Trading Region Upgrade Service
Pilotphase 2018/2019
Description
The Trading Region Upgrade (TRU) service was designed and marketed by the Austrian and Czech Transmission System Operators Gas Connect Austria (GCA) and NET4GAS (N4G) in order to connect the Austrian and the Czech gas markets directly. As of 01 October 2018, 06:00 CE(S)T, TRU gave the network users who succeeded in the TRU auction the right to send an exit nomination from the Czech market area, which was immediately matched with entry into the Austrian Market Area East, and vice versa.
The commercial framework of the TRU one-year pilot phase was designed as follows:
| Direction | From Austria to the Czech Republic and vice versa |
|---|---|
| Service runtime | From 01 October 2018 until 01 October 2019 |
| Auction capacity | Maximum 112,868 kWh/h |
| Product runtimes | Yearly, Quarterly, Monthly & Daily |
| Yearly tariff (from the Czech Republic to Austria) | 3,818.06 CZK/MWh/d/a1 + variable fee of 0.003 x CNCG2 |
| Yearly tariff (from Austria to the Czech Republic) | 7.27 EUR/kWh/h/a |
| Auction mechanism | Uniform price algorithm |
| Auction form | Paper based yearly, quarterly and monthly auctions Day-ahead products offered at PRISMA from 31 October 2018 |
1Equal to approximately 3.593 EUR/kWh/h/a using a 25.5 EUR/CZK exchange rate.
2 CNCG = value of the “End of Day Price” at EEX for the following gas day D+1 product for the NCG zone on the current day D
Market demand & auction results
The TRU service was first offered as a yearly service with a quantity of 112,686 kWh/h, out of which 90,000 kWh/h was sold in the direction from the Czech Republic to Austria. The volume was sold at a premium of 9.9 % to the reserve price.
Further, the TRU service was also offered at quarterly auctions. In the first TRU quarterly auction, shippers submitted binding bids for the second and third calendar quarters of 2019 for the direction from the Czech Republic to Austria. The TRU service from the Czech Republic to Austria was sold out in Q2 2019 and Q3 2019 with a significant auction premium of approximately 6.9%.
Both prior to the auction, as well as after the yearly auction, GCA and N4G received feedback from the shippers that they were very interested in higher volumes and shorter product runtimes. Unfortunately, there was very limited TRU capacity left for a short-term period after the yearly and first quarterly auctions. In fact, the volumes were so minor that they were not commercially interesting for the shippers (e.g. the administrative cost of booking the minor volumes far exceeded the potential profits). Nevertheless, GCA and N4G tested out the operations of short-term booking proceedings and offered the remaining capacity through an automated TRU daily auction via the PRISMA booking platform starting 31 October 2018.
The following table gives an overview of the TRU bookings by product runtimes and direction. For better comparability, the booked hourly flow rates per product runtime were converted into MWh volume units, meaning the contracted hourly flow rate times the number of hours during which the transportation service was contracted.
| Expressed in MWh | TRU CZ > AT | TRU AT > CZ |
|---|---|---|
| Yearly product | 788,400 | 0 |
| Quarterly product | 96,624 | 0 |
| Monthly product | 0 | 0 |
| Daily product | 0 | 0 |
| Unsold | 96,096 | 981,120 |
| Total project volume | 981,120 | 981,120 |
Utilisation rate
Throughout the pilot phase, the daily TRU utilisation rate amounted to 80% on average. On a daily perspective, TRU has been used on 303 calendar days. The following chart shows the utilisation rate of TRU during the pilot phase. The dark blue line represents the contracted TRU amount, which is equivalent to the maximum utilisation rate of 100%. The light blue line shows the average daily utilisation rate per month.
Conclusion
The market response to TRU has confirmed great interest in cross-border capacity between the Czech Republic and Austria. Despite the clear focus of the shippers on short-term capacity products (daily and monthly), NET4GAS received bids even in the yearly auction already exceeding the total capacity offered by 2.5 times (290,000 kWh/h/y). From an operational perspective, the TRU service also worked flawlessly.
Despite the positive assessment of TRU, marketing of the TRU product is currently suspended as no new arrangements have been agreed by the relevant parties in the Czech Republic, Slovakia and Austria.
What are the benefits for TRU customers?
- TRU facilitates cross-border transmission and access to both market areas
- TRU simplifies transactions, i.a. through establishing a One Stop Shop
- TRU reduces transaction costs
- TRU increases trading flexibility
- TRU mitigates potential risks as regards capacities and allocation by the combination of necessary separate capacities into one booking procedure
Further general information on the TRU service are available in the TRU Information Sheet (issued before the yearly auction).
Please be informed that for the purpose of fulfilling reporting obligations, in particular according to paragraph 14 number 2 of the Austrian gas monitoring ordinance 2017 ("Gas-Monitoring-Verordnung 2017"), TRU users were asked to use the Baumgarten WAG point.
TRU in the direction from the Czech Republic to Austria was marketed by NET4GAS (detailed information can be found here).
For any other questions you may have about TRU service and the auction procedure, please do not hesitate to contact us or NET4GAS:
NET4GAS
Client & Contract Management team
+ 420 220 224 584
+ 420 220 225 329
+ 420 220 225 350
+ 420 220 225 370
capacitybooking@net4gas.cz