Background and Process Legal requirements on transmission tariffs De-coupled entry-exit systems No distinction between domestic transport and transit Qualitative requirements (Commission Staff Working Document) KEMA Study 2009 Evaluation of existing differences in the methodologies for gas transmission network tariffs in Europe - Identification of barriers to cross-border trade 17th Madrid Forum invited ERGEG to start preparatory work on the framework guideline on tariffs Preparatory work and analysis of national charging systems by ERGEG since November 2010 5 bilateral meetings with ENTSOG Scoping discussion with the EC 19th Madrid Forum: EC announced that work could be pursued in the context of Commission Guidelines

Main legal requirements Article 41, Gas Directive (2009/73/EC) The NRA shall ensure that TSOs are granted appropriate incentive, over both the short and long term, to increase efficiencies, foster market integration and security of supply and support the related research activities. Article 13, Gas Regulation (EC) 715/2009: Transmission tariffs or methodologies Shall facilitate efficient gas trade and competition, while at the same time avoiding cross-subsidies between network users and providing incentives for investment Reflect the actual costs incurred Tariffs may also be determined through market-based arrangements, such as auctions, provided that such arrangements and the revenues arising from them are approved by the NRA.

Identification of problems Tariffs can act as barriers to efficient gas trade and competition Premium on short-term capacity products allocated with a short lead time may frustrate arbitrage flows and price convergence Need to assess the relation between prices for short term and long term capacity products and the risks associated to optimization strategies by shippers Pricing of interruptible and non-physical backhaul capacity Need to find a proper balance between facilitating short term gas trading and providing long term signals for covering costs and promoting efficient investments Cross subsidies between cross-border and domestic network usage Cross subsidies within a market and Cross subsidies between two adjacent markets  Cost-reflectivity as a background principle

Identification of objectives Objective 1: Harmonized transmission tariff structures shall facilitate efficient gas trade and competition Objective 2: Harmonized transmission tariff structures shall avoid undue discrimination between cross-border and domestic network usage Objective 3: Harmonized transmission tariff structures shall guarantee recovery of allowed revenues associated to cross-border interconnection points Objective 4: Harmonized transmission tariff structures shall provide incentives for new and efficient investments  relation with the Energy Infrastructure Package  Work on the Gas Target Model, FG CAM and Balancing to be taken into account in the Tariff FG development process.

Cross-border interconnection points Proposed scope Cross-border interconnection points IPs between two or more Member States as well as IPs between adjacent entry-exit-systems within the same Member State IPs to LNG and storage facilities may be included, if relevant for market integration and the contribution to non-discrimination, effective competition and the efficient functioning of the market Contribute to recovering the allowed revenues (associated to interconnection points) However, detailed rules for the determination of costs (or allowed revenues) are not within the scope

Discussions on the Initial Impact Assessment Define a cost allocation methodology Avoid undue discrimination between cross-border and domestic network usage Mitigate the risk of pancaking Recovery of allowed revenues Deal with over-recovery and under-recovery of allowed revenues Setting of reserve prices For short term products  effects on TSOs ability to recover allowed revenues For interruptible and backhaul capacity Split of auction revenues between TSOs for bundled capacity products

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