The Network Code on Gas Transmission. Episode 1

by Dumitru Chisalita

A New Network Code entered into force as of 1 October 2018, on which the Intelligent Energy Association plans to conduct an analysis to prevent a number of abnormalities that have occurred with the application of the previous Network Code. Thus, before starting the analysis on the new Code, we will present an analysis of the old Network Code, which has caused the application of penalties to Network Users which in our opinion violated precisely the provisions of the Network Code in force until 30 September 2018.

1. The provisions of the Network Code approved by the ANRE Order no. 16/2013 with further amendments and additions, on the entry/exit points to/from the National Transmission System

The Network Code established, as a general rule, in art. 7 para. 2, that the entry/exit points to/from the NTS may be both physical and virtual in nature, following to mention, from case to case, in the specific articles of the Network Code, which was the type of point referred to by each operation provided for by the Code.

Thus, the Network Code provided:

1. According to art. 9 and art. 14 which refers to the operations of hand-over/take-over between the Network User and the Transmission System Operator which will be carried out in physical points:

Art. 9. A physical entry point is that point represented by the system/means of fiscal/commercial measurement where, based on the gas transmission contract, the NU hands over and the TSO takes over for transmission through the NTS, natural gas from the adjacent systems.

Art. 14. A physical exit point is that point represented by the system/means of fiscal/commercial measurement where, based on the gas transmission contract, the TSO hands over and the NU takes over natural gas transported through the NTS for handing it over in the adjacent systems/to the DC.

1. According to art. 67, art. 68, art. 69, art. 71³, art. 71⁴, art. 73 referring to the operations of ALLOCATION of quantities taken over by the Transmission System Operator in the entry points and the quantities handed over by the Transmission System Operator in the exit points, which will be carried out in virtual points:

Art 67. (1) In order to perform allocation to the virtual entry points in the NTS from production blocks, each producer shall submit to the TSO, by 10:00 o’clock of the gas day D+1, the following information on deliveries made in the gas day D (…)

(2) During the time interval 10:00-10:30 of the gas day D+1, the TSO shall calculate the quantity of energy for the gas day D, related to each virtual entry point in the NTS, based on information referred to in para. (1).

Art. Art 68. In order to perform allocation to the virtual entry points in the NTS from storage facilities, each SO shall submit to the TSO, by 10:00 o’clock of the gas day D+1, the following information on deliveries made in the gas day D.

Art. 69. (1) In order to perform allocation in the NTS entry points Isaccea (UA-RO) and Mediesu Aurit (UA-RO), the TSO shall display in the information platform, on the day D+1, by 10:00 o’clock, the following information:

(2) In the time interval 10:00-10:30 of the gas day D+1, the TSO shall perform the following operations:

1. a) calculate the quantity of energy related to the virtual interconnection point, consisting of the two entry points in the NTS referred to in para. (1), based on information referred to in the same paragraph;

Art. 71³ (1) The DO shall perform allocation on each NU and/or each NU partner that is in a contractual relationship with the DO, for deliveries operated through the own distribution networks based on information submitted by the TSO to the DO in accordance with the provisions of

Art. 71⁴ In order to carry out the allocation process performed by the TSO, the DO have the obligation to submit to the TSO, on day D+1, by 14:00 o’clock, information regarding the quantities allocated on day D t each NU and/or the NU partner that is in a contractual relationship with the DO, in accordance with the provisions of art. 37 para. (2), separately mentioning the quantities allocated based on daily reading at end-customers and quantities allocated based on consumption profiles. The DO is required to submit to the NU or NU partners which are in a contractual relationship with the DO the consumption broken down at customer level, given the daily allocation.

Note: Given that each DO is defined in the Network Code as a virtual point (see ANNEX No. 11 of the Network Code – The List of component virtual points and physical points), in this case the person who wrote the text of the code, undertaken by the Regulator, did not consider useful to provide in art. 71⁴ that allocation is made on virtual point. At the same time, art. 71⁴ does not mention exit points, the Distribution Operator having the obligation to make the allocation only on NU.

 Art. 73. (1) In order to perform allocation at the virtual exit points from the NTS to storage facilities, each TSO shall submit to the SO, by 12:00 o’clock of the gas day D+1, the following information on deliveries made in the gas day D

In my opinion, in drafting the Network Code, the person who designed the text, approved by the regulatory authority, felt the need to make a general formulation with regard to entry/exit points to/from the NTS at the level of other operations defined in other articles (art. 30, art. 50, art. 51, art. 65 etc.), due to the fact that these operations are complex, carried out at the level of physical point and/or virtual point (summing, correlations). Thus, in my opinion, the person who drafted the text, undertaken by the regulatory authority, did not want to formulate in a repetitive manner the article, once at the level of the physical point and once at the level of the virtual point.

Thus, according to:

Art. 30 Capacity booking is made in the entry points in the NTS and in the exit points from the NTS, in energy units.

Art. 50 Each nomination received from a NU is analyzed by the TSO for verification:

1. a) whether the quantities nominated in each entry and exit point into/from the NTS match the capacity booked by the NU in the respective points;
2. b) of equality between the quantities nominated in the entry points in the NTS and the quantities nominated in the exit points from the NTS.

Art. 51 (1) In the event where the gas quantity nominated by the NU in an entry/exit point to/from the NTS exceeds the capacity booked by that NU in the respective point, the TSO shall verify whether the sum of gas quantities nominated by all NU in that entry/exit point to/from the NTS matches its technical capacity and:

1. a) supplements the capacity booked by the respective NU in that entry/exit point to the level of the quantity nominated, if the sum of gas quantities nominated by all NU in the respective entry/exit point to/from the NTS matches its technical capacity, respectively;
2. b) supplements the capacity booked by the respective NU in that entry/exit point to the level of the quantity resulting from the application of the pro rata principle with the capacities booked on the gas quantities related to all NU whose nominations exceed the capacities booked by them in the respective point.

(2) Nominations/renominations sent by a NU exceeding the capacity booked are recorded by the TSO only if they fall within the available technical capacity.

(3) Supplementing, under the conditions provided for in para. (1), the booked capacity is mandatory for NU and TSO for day D. NU may not give up that additional daily capacity, once the TSO has approved a nomination that exceeds the capacity booked by the NU on a virtual entry/exit point to/from the NTS.

(4) For the additional capacity resulting under para. 91), the tariff charged is the capacity booking tariff for the provision of the firm transmission service per day, in force on the date of approval of the nomination.

Art. 65 Allocation represents the designation by the TSO for each NU of gas quantities, expressed in energy units, in the entry/exit points to/from the NTS, according to the provisions of the Network Code.

2. The correctness of the allocation of the gas quantities entering/exiting the National Transmission System according to the Network Code approved by ANRE Order no. 16/2013 with further amendments and additions, in the conduct of the commercial relationship between the TSO and the Network Users

Until 30 September 2018, the Network Code defined allocation in para. 2, art. 6 as the designation, by the operators of adjacent systems, or as the case may be, by the TSO, of the gas quantities for the NU, expressed in energy units, in the entry and exit points, according to the Network Code.

Later, in the Network Code there were several articles regulating for the various types of entry/exit points to/from the NTS the allocation of quantities for each NU.

1. For the type of entry points in production blocks, the Network Code clearly established that at the level of these points of the NTS ALLOCATION IS MADE ON VIRTUAL POINTS, as it results from art. 67 (1). In order to perform allocation at the virtual entry points to the NTS from production blocks, each producer sends to the TSO, by 10:00 o’clock of the gas day D+1, the following information on deliveries made on the gas day D (…) (2) In the time interval 10:00 – 10:00 of the gas day D+1, the TSO calculates the energy quantity for the gas day D related to each virtual entry point to the NTS, based on information referred to in para. (1).

Thus, I believe art. 67 of the Network Code was violated when allocation was made on entry points from production blocks for Network Users, thus the elements underlying the calculation of capacity overrun, imbalances and even invoicing of services based on these allocations being incorrect.

2. For the type of entry points from the storage facilities the Network Code clearly established that at the level of these points of the NTS, ALLOCATION IS MADE ON VIRTUAL POINTS, as it results from Art 68 In order to perform allocation to the virtual entry points in the NTS from storage facilities, each SO shall submit to the TSO, by 10:00 o’clock of the gas day D+1, the following information on deliveries made in the gas day D.

Thus, I believe art. 68 of the Network Code was violated when allocation was made on entry points from the storage facilities for Network Users, thus the elements underlying the calculation of capacity overrun, imbalances and even invoicing of services based on these allocations being incorrect.

3. For the type of entry points from import from the Russian Federation, the Network Code clearly established that at the level of these points of the NTS ALLOCATION IS MADE ON VIRTUAL POINTS, as it results from art. 69 1) In order to perform allocation in the NTS entry points Isaccea (UA-RO) and Mediesu Aurit (UA-RO), the TSO shall display in the information platform, on the day D+1, by 10:00 o’clock, the following information: (2) In the time interval 10:00-10:30 of the gas day D+1, the TSO shall perform the following operations: a) calculate the quantity of energy related to the virtual interconnection point, consisting of the two entry points in the NTS referred to in para. (1), based on information referred to in the same paragraph;

Thus, I believe art. 69 of the Network Code was violated when allocation was made on entry points from import from the Russian Federation for Network Users, thus the elements underlying the calculation of capacity overrun, imbalances and even invoicing of services based on these allocations being incorrect.

4. For the type of exit points to distribution operators the Network Code clearly established that at the level of these points of the NTS, ALLOCATION IS MADE ON VIRTUAL POINTS, as it results from art. 71³The DO shall perform allocation on each NU and/or each NU partner that is in a contractual relationship with the DO, for deliveries operated through the own distribution networks based on information submitted by the TSO to the DO in accordance with the provisions of

Note: Given that each DO is defined in the Network Code as a virtual point (see ANNEX No. 11 of the Network Code – The List of component virtual points and physical points), in this case the person who wrote the text, approved by the Regulator, did not consider useful to provide in the respective article that allocation is made on virtual point. At the same time, art. 71³ does not mention exit points, the Distribution Operator having the obligation to make the allocation only on NU.

Thus, I believe art. 71³ of the Network Code was violated when allocation was made on exit points from the storage facilities for Network Users, thus the elements underlying the calculation of capacity overrun, imbalances and even invoicing of services based on these allocations being incorrect.

5. For the type of exit points to storage facilities the Network Code clearly established that at the level of these points of the NTS, ALLOCATION IS MADE ON VIRTUAL POINTS, as it results from Art. 73 In order to perform allocation at the virtual exit points from the NTS to storage facilities, each TSO shall submit to the SO, by 12:00 o’clock of the gas day D+1, the following information on deliveries made in the gas day D

Thus, I believe that the TSO violated art. 73 of the Network Code, when it made the allocation on exit points to storage facilities for Network Users, thus the elements underlying the calculation of capacity overrun, imbalances and even invoicing of services based on these allocations being incorrect. In conclusion, in my opinion the allocation of quantities entering/exiting the NTS, according to the Network Code approved by ANRE Order no. 16/2013, had to be made exclusively on virtual points, no method to allocate the gas quantities at the level of physical points being established in the Network Code.

The interpretation of the notion “type of points” in art. 99 (For each gas day and each type of entry/exit points to/from the NTS where the NU exceeded the capacity booked, the NU will pay to the TSO a tariff for exceeding the capacity booked) referring to physical points is in my opinion a mistake, as the Network Code is explicit in its content and establishes that allocation is exclusively made on virtual points, even providing details on how this allocation is made individually on each TYPE OF POINTS.

Thus, the Network Code validated the existence of the following:

1. a) TYPES OF ENTRY POINTS TO THE NTS:

– entry points from production blocks (the quantity to be invoiced is determined according to the allocation method referred to in art. 67 on virtual points)

– entry points from storage facilities (the quantity to be invoiced is determined according to the allocation method referred to in art. 68 on virtual points)

– entry points from import (the quantity to be invoiced is determined according to the allocation method referred to in art. 69 on virtual points)

1. b) TYPES OF EXIT POINTS FROM THE NTS:

– exit points to distribution operators (the quantity to be invoiced is determined according to the allocation method referred to in art. 71 on virtual points)

– exit points to Direct Consumers (the quantity to be invoiced is determined according to the allocation method referred to in art. 72 on virtual points)

– exit points to storage facilities (the quantity to be invoiced is determined according to the allocation method referred to in art. 73 on virtual points)

We started this analysis as the provisions of the New Network Code, in force as of 1 October 2018, brings again to the fore the two types of physical and virtual points, leaving again room for interpretations, which in the past have caused penalties of hundreds of thousands of RON, applied in our opinion unfairly and which were paid exclusively by end-consumers, of which a large part were household consumers.

Translation from Romanian by Romaniascout.

Image courtesy of graur codrin at FreeDigitalPhotos.net