Framework Guidelines on Gas Balancing in Transmission Systems

Publishing date: 18/10/2011 Document title: We appreciate your feedback

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Framework Guidelines on Gas Balancing in Transmission Systems

FGB-2011-G-002 18 October 2011

This Document contains the Framework Guidelines on Gas Balancing in Transmission Systems, which the Agency for the Cooperation of Energy Regulators (ACER) has developed pursuant to Articles 6 of Regulation (EC) No 713/2009 and of Regulation (EC) No 715/2009 and on the basis of a request from the European Commission.

Related Documents

ACER/ERGEG documents

[1] “Framework Guidelines on gas balancing rules – Evaluation of Responses”, ACER, 12 October 2011, Ref: G002-2011-10-12 [2] “Framework Guidelines on Gas Balancing in Transmission Systems - Draft for consultation, ACER, 12 April 2011, Ref: DFGC-2011-G-002 [3] “Pilot Framework Guideline on gas balancing rules – Evaluation of Responses”, ERGEG, 12 April 2011, Ref: E10-GNM-13-03b [4] “Gas Balancing in Transmission Systems” Framework Guidelines, ERGEG, 10 March 2011, Ref E10-GNM-13-03 [5] “Gas Balancing Rules on European Gas Transmission Networks: Draft Pilot Framework Guideline“, Public consultation document, ERGEG, 18 August 2010, Ref: E10-GNM-13- 03 [6] “Pilot Framework Guideline on gas balancing rules - Instructions for responding to the public consultation”, ERGEG, August 2010, Ref: E10-GNM-13-03b [7] “Gas Balancing Rules on European Gas Transmission Networks - Draft Pilot Framework Guideline, Initial Impact Assessment”, ERGEG, August 2010, Ref: E10- GNM-13-04

1. General Provisions

1.1. Introduction

The gas markets in Europe are fragmented, with several balancing zones across the European Union (EU) and different balancing arrangements applying in neighbouring markets. This entrenches the market power of incumbents and increases the barriers to new entry into the EU gas markets. In many Member States, network users do not yet have regular information during the balancing period on whether their portfolio is in balance or have access to liquid wholesale markets to trade flexible gas. This impedes new entrants’ ability to balance their portfolios and increases their exposure to imbalance charges. It also means that Transmission System Operators (TSOs) undertake most of the network balancing and, in order to fulfil this task, hold options to significant amounts of flexible gas, via long-term contracts, which could otherwise be traded in the wholesale market. In many balancing regimes, imbalance charges do not reflect the cost of the TSO balancing the gas network. This can result in incentives for inefficient behaviour and cross-subsidies between network users which could be considered discriminatory .

1.2. Scope

These Framework Guidelines aim at setting out clear and objective principles for the development of a network code on gas balancing as required by Article 6(2) of Regulation 715/2009 (the “Gas Regulation”).

The network code on gas balancing will apply to balancing regimes within EU borders. TSOs and Distribution System Operators (DSOs) shall cooperate in developing and implementing the network code, which will apply directly to DSOs where appropriate but will only harmonise DSOs’ roles to the extent necessary to implement the principles set out in these Framework Guidelines. ENTSOG shall involve DSOs in the drafting of relevant sections of the network code, adopting an efficient process of engagement through organisations representing DSOs at a European or, where appropriate, national level.

The network code on gas balancing will also apply to arrangements for cross-border balancing, which is the exchange or trade of flexible gas between neighbouring balancing zones and the netting of network users’ imbalances across adjacent balancing zones in order to support the development of competition and to facilitate market integration.

The network code(s) adopted according to these Framework Guidelines will be evaluated by ACER, taking into account their degree of compliance with the Framework Guidelines and the fulfilment of the objectives: maintaining security of supply, supporting the completion and functioning of the internal market in gas and cross-border trade, including delivering benefits to the customers.

1.3. Objective

The network code which is developed on the basis of these Framework Guidelines shall define a European gas balancing regime which is market based and enables network users to trade gas efficiently, including across borders.

In fact, the over-arching objective of the network code on gas balancing is to promote the harmonisation of balancing regimes in order to encourage and facilitate gas trading across systems and to support the development of competition within the EU, both between Member States and within each Member State, and thereby move towards greater market integration.

The specific objective for the network code on gas balancing is to create balancing rules, including network-related rules on nominations procedures, rules for imbalance charges and rules for operational balancing between TSOs’ systems as required by Article 8(6)(j) of the Gas Regulation.

The network code on gas balancing shall also have regard to the requirements in Article 21 of the Gas Regulation, i.e. it shall define balancing rules that are fair, non-discriminatory, based on objective criteria and which are market-based while reflecting the resources available to the TSO.

To this end, Article 21 of the Gas Regulation requires TSOs to:  provide sufficient, well-timed and reliable information on the balancing status of users to enable network users to balance (Article 21(2));  apply imbalance charges that are cost-reflective to the extent possible, whilst providing appropriate incentives on network users to balance their inputs and off takes of gas (Article 21(3)); and  endeavour to harmonise and streamline balancing structures and imbalance charges in order to facilitate gas trading (Article 21(4)).

Therefore, the balancing regime defined by the network code on gas balancing shall include cost-reflective imbalance charges to the extent possible, set on the basis of the marginal price, to incentivise network users to balance their portfolio efficiently. Network users shall receive up to date information on their own balancing position as well as the system’s balancing status during the balancing period to enable them to do this. This will minimise the TSO’s role in balancing and increase that of market participants, if flexible gas is released and wholesale markets, which allow for the trade of flexible gas between network users either bilaterally or via an exchange, are developed in parallel.

Where there is a need for the TSO to procure balancing services, it shall do so on the wholesale market on an equal footing with network users. However, where trading on wholesale markets is

limited or products needed by TSOs for balancing purposes (such as temporal or locational products) are not available on the wholesale market, it may be appropriate, as an interim step, for the TSO to procure balancing services on a balancing platform, where it acts as the counterparty to all trades of flexible gas. Balancing platforms could be used by more than one TSO, potentially in different countries, where sufficient cross-border interconnection capacity exists .

The network code on gas balancing shall also define a harmonised balancing period of 24 hours with financial settlement at the end of the gas day . Where the TSO needs to take balancing actions within this balancing period, it will procure these balancing services on the wholesale market – or, in the interim, on the balancing platform.

1.4. Definitions

For the purpose of these Framework Guidelines, the definitions of Directive 2009/73/EC (the “Gas Directive”) and the Gas Regulation apply, in addition to the following definitions:

 Balancing platform – a trading platform on which flexible gas is bought and sold, balancing services are procured and the TSO is party to every trade.

 Balancing regime – the rules and agreements that apply to portfolio and TSO balancing, including the procurement of flexible gas, balancing services and imbalance charges.

 Balancing services – additional services (i.e. additional to the buying and selling of flexible gas) that a TSO may buy in order for the system to remain within safe operational limits, for example the ability to inject/ withdraw gas into/ from storage.

 Balancing zone – an entry-exit system, which may consist of more than one system, as defined in Article 2(13) of the Gas Directive, to which a specific balancing regime is applicable. Distribution systems may be part of the balancing zone. The entries from storage and LNG into the transmission system as well as the exits from the transmission system into the storage are part of the balancing zone.

 Cross-border balancing zone – a balancing zone which consists of (parts of) more than one Member State.

 Cross-border balancing – the exchange or trading of flexible gas between neighbouring balancing zones in order to improve efficiency and facilitate market integration and the arrangements of network users to net their imbalances across two adjacent balancing zones. These balancing zones could be within the same, or in adjacent Member States.  Flexible gas – gas required to meet short term fluctuations in demand by customers. It also contributes to overall system security by responding to unexpected system requirements.  Imbalance – the situation in which individual network users’ injections into the balancing zone differ from their off-takes from the balancing zone or in which aggregate inputs differ from aggregate off-takes in a balancing period. This may result in either individual network users and/or the TSO buying or selling gas (or the TSO buying balancing services) in order to offset the imbalance. Inputs into and off-takes from the balancing zone can take the form of either physical gas at a specific point or gas exchanged at a virtual point in the market.  Imbalance charge – the charge applied by a TSO to network users (or payment received by a network user from the TSO) for financial settlement of a network users’ imbalance in respect of one balancing period.  Joint balancing platform - a balancing platform used by TSOs to procure products relating to more than one balancing zone.  Linepack – the storage of gas by compression in gas transmission and distribution systems, but not including facilities reserved for TSOs carrying out their functions, as defined in Article 2(15) of the Gas Directive.  Liquidity – the ability to quickly buy or sell reasonable volumes of gas without causing a significant change in price and without incurring significant transaction costs. A key feature of a liquid market is that it has a large number of buyers and sellers willing to transact at all times. The assessment of market liquidity shall include a consideration of the volumes traded, churn rates and the number of players on the market.  Local balancing – the actions undertaken by the TSOs addressing imbalances at particular locations within the balancing zone.  Locational product – Flexible gas products traded for delivery only at specified locations within the balancing zone.  Long-term flexible gas products – flexible gas products traded for delivery over more than two days (or three days in the event of a national holiday attached to a weekend) and up to one year, i.e. including weekly, monthly, quarterly and annual durations.  Marginal Buy Price – a price based on the higher of:

o the highest price of any gas balancing trading to which the TSO is a party in respect of the balancing period (excluding locational or temporal products); and o the weighted average price of gas traded in respect of that day. (This price may include a small adjustment to incentivise network users to balance).

 Marginal Sell Price – a price based on the lower of: o the lowest price of any gas balancing trading to which the TSO is a party in respect of the balancing period (excluding locational or temporal products); and o the weighted average price of gas traded in respect of that day. (This price may include a small adjustment to incentivise network users to balance).  Network user – a party that uses the transmission system to transport gas from one location to another or to trade gas at the virtual trading point.

 Portfolio balancing – the actions undertaken by network users in order to help ensure that their off-takes from a balancing zone match their inputs onto the same balancing zone over the duration of the relevant balancing period.  Short-term flexible gas products – flexible gas products traded intraday, day-ahead, two days-ahead of gas delivery or for two days over a weekend (or three days in the event of a national holiday attached to the weekend).  Temporal product – flexible gas product traded for delivery during a certain time period within the balancing period  Transmission system – a high pressure transmission network consisting of terminals, compressor stations, pipeline systems and off-take points. For the purposes of these Framework Guidelines, Liquefied Natural Gas (LNG) and storage facilities are not included in the transmission system.  TSO balancing – the actions undertaken by the TSO to ensure that the system stays within its accepted operational limits .  Wholesale market – a physical or virtual point at which network users trade gas with each other either bilaterally, or via an exchange. The TSO can also trade in this market for balancing purposes. A range of products can be traded including: financial/virtual, physical (where the gas is required to be delivered at a certain point) and temporal (where the gas is required to be delivered during a certain time period within the gas day).

In the above definitions, all references to the Transmission System Operator (TSO) refer to the entity responsible for keeping the system in balance. Where this is a party different from TSO, references to TSOs in this document relate to that party.

1.5. Implementation

Given the different stages of development of competition and liquidity in the gas markets across Europe, common balancing rules may only be achieved gradually. The network code on gas balancing shall therefore define balancing rules that are consistent with the ultimate goal of a common balancing regime, but that allow for TSOs to implement interim steps, where this may be appropriate. TSOs shall only implement interim steps if the national regulatory authority (NRA) has approved this, based on an assessment of the development of market liquidity.

Member States may put in place additional gas balancing arrangements that shall apply during an emergency (as defined in Article 10(3)(c) of Regulation (EC) No 994/2010 concerning measures to safeguard security of gas supply). Some guidance on these additional arrangements is already provided in that Regulation and more guidance will eventually be provided in the network code on operational procedures in an emergency (according to Article 8(6)(f) of the Gas Regulation).

For the avoidance of doubt, the methodologies establishing the terms and conditions for the provision of gas balancing services that NRAs fix or approve under the provisions of Article 41(6)(b) of the Gas Directive shall be consistent with the network code on gas balancing.

The network code on gas balancing shall require the European Network of Transmission System Operators for Gas (ENTSOG) to regularly review the progress towards its implementation.

Where the Framework Guidelines explicitly allow for alternative options to reflect relevant circumstances, the Network Code shall be drafted to retain these options.

2. Principles for network users and TSO roles and responsibilities

2.1. General provisions

The network code on gas balancing shall provide for network users to balance their portfolios by matching their inputs into and off-takes from each balancing zone during the relevant balancing period. The network code shall provide that balancing responsibilities are shared between the TSOs and network users, in accordance with the requirements specified below.

The network code on gas balancing shall create EU wide rules on gas balancing. When implementing the network code, TSOs shall consider the impact of their balancing rules on the development of trading with adjoining balancing zones. Where this is needed to implement the code effectively, TSOs shall coordinate the development of their balancing regimes and their balancing activities with other TSOs.

The network code on gas balancing shall not prevent TSOs from allocating linepack to network users if approved by the relevant NRA. Where linepack is sold, TSOs shall allocate the linepack to network users as a commercial product on a transparent and non-discriminatory basis and it shall be offered at a cost reflective price. The price may also be determined through competitive mechanisms. The decision by the relevant NRA to allocate linepack shall be based on objective criteria, including the physical characteristics of the networks, whether the provision is consistent with Section 4 of these Framework Guidelines and whether offering a linepack product would facilitate a more efficient use of the system.

The network code on gas balancing shall set out that network users, through their portfolio balancing activities, shall take primary responsibility for matching their inputs against their customers’ off-takes from the balancing zone during the relevant balancing period. The principle is to provide, as much as possible, for network users to balance their individual portfolios which is likely to minimise the need for TSOs’ balancing actions.

The network code on gas balancing shall require that TSOs, during its implementation, shall not impose barriers to the development of liquid short term wholesale markets.

3. Buying and selling of flexible gas and balancing services by TSOs

In order for TSOs to ensure that the system is kept within safe operational limits, they need to be able to buy and sell gas and may also need to be able to buy balancing services.

The network code on gas balancing shall require TSOs to procure flexible gas and related balancing services in a way that helps minimise the cost of balancing the system. For the procurement of flexible gas, they shall accept the lowest priced offers or highest priced bids (in other words to trade as close to the market price as possible). TSOs shall be cost neutral in relation to their balancing activities, i.e. any net costs or revenues arising from TSO balancing and financial settlement of network user imbalances shall be passed on to network users, although NRAs may incentivise TSOs to procure efficiently by allowing them to receive a payment if balancing costs are minimised to a certain level, or require them to make a payment if these are above a certain amount.

The network code on gas balancing shall require TSOs’ procurement and sale of flexible gas and balancing services to be market-based. As such, TSOs should use the wholesale gas market to procure gas in a transparent and non-discriminatory manner, as far as possible on an equal footing with network users and by maximising the amount of their balancing needs to be fulfilled through the buying and selling of within-day products.

3.1. Balancing services and flexible gas products

The network code on gas balancing shall define standardised products and related balancing services that TSOs may buy or sell. These standardised products shall include short-term products, which are traded during the gas day either on a physical basis or through title transfer. They may also include long-term products of up to one year. The long-term products may be either for a particular volume of flexible gas or an option to inject or withdraw a particular volume of flexible gas.

The network code on gas balancing shall require TSOs to maximise the amount of their gas balancing needs to be fulfilled through the buying and selling of short-term standardised products on the wholesale market (or, where the interim step applies, on the balancing platform). NRAs may design incentive mechanisms to encourage TSOs’ compliance with this requirement.

The network code on gas balancing shall require TSOs, when defining the products to be bought or sold, to coordinate the product range with neighbouring markets (or balancing platforms, where the interim step applies).

In order to allow TSOs to meet the specific balancing needs of their transmission systems, the network code on gas balancing shall permit TSOs to buy or sell non standardised products such as temporal products and / or locational products.

3.2. Interim measures

Where a wholesale market is insufficiently liquid (or where temporal and locational products required by the TSO cannot reasonably be procured on the wholesale market), the network code on gas balancing shall provide for TSOs to procure their flexible gas and balancing services on a balancing platform. TSOs shall take account of the current level of market development and shall ensure that implementing this interim step facilitates future procurement of flexible gas, including locational and temporal products, on the wholesale market.

Balancing platforms shall only be used as an interim step towards the creation of a liquid wholesale market and may cover more than one balancing zone. This shall be without prejudice to the possibility of NRA to grant exemptions, as specified below. Moreover, the network code on gas balancing shall require TSOs, if using balancing platforms, to buy and sell flexible gas transparently and on a non-discriminatory basis through a system of bids and offers. Any network user shall have the right to participate in the balancing platform.

The network code on gas balancing shall set out criteria on the design of balancing platforms. The network code on gas balancing shall further require TSOs or the undertaking responsible for establishing the balancing platforms, to consider whether a joint balancing platform with neighbouring balancing zones might be established, in accordance with the provisions in Section 7. Where there is sufficient interconnection and proves efficient, a joint balancing platform shall be established for more than one balancing zone. The network code shall specify the arrangements for TSOs to cooperate in creating and using such joint balancing platforms.

The network code on gas balancing shall allow TSOs to seek from the NRA an exemption from the requirement to establish a balancing platform and instead obtain the permission to enter into a contract with one or more providers of flexible gas. For smaller markets, the network code shall allow TSOs to request from the relevant NRA to include flexible gas in LNG facilities as part of the balancing zone. Either of these exemptions shall only be granted where the TSO has proved to the NRA that, as a result of insufficient interconnection between balancing zones, a balancing platform would not increase liquidity in the markets for flexible gas products and balancing services and would not enable the TSO to balance the system more efficiently. The price and the terms and conditions as well as the duration of this contract should be published and approved by the relevant NRA. The NRA shall notify its decision, including the justification and all relevant information, to ACER without delay. Within 3 months of receipt of that notification, ACER may request the concerned NRA to amend its decision.

Where long term contracts for the procurement of flexible gas are already in place and provide TSOs with an option to take specific volumes of flexible gas, the network code on gas balancing shall provide for the volumes of flexible gas covered by the option to be reduced. The network code on gas balancing shall include arrangements for TSOs or the undertaking holding the flexible gas to release back to the market any surplus gas which is not required for balancing purposes in any given balancing period, in order that network users have access to greater volumes of flexible gas. ENTSOG shall consult on the rules of procedure for the release of flexible gas. The relevant NRA(s) may set targets regarding the proportion by which these long term contracts should be reduced in order to increase liquidity in short term gas markets.

Compliance and monitoring will be followed up based on the provisions of Section 8.

4. Balancing period and nomination procedures

4.1. Balancing period

The network code on gas balancing shall provide that the balancing period for a balancing zone is a standardised daily interval, at the end of which network users are financially settled for any deviations, as accumulated over the course of the preceding 24 hours, between their inputs into and off-takes from the balancing zone. In the network code this standardisation shall be set out from 5:00 to 5:00 UTC/GMT or any other time period harmonized across the EU as decided for daily capacity products in the network code on Capacity Allocation Mechanisms .

At the end of the balancing period, network users shall be financially settled based on their individual position . Being financially settled after this interval does not preclude network users from engaging in portfolio balancing activities within this interval. Once they have been financially settled, each network user’s portfolio position will be reset to zero.

4.2. Within-day obligations

Where the TSO needs to take balancing actions regarding the system’s position during the day, the network code on gas balancing shall provide for the TSO to impose specific obligations relating to network users’ inputs and off-takes during the gas day (“within-day obligations”). This shall only occur where, in order to ensure system integrity and to minimise the need for the TSO to take balancing actions, it is necessary to incentivise network users to take appropriate balancing actions during the day.

The network code on gas balancing shall require that balancing services required for within-day balancing are procured in a market-based manner, pursuant to Section 3 of these Framework Guidelines.

The network code on gas balancing shall require that any within-day obligations shall not act as an undue barrier to cross-border trade or to new network users entering the market and shall only be adopted once network users are provided with sufficient information to enable them to comply with the obligations. Any within-day obligation shall not undermine the principle of a daily balancing regime, i.e. the main costs to be incurred by network users in relation to their balancing obligations shall relate to their position at the end of the day in accordance with Section 5 of these Framework Guidelines (and charges relating to within-day obligations shall only be a small proportion of any imbalance charges). Where such within-day obligations apply, the TSO may impose on network users a charge for failing to meet the obligations. This charge shall be, to the extent possible, cost reflective and shall not pose any undue barriers on new entry into the European markets or on cross-border trade. The network code on gas balancing shall prohibit the imposition of obligations according to which network users are financially settled to a position of zero during the gas day.

The network code on gas balancing shall require the TSO in each balancing zone to publically consult on any specific within-day obligation it proposes to impose, including the methodology and assumptions used in arriving at the conclusion that the conditions set out above apply. The proposal for a within-day obligation shall include analysis of the likely financial impact on network users, the effect this may have on market entry, cross-border trade, hub liquidity and demonstrate that it is not discriminatory. The network code shall require the TSO to seek NRA approval before imposing any within-day obligations. In deciding whether or not to approve such within-day obligations, the NRA shall consider whether the benefits in terms of the economic and efficient operation of the transmission system outweigh any potential negative impacts.

Where a NRA has a concern that the obligations proposed by the TSO may adversely impact on cross-border trade, the NRA may seek an opinion or a recommendation from ACER, based on the provisions of the Regulation (EC) 713/2009 (the “Agency Regulation”). ACER shall monitor the balancing provisions, including within-day obligations and may request the relevant NRA to review any obligations which appear to conflict with the paragraph above.

4.3. Nomination procedure

If not covered by other legal obligations, the network code on gas balancing shall set out criteria for nomination and renomination procedures to be harmonised at both sides of the border at interconnection points and consistently across Europe. Renominations are needed to enable network users to adjust their own positions and buy or sell flexible gas for balancing purposes. These criteria shall minimise response times by allowing network users to adjust their balance position during the gas day up to a specified time in accordance with other legal obligations. The network code on gas balancing shall prevent TSOs from requiring that network users nominate input volumes which match their output volumes or vice versa.

5. Imbalance charges

5.1. General provisions

The network code on gas balancing shall require TSOs to publish transparent methodologies for the calculation of imbalance charges. It shall establish harmonised principles for these methodologies in accordance with the rules set out below. TSOs shall provide network users with regular and detailed information on how any imbalance charges they incurred were calculated.

The network code on gas balancing shall require TSOs to charge imbalance charges separately from other transmission charges. Imbalance charges shall be reflective of the costs incurred by the TSO in buying gas and balancing services (or the revenues received by the TSO in selling gas) to the extent this is possible. Imbalance charges shall be levied on the network users that were out of balance at the end of the balancing period. Only costs incurred by TSOs from undertaking balancing activities that are not directly attributable to a network user causing imbalances may be shared across all network users. Imbalance charges shall be targeted on the network users contributing to the imbalance and therefore shall not include other charges.

The network code on gas balancing shall require TSOs to have in place imbalance charges that provide appropriate incentives on network users to balance their portfolios, without deterring new market entry or impeding the development of competitive markets. The purpose of such incentives is to ensure that individual network users are incentivised to undertake portfolio balancing activities and potentially avoid incurring imbalance charges, which minimises the need for TSOs to undertake balancing activities.

The network code on gas balancing shall require TSOs to have in place imbalance charges that are consistent with the requirements set out in this Section and which have been approved by the NRA pursuant to Article 41(6)(b) of the Gas Directive.

The network code on gas balancing shall set out that, where TSOs use either the wholesale market or a balancing platform, including a joint balancing platform, to buy or sell balancing gas, the imbalance charges shall be based on the marginal sell price or the marginal buy price. The marginal buy price and the marginal sell price also apply when the TSO has taken no action. The imbalance charge may include a small adjustment to incentivise network users to balance their portfolios. This adjustment shall be designed and applied in a non-discriminatory manner, so that it does not deter market entry or impede the development of competitive markets.

5.2. Interim measures

Where, because of insufficient liquidity in the wholesale market, the TSO uses one of the interim measures named in Section 3.2 for procuring balancing services, the imbalance charge may be based on an administered price or a proxy for a market price. This proxy may be based on the prices in different wholesale gas markets. The imbalance charge may then include a small uplift or reduction in order to incentivise network users to balance their portfolios. This charge should not deter new market entry and must be approved by the relevant NRA to ensure that it still provides an appropriate incentive for the network user to balance its portfolio.

The network code on gas balancing may provide network users with tolerance levels that shall reflect genuine system flexibility and user needs. These tolerances may be free of imbalance charges. Rules for the level of tolerances allocated to categories of network users shall be approved by the relevant NRA and designed so as to not create discrimination, in particular against network users with smaller gas portfolios. Tolerances may be introduced as an interim step which applies where network users do not have access to a liquid short-term wholesale gas market or to sources of flexible gas (including the associated infrastructure) to trade in order to be in a position to balance their portfolios.

6. TSO information provision obligations

The network code on gas balancing shall require TSOs to set out the detailed information in compliance with the provisions outlined below.

The network code on gas balancing shall provide that aggregate network user input and off-take information is made available by the TSO in a clear, timely manner and on the same timescale to all network users in order for them to be able to take necessary actions to correct their imbalances.

It is also important that network users are aware of TSO actions to buy and sell gas from network users or other TSOs. Regular information is also required on the overall status of the system in accordance with Chapter 3 of Annex 1 to the Gas Regulation. Consistency across Europe is also required in how information is published to prevent information barriers hindering cross border trade. This information shall be published in English as well as the local language in a harmonised format, to be defined in the network code.

The network code on gas balancing shall require TSOs to provide, free of charge, to each network user the available information regarding its inputs on to and off-takes from the balancing zone at appropriate intervals during the balancing period in order for network users to be able to balance their portfolios. Appropriate intervals shall be at least twice a day or more frequently if necessary to enable network users to meet their balancing requirements, and to comply with any within-day obligations (as set out in Section 4.1). Within 2 years of adoption of the network code, TSOs shall assess the costs and benefits of more frequent information provision and shall consult stakeholders on this assessment, in cooperation with DSOs where they are affected. Based on this assessment, the relevant NRA may require more frequent information provision from the TSOs to the network users. Until such an assessment has been completed and any changes implemented, network users may be subject to less onerous balancing obligations if transitional arrangements are agreed by the relevant NRA (for example through the application of interim measures as set out in section 5.2). These arrangements, once agreed, are notified to ACER.

The network code shall require DSOs to cooperate with TSOs and provide relevant information to enable TSOs to comply with the requirements on information provision set out in this Section.

In the absence of information being metered during the balancing period and in order to facilitate new entry, the network code on gas balancing shall oblige TSOs to provide detailed forecasts of off-take volumes for non-daily metered customers at the day-ahead stage. The TSO shall provide updates of this forecast at appropriate intervals during the balancing period, at least twice a day, unless network users are able to fulfil their balancing obligations with information provided day-ahead, e.g. they are cashed out against day-ahead off-take forecasts.

7. Cross-border cooperation

The network code on gas balancing shall require relevant TSOs to cooperate in order to integrate European gas markets by merging entry and exit zones or create cross-border balancing zones wherever this is technically feasible and economically reasonable or through other means such as market coupling.

The relevant TSOs shall consult stakeholders on proposals to integrate European gas markets, including an impact assessment of the expected costs and benefits and on the timeline for completion. ENTSOG shall share the results of the stakeholder consultations with the relevant NRAs and ACER. The final proposal shall be submitted for approval to the relevant NRAs and for information to ACER. The involved NRAs shall coordinate to reach the best outcome possible when providing a decision on this proposal. NRAs may seek an opinion or a recommendation from ACER, based on the provisions of the Agency Regulation.

The network code on gas balancing shall require ENTSOG to regularly review the progress of harmonisation of rules in adjacent balancing zones in order to identify opportunities for the creation of cross-border balancing zones and market coupling. The review will also consider whether there are additional measures needed to harmonise rules, which may facilitate the achievement of cross-border balancing zones.

The network code on gas balancing shall include proposals for TSOs to implement cross-border balancing projects in the European gas regions. In developing these proposals, TSOs will consult on options for cross-border balancing, including but not restricted to arrangements for:

 shipper-led cross-border portfolio balancing, which would allow network users to net their imbalances between cross-border neighbouring balancing zones; this shall be without prejudice to a fair allocation of balancing costs among network users of interconnected balancing zones;  cross-border TSO balancing, which would allow TSOs to act as intermediaries to facilitate access to flexible gas in neighbouring markets (for example by allowing their neighbouring TSOs to accept bids and offers for balancing services in their balancing zone); and  a joint balancing platform for TSOs in neighbouring balancing zones to buy and sell balancing gas, where sufficient interconnection exists.

These requirements shall not prevent TSOs in any of the gas regions (as defined in the European regional initiatives) from bringing forward or consulting on proposals to merge balancing zones or for cross-border balancing in the meantime. On the contrary, regional initiatives could serve as platform to bring forward cross-border balancing cooperations.

8. Transitional period, compliance and monitoring

The network code on gas balancing shall specify that within 12 months after its adoption TSOs shall comply with its requirements. This includes the adaptation of existing contracts and, where relevant, national network codes. NRAs may allow, taking full account of ACER’s opinion, for an additional 12 months for the requirements to be implemented, provided that TSOs are not implementing any of the requirements set out as interim measures.

Where TSOs implement any of the interim measures, TSOs shall send a report to the relevant NRA and to ACER explaining why the conditions for these interim measures are met. The report shall propose a roadmap, including a plan for moving away from the interim measures at the latest within five years of the entry into force of the network code. This report shall be proposed for approval to the NRA and for information to ACER every twelve months. TSOs shall publically consult on these reports before their submission to the NRA and ACER. ACER will monitor these reports according to Article 9(1) of the Gas Regulation. The competent NRA, taking full account of ACER’s opinion, shall approve the roadmap or may require the TSO to modify it. ACER may request the concerned NRA to amend its approval decision.

Publishing date: 18/10/2011 Document title: We appreciate your feedback

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