The Gas Market Model Ordinance plays a major role in the Austrian gas market, as it regulates network access and the capacity management and balancing system in Austria's three market areas: the east, Tyrol and Vorarlberg.
The ordinance is in the process of being amended and its new provisions will take effect on October 1 2016 and January 1 2017, respectively. In essence, the amended ordinance foresees more nuanced requirements and options in relation to the issues outlined below.
Aggregation of residual loads
In order to guarantee the equal treatment of all suppliers, the concept and calculation of residual loads has been introduced in the ordinance. 'Residual load' is defined as the difference between the actual consumption of standardised load profile (SLP) consumers (calculated by subtracting measured withdrawals, linepack changes, system losses, consumption and metering errors from the amount of energy exchanged between the systems) and the predicted consumption of SLP customers based on aggregating load profiles (Section 2(1)(14a) of the ordinance). As outlined in the ordinance, residual loads must be calculated and allocated proportionally by the balance group coordinator, within the course of clearing, based on data submitted by the respective distribution system operator. For that purpose, each distribution system operator must determine the corresponding quantities for all suppliers in its respective network area by aggregating the synthetic load profiles (Sections 27(11) and 37(10) of the ordinance). As a consequence, distribution system operators must establish appropriate arrangements in their organisational structure – in particular, in relation to obtaining and providing the relevant data before the ordinance comes into force (ie, before January 1 2017).
Merit order list and balancing energy
The balancing instrument of the merit order list was extended by an additional product which aims to enable load-metered end consumers to participate in the merit order list. The purpose of introducing an additional product for load-metered end consumers is to increase the potential to acquire balance energy on the market in case of shortages. According to the ordinance, balance group representatives must conclude agreements regarding participation in and the settlement of the merit order list with load-metered end consumers that intend to participate and that have a contractually agreed maximum output exceeding 10,000 kilowatt-hour per hertz (kWh/h) (Sections 20(6) and 39(6) of the ordinance). The conclusion of such agreements is compulsory for end consumers with a contractually agreed maximum output exceeding 50,000 kWh/h (bulk purchasers). This also triggers the obligation for bulk purchasers to register as providers of balancing energy (Section 30(1) of the ordinance).
Consequently, the merit order list will contain two different products:
- standard product – lead time of 30 minutes, a minimum duration of one hour and a minimum size of 1 megawatt-hour per hertz (MWh/h); and
- flexibility product – options of either three, six or 12 hours of lead time to be chosen as rest of the day product or daily band per gas day with a lead time until 6:00pm of the preceding day and a minimum size of 1 MWh/h (Sections 31(1), 31(2), 31(7), 31(7a), 31(8), 31(11) and 31(12) of the ordinance).
Apart from the lead time, duration and size, the difference between standard and flexibility products is that in the case of flexibility products, it is possible to oblige the distribution area manager to accept the entire offer rather than parts therein (Section 31(8) of the ordinance).
Moreover, in light of the newly introduced balancing instrument, distribution area managers must procure physical balancing energy in accordance with the following priority system (Section 27(9)):
- procurement through trade of standardised products on natural gas exchanges via the virtual trading point;
- procurement through standardised products in accordance with the merit order list; and
- procurement through flexibility products in accordance with the merit order list.
The provisions regarding the merit order list and balancing energy will come into force on January 1 2017.
Cross-border interconnection points in Vorarlberg
Due to new regulations in Liechtenstein, it was necessary to amend the provisions on the organisational and operational settlement of cross-border interconnection points in the Vorarlberg market area. These provisions also apply in the Tyrol market area. In accordance with the amendments to the ordinance, balance group coordinators and distribution area managers will be responsible for settling volume movements at cross-border interconnection points which can be booked by system users. For that purpose, distribution area managers must:
- predict the total consumption of end consumers in the Tyrol and Vorarlberg market areas;
- consider the timetables for cross-border interconnection points; and
- nominate the corresponding exit capacities with the bordering upstream system operators (Section 45(4) of the ordinance).
Similarly, the balance group representative's role is to register timetables for end consumers per balance group and cross-border interconnection points with the distribution area manager (Sections 37(3) and 45 of the ordinance). Further, the balance group representative must initiate the transfer of the necessary amounts of gas at the virtual trading point of the bordering upstream market area (NetConnect Germany). However, a physical gas delivery from the Tyrol and Vorarlberg market areas to the bordering market area NetConnect Germany is not envisaged and, according to the existing and amended market rules, only exit capacities can be nominated by the distribution area manager. This should be considered by the balance group representative when timetables are compiled.
The provisions regarding the cross-border interconnection points in the Vorarlberg market area will come into force on October 1 2016.
This article was edited by and first appeared on http://www.internationallawoffice.com/.
Originally published as Schoenherr legal insights on 21 September 2016.