7 th IG Meeting GRI SSE GRI SouthEast

7 th IG Meeting, GRI SSE GRI South-East Region Milano, Italy, 26 March 2010

1. Agenda Topics Rapporteur Arrival and registration 1. Opening - Approval of the agenda - Approval of minutes of the 7 th SG meeting - Review of action points & new structure 2. Updates 3. Guidelines for CAM & CMP & Next steps 4. Mercados Recommendations & Work Programme 2010 -2011 5. GRI SSE Position on Cost Allocation 7 th IG Meeting, Milan, Italy, 26 March 2010 Co-chairs Co-chairs 2

1. Agenda Topics Rapporteur 6. IP Arnoldstein/Tarvisio 7. Status IPAs at other IPs 8. Practical questions on OBA Implementation (IP Baumgarten: OMV Gas, TAG, BOG and eustream) AEEG 9. Update on who joined the Transparency Platform 10. Ao. B GTE+ 7 th IG Meeting, Milan, Italy, 26 March 2010 TSOs BOG 3

1. b) Approval of minutes of 7 th SG meeting in Vienna http: //www. energyregulators. eu/portal/page/portal/EER_HOME/EER_INITIATIV ES/GRI/South_East/Meetings 1/SG_meetings/7 supths up%20 SSE%20 SG/AD 7 th IG Meeting, Milan, Italy, 26 March 2010 4

1. c) Review of Action Points New Format for monitoring of progress Action Description Who When Due Status A-09041605 Discussion on how to allocate costs for reverse flow investments affected TSOs and NRAs October 2009 Completed A-09041607 Update: IPAs at other IPs TSOs A-09062601 Capacity and congestion management – identification of priority issues for harmonization at regional level TSOs 7 th IG Meeting, Milan, Italy, 26 March 2010 Ongoing Next meeting Ongoing 5

2. Updates by country 7 th IG Meeting, Milan, Italy, 26 March 2010 6

3. Way Forward CAM and CMP Framework Guideline on capacity allocation • May 2010: Publication of evaluation of responses and revised Framework Guideline Recommendations on comitology guidelines for congestion management • Stakeholders are invited to comment on CMP comitology guidelines by 31 March 2010 • Revision of Guidelines and submission to the European Commission by June 2010 7 th IG Meeting, Milan, Italy, 26 March 2010 10

4. Mercados - Weaknesses 7 th IG Meeting, Milan, Italy, 26 March 2010 13

4. Mercados - Recommendations 7 th IG Meeting, Milan, Italy, 26 March 2010 14

4. Work Programme 1. Regional Wholesale Trading 2. Market Integration 3. Transparency 7 th IG Meeting, Milan, Italy, 26 March 2010 15

4. Regional Wholesale Trading GRI-SSE-RWT-1: Trading Points • facilitation of access to the virtual trading point for the gas market South-East • national consumer markets and transit market should be technically and administratively merged • national trading points to be established • Entry/Exit Systems to be implemented in all markets of the GRI SSE GRI-SSE- RWT-2: Improvement of Hub-to-Hub Trading • facilitation of Hub-to-Hub Trading • harmonisation between the hubs GRI-SSE- RWT-3: Regional Balancing Services • Common balancing arrangements • Coordination and compensation of imbalances (TSOs coordinate to allow shippers to offset their imbalances in one zone against those in another) • Criteria for the definition of balancing areas 7 th IG Meeting, Milan, Italy, 26 March 2010 16

4. Market Integration GRI-SSE-MI-1: IP Assessment • implementation of an Operational Balancing Agreement • template for reproduction at those Interconnection Points in the SSE GRI-SSE-MI-2: Monitoring of Implementation of OBAs at other IPs GRI-SSE-MI-3: Reverse Flow Investments • Tendering of the projects themselves, and • Cost allocation for the remaining part of the investments GRI-SSE-MI-4: MS’ improvement of Regional Solidarity • GRI SSE RCC to serve as assisting body to development of regional Emergency plans GRI-SSE-MI-5: TSO Regional 10 Year Network Development Plan (2011) • Regional 10 Year Network Development Plan will follow one year after each publication of the Europe-wide plan 7 th IG Meeting, Milan, Italy, 26 March 2010 17

4. Transparency GRI-SSE-T-1: Monitoring of data delivery (GTE+ Transparency Platform) • The RCC will constantly monitor the data quality and completeness provided by the TSOs and encourage TSOs to improve data provision GRI-SSE-T-2: Monitoring of data quality for GSE Platform • The RCC will constantly monitor the data quality and completeness provided by the SSOs. 7 th IG Meeting, Milan, Italy, 26 March 2010 18

Cost recovery mechanisms • No market demand for So. S investments – These investments will not be born by costumers via regular mechanism – New mechanisms needed • New mechanism with ability to cope with different situations – – Small / large investments Reverse flow projects One, two or several countries benefiting from So. S Investment Evolving needs of countries GIE position on cost recovery of infrastructure for So. S

Principles that should be obeyed • Mechanism should apply cross-Europe • Mechanism should be able to cope with evolving requirements of So. S • Cost recovery mechanism should not be limited to reverse flows and take into account all So. S investments • Ultimately, end-users of benefiting countries should fully bear the cost • TSOs should not bear the risk of So. S investment GIE position on cost recovery of infrastructure for So. S

Some suggestions Possibilities for cost recovery mechanisms (no market demand) • Stay as close as possible to current schemes Take into account shippers responsibility for providing gas – consider a public service obligation to contract capacity for non-market events • Investments in So. S are more policy-driven Involve Member States in capacity booking • TSOs book capacity through open season Further refinement needed to cope with involvement of several MS Need full clarity on the mechanism for cost-recovery if two or more MS involved GIE position on cost recovery of infrastructure for So. S

Suggestions for involvement of more than 2 MS Efficiency of Multi-lateral/Regional/European Mechanism: • So. S provider claims costs to a central organism • Central organism claims costs to benefiting countries Precise determination of means needed – further elaboration on mechanism should be done GIE position on cost recovery of infrastructure for So. S

6. IP Arnoldstein / Tarvisio On 10 march 2010 a meeting gathering TAG Gmb. H, SNAM Rete Gas, and AEEG, ECG has been organized to assess the status of the IPA process TAG Gmb. H presented a proposal for an Interconnection Point Agreement (IPA) to SNAM Rete Gas (SRG) to define some technical issues to be tackled. The main argument of the IPA is the Operational Balancing Account (OBA) and the relevant imbalance tolerance. 7 th IG Meeting, Milan, Italy, 26 March 2010 23

6. IP Arnoldstein / Tarvisio SNAM’s preliminary assessment SNAM identified four important issues to be faced to introduce the OBA: • Modify the current practice in use at Italian Customs offices for accounting of imported gas volumes; • Increased SNAM Rete Gas storage capacity needs to manage the differences between nominated and measured volumes; • Possible amendment to be proposed to the Italian Network Code and balancing rules: • Management of the imbalance volumes “nomination/measured” if exceeding a certain tolerance. 7 th IG Meeting, Milan, Italy, 26 March 2010 24

7. Monitoring OBAs at IPs 7 th IG Meeting, Milan, Italy, 26 March 2010 25

GTE Interconnection points – update status (28. 2. 2010)

Survey on TSOs coordination activities at IPs – status as of 28. 2. 2010 28 33 6 27 7 1 4 Legend: 5 26 3 10 13 16 9 11 2 22 23 24 21 OBA 25 18 OBA in preparation 17 29 32 30 34 31 14 27 19 Others

Survey on TSOs coordination activities at IPs Survey on TSOs coordination activities at Ips (status as of 28. 2. 2010) Interconnection point 28 TSO IPA Comments/ Next Steps Hora Svaté Kateřiny NET 4 GAS Wingas Transport Pro Rata/SBA 1 OBA 10/2010 ISO 2003 to be applied in whole chain 9/2010 Lanžhot NET 4 GAS eustream Pro Rata/SBA 2 OBA 10/2010 ISO 2003 to be applied in whole chain 9/2010 Waidhaus NET 4 GAS E. ON/ Gaz de France Pro Rata/SBA 3 OBA 10/2010 ISO 2003 to be applied in whole chain 9/2010 Olbernhau II Wingas Transport NET 4 GAS OBA 4 Hora Svaté Kateřiny Ontras NET 4 GAS OBA 5 Mallnow Eu. Ro. Pol. Gaz S. A. Wingas Transport Pro Rata 6 Lasow (Görlitz) Ontras Gaz System OBA 7 Oberkappel BOG EGT/ GRTgaz Deutschland Gmb. H BS Überackern OMV Gas Wingas Transport OBA 10 Überackern OMV Gas bayernets OBA 11 Griespass Snam Rete Gas Enl /Swissgas Mix 13 Mazara del Vallo TPMC Snam Rete Gas Mix 14 Tarvisio Snam Rete Gas TAG Gmb. H Mix 16 Gorica/Gorizia Geoplinovodi Snam Rete Gas Mix 17 IPA in discussion Murfeld/Ceršak OMV Gas Geoplinovodi OBA 18 Gela Green Stream Network Snam Rete Gas Mix 19 Mosonmagyarovar OMV Gas E. ON/Földgáz OBA 21 Baumgarten OMV Gas eu - stream OBA 22 Baumgarten BOG eu - stream OBA 23 IPA finalised with OBA - Discussions on ISO 2003 started Baumgarten TAG Gmb. H eu - stream OBA 24 Velke Kapusany Nafto. Gaz eu - stream Pro Rata 25 no EU-internal IP Drozdowicze Nafto. Gaz System Mix 26 no EU-internal IP Wysokoje Bieltransgas Gaz System Mix 27 no EU-internal IP Tietierowka Bieltransgas Gaz System Mix 28 Negru Voda Transgaz Bulgartransgaz 29 Malkoclar Bulgartransgaz Botas 30 no EU-internal IP Kula/Sidirokastron Bulgartransgaz DESFA 31 Zidilovo Bulgartransgaz Makpetrol Kondratki Bieltransgas Eu. Ro. Pol. Gaz S. A. Kipoi Botas DESFA 9 IPA in discussion - in parallel, discussions on ISO 2003 32 no EU-internal IP Pro Rata 33 (newly added) 34

8. Practical Implications for Implementation of OBAs A challenging Interconnection Agreement…. . 7 th IG Meeting, Milan, Italy, 26 March 2010 29

Baumgarten-Oberkappel Gasleitungsgesellschaft m. b. H. Nomination and matching at the Interconnection Point Baumgarten: A challenging Interconnection Agreement GRI SSE Implementation Group Meeting 26/03/2010 - Milano

Interconnection Point Agreement is not only about OBAs The IPA states the technical and operational conditions between the adjacent TSOs (EASEE-gas CBP 2005/002 -02): Matching procedures (information exchange) Flow control Impact on the TSOs Impact on shippers + ++ (IT impact) (nomination scheme and schedule) + (OBA steering, operations) Measurement procedures Gas Spec, Min and Max delivery pressure Allocation rules + (operations, losses in TSO) ++ (in particular operation conditions) + (refusal of off-spec gas) + ++ (OBA, Balancing Shipper or pro-rata) Coordination of operation Information exchange Exceptional events ++ + (windows for maintenance and tieins) (limitation of reduction periods) + + (operations, crisis) (consistency between TSOs) GRI SSE – 26. 03. 2010 - p 31

Baumgarten IPA Issues with the matching process: Units and gas day GRI SSE – 26. 03. 2010 - p 32

Two different unit systems, 2 different gas days Slovakia: Sm 3(20°C) – 8. 00 to 8. 00 Austria: k. Wh based on forecasted GCV – 6. 00 to 6. 00. Issues: how to transform slovak nominations (Sm 3/d) in EASEE-gas CBP standard? (k. Wh/h) Solutions: 3 GCV forecast (one for each downstream All TSOs agreed on a common forecast system (OGG, TAG, BOG)) GCV. Based on this GCV, eustream transforms its shipper´s nominations into k. Wh for matching. Transforming Nm 3(15°) into Sm 3(20°) Austrian TSOs provide eustream with the 8. 00 to 8. 00 day vs 6. 00 to 6. 00 Austrian TSOs request their shippers for calculation in Sm 3(20°) as an additional information+ defined k. Wh based on Nm 3(15°) as the reference. 6. 00 to 8. 00 nominations. The „lesser rule“ hourly matching, the 2 h renomination lead time and the OBA between the TSOs allow the compatibility with eustream´s daily matching. GRI SSE – 26. 03. 2010 - p 33

Issues in matching process: Matching the nominations for each shipper pairs GRI SSE – 26. 03. 2010 - p 34

Daily matching process Gas Day D-1 Gas Day D+1 A 6 h 8 h 8 h 10 h 12 h 14 h 16 h 18 h 22 h 24 h 2 h 4 h 6 h 8 h = or ≠ Gas Day D-1 Gas Day D S K 8 h 20 h 8 h GRI SSE – 26. 03. 2010 - p 35 Gas Day D+1 8 h

Hourly matching process Gas Day D-1 Gas Day D+1 A 6 h 8 h 8 h 10 h 12 h 14 h 16 h 18 h 20 h 22 h 24 h 2 h 4 h 6 h 8 h = or ≠ Gas Day D-1 Gas Day D S K 8 h 8 h GRI SSE – 26. 03. 2010 - p 36 Gas Day D+1 8 h

Solution choosen: hourly matching Compatible with EASEE-gas CBP The profiles on the Slovak and Austrian TSO network are relatively „flat“ (transit or compensated domestic) Some shippers on eustream already send an hourly profiled nomination for information. GRI SSE – 26. 03. 2010 - p 37

Impact of the decision Typical transit profile or balancingcompensated domestic profile Hourly matching = + Slovakia Austria + Baumgarten Typical non balancingcompensated end-consumer profile = GRI SSE – 26. 03. 2010 - p 38

Impact of the decision: lesser rule = + Austrian Side Slovak Side Matched • Eustream might „shape“ the incoming flow based on history and compensate small deviations within the dayly balancing mechanism + use the lead time from 6. 00 to 8. 00. GRI SSE – 26. 03. 2010 - p 39

Matching process: Matching between the systems, integration of CEGH trading platform GRI SSE – 26. 03. 2010 - p 40

Possible nominations at the SK/AT border Baumgarten station MS 3 March/Morava: limit of responsibility between the TSOs 2, 3 km Q 2 Q´ 2 WAG ICP BOG Q´ 1 a Q 1 Q´ 1 b OMV ICP OMV Gas MS 1 MS 4 TAG ICP Eustream Flange trading OTC or Gas exchange CEGH trading Combination of CEGH trading Q 3 Q´ 4 TAG MS 2 The CMA has been tasked by the TSOs to check the consistency of all nominations at the SK/AT border, within the technical limits set by the TSOs GRI SSE – 26. 03. 2010 - p 41

Summary: TSO allowed flexibility for trading parties Within the Interconnection Point Agreement Baumgarten the 4 TSOs (eustream, TAG, OGG, BOG) and the CEGH established the procedures : Keeping open both possibilities for trade on the CEGH trading Platform (OTC or exchange) or on the flange. the trading parties can freely determine what is their preferred trading solution. Allowing to compensate the different regimes for balancing and units. These regimes derive on the one hand from the legal framework (authorities and NRA). But also are not independant on the terms of the trade contracts (between trading parties, e. g gas day definition in the trade contract). GRI SSE – 26. 03. 2010 - p 42

8. IPAs with OBAs – Next Steps • NRAs and TSOs could cooperate by forming “Project Teams” in order to discuss given issues and barriers for the implementation at their respective Interconnection Points. • Experience from the IP Baumgarten and, in the future, form the IP Arnoldstein-Tarvisio, as well as other successful implementations, may serve as templates. • The GRI SSE will constantly support and monitor the implementation of Interconnection Point Agreements containing OBAs 7 th IG Meeting, Milan, Italy, 26 March 2010 43

Transparency Plattform SSE TSO Participants Participant as of beginning: • Snam Rete Gas • OMV Gas • NET 4 GAS Participants since last year: • Eustream • Geoplin Plinovodi • FGSZ In a testing phase: • BOG Preparing for participation: • TAG

10. Any other Business Next Meeting Date scheduled for 20 th of May – we propose another date, either for Regional Cooperation & Regional Solidarity or Transparency Group 1. 3 RCCs Date Place 16. Jun/10. Nov Rome/Vienna 2. 3 focus IGs: - SOS 10. Nov 1. 3. 1 SG/IG: - Wholesale Trading and Transparen y 16. & 17. Jun 7 th IG Meeting, Milan, Italy, 26 March 2010 Vienna Rome (rotative venue) 45

Closure Thank you very much! 7 th IG Meeting, Milan, Italy, 26 March 2010 46

Contact Michael Schmöltzer Head of Gas Department E-Control gmb. H +43(0)1 – 24 7 24 / 801 Michael. schmoeltzer@e-control. at www. ceer. org 7 th IG Meeting, Milan, Italy, 26 March 2010 47