GRI North West – RCC Meeting on 28 August

Day Ahead – status and legal issues Background Day Ahead pilot project was launched within the ERGEG Regional Initiative in 2006 Aim: Better use of existing capacity – improved liquidity – introduce market based trading of capacity (auctioning) Sale of primary interruptible capacity + secondary firm capacity Sale at two selected Interconnectors: BOS and Ellund Sale via online trading platforms

Day Ahead – status and legal issues Status today Trading went live in mid-may 2008 at BOS after many delays and pending problems (policy paper to RCC) Focus is now on getting trading possible at the Ellund IP Energinet.dk has again rejoined the project Energinet.dk met in June with DONG Energy Pipeline to discuss contract needs (TSOs, shippers, platforms). Contract from BEB (also used by DEP) to serve as model and to be adapted to Energinet.dk rules IT not discussed (BEB has major role and was not present) NB: Gasunie Deutschland has just taken over BEB Gastransport – but has confirmed that this will not affect their participation in the pilot Energinet.dk will meet with APX on September 11 Plenum meeting in Copenhagen on 12 September to bring project forward )

Day Ahead – status and legal issues trac-x - trading 36 shippers registered as participants on the DA trading (15 guests) Daily capacity offers at BOS as EGT entry/exit capacity in lots of 10,000 to 100,000 kWh/ as auction procedure Up till August 20, there was a total offer of 14,865 MWh/h on the platform But no actual trading so far ! EFET and working group has to find out what is hampering trade ! trac-x – other Contracts in place with EGT, Wingas and BEB. Important to get contract with GTS in place to offer trading on both sides Will start contract negotiations with Energinet.dk and DEP within a short time

Day Ahead – status and legal issues APX - trading Trading opened on 14 May trading members have completed signing up process for BOS trading 3 of the 5 members have posted orders for products GTS exit to BEB/E.ON and GTS entry from E.ON So far only one trade for 30 MW (GTS exit to BEB) has been concluded ! APX – other Feedback from members: GTS fee is too high and trading window too short Bundled products + products of longer duration (month) would help But members welcome the project and are observing possibilities

Day Ahead – status and legal issues Legal issues (paper)

Day Ahead – status and legal issues Regulation 1775/2005 Article 3: Member States may decide that tariffs may also be determined through market- based arrangements such as auctions, provided that such arrangements and the revenues arising therefrom are approved by the regulatory authority. Article 5 (2): Transmission system operators shall implement and publish non-discriminatory and transparent capacity allocation mechanisms, which shall: [a…] (b) be compatible with the market mechanisms including spot markets and trading hubs, while being flexible and capable of adapting to evolving market circumstances. EU legislation therefore allows market based auctioning of capacity…

Day Ahead – status and legal issues However…there are legal barriers in national legislation The legal barriers are identified by the legal taskforce in the legal issues paper: In several countries, primary capacity has to be sold by FCFS The scope of the pilot is therefore now limited to secondary capacity There are also legal bottlenecks in terms of secondary capacity (a single common platform) (prices not significantly higher than primary capacity) The legal bottlenecks have not been discussed at recent meetings – where focus has been on market issues and technical issues There has been reassurance (see also annex) earlier that the bottlenecks should not interfere with the pilot However, the pilot should expand and endure - therefore, the legal bottlenecks are still a serious problem and should be addressed by the proper institutions This is also relevant in light of the CAM/CMP work in general

Day Ahead – status and legal issues Additionally: APX has asked the Commission about the admissibility of the national “one single platform” requirement in a European legal context The Commission has yet to respond

Day Ahead – status and legal issues Way Forward Short and medium-term Get trading going at BOS Get Ellund live and running Work to remove (4) immediate barriers as noted in Policy Paper to RCC (gate closure time – reselling – contract numbers – GTS’ trading fee) Long-term Introduce new products – e.g. month-ahead – to meet market demand Work to remove legal barriers to allow pilot to endure and develop Extend project to new interconnection points