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Modification 500 slides for Workgroup
Malcolm Montgomery
Matthew Hatch
Session 1 – Primary Processes
 Auction Overview
 Process Overview
 Joint Booking Platform
 Available Firm Capacity
 Ascending Clock Auctions
 Uniform Price Auctions
2
Content – Further Sessions
Secondary Processes
 CMP Surrender
 CMP LT UIOLI
 Transfers
 Scale backs
 Buy backs
 Unbundling
 Voluntary Bundling
Supporting Processes
 Tariffs & Charging
Methodology
 Transitional Arrangements
 Contingency
 User PRISMA Registration
 Credit / Invoice / Over-run /
Neutrality / Termination /
Voluntary Discontinuance
 PRISMA
3
CAM/CMP high level auction overview
Other
TSO
TSO informed of
bundled/unbundled
split
Compile
auction data
CAM calendar
SHIPPER
PRISMA
GEMINI NG
LT UIOLI,
Oversubscription,
+Prices
Surrender
cut-off
Post auction
processing
Calculate
bundle
Surrenders On going
Compile
auction data
Auction
Invite(s)
Run
Auctions
View
auction
Submit
bids
TSO informed of
bundled/unbundled
split
NG &
Shipper
inventory
Publish
results
Receive
outcomes
View
info
Receive
invoices
TO BE DEFINED BY OTHER TSO
4
Interconnector Capacity & Auctions
Auction
Capacity
 Annual Yearly Interconnector
Capacity Auction
 Annual NTS Interconnector
Capacity
 Annual Quarterly Interconnector
Capacity Auction
 Quarterly NTS Interconnector
Capacity
 Rolling Monthly Interconnector
Capacity Auction
 Monthly NTS Interconnector
Capacity
 Rolling Day Ahead Interconnector
Capacity Auction
 Daily NTS Interconnector
Capacity
 Interruptible Rolling Day Ahead
Interconnector Capacity Auction
 Interruptible NTS Interconnector
Capacity
 Within Day Interconnector
Capacity Auction
 Daily NTS Interconnector
Capacity
5
CAM
Standard capacity products - auction calendar
Product
Capacity
Commencing
Start of
the
auction
Invitation
publication
Firm
Y1 to Y15
annual
strips
1st October
1st
Monday
of March
1 month
before
auction starts
Annual
Quarterly
Firm
Q1 to Q4
1st October
1st January
1st April
1st of July
1st
Monday
of June
2 weeks
before
auction starts
Rolling
Monthly
Firm
monthly
tranche
1st day of
each month
3rd
Monday
of the
month
1 week before
auction starts
Start of the
gas day
Firm
15:30*
Interrupt’
[16:30]
Auction
Frequency
Annual Yearly
annually
Rolling
Day ahead
Within Day
monthly
daily
hourly
Firm &
Interruptible
D+1
Firm
D
* All times are GMT for winter and BST for summer
Hour bar +3.5
from end of
bid window
D-1
[18:00]
At the start of
the auction
After closure
of the day
ahead auction
Allocation
Auction
algorithm
next
business
day
(after the
closing
bid
window)
Ascending
clock
30
minutes
after the
bidding
round
closes
30
minutes
after the
bidding
round
closes
Uniform
price
6
PRISMA
 CAM Regulation requires that TSOs offer capacity via a
joint web based booking platform.
 NG launched open letter consultation on PRISMA.
 NG is now signed up as a shareholder of PRISMA along
with other TSOs in (NW) Europe.
 Users will need to complete Registration on PRISMA
before using PRISMA functionalities.
 Relevant User data will be exchanged between NGG and
PRISMA for the purposes of completing processes within
modification 500.
7
NG / PRISMA Processes Overview
PRISMA Processes
User
Registration
Credit
Limit
User
Credit
Registration Sanction
Grid Point Data Surrender
Maintenance
Request
Add Location
Surrender
Process
Run Auction
Set up
Auction
Process
Results
Secondary
Transactions
Transfers
NG Processes
Assignment
Scalebacks
Oversubscription
Tariffs
Recall
Buybacks
LT UIOLI
Invoicing
8
Available Firm Capacity
Unsold
Technical
Surrender
LT UIOLI
NG
Available
Capacity
PRISMA
Oversubscription
NG Technical Capacity
= Licence Baseline
Adjacent
TSO
Available
Capacity
Available
Bundled
Available
Unbundled
9
Technical Capacity Set Aside
for shorter term auctions
 Relevant for Annual Yearly Interconnector Auctions
only
 Y+6 to Y+15 - 20% of Technical Capacity
 Y+1 to Y+5
- 10% of Technical Capacity
 In the event that technical capacity has sold out to more
than 80/90% for a relevant gas year then all remaining
unsold technical capacity will be set aside for shorter
term auctions.
10
Uneven sold profile over Year Y
Technical Capacity
Unsold ‘b’
Unsold
‘a’
Sold
Q1
(80/90% level)
Unsold ‘c’
Unsold ‘d’
Sold
Q2
Sold
Q3
Sold
Q4
 Technical Capacity made available for the year above in
an Annual Yearly Auction = ‘b’
11
CAM Cross border bundling - unsold capacity
Bundled
Capacity
Consists of corresponding entry and exit capacity on both sides
of the IP
Cross border bundling of unsold capacity has to be given
priority
Unbundled
Capacity
Where more available firm capacity exists on one side of an IP,
this can be offered as an unbundled product up to 1 year ahead
except for matching up to the sold level
Available
Capacity
Where more
available firm
capacity exists on
UK side – NGG may
offer excess as
unbundled product
Adjacent
TSO(s)
NG
Unbundled
Available
Capacity
Available to
‘bundle’
12
Restriction in sale of unbundled capacity (>Y+1)
13
Available Interruptible Capacity
 In line with existing UNC provisions.
 Entry Release (as per UNC Section B 2.5.10):
 Exit Release (as per UNC Section B 3.6.2):
 Reverse Flow
An amount equal to the forward flow technical
capacity.
14
Ascending Clock Auctions
Ascending Clock Auctions –
overview
 Allow Users to place volume bids for capacity in bidding rounds at
pre-defined prices (starting with the reserve price)
 The price increases in each round (by the Large Price Step) until the
demand for capacity has reduced such that the bids can be allocated
in full
 But if a First Time Undersell happens (when aggregate demand is first
less than the offered capacity)
 a further bidding round will be undertaken with the price equal to the
previous round’s price plus the Small Price Step
 Users can submit more than 1 bid per round
 Total volume of bids in any round from the same User must be less than
or equal to the capacity offered in the auction
 Bids can be modified or withdrawn up to the close of the relevant bid
window
 Once the bidding round closes, no changes can be made
16
Auction Invitation
17
Ascending Clock Bid windows
Bid Window
18
Ascending Clock Auctions –
Algorithm (1-to-1)
1st round of auction
Capacity offered at
Reserve price (P0)
Are aggregate bids <=
Offered capacity?
Auction Closes
YES
Allocate in full at the Reserve price
NO
2nd and subsequent
rounds
Capacity offered at
Previous Round’s price +
Large Price Step
Auction Closes
Are aggregate bids =
Offered capacity?
YES
Allocate in full at the Offered price
(Previous Round’s price + LPS)
NO
Are aggregate bids <
Offered capacity?
YES
First Time Undersell
NO
19
Ascending Clock Auctions –
First Time Undersell (1-to-1)
First Time Undersell
(FTU)
Capacity offered at
Previous completed round
Price + Small Price Step
Auction Closes
Are aggregate bids <=
Offered capacity?
YES
Allocate in full at the Offered price
(Previous completed round’s price +
SPS)
NO
2nd and subsequent
rounds
Capacity offered at
Previous FTU price +
Small Price Step
Auction Closes
Are aggregate bids <=
Offered capacity?
YES
Allocate in full at the Offered price
(Previous FTU price + SPS)
NO
Iterate round until Offered price is equal to
price which led to FTU occurring - SPS
Auction will then close at this point, with
capacity allocated at price which led to FTU
occuring
20
Auction in Progress example screen - 1
21
Auction In Progress example screen - 2
22
Ascending Clock example (1)
 The available quantity is 200.
 Applicable Price for round 1 is equal to the reserve price
 Shipper bids are as follows
Shipper
Qty
A
100
B
90
C
50
 The bid demanded in round 1 is 240
 This is greater than the available, so the auction progresses to the
next round and the price increments by 1 large price step.
23
Ascending Clock example (2)
 Applicable Price for round 2 is equal to the reserve price + 1
Large Price Step.
 Shipper bids are as follows.
Shipper
Rd 1
Rd 2
A
100
90
B
90
85
C
50
45
Note: Rd 2
quantities must be
less than or equal to
the Rd 1 quantity
 The bid demanded in round 2 is 220
 This is greater than the available, so the auction progresses to
the next round and the price increments by 1 large price step.
24
Ascending Clock example (3)
 Applicable Price for round 3 is equal to the reserve price + 2 Large
Price Step.
 Shipper bids are as follows
Shipper
Rd 1
Rd 2
Rd 3
A
100
90
80
B
90
85
75
C
50
45
35
Note: Rd 3
quantities must be
less than or equal to
the Rd 2 quantity
 The bid demanded in round 3 is 190
 This is less than the available for the first time
 so the auction progresses to the next round and the price
decrements by 1 large price step and increments by 1 small price
step.
25
Ascending Clock example (4)
 Applicable Price for round 4 is equal to the reserve price + 1 Large
Price Step + 1 small price step.
 Shipper bids are as follows
Shipper
Rd 1
Rd 2
Rd 3
Rd 4
A
100
90
80
86
B
90
85
75
81
C
50
45
35
41
Note: Rd 4
quantities must
be between Rd
2 and Rd 3
quantities
 The bid demanded in round 4 is 208
 This is greater than the available so the auction progresses to the
next round by 1 small price step.
26
Ascending Clock example (5)
 Applicable Price for round 5 is equal to the reserve price + 1 Large
Price Step + 2 small price steps.
 Shipper bids are as follows
Shipper
Rd 1
Rd 2
Rd 3
Rd 4
Rd 5
A
100
90
80
86
83
B
90
85
75
81
77
C
50
45
35
41
36
Note: Rd 5
quantities must
be between Rd
3 and Rd 4
quantities.
 The bid demanded in round 5 is 196
 This is less than the available, but not for the first time, so the bids
for round 5 are allocated in full.
 4 units of capacity remain unsold.
27
Ascending Clock Auctions –
Prices paid
 The User pays the cleared price for the capacity as
determined through the auction algorithm
 Set at the reserve price plus the relevant auction premium
(multiples of the LPS and/or SPS as relevant)
 If the auction is for unbundled capacity, National Grid
NTS invoices the User for the cleared price obtained in
the auction
 If the auction is for bundled capacity, National Grid NTS
invoices the User for its share of the cleared price
obtained in the auction
 [Determined by the reserve price plus the relevant
multiples of the LPS/SPS]
28
Uniform Price Auctions
Uniform Price Auctions –
overview
 There is a single bidding round in which Users bid a
price as well as a quantity
 Users can submit up to 10 bids
 Multiple bids from the same User are treated independently
 Total volume of bids from the same User must be less than or
equal to the capacity offered in the auction
 Bids can be modified or withdrawn up to the close of the
relevant bid window
 Once the bidding round closes, no changes can be made
 Only Daily or Within-Daily Capacity is offered
30
Daily Auction Bid Windows
31
Uniform Price Auction Invitation (unbundled)
32
Uniform Price Auction Invitation (bundled)
33
Uniform Price Auctions –
Algorithm (1-to-1)
Uniform Price Auction
Capacity offered
Users bid quantity and price
Are aggregate bids <=
Offered capacity?
YES
Auction Closes
Allocate in full
Users pay clearing price
Bids are ranked in price
order, highest first
All users pay the clearing
price, set as follows:
NO
•if demand is less than
offered capacity, the
clearing price is the
reserve price or
Allocate
capacity to
highest priced
bids first
up to
available capacity
• if demand is above
offered capacity, the
clearing price is the price
of the lowest successful
bid
YES
Are all the bids allocated
in full?
Auction Closes
Allocate in full
Users pay clearing price
NO
* Providing the pro-rated amount
is above the Users’ minimum
quantity submitted
Allocate
remaining available
capacity
pro-rated to
remaining bids*
Auction Closes
Some users have been
allocated in full, some
pro-rated
Users pay clearing price
34
Uniform Price Example (1)
 Available quantity for auction is 400.
 3 Shippers enter 6 bids.
 At the end of the auction then all bids are sorted by price.
 Bids at the same price create a bid price group
Shipper
Qty
Min Qty
Price
A
100
100
4
B
50
20
4
A
70
1
3
C
80
5
2
B
150
10
2
C
150
1
1
35
Uniform Price example (2)
Shipper Qty
Min Qty Price
Provisional
allocation
Remaining
capacity
Group <
supply?
400

70
250

2
80
180
x
10
2
150
1
1
0
0
n/a
A
100
100
4
100
B
50
20
4
50
A
70
1
3
C
80
5
B
150
C
150
 Pro-rate 3rd bid group to reduce bid group quantity (230) down to
the remaining available capacity for that group (180)
36
Uniform Price example (3)
 So after pro-ration the bid for 80 is reduced to 62.6 and the bid for
150 is reduced to 118.4
Shipper
Qty
Min Qty
Price
Provisional
allocation
Min < prorated qty?
A
100
100
4
100

B
50
20
4
50

A
70
1
3
70

C
80
5
2
62.6

B
150
10
2
118.4

C
150
1
1
0
n/a
 If pro-rated bids > min requested quantity then allocation is complete.
37
Uniform Price example (4)
 If pro-rated bids < min requested quantity then bid is ‘killed’.
Shipper
Qty
Min Qty
Price
Provisional
allocation
Min < prorated qty?
A
100
100
4
100

B
50
20
4
50

A
70
1
3
70

C
80
5
2
62.6

B
150
150
2
118.4
x
C
150
1
1
0
n/a
38
Uniform Price example (5)
 Bid stack is re-evaluated with any ‘killed’ bid(s) reduced to zero.
Shipper Qty
Min
Qty
Price Provisional
allocation
Remaining
capacity
Group <
supply?
Min < prorated qty?
Final
allocation
400


100
A
100
100
4
100
B
50
20
4
50
A
70
1
3
70
250


70
C
80
5
2
80
180


80
B
150
50
2
0
x
C
150
1
1
150
100
50
0
x

100
39
Uniform Price Auctions –
Prices paid
 The User pays the cleared price for the capacity as
determined through the auction algorithm
 If the auction is for unbundled capacity, National Grid
NTS invoices the User for the cleared price obtained in
the auction
 If the auction is for bundled capacity, National Grid NTS
invoices the User for its share of the cleared price
obtained in the auction
 Determined from the National Grid NTS applicable reserve
price plus a [50%] share of the auction premium
40
Post Auction
Post Auction Reporting
 Aggregate auction results will be published on the Joint
Booking Platform.
 Individual auction results will be sent directly from the
Joint Booking Platform to Users.
 In addition to this:
 Auction information will be viewable on Gemini;
 Net entitlements will be updated and viewable on Gemini.
42
View Aggregate Uniform Price Details - 1
43
View Aggregate Uniform Price Details - 2
44
Additional Info in case of competition - 1
45
Additional Info in case of competition - 2
46
View Aggregate Ascending Clock Details - 1
47
View Aggregate Ascending Clock Details - 2
48
Individual Auction Result Info from PRISMA
 TSO
 Type of gas
 Auction ID
 Regulated Tariff
 Deal ID
 Surcharge
 Product
 Total (clearing) price
 Network Point Name
 Split factor (uniform price)
 Network Point ID
 User details (i.e. User who placed
bid)
 Direction of gas flow
 Market Area
 Category (bundled/unbundled)
 Quantity
 Capacity Period
49
Post Auction processing by National Grid
 Auction results come back from PRISMA.
- Bundled bid demand
- Unbundled bid demand
 Allocate bundled results first:
 Unsold > Surrenders > LT UIOLI > Oversubscription
 Then allocate unbundled results:
 Remaining unsold > remaining surrenders > remaining LT UIOLI >
remaining oversubscription
 This way all unsold must be used before re-allocating surrenders; all
surrenders before LT UIOLI; and all LT UIOLI before non-ob.
unsold
Surrender
LT UIOLI
Non-Ob
U
S
L
O
50
Next Steps
Next steps
 Date for next Workgroup
 Content for future Workgroup sessions
 Feedback from this session
 AOB
52
National Grid UNC Mod (CAM & CMP adaptations)
Initial Estimated Timescales
Modification
raised at UNC
Panel
Jun 14
Ofgem
Decision
Feb
EU
Workgroup
Jan 15
Feb 15
Jul 14
Sep 14
Oct 14
Nov 14
18 DEC
6 NOV
2 Oct
4 Sep
7 Aug
Aug14
Consultation
Dec 14
Implementation
Date
1st Nov*
May 14
UNC Panel
to review
WG report
and issue to
consultation
Modification
WG
Development
Modification
WG
development
3 Jul
Modification
WG
development
5 Jun
EU
Workgroup
1 May
15 May
Draft CAM Mod
shared with
EU WG
Modification
WG
Development
UNC Panel
Vote on
FMR and
submission
to Ofgem
20 NOV
Modification WG
development
Finalise WG
Report and
submit to
Panel
*W.E.F 1st November 2015
Nov 15
53