1 / 48

EBCC MEETING 27th April 2012

EBCC MEETING 27th April 2012. AGENDA. 1.0 Introduction 2.0 Minutes and Actions 3.0 Operational Update 4.0 Modification Proposals 5.0 Significant Code Review Update 7.0 Presentation of Winter Operations 2011/2012 8.0 Proposed Review of Energy Balancing Credit Rules

slyons
Télécharger la présentation

EBCC MEETING 27th April 2012

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. EBCC MEETING 27th April 2012

  2. AGENDA 1.0 Introduction 2.0 Minutes and Actions 3.0 Operational Update 4.0 Modification Proposals 5.0 Significant Code Review Update 7.0 Presentation of Winter Operations 2011/2012 8.0 Proposed Review of Energy Balancing Credit Rules 9.0 Update Deposit Deed 10.0 Risk Register 11.0 AOB - Lehmans - EU Update - Team Update 12.0 Date of Next Meeting

  3. Operational UpdateMarch 2012

  4. Modification UpdateMarket Operator Mod

  5. Winter Operations Presentation2011/2012

  6. What went well • Emergency EBCC convened in October/November 2011 for River Ter in accordance with Section X 1.2.3. • No Failures reported. • Pro-active engagement with at risk parties and EBCC members. • Review the Credit Framework • Early engagement with Users in relation to MOD 640 Adjustments. • Introduction of AMS Banking and the change of banking arrangements. • Introduction of Non Registrable Deposit Deed

  7. Lessons Learnt • Be more aware of external factors when progressing change. • SCR has delayed progression of Modification 233v • Implementation of Non Registrable Deposit Deed • Give clearly definitive instructions to external stakeholders.

  8. FI Aggregate Limit ReviewApril 2012

  9. Contents • Background • Case for Change • Action Taken • Rating Amendment • Impact • Outlook • Deposit Deeds • Recommendations/Ways Forward • Conclusions • Appendices

  10. Background • In order to provide security for the purposes of Energy Balancing Activities a Financial Institute was required to hold a rating of A1/A+ or above. • In 2011 the global economic climate deteriorate with the downgrading of a number of sovereign economies. • As a result of that downgrading many Financial Institutions were also subject to a downwards rating change.

  11. Background Rating Comparison Table Prior to November 2011: Ratings below A1 and A+ have a zero aggregate limit and are unsuitable for Security.

  12. Case for Change • 28.5% of FIs providing security were downgraded over 6 months. • 26 Users affected in total. • May 2011 - Credit Agricole is downgraded below A1/A+. • September 2011 - Bank of America and Intesa Sanpaolo are downgraded below A1/A+. • October 2011 - National Westminster and Royal Bank of Scotland are downgraded below A1/A+. • November 2011- Barclays Bank is downgraded to A+. % of impact frequency on affected Users

  13. Action Taken • Energy Balancing Credit Rules amended in November 2011. • The rating boundary for the purposes of guaranteeing Security was lowered. • A £25,605,000 aggregate limit became applicable to FIs with a rating of A2/A and A3/A-. • 30 day time limit for Users to find alternative security was extended to 90 days to act as a moratorium.

  14. Rating Amendment Rating Comparison Table Post November 2011: £25,605,000 aggregate limit now includes ratings A2, A3 and A, A-

  15. Impact • Further 8.6%of FIs suffered downgrades from December 2011 without impact to the 3 Users with security in place totalling £7.7 Million. • Currently 26% of FIs are rated below the previous A1/A+ boundary. FI Ratings April 2012 FI Ratings April 2011 5% 26% 26% 52% 43% 48%

  16. Outlook Moody’s Outlook 13% 87% Possible Downgrade 13% Not on Watch 87% S & P’s Outlook 61% 39% 39% Negative 61% Stable

  17. Outlook 0 92,849,000 70,000 45,792,000 26,070,000 214,417,000 158,244,000 32,489,050 0 47,613,000 0 0 Aggregate secured credit by rating band

  18. Outlook • Sovereign creditworthiness is expected to continue deteriorating during 2012. • A number of FIs providing security have interests in high risk areas and will be reviewed by Moody’s for potential downgrade. * Total security held as LOC is £319,376,000

  19. Deposit Deeds • Growing use of deposit deeds. • Success in terms of offering customers an alternate method of security to a LOC. • Removes administration and associated costs involved in obtaining a LOC every year. • Assists rationalisation of accounts. • Users may not be able or wish to hold large amounts of cash.

  20. Recommendations/Ways Forward • Alert customers when FIs are subject to a possible downgrade. • Amend Energy Balancing Credit Rules to include specific conditions on a sliding 90 day time limit for providing alternative security. • Consider further possibilities for Deposit Deeds. • Increase awareness of FIs able to provide security within the new boundary change. • Make customers more aware of alternative security measures.

  21. Conclusions • 28.5% of FIs exceeded their aggregate limit from April 2011 to November 2011 due to downgrades. • Further downgrades are expected during 2012. • Although the economic atmosphere is generally negative the support of central banks makes failures less likely. • Change to rating requirements has maintained a stable risk position and assisted increasing overall spread of risk. • Increasing the aggregate limit is not necessary. • A proactive approach with Users should be explored. • Sliding timescale for providing alternative security necessary

  22. Appendix 1

  23. Appendix 1 Cont.

  24. Appendix 2 Currently a majority of customers rely on a LOC from a FI, although there has been a rise in Deposit Deed registration.

  25. Appendix 3

  26. Energy Balancing Credit RulesProposed Review

  27. Background • The EBCR have been subject to ongoing amendment, however the document has not been reviewed in its entirety for a year. • The appearance and performance of the EBCR is not at full potential. • Users are not making use of the EBCR as intended.

  28. Summary of Findings • Complaints received from potential New Users/Users that calculations are not explained with sufficient clarity. • Formatting is irregular. • Dense text and paragraphs is off-putting to readers. • Difficult to search document/ locate areas of interest. • Key information is not up to date. • Notices overly detailed/unclear.

  29. Case for Change • Text heavy pages are not User friendly. • Individual requirements are not listed in a manner that makes them easy to identify. • Information is repeated unnecessarily.

  30. Case for Change Cont. Information has not been updated Formatting/grammatical errors.

  31. Case for Change Cont. • Explanations of calculations are not clear, particularly to New Users. • No references provided to enable Users to find the information necessary to perform their own calculations.

  32. Case for Change Cont. • Notices are very lengthy. • Level/type of information included can be misunderstood.

  33. Conclusion • EBCR document requires streamlining. • Should be updated in line with Xoserve’s current branding. • Text requires review for amendment/simplification. • Notices should be reviewed for clarification. • Request User Feedback.

  34. Deposit Deed Update

  35. Conclusion • Security is a moving target • Total number of Users 193 • Total Security in place £349,064,500 • Number of Deposit Deeds in place 55 ( £17,845,000) • Number of Letter of Credits in place 112 (£322,162,000) • Cash Deposits still in progress 26 (£9,057,500)

  36. Risk Register Update

  37. Register Part 1 Risk Register as at 26/4/12 :

  38. Register Part 2 Risk Register as at 26/4/12 :

  39. Lehman’s Update

  40. Update • Court Order in the US to reduce and allow claim for the discounted amount of $15,874,398.73 held on 22nd March 2012. Time for appeal has elapsed. • Xoserve are working with NG Legal and Skaddens to finalise a Termination Agreement – This is no longer required. • Working in conjunction with National Grid’s Treasury department to sell the claim.

  41. EU Third Energy PackageUpdate

  42. Background • Collection of three European Regulations and two European Directives. • Aims to create a harmonised market for gas and electricity within the European Union. • Creates a new institutional framework: • Agency for the Cooperation of Energy Regulators (ACER); • the European Transmission System Operators for Gas (ENTSOG); and • the European Transmission System Operators for Electricity (ENTSO-E).

  43. Developing European Network Codes • Development of binding Network Codes across 12 areas is required: • Capacity Allocation Management • Energy Balancing • Tariffs • Interoperability Rules • Trading Rules • Third Party Access • Security and Reliability • Network Connection • Data exchange and Settlement • Operational Procedures in an Emergency • Energy Efficiency • Transparency Rules

  44. Current Position • Draft Network Code for Capacity Allocation Mechanisms was delivered on 06 March 2012 and submitted for review and comitology. • Initial draft Network Code for Balancing submitted for consultation on 13 April 2012. • Scoping documents for Tariffs FG development issued on 08 February 2012, ACER to produce FG based on responses by June 2012. • Draft FG for Interoperability issued for consultation on 16 March 2012, consultation is due to close mid May 2012.

  45. Potential Change • CAM Network Code redefines the Gas Day. • Requirement for capacity to be allocated as ‘Bundled Capacity’ at interconnection points. • Nominations at interconnection points will be a single transaction to nominate for both sides of the connection. • Draft Balancing Code redefines current UNC definitions. • Invoicing methodologies and tariffs possibly amended. • Overriding requirement that national contracts cannot pose undue burdens on New Users.

  46. Potential Impact Areas • Implications for Gemini and invoicing. • Change in Gas Day affects all reliant time periods ie submission of data, scheduling files etc. • External pressures to change existing Credit arrangements.

  47. Way Forward • Ongoing analysis to take place. • EU monitoring to continue. • Maintenance of a Watching Brief.

  48. AOB • AOB • QUESTIONS?

More Related