Allocation Rules

Martin ApkoCAO Central Allocation Office GmbH

30 February 2009, CEE Implementation Group, Vienna

Participation in Allocation Process Collaterals Products Secondary Market Allocation Algorithm Emergency procedures Settlement Transparency Additional Features

Content

Registration• signed registration form• extract from commercial register• contact details Confirmation of the registration by CAO constitute the contract

between CAO and registered entity. Entity is identified by unique EIC code (usage of more EIC codes is

not allowed)

Access to CAO IT• user registration• qualified electronic certificates for encrypting and signature of data

Collaterals

Participation in Allocation

Rating• ? “BBB-” (S&P) or “Baa3” (Moody’s) or “BBB-” (Fitch/IBCA) or

higher – represents 5 000 000 EUR of Credit Limit

Bank guarantee• any bank with the required rating• requirements specified by AR

Deposit• on the account of CAO• on the escrow account of Allocation Participant

Collaterals (I/II)

Credit Limit• sum of all collaterals valid for an individual allocation process• credit limit is utilized by not paid invoices and bids submitted into the

system• unutilized credit limit defines if the bids will be accepted for

evaluation or not:o in case of daily auction bids – maximum value is checked on the input

to the systemo in case of yearly/monthly auction bids – preliminary evaluation is used

to identify allocation participants whose bids will be excluded due to insufficient collaterals

Collaterals (II/II)

Technical parameters calculation done on the base load basis

Standard products• yearly• monthly• daily

Block products• to be defined by CAO staff• flexible

Bids can be satisfied also only partially – divisible bids. Result of the allocation is right to use the capacity (PTR)

identified by source CA, sink CA

Products

Supported activities• Transfer• Resell valid for yearly & monthly PTRs on self-service basis via CAO IT

Transfer• possible for paid PTRs• by D-2, auto-rejection if not confirmed by transferee• slicing is possible as regards time (hourly basis) and volume (MW)• all rights and obligations (with exception of payment for the

allocation of PTR) are transferred

Secondary market (I/II)

Resell• possible for paid PTRs• into monthly allocation (base load), slicing is possible as regards

volume (MW)• into daily allocation, slicing is possible as regards time (hourly

basis) and volume (MW)• compensation for holder of PTR is equal to the allocation price

determined in the relevant monthly/daily allocation process, however the compensation may not exceed the original payment for reservation of PTR

Secondary market (II/II)

Social welfare maximization principal applied see presentation of Mr. Todem

Allocation Algorithm

In case of emergency situation or to avoid the emergency situation TSOs may apply curtailment of PTRs via CAO

Following criteria has to be considered in such case:• What is the duration of the emergency situation (e.g. How long it will

take to replace the damaged network element)?• When the information is available to TSOs?• Trade off between accuracy of the curtailment and time of

notification to the market.

Emergency procedures (I/III)

Curtailment of Allocated PTRs• applicable in cases when TSOs identify necessity of curtailment

longer time in advance or curtailment will be applicable for several days

• usage of all allocated PTRs is taken into account• the highest price bids from yearly and monthly allocation up to the

level of allocated PTRs are evaluated with use of the allocation algorithm taking into account actual/updated grid conditions

• CAO inform allocation participants about curtailment

Emergency procedures (II/III)

Curtailment of Nominated PTRs• applicable in cases when TSOs identify necessity of curtailment

shortly before the daily allocation or just during the calculation of daily Available Maximum Flows – i.e. after the nomination gate closure

• nominations submitted by market participants to TSOs are taken into account (including netting)

• the highest price bids from yearly and monthly allocation up to the level of nominated PTRs are evaluated with use of the allocation algorithm taking into account actual/updated grid conditions

• CAO inform allocation participants about curtailment • TSO confirm curtailed transmission schedules to market

participants

Emergency procedures (III/III)

Reservation of PTRs • yearly – 12 equal installments (in advance)• monthly – 1 invoice (in advance)• daily – all daily allocations within calendar month (1 invoice ex-post)

Resell • invoice issued by allocation participant• all resells within calendar month (1 invoice ex-post)

Curtailment • invoice issued by allocation participant

Settlement

Technical data• Available Maximum Flows• Export/Import limits• PTDF matrix

Market data• specification of the deadlines and product• Requested PTRs• Allocated PTRs• Number of participants• List of bids without identification of the bidder (bidding curve)

Transparency

Notice Board• communication platform supporting the secondary market

Balancing Services• delivery of cross-border balancing services is allowed on several

borders in CEE region• to allocate transparently capacity for this purpose (and set the price

for such capacity), PTRs allocated within the standard allocation process may be notified to be used for balancing services provision

Additional Features