transelectrica - the romanian tso: chalenges and perspectives bogdan popescu-vifor director...

Transelectrica - The Romanian TSO: Chalenges and Perspectives

Bogdan Popescu-ViforDirector Strategy, Planning, Marketing & Sales Transelectrica SAConferinta Energiei in regiunea Marii Negre, Bucuresti, 4.04.2006

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Conferinta Energiei in regiunea Marii Negre, Bucuresti, 4.04.2006Transelectrica

Power Market Structure

Co-generation companies and IPP’s

TSO

Power Exchange

Thermal generators

8 distribution & supply companies

Traders and suppliers

Nuclearelectrica

Hidroelectrica

Transelectrica

OPCOM

T7T2T1

E1 E2 E3 E8

...

…

...

...

Market opening degree

1.07.2005: ~83%

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Mission and responsibility: to ensure the Romanian Power

System’s reliable and stable operations, at high quality standards,

while providing a national electricity market infrastructure and

securing regulated access to the Romanian electricity transmission

network under transparent, non-discriminatory and fair conditions to

all market participants.

Main activities of Transelectrica are:

» Technical and operational management of the Power System, to ensure its safety and stability

» Operation, maintenance and development of its assets

» Planning of the National Power System and transmission network development

» Market administration through its legally independent subsidiary OPCOM

» Management of interconnections and electricity transits with neighbouring countries

» Transelectrica does not trade electricity, except to cover its own transmission losses

Transelectrica’s functions:

Transmission and System Operator for the Romanian Power System;

Balancing Market Operator;

Commercial operator of the electricity market, through OPCOM;

Metering Operator in the wholesale market.

Transelectrica’s roles and responsibilities

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The Romanian Transmission Grid8,800 km of Over Head Lines (OHL) :

154.4 km of 750 kV

4,474.2 km of 400 kV

4,134 km of 220 kV

40 km of 110 kV

79 transforming substations

1 of 750 kV

32 of 400 kV

46 of 220 kV

The total transmission capacity is 22,000 MW

UkraineH

unga

ry

Serbia & Montenegro

Ukraine

Moldova

Bulgaria

Black Sea

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Transelectrica – the TSO

Transelectrica is member of

UCTE

ETSO

SETSO TF

Continuous involvement in

Athens Forum process

ECSEE Development

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Tariffs structure

Three categories of tariffs:

Transmission tariff: covers total network costs, including maintenance and development

System services tariff: covers the costs of the national power system dispatching, including the cost of purchasing ancillary services

Market administration tariff: covers the costs of OPCOM

Determination / adjustment of the transmission tariff

Methodology for setting transmission tariff: starting with 2005 - Revenue – Cap Model

Input data used: regulated asset base, changes in WC, forecast calculation of operational costs, interest expenses and CAPEX submitted by Transelectrica

Tariff reviewed annually in the first regulatory period (2005-2007) and on 5-year periods afterwards. ANRE can make interim adjustments according to the EURO/RON rate.

Tariff adjustments - also triggered by cost deviations over +/- 5% of the assumed level.

6.5% - WACC used by ANRE for the

2006 transmission tariff.

Tariffs: determined by ANRE, based on the Regulated Assets Base mechanism

Tariff for market administration - set under a pass-through logic

Tariff determination methodology

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9.4%

12.5%

7.7%

6.7%

6.4%

6.2%6.0%5.9%

5.9%

4.6%

3.9%

3.6%

3.3%

3.3%

3.1%

3.0%3.0%

2.7% Altii

Hidroelectrica

Electrica Muntenia Sud

Electrica Moldova

Electrica Oltenia

Electrica Muntenia Nord

Electrica Transilvania Sud

Electrica Transilvania Nord

Energy Holding

Electrica Banat

CE Turceni

Electrica Dobrogea

ALRO

CE Rovinari

CE Craiova

Nuclearelectrica

Mittal Steel

Electrocentrale Bucuresti

Electrocentrale Deva

RAAN

The most important clients in 2006

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The Power Market and the System Operation

The Wholesale Market Commercial Code approved by ANRE in 2004 provides for TSO

to running the balancing market to purchasing ancillary services on market-based

procedures

to allocating interconnection capacities on market-based procedures

To awarding green certificates to green energy producers

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Power Market in Romania (2005)

Producers

OPCOM Power Exchange(Physical day-ahead market

Financial derivatives Financial settlement)

Transelectrica

Suppliers

Scheduling

Balancing market

Bids(QuantitiesPrices)


OTCBilateral Contracts

Physical Notifications

Physical Notifications



SPOT PRICE

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Balancing Market

The Balancing Market represents a tool for the TSO to handle:

the unpredictable imbalances between production and consumption as a result of the deviations from the operational program established based on the physical notifications from the market participants, as scheduled according to the other electricity markets (spot market, OTC contracts etc.), forecast imprecision, forced outages, etc.

the system constraints resulted from both the ex-ante trading, on the basis of physical notifications, and in real time.

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OTC Contracts

Trades on the spot

Spot market (Day-ahead

Market)

Balancing Market

Trades on the Balancing Market

hh-111.00 15.00 17.00

DD -1

Bids

Schedules

Bids

time

MW

D+1

The Power Market And System Balancing

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Bids on the Balancing Market

Bids per generating unit, for each hour, up to 10 pairs {Qty/Price}

Same bid used for secondary, fast and slow tertiary regulation

Secondary regulation energy settled at marginal price

Fast and slow tertiary regulation energy settled “pay-as-bid”

Secondary, fast tertiary and slow tertiary reserves contracted and settled separately

Price [lei/MWh

Qty [MWh/h]Qmax0

Set Point according to the Physical Notification

Upward regulationDownward regulation

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Generating Companies and

Dispatchable Consumers

Balancing Responsible Parties

Eligible Consumers

TRANSELECTRICA Transmission & System OperatorBalancing Market

OperatorElectricity

Suppliers & Traders

LEGEND:

Downwards Regulating Power Contracts

Upwards Regulating Power Contracts

Deficit Imbalance Power Contracts

Excess Imbalance Power Contracts

Distribution & Supply

Companies

Generating Companies and

Dispatchable Consumers

Commercial arrangements on the balancing market

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Romanian Experience until now

Complex software needed for

Running the balancing market

Settlement of the balancing market

Settlement of imbalances

Complex metering system needed for

Metered data on the balancing responsible parties’ boundaries

Metered data for the balancing market participants

Defining balancing responsible parties is crucial

Adequate training for all the market participants is highly required

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The Power Market and the System Operation

The Wholesale Market Commercial Code approved by ANRE in 2004 provides for TSO

to running the balancing market

to purchasing ancillary services on market-based procedures

to allocating interconnection capacities on market-based procedures

To awarding green certificates to green energy producers

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Power exchanges on interconnection lines2005 (in MWh)

The transmission, system and market administration services for the imported/exported energy is provided on contractual basis.

The tariffs applied are regulated by ANRE and are the same as on the domestic market.

The only restriction on imported/exported power is the net transfer capacity of the interconnection lines.

Transelectrica aims to participate in the inter-TSO compensation mechanism within the SEE region, facilitating the cross border trades.

[GWh] [GWh]

34

201470

0

0

0

112784

762926

22102

0

0

226246

708000

0

0

0

1183

21860

0

0

194474

1449

281830

30482

(*)

physical flows on interconnection lines for 2005 [MWh]

2010809

Dobrudja

0

0

MOLDAVIA

SERBIA and

MONTENEGRO

774 767436962

17471601 1,469

2,077

3,2903,0462938

4517

Import Export

2000 20012002 20032004 2005

Cross – Border Transmission

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Rationals for capacity allocation

Directive 2003/54 on Internal Energy Market

EC Regulation 1228/2003 on Congestion management and Cross-border trading

Congestion management should be performed with market-based solutions

Explicit and implicit auctions are the only market-based ways to allocate the capacity

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Agreements with the Neighbouring TSOs

Memoranda concluded with MAVIR Rt, NEK EAD si EMS for:

NTC, ATC evaluation and convening

50:50 sharing of allocation responsibility on each direction

Explicit auction on each border on the Romanian side

Exceptions:

Ukraine: Agreement still to be negotiated with Ukrenergo

Moldova: Power imports and exports possible only in pasive islands and radial operation

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Explicit Auctions Procedure

Registration of auction participants: Any market participant intending to take part in Cross-Border Auctions have to fulfil the following preconditions:

Hold a valid license from ANRE (for all applying parties from Romania)

Provide ETSO Identification Code (EIC)

Be assigned to a Balance Responsible Party

ATC Allocation Procedure aproved by ANRE and published on the web site www.ope.ro

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ATC Auction: Standard Bid

Bids per cross-border interface and direction, same for each hour of the auction period, up to 10 pairs {Qty/Price}

Price [lei/MWh

Qty [MW]0

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ATC Auction: Standard Merit Order (1)

Price [lei/MWh

Qty [MW]0

ATC Value

Auction Price

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ATC Auction: Standard Merit Order (2)

Price [lei/MWh

0ATC Value

Auction Price

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Romanian Experience until now

There is a need for all TSOs involved to use a common agreed procedure to calculate the NTC values

Auctioning process unification on each border might be more adequate

Requires bilateral agreements between TSOs

Requires regulatory agreement and aproval on the both sides

Flow-based coordinated explicit auction at regional level could be a better solution.

Day-ahead implicit auctions on the spot market could enhance the usage degree of the cross-border lines

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Conclusions

Romania achieved steps forward in terms of:

Transmission network development

Market mechanisms implementation with

Internal and

Regional perspective

Romania is ready to share its expertise

transelectrica - the romanian tso: chalenges and perspectives bogdan popescu-vifor director...

Documents

transelectrica tariff

tso transelectrica

system operator

regiunea marii negre

wholesale market

market participants

romanian transmission

romanian tso