP) is the commercial point of supply capacities between Spain and France. Thus, the available capacities at the interconnecting points are offered at a single virtual point called VIP Pirineos. The virtual interconnection point capacities are published on both the Enagas and TIGF websites. Enagas and TIGF jointly offer the maximum possible volume of bundled capacity between Spain and France in both directions of flow. According to the CAM network code, bundled capacity means a standard capacity product offered on a firm basis, which consists of corresponding entry and exit capacity at both sides of every interconnection point. In other words: Each standard product offered contains the same capacity volume on both sides of the virtual interconnection point. The capacities are reserved via a single allocation procedure. The capacities are allocated to the same shipper on both sides of the virtual interconnection point. (The same shipper on the PRISMA platform shall be deemed to be a company in possession of an EIC code.) For a detailed description of capacity allocation processes at VIP Pirineos see: trat_de_transport_2017/m%c3%a0j_2017 EN/06_Appendix_E.1 Procedure_for_the_ marketing_of_capacities_at_the_pirineos_en.pdf 4.4 Requirements to participate in auctions Capacity allocated to a Shipper at the PRISMA booking platform will be automatically introduced in the Enagas, REN, and TIGF Third Party Access Platforms. Thus, this allocation will be binding for shippers and it will not be necessary to sign any additional 18

19 documents. Once the shipper has been informed of the allocation of capacities, it will also be informed of the eventual need to reinforce the financial guarantees associated with the Transport Contract signed with the relevant transport operator. In order to participate in an auction, licenced commercialicers in France, Portugal and Spain shall be registered at PRISMA through separate registrations relative to each TSO, since different conditions may apply. The registration process consists of two steps which are both executed on the platform: Registration to use the platform (user registration) Registration to conclude bookings and to participate in auctions (company registration) Commercialicer s registration process is detailed in the figure below. Figure 6 : PRISMA Commercialicer s registration process. Source: PRISMA 24 Capacity allocated to a Commercialicer at the PRISMA booking platform 25 will be binding for commercialicers and it will not be necessary to sign any additional documents. Regarding the trading of capacity in the secondary market, this can also be performed via PRISMA. To that end, REN, TIGF, and Enagas, in coordination with the National Regulatory Authorities (NRAs), shall, if deemed necessary, clarify any aspect regarding the platform use and associated rules adaptation for transfer on the secondary capacity market to make them compatible with the use of that platform. ENTSOG and Prisma publish the auction calendar on a yearly basis Further information you can receive via: ; the auction calendar and training material you find under 19

20 5 Access to hub services By means of several Directives and Regulations, the European Council and the European Parliament have laid down the common rules on the creation of the internal market for natural gas in the European Union. Within this context, the European Commission, the Agency for the Cooperation of Energy Regulators (ACER), and the national regulators are backing the implementation of the European Gas Target Model. Based on these principles, the initial idea about the Spanish Organized Gas Market (OGM) derives from a Roadmap published in April 2010 by the CNMC following public recognition that the Spanish wholesale market was facing problems regarding poor liquidity and a lack of transparency. The objective was to accelerate the creation of a gas hub in the Spanish Gas System to promote competitiveness and reduce the lack of transparency of the then current OTC market. To this end, the Spanish legislation through Law 8/2015 of 21 May, amending Law 34/1998, of 7 October, created a combined entity MIBGAS to act as the operator for the Organized Gas Market. Spanish and Portuguese market operators are entitled to 20% of MIBGAS share capital together what results in Enagas and REN maintaining approximately 13.3 % and 6.6% of MIBGAS respectively. Although, as of December 2015, the new natural gas exchange started to operate in Spain, no trading platform has been established so far in Portugal despite the fact that Portugal s plan to implement a trading platform by 1 October 2016 remains unchanged. Depending on the evolution of the Iberian gas market, the use of a standard trading platform between Portugal and Spain could be the most feasible option with a mediumterm target to extend MIBGAS platform s operations to include Portugal in line with current joint operations on Spanish and Portuguese Electricity markets. In this sense, the objective would not only be to integrate the Portuguese and Spanish markets into a single Iberian market, but also to provide price signals and enhance market liquidity in both gas markets. In addition, it will also facilitate the implementation of the Commission Regulation (EU) No 312/2014 of 26 March 2014 on the Network Code on Gas Balancing of Transmission Networks (Balancing regime), which has already been implemented in Spanish legislation on 1 October The Iberian OGM is structured around a platform for gas trading to be delivered at the Virtual Balancing Point (PVB) for different time horizons. Within this framework, the following core concepts define the OGM s operating model: Gas trading, both at the PVB and at one or more local points in the future. Contracting capacity independently for gas inputs and outputs on the network. Daily balancing of operations. The firmness of trades in the market, with a commitment to deliver. Involvement of the Technical Manager of the Gas System in balancing procedures. MIBGAS, the entity responsible for managing the OGM, is required to undertake the necessary measures to operate properly as well as to apply the financial procedures on 20

21 services, upholding the principles of efficiency, effectiveness, transparency, objectivity, non-discrimination and independence. In line with this, MIBGAS primary duties include: Arrange and accept the registration of prospective agents. Define and list the products accepted for trading. Receive orders for the purchase and sale of gas, and of any products involved in the gas supply chain that may be traded, conducting their validation, management and matching, as well as calculating the prices arising from the matching processes. Disclose on a daily basis the prices and volumes traded for each of the market products, as well as the reference prices and, amongst them, those to be used in the settlements of imbalances. Perform directly, or through a third party, acting as counterparty, the settlements of market processes, invoicing and collection and payment processes, as well as managing market guarantees. Provide each Technical Manager, or those parties as appropriate, with information on the trades made by the agents in the market, as per the provisions of current legislation. Send to the ACER platform the information required in REMIT that falls within its responsibility. It is important to highlight that new market standards have led to the development of a wide scope of alternatives regarding brokering and integrated logistics services. In this respect, the Iberian Gas Hub is possibly the leading company operating not only on the exchange but also on the OTC market. No provisions with regard to Balancing Services have been implemented in Portugal 27 so far. Yet, this is a possibility that is not discarded, depending, amongst others, on the nearterm liquidity of the Iberian gas market. In fact, the merit order for the balancing actions to fulfill the operational balancing is currently under discussion between ERSE 28 and REN. Although at the moment the operational balancing is carried out using a stock of working gas, with the future implementation of MIBGAS in Portugal, balancing actions may begin to use market solutions. 5.1 Registration as an agent or delegated entity at MIBGAS MIBGAS is the body responsible for the registration process for those interested in participating in the OGM. The Guide on Accessing the Organized Gas Market (the Guide) is a complete reference manual, describing the necessary steps to be taken to acquire 27 Portugal is due to its limited market volume exempted from the European gas market regulation. 28 Portuguese regulator 21

22 the status of Agent or Delegated Entity in the OGM. 29 It includes standardized models for all the required documents (e.g. the types of powers of attorney, bank guarantee, etc. to be provided during the submission process). The process to adhere to requires completing the Agent Registration procedure. 30 The status of agent involves fulfilling the following requirements: Have previously acquired the status of Authorized Party in the Spanish or Portuguese systems, or in both, as granted by the System s Technical Managers. Have expressly adhered to the rules and conditions on operation and settlement through the subscription of the corresponding Adhesion Contract. Have undergone the required technical qualification tests. Have provided the various operation data associated with their involvement in the market, as well as all the necessary information for the processes of invoicing, guarantees, and collections and payments, as described in this guide. In parallel with this process, steps must be taken to obtain the status of Authorized Party in the Spanish or Portuguese systems, or in both, before the Technical Manager of the Spanish Gas System (GTS) or the Global Technical Manager of the Portuguese Gas System (GTG). Those Agents that acquire the status of Authorized Party exclusively in either the Spanish or Portuguese systems may only trade in products with delivery in the Spanish or Portuguese systems, respectively. The procedure for obtaining the status of Authorized Party may be undertaken in parallel to the procedures required for acquiring the status of Agent, with the former step being a pre-requisite for completing the registration process as an Agent. In relation to the technical qualification of the Agent, Annex II in the Guide describes the procedure to obtain technical qualification through ensuring that the Agents IT systems are properly set up and that the personnel receiving that qualification have the necessary understanding of the Market Platform to take part in it. Once the receipt of all the information in electronic and paper form has been verified, and the System Technical Manager s confirmation that the applicant is fit for purpose, MIBGAS shall declare the process completed and grant the status of agent. 5.2 Guarantees management Spain s Royal Decree 984/2015 of 30 October, which expands on the regulatory principles of both the OGM and TPA structure going forward, designates MIBGAS as the Guarantee Manager overall. As such, MIBGAS is the responsible body for the centralized 29 Available at: 30 Available at: 22

23 management of capacity booking guarantees which result from regulated infrastructure operations, guarantees required due to participation in the OGM, as well as guarantees to cover outstanding payments as a result of imbalance settlements in either the Virtual Balancing Point or the regasification plants. To this end, parties with access rights to the gas system infrastructure, agents of the OGM and accredited parties by the Technical System Operator must register as Guarantee Account Users in the Guarantee Manager. The Guarantee Management Rules of the Gas System have been already approved by Resolution of the Secretary of State for Energy in Spain. 31 The software and the technical documentation necessary for setting up the client s workstations for accessing the Guarantee Management Platform are also available Market operation OGM operations are organized around an electronic platform developed by OMIE (the electricity market operator) based on previous experience in the power market. In line with this, standardized products are negotiated using tittle transfer. All commercialicers, distributors, retailers and direct consumers may buy or sell gas through those standardized products (Spanish Royal Decree 984/2015, of 30 October) according to their commitments and needs. The procurements are free and voluntary. Moreover, and pursuant to the gas balancing network code, the Technical Manager of the Gas System (Enagas GTS or REN GTG) will participate in the Organized Gas Market to purchase or sell gas required to enable it to perform its balancing actions and ensure the viability of the programs. Trading on the market is organized into trading sessions, with the possibility of trading in one or more products at each one of them. There are currently two types of sessions: Daily Trading Session, with trading in Daily Product, Month-Ahead Product and Balance of Month Product. Intraday Trading Session, with trading in Intraday Product. In turn, a session may involve two types of trading: Auction: In auction trading the agents may post purchase and sales (bid/ask) orders for a particular product. Once the auction has closed, MIBGAS integrates all the purchase and sales orders received, respectively plotting the purchase and sales curves for that product. The crossing point on both curves provides the auction s marginal price, which is applied to all the trades matched. Continuous Market: In Continuous Market trading, the orders are processed as they are posted on the trading platform. If a new order posted is competitive with 31 See detailed description and documents in English and Spanish describing the guarantee management: 32 See 23

24 pre-existing orders of the opposite sign in the order book, the order is matched with those orders and the trade is firm; otherwise, it remains in the order book. If an order is conditional, the conditions specified for each one will be taken into account. Each matching process gives rise to a firm trade, which is saved, reported to the corresponding Technical Manager, settled and paid. 6 Fees 6.1 Third Party Access framework As a cornerstone of the liberalized market fundamentals, a regulated TPA (third-party access) exists in Spain, theoretically allowing any market participant to ship gas to a customer under the same economic conditions across the gas transmission network. However, economies of scale and integration of activities will differentiate the operational performance of the different suppliers. It is important to point out that Article 25 of the RD 949/2001 sets out the obligation to review TPA charges considering actual incomes from previous year versus expectations in terms of demand growth and recovery of investments and remuneration of the regulated activities for the following year, at least on a yearly basis. As a consequence of this principle, and considering the significant investment in a short period as well as prospects for lower gas demand in the future, TPA unit charges have been increasing since 2008, creating an incipient imbalance in the gas sector. In order to reduce this deficit, the Ministry published RDL 13/2012 to introduce new measures including a moratorium on new gas infrastructure as well as a reduction in the regulated remuneration of TPA activities. More recently, the Ministry has approved RDL 8/2014 and Law 18/2014 to establish controls on the gas system balance equaling revenues and costs incurred, with this including a reduction of the accumulated deficit over 15 years. In line with this, TPA tariffs are automatically increased in the following year, if the annual tariff deficit reaches more than 10% or if the combined annual tariff deficit and the remaining annuities of paying down the accumulated tariff deficit exceed 15%. The tariff increase will correspond to the volume by which those thresholds were exceeded. 6.2 Third party access tariffs The Spanish tariff system is additive, meaning that each regulated activity has a separate tariff and that each market player pays a bundled access tariff given by the sum of each tariff price for every activity used by the market player. Each of these activities is regulated separately. The methodology to calculate tariffs for infrastructure under regulated TPA is approved by the CNMC, following a public consultation procedure. A general scheme for TPA charges is shown below: 24

25 Figure 7: TPA charges structure. Source: Authors TPA access tariffs are structured as follows: Regasification fees, made up of a fixed term payment related to annual contracted capacity by the shipper and a variable component. LNG unloading fees calculated per vessel and including the right to use all unloading facilities at the LNG regasification plant. Charges vary depending on the terminal. LNG storage fee calculated on the basis of a daily rate based on volume at the LNG tank. Transmission and distribution charges, made up of two components one fixed term for capacity reservation into the transportation grid and another term called Conducción which relate to the transport and distribution chain and varies according to the size of customer and the final pressure. They are split into a fixed component related to the peak day capacity and a variable component associated with throughput. The right to use the so-called Almacenamiento Operativo de Transporte (AOT) or linepack allowance for balancing purposes is no longer in place since the implementation of the MIBGAS PVB market, as balancing is now performed through the PVB exchange on a daily basis. LNG trucks and LNG vessels loading fees, made up of a fixed capacity fee and a variable component. An underground storage fee, made up of a fixed fee and a variable component regarding injection or/and withdrawal volumes. All TPA tariffs and energy losses by a percentage from the LNG terminal to the end of the distribution network are charged to commercialicers directly who, in turn, are able to pass through this cost to end-users. 6.3 LNG terminal tariffs The tariff for the use of the LNG terminal can be bundled or unbundled. LNG terminal unbundled fees include: Tariff for the service of LNG unloading at the LNG terminal in / cargo and a variable fee in cent /kwh. Tariff for the service of LNG loading applied through a fixed charge in /operation and a variable fee in cent /kwh. 25

26 Tariff for the service of LNG regasification and emission to the transmission system with two different items: regasification capacity utilized based on a monthly price applied to the maximum daily gas emission during a month window in /MWh/day and a commodity charge in cent /kwh. Tariff for the use of LNG storage in cent /MWh/day. Tariff for LNG truck loading price also calculated similarly as for LNG regasification services although monthly capacity usage fee is applied over the average monthly use. The bundled fee includes the right to use unloading and LNG regasification services on the basis of the unbundled regasification fee, whereas LNG storage is charged separately in this case. In order to promote a flexible use of the terminal (short duration users), an alternative tariff option exists where the capacity price is charged through a multiplying factor. 6.4 Underground storage tariff The tariff for the use of the underground storage has three components, corresponding to three different services: gas injection, gas emission and gas storage. Although there are different physical cavities, tariff charges are non-discriminatory. Underground storage tariffs include: Gas injection and emission (off-take) commodity charges in cent /kwh. Gas storage charge with a monthly price in cent /kwh/month. 6.5 Entry to Network and Transmission and Distribution (Conduction) tariffs Entry to the gas network and transmission and distribution operations are considered separately. Entry to network tariffs is based on a fixed fee based on capacity contracted in /MWh/day and independent of the location of the entry point, i.e. postal tariff system 33. With regards to the Transmission and Distribution (Conducción) tariff, there are two different components: Fixed term payment based on utilized capacity charged on a monthly price applied to the maximum daily gas emission during a month window in cent /kwh/day and, A commodity charge in cent /kwh based on the volumes and pressure level at the exit point. TPA tariffs applicable during the gas year are shown in the Annexes below. 33 Although regulatory pressures for a new tariff system according to a fully decoupled Entry/Exit tariff system are strong, a Postal system is formally in Spain since the beginning of liberalization. 26

27 Annex 1. Regulated services included within the scope of TPA in Spain Source: 27

28 Annex 2. Technical Capacities in the Spanish-Portuguese VIP IBERICO AND Spanish-French VIP Pirineos Interconnection Agreement. 28

29 29

30 Source: es%20agreement%20vip%20iberico.pdf 30