The 7th Gas Network Code in Romania

There have been many experiments with the implementation of Network Codes in Romania, each of them failing. It is important to mention that these experiences have resulted in costs of millions of euros, with consultants, measuring equipment, computer platforms, computer technology etc., which will reflect again in the pockets of end-consumers. I estimate that within 10 years from the introduction of the Network Code, in order to ensure gas supply to end-consumers and reduce expenses (i.e. the price to end-consumers), over EUR 50mln (around EUR 0.5mln/year) were spent with the implementation of this Code. Added to this amount are the costs with imbalances, due primarily to how the Network Code was written, costs of around EUR 0.1mln/year. These costs resulted in an increase in prices to consumers. This, in the situation in which Natural Gas Crises occur every winter, as they did 10 years ago.

Copying the Code from a Western European country will not solve the problem in Romania. It is worth mentioning that the European Union launches Directives and does not impose a law for all countries, understanding the impossibility to apply it, due to the multiple particularities existing in each of them.

The Intelligent Energy Association has presented a year ago the causes of non-functioning of the Network Code, and 20 days ago it organized a Roundtable on the Network Code, resulting in a number of minimum elements necessary to be included in a Functional Network Code (https://asociatiaenergiainteligenta.ro/?p=1131&lang=ro). We believe that some of the points of view issued by the Association have coincided with the principles included in the document posted on the website.

We consider necessary to resume the other elements that have been presented and submit them to analysis in order to be included in the realization of a functional and especially USEFUL Network Code (the elements cut were included in our opinion in the document published on ANRE’s website).

1. Legislative framework antagonistic to the Network Code

• Lack of Distribution Network Codes, UGS Network Code as a set of rules, determining the responsibilities and rights of the parties, as well as the manner in which gas flow continuity must be ensured in the transmission system to the end-consumer, penalties charged or from which the user of the distribution system benefits,
• Lack of other Transmission Network Codes as a set of rules, determining the responsibilities and rights of the parties, as well as the manner in which gas flow continuity must be ensured in the transmission system to others transmission.
• Lack of UGS Network Code as a set of rules, determining the responsibilities and rights of the parties, as well as the manner in which gas flow continuity must be ensured in the transmission system to UGS,
• Lack of the market model, containing clear rules, procedures and instructions in terms of gas trading and interaction of suppliers with shippers (allowing the monitoring of the flow in real time throughout the source-consumer circuit). Among the many elements that should be defined by this document, mechanisms for ensuring the flexibility and instruments for quick access of all participants thereto and the development of cheap systems to guarantee commercial operations are primary,
• Lack of a plan which would define preventive/reactive plans for emergency situations, monitor and intervene according to principles that would not affect the commercial activity

2.Lack of the following principles from the text of the Network Code

• Only the one who makes a mistake pays and only for its act in relation to responsibilities undertaken under contracts with the transmission operator,
• The price of the mistake is the one set by the Romanian market at the time of making the mistake (not before or after the deed).
• Speculative lawful purpose, allowing the apparition of counterparties in the market to punish indolence of certain users
• Commercial balancing, seconded by physical and hydraulic balancing.
• The way in which the transmission operator will pay for its mistakes (failure to meet contractual conditions in terms of making available the booked capacity and ensuring the continuity in supply, if it is due to other network users), in relation to those who make mistakes, the price of the transmission operator’s mistake being also necessary to be determined by the Romanian market at the time of the mistake.

3.Physical configuration of the current NTS and adjacent systems

What is currently named NTS is in fact a mixture of transmission systems: closed (local, of source-consumption type), semi-closed (regional) systems and a “0” transmission system. Thus, rules suitable for the “0” system are not appropriate for the closed or semi-closed systems (differences of technical, hydraulic, operational, functional nature etc.). Moreover, the current code treats systems that do not communicate physically as if they would communicate physically, respectively there is a manipulation of the idea of physical balance in the NTS, but in reality it is only an arithmetic illusion. The Code will be applicable only on a homogeneous system. But re-engineering is required not only for the NTS, but also for the other adjacent systems.

4.Nonexistence of flexibility mechanisms

• Lack of possibility to store gas throughout the year depending on supply and demand, in:

1. underground storage facilities,
2. transmission/distribution pipelines
3. systems placed at consumers

• Lack of introduction of receipt as exchange element or/and as guarantee element
• Stimulating the development in the market of new products ensuring higher flexibility (loaning, parking)

5.IT Platforms

• Lack of platforms for booking/trading in the main and secondary market of:
  1. distribution capacity,
  2. storage capacity
• Lack of sale/nomination/allocation platforms
  1. Distribution services
  2. Storage services
  3. Pipeline storage services
  4. Flexibility services (loaning, parking, limitation of price volatility by stop-limit etc.)
• Lack of system balancing platforms with the existence of at least 5 sub-platforms:
  1. Trade balancing by placing bonds (anticipative)  for the day ahead/intraday
  2. Physical/hydraulic balancing of the system by placing orders (anticipative)  for the day ahead/intraday
  3. Physical/hydraulic balancing of the NTS by placing bonds (anticipative)  for the day ahead/intraday
• Lack of matching platforms, clearing platforms, platforms for tracking bad-payers, for trading gas titles and receipts etc.

The Intelligent Energy Association requests the parties involved in this process to analyze all the implications of launching in the market a new Network Code, in order to prevent the unpleasant experience of the recent years, to realize a set of rules that bring added value and especially to no longer increase, uselessly, the bills to end-consumers.

Translation from Romanian by Romaniascout.