Electricity Trading via Interconnectors up for Discussion

OFREG today published a consultation paper on trading arrangements for electricity via the Moyle and North/South Interconnectors

Electricity Regulator, Douglas McIldoon said that he was aiming to use the consultation process to produce an open, transparent and competitive Moyle and North/South Interconnector trading model for access, allocation and transmission pricing which will take account of the new trading environment brought about by the Moyle Interconnector.

“This new environment will see Northern Ireland and hence the Republic of Ireland, connected to GB for the first time with Northern Ireland becoming one of the most open systems in Europe in terms of total interconnector capacity as a % of maximum demand.”

“I am now seeking views in order to develop a model for Moyle and North/South Interconnector trading from 1 April 2002 that can be continuously developed to meet the ever changing needs of the market,” said Mr McIldoon.

Comments on the views contained in the paper “Moyle and North/South Interconnectors – Trading Arrangements from 1 April 2002” are sought from the industry and other interested parties by Tuesday 31 July 2001 and responses should be made to Emma Magill at OFREG or via e-mail: emma.magill@ofregni.gov.uk

For further information or to arrange an interview with Douglas McIldoon, please contact Nick Carson on 028 9127 5965 or 07711 482807

Notes

1. North/South Interconnector

Prior to 1 April 2002

The main N/S Interconnector currently has a theoretical available transfer capacity of 330MW although not all of this is currently available for trading. Investments are scheduled which will strengthen the theoretical capacity of the main N/S Interconnector to 660MW. In addition, the two present standby connections to the West are being upgraded to become full system interconnectors each with a capacity of 125MW. For the purposes of this paper Ofreg are considering all North/South interconnections as a single entity for trading purposes.

Interconnector trading has been under way between the two electricity systems in Ireland since the restoration of the N/S Interconnector in 1995. Until February 2000 the N/S Interconnector had been used mainly for providing mutual support for the two electricity systems and limited trading between the utilities.

In February 2000, with both the Northern Ireland (NI) and Republic of Ireland (RoI) electricity markets open to competition the potential increased for the two parts of the island to benefit from cross-border trade via the N/S Interconnector. Ofreg and the RoI regulatory body, the Commission for Electricity Regulation (CER) agreed interim interconnector trading arrangements in order to adopt a harmonised approach with third party access capacity allocated by auction.

The N/S Interconnector export capacity rights for 100MW capacity from February 2000 to March 2001were awarded via an auction. A reserve price of £100/MW per month was set with capacity allocated in 1MW tranches. The N/S export capacity rights from April 2001 to March 2002 were auctioned on similar terms as before with 120MW now being made available.

2. Moyle Interconnector

Prior to 1 April 2002

The Moyle Interconnector, with a capacity of 500MW has been developed as a strategic infrastructure project to link the previously isolated NI electricity system to the systems of Great Britain (GB) and the European mainland. The potential benefits of access to these larger systems for the NI electricity consumer include downward pressure on electricity prices from increased competition in generation along with enhanced security and diversity of supply.

NIE Power Procurement Business (PPB) has contracted with Scottish Power (SP) for an amount of energy equalling an average 125MW of the 500MW capacity. This Electricity Supply Agreement (for a period of 70 months from the date of commissioning) will leave the remaining capacity available for use by third parties on a non-discriminatory basis.

It is anticipated that the Moyle Interconnector will be available for use for trading from 1 January 2002. For the first 3 months of operation up until 31 March 2002 a simplified form of access and allocation has been adopted. The practical ATC for this period has been determined as 300MW with 175MW of capacity being auctioned to third parties. Capacity has been allocated in tranches of 5MW with a reserve price of £1,000/MW per month, pay as bid. PPB will pay this reserve price for it’s 125MW of reserved capacity for the first 3 months of 2002.