N-W Regional Initiative: Transparency

Questionnaire Results

Sonia BrownDirector – European Strategy &

Environment19 September 2007

2

Welcome

Thank you to all those operators who have responded

18 TSO responses received – good quality of responses

Intention today is to discuss responses received

Explain how responses have been assessed against EFET wish-list – i.e. traffic light approach

Discuss possible areas for improvement in transparency – i.e. potential ‘quick wins’ where information could be released

Discuss the process going forward – i.e. RCC to discuss which information should be released

3

Key findings …

Most TSOs are providing the static information requested

Most TSOs are providing some dynamic data

More capacity information available than flow data (although some TSOs publish historic flows)

Some TSOs already improving transparency

TSOs have indicated willingness to look at further improvements

A lot of information provided on online booking systems vs. public websites

Most TSOs say line-pack data not relevant to systems

4

Areas for discussion today

Prioritisation

Which are the ‘quick wins’ and which are the highest priorities – are these the same?

Timing for delivery

Can we deliver improvements this year? What could be delivered in 2008?

Barriers

What – if any – are the barriers to progress this? Discussion needed to take forward with regulators where appropriate

Not for discussion today = costs

Identify only where this is a barrier – then we can discuss priorities together with RCC

5

How we have displayed information here

Red light indicates: information identified as a

key priority for EFET/IFIEC

Amber light indicates: information identified as a

medium level priority for EFET/IFIEC

Green light indicates: information identified as

lower level priority for EFET/IFIEC

6

Summary of responsesReal time capacity (booked, commercially and technically available

Most TSOs provide information already – improving frequency

Provision of real time gas flows TSOs have indicated willingness to improve

Daily aggregate day-ahead nominations Allow assessment system useage/ impact on costs

Daily aggregate upstream flows Most TSOs know how much gas is entering their system

Daily aggregate demand forecasts Most TSOs undertake for own purposes already

Preliminary imbalance volumes and costs Allows proactive management of balancing position/ costs

I mbalance charges per period real time Allows proactive management of balancing position/ costs

Historic daily flows, interruptions data published

I f already available to TSOs could be published

All non-confidential information published on public website

Moving data from online booking systems/ private website to public site

Daily prompt allocation information Allows quick cost determinationDaily maintenance schedules/ planned outages

Most TSOs already publish – improving frequency

Daily actual measured gas quality values TSOs providing some information – improving frequency/ range of parameters

All information provided in English and national language

GB Case Study

Release of gas flow information

8

GB case study – gas flow data

•Sub-terminal flow info D+2

•Sub-terminal flow info aggregated to north-south split hourly

•Sub-terminal flow info updated every 12 minutes

•Covers NTS terminals and other terminals >10mcm/day

Aim - to provide close to real time data on gas flows into NTS

At end 2004, a proposed enhancement of information provision relating to flows into the NTS was raised

Would increased gas flow information benefit customers?

Ofgem conducted cost-benefit analysis to inform decision

9

GB case study approach

Assume prices include a risk premium which reflects the uncertainty which exists when an offshore outage occurs

Model impact of near real-time flow data on prices

Near real-time flow data reduces uncertainty and the risk premium …

... leads to lower prices and costs to consumers

High impact Medium impact Low impact

Reduction in consumer costs

£59.08m £46.06m £20.03m

10

Impact – outage example• Unexpected closure

of CATS pipeline reduces flow into Teesside to zero

• Information would only have been

available to market via

rumour/speculation in real time previously

11

Short-term price effects

-40

-30

-20

-10

0

10

20

30

40

50

60

D-1 D D+1 D+2 D+3

SA

P (

p/t

herm

)

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

% c

han

ge f

rom

D-1

SAP (BEFORE info release) SAP (AFTER info release) % Change (BEFORE info release) % Change (AFTER info release)

Two CATS outages compared Pre-info release: more volatility, greater

increase in price Post-info release: less volatility, lower

increase in price

12

-10

0

10

20

30

40

50

60

70

80

D-1 D D+1 D+2 D+3 D+4 D+5

SA

P (

p/t

herm

)

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

% c

han

ge f

rom

D-1

Y+1 forw ard price (BEFORE info release) Y+1 forw ard price (AFTER info release)

% Change (BEFORE info release) % Change (AFTER info release)

Long-term price effects

Similar impact for longer-term prices

13

Customers and markets can benefit from increased information transparency

Need to consider costs and benefits of releasing information to market

Once it is clear that information can be released – then it is a question for regulators … should the information be released?

Reduces risk premium linked to

uncertainty

Lower prices and volatility in

short term

Lower prices and volatility in longer term too

Benefits to consumers

GB case study shows value of enhanced information provision …

Clearer economic

signals

Moving forward…

Considering the ‘quick wins’

15

Process from here …

Discussion today regarding what is possible – i.e. what info could be released

Discussion of findings with RCC on areas of potential improvement – establish what info should be released –

considerations of costs/benefits

TSOs to develop plans to take actions forward - areas identified as ‘quick wins’

TSO plans reviewed – RCC / stakeholder input

Plans to be signed off by RCC

RCC to monitor progress towards implementation

16

Thank you

Thanks once again for all the helpful responses received – feedback has been very constructive

Potential to make real progress as part of the Gas Regional Initiative

October stakeholder meeting will be key to demonstrate work and progress made to date

Today is a real step in that direction

17