Congestion management methods in the Baltic States, current situation, future developments. Ingrid Arus

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1 Cngestin management methds in the Baltic States, current situatin, future develpments Ingrid Arus Head f Electricity Markets Department Elering AS

2 Baltic TSOs Agreement n CC and CA 2014 EstLink 2 cngestin n EE-LV brder Baltic TSOs psitin

3 Baltic TSOs Agreement n CC and CA Meshed netwrk, BRELL synchrnus area First agreed psitin Capacities fr trade Estnia-Latvia = equal t NTC f technical crss sectins EE LV/RU Estnian-Latvian and Latvian-Lithuanian ATCs are allcated via implicit auctin perfrmed by NPS Trading capacities between 3rd cuntries and Baltic pwer systems are allcated by NPS via capacity ptimizatin methd Nne f Baltic crss-brder capacities are reserved fr direct trade with 3rd cuntries

4 Regulatrs psitin Gd start and prgress Mnitring f the implementatin shall be perfrmed Implicit auctin implementatin f the NPS platfrm main precnditin fr develpment f financial prducts CfD (EPAD) in Estnia + ptins t start with the prducts fr LV and LT by Nasdaq OMX Regulatrs stressed ut when the new link between Estnia and Finland is in peratin, efficient financial instruments shuld be intrduced Regulatin (EC) N 714/2009 is nt applicable t 3rd cuntries

5 Statistics and regulatin MW XB capacity n EE-FI brder Physical cngestin : 38% f time 2014 n cngestin 800 MW XB capacity n EE-LV brder Physical cngestin : 3% f time 2014 structural cngestin n the brder Regulatin (EC) N 714/2009 f the Eurpean Parliament and f the Cuncil ANNEX I p.2.8. In regins where frward financial electricity markets are well develped and have shwn their efficiency, all intercnnectin capacity may be allcated thrugh implicit auctining

6 Cmmn apprach 3.1. Capacity allcatin at an intercnnectin shall be crdinated and implemented using cmmn allcatin prcedures by the TSOs invlved. In cases where cmmercial exchanges between tw cuntries (EE and LV) are expected t affect physical flw cnditins in any third cuntry (LT) significantly, cngestin-management methds shall be crdinated between all the TSOs s affected thrugh a cmmn cngestin-management prcedure. Natinal regulatry authrities and TSOs shall ensure that n cngestin-management prcedure with significant effects n physical electric pwer flws in ther netwrks is devised unilaterally.

7 Optins Prducts t hedge price area risk Electricity Price Area Differential (EPAD) EPADs are traded by the market players withut the TSOs invlvement Financial Transmissin Rights (FTRs) FTRs are issued by the TSOs (r 3rd parties). At present nging Eurpean wrk regarding framewrk guidelines. TSOs shall sell FTRs r PTRs unless apprpriate crss-brder financial hedging instruments are ffered in liquid financial markets Physical Transmissin Rights (PTRs) PTR are issued by the TSOs

8 NTC (EE-LV) Baltic TSOs psitin (1) NTC calculatin after emergency PP is in peratin in Estnia PTR partial auctin n XB EE-LV PTR price hedging pprtunity fr market participants UIOSI, bligatry selling back price is calculated via different prices» TSOs get the auctin price, PTR wner bttleneck incme (price difference) 20% f NTC Mnthly auctin/r ne auctin fr the 5 mnths prduct Temprary slutin January May 2014, cmmn decisin with Nasdaq OMX EPAD COMBO FTR-like prduct n the EE-LV brder

9 Baltic TSOs psitin (2) Capacity calculatin and allcatin with 3 rd cuntries: ATC with 3 rd cuntries shuld be calculated guaranteeing the cmpetitin in Lithuania/Latvia As an ptin PTR partial auctin n XB LT BLR culd be intrduced ensuring minimum crss-brder capacity Pssible affect n the ATC n EE-LV brder shuld be minimized Future directin is twards virtual bidding area and flw-based slutin Bids frm 3rd cuntries price dependent bids (discussin is needed with NPS)

10 Baltic TSOs psitin (3) One virtual bidding zne fr trade with third cuntries Allcatin is managed in cperatin TSOs + NPS Start ASAP Implementatin 2014? Implicit auctin NTC Implicit auctin NTC Bids frm KAL EE price area LV price area LT price area NTC Agreed ATC Agreed ATC Agreed ATC ATC frm 3 rd cuntries Imprt/exprt areas with 3 rd cuntries

11 Market setup next steps Baltic Study Ordered by TSOs Overall picture f the markets Obstacles fr efficient market Input t the BEMIP HLG BEMIP Actin Plan Sub-Actin Plan Ministries are leading Reprt t the BEMIP HLG

12 Thank yu!

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