2nd IG Meeting – Region South-South East 5th July 2007, Krakow, Poland

2 Agenda

3 Implementation Task Forces Implementation TFResponsibleResult until Best-practice standardised bulletin board - RCC: TOR - TSOs - Next steps End June/ beginning of July Summary of planned investments in the region (incl. Storage) - RCC: TOR - ECG: Survey results - TSOs & SSOs - Next steps End June/ beginning of July Removing remaining obstacles to implementation of IPA/OBA - RCC: TOR - TSOs - Next steps End June/ beginning of July Best practice provision of OSS service - RCC : TOR - TSOs - Next steps End June/ beginning of July REETS - RCC : TOR - AEEG - Next steps End June/ beginning of July Hub development as regional balancing market - RCC TOR - CEGH, PSV - EFET, Eurelectric - Next steps End June/ beginning of July

Gas Regional Initiative South-South East Contribution by TSOs Milano Tasks 5 July 2007, Krakow, Poland

Contribution by TSOs

Participating TSOs Geoplin Plinovodi OMV Gas GmbH RWE Transgas Net Snam Rete Gas SPP-preprava Trans Austria Gasleitung GmbH

Best practice: Standardised bulletin board Summary of planned investments in the region (excl. storage) Planned investments regarding storage should be presented by SSOs as TSOs may not be aware of them Removing remaining obstacles to implementation of IPA/OBA Best practice: Provision of one-stop-shop (OSS) service Milano Tasks - Contribution by TSOs

TSOs discussed all topics identified as areas for further work TSOs Met on 18 May in Prague TSOs’ understanding of the Milano tasks was very different from the contents given in the Terms of Reference sent on 23 May by Mr. Rieser /on 24 May by REM SSE Co-Chairs The given Terms of Reference seem to go well beyond what was said in Milano

9 Agenda

10 Best-practice standardised bulletin board  Why necessary  Regulation 1775/2005/EC Art. 8: “Each transmission system operator shall take reasonable steps to allow capacity rights to be freely tradable and to facilitate such trade.”  Quote from Explanatory Notes (Reg. 1775/2005/EC) “TSOs should be obliged to publish the offer of secondary capacity when requested by the seller. The TSOs should be urged to organise a bulletin board where this is not organised in another market place.“  RCC’s background paper: TSOs should cooperate in setting up a central bulletin board as a trading platform for secondary market capacities for transmission pipelines in the region SEE

11 Best-practice standardised bulletin board  What is expected:  Implementation of an online, user-friendly, and secure trading platform.  Step 1: a best practice online-based trading platform for secondary market capacities in the SSE regional energy market shall be identified  Step 2: implementation of an online platform using a harmonised standard for transmission capacity on all major transit systems of the region SEE

12 Example to be used for all Austrian transit capacities

TSOs’ understanding: creation of a harmonised user-friendly bulletin board by EACH TSO (no joint platform) Bulletin Board is no true trading platform only an information board made available by the TSOs to make it easier for interested parties to find each other; the TSOs are not involved in the transaction until the parties that have traded/want to trade capacity send them notice thereof Harmonised Bulletin Board (1)

Approach taken: operational rules for running the bulletin boards were checked and pros and cons of their functioning were discussed TSOs agreed to use standard contents for presenting the information on the capacity bid/offer received in whatever form from the shippers The contents (format) used by TAG has been chosen as the best practice Harmonised Bulletin Board (2) The TSOs would like to note that shippers have made very little use of the bulletin boards so far

TAG Bulletin Board Harmonised Bulletin Board (3) * * Optional information may be in the form of an attachment or as directly published text

16 Action POINT 1 - Best-practice standardised bulletin board  Suggested next steps  Coordinator: TSOs  Next steps:  TSOs agreed to use standard contents for presenting the information on the capacity bid/offer received in whatever form from the shippers  The contents (format) used by TAG has been chosen as the best practice  Timing:  Implementation of the standard content till September

17 Agenda

18 Route Assessment in SSE Gas Regional Initiative – Region: South-South East, Assessment on selected Transportation Routes

19 Available firm capacity SPP Preprava SK RTN CZ BOG A TAG A OMV A Geoplin plinovodi SI SRG I GAZ System PL route 1 UK-SK-CZ-GER yes route 2 UK-SK-A-SI-I no yesno route 3 UK-SK-A-I no route 4 UK-SK-A-GER no route 5 BE-PL-GER no route 6 AL-I-A-SK noyes

20 Short term congestion management SPP Preprava SK RTN CZ BOG A TAG A OMV A Geoplin plinovodi SI SRG I GAZ System PL route 1 UK-SK-CZ-GER none interr. UIOLI, bulletin board route 2 UK-SK-A-SI-I none interr. UIOLI, bulletin board none route 3 UK-SK-A-I none interr. UIOLI, bulletin board route 4 UK-SK-A-GER none interr. UIOLI, bulletin board route 5 BE-PL-GER interr. UIOLI route 6 AL-I-A-SK interr. UIOLI, bulletin board bulletin board

21 Capacity expansion SPP Preprava SK RTN CZ BOG A TAG A OMV A Geoplin plinovodi SI SRG I GAZ System PL route 1 UK-SK-CZ-GER no plans route 2 UK-SK-A-SI-I no plans planned - not enough no plansplanned route 3 UK-SK-A-I no plans planned - not enough route 4 UK-SK-A-GER no plans open season route 5 BE-PL-GER no plans route 6 AL-I-A-SK backhaulplanned

22 Congestion Management – Obligation of TSOs  Why necessary  Regulation 1775/2005/EC Art. 5: “In the event that physical congestion exists, non discriminatory, transparent capacity allocation mechanisms shall be applied by the transmission system operator or, as appropriate, the regulatory authorities.“  Quote from Explanatory Notes (Reg. 1775/2005/EC) In the case of new investments in transportation capacity (which includes significant expansion of existing capacity), the TSOs' responsibility to ensure the long term ability of the system by meeting reasonable demands would make it appropriate to organise an open season or open subscription period before allocating capacity, in order to determine more precisely the required capacity expansion.  RCC’s route assessment: Congestion management measures are missing

23 Summary of planned investments in gas infrastructure  What is expected:  Deliverable 1: Survey of the future gas demand and capacity need by country (10 years ahead)  Deliverable 2: Survey of planned and actual investments in transmission pipelines and storage facilities, by country and TSO/SSO  Deliverable 3: Analysis of concrete obstacles to investment, be it regulatory, legal, political or other reasons

24 Summary of planned expansions in SEE (incl. Storage)  Presentation/report  Report by RCC  Early findings from questionnaire  Review by country  Austria  Bulgaria  Czech Republic  Greece  Hungary  Italy  Poland  Romania  Slovakia  Slovenia

In the light of the obligation imposed by Regulation (EC) 1775/2003 to publish regular long-term forecasts of available capacities for up to 10 years for all relevant points, in case the TSOs have the obligation under the national law to publish an investment forecast, they mostly interpret planned investments as investments that will be realised (i.e. no investment plans in pre-feasibility and feasibility stage) Summary of Investment Forecasts The TSOs would like to underline that it is not the investments as such but the associated increase in transmission capacity that is of interest to shippers

SPP - preprava Decisions on investments currently under preparation according to the demand of the network users.

DevelopmentsLength [km]Notes Olbernhau-Waidhaus (link to the Nordstream/OPAL) 3 alternativesMarket Survey Ongoing The new capacity should come on stream gradually between RWE Transgas Net (1)

RWE Transgas Net (2)

InvestmentsVolume Increase Planned entry into operation Notes Compressor Station Eggendorf (Region Lower Austria) 3.2 bcm/y1 October 2008Capacity allocated through long-term allocation procedure on a pro-rata basis Compressor Station Weitendorf (Region Styria) 3.3 bcm/yCapacity to be allocated in the near future Total capacity to be made available through the new investments amounts to 6.5 bcm/y. Further information will be published on TAG’s web site in due time. Trans Austria Gas Leitung (1)

Trans Austria Gas Leitung (2)

Planned investments into the transit system Volume Increase Planned entry into operation Notes Compressor Station at Oberkappel (Penta West) including extension of PW transfer metering station at Überackern 1.75 bcm/y1 November 2011Under construction, capacity nearly sold Planned investments into the Austrian domestic system should be looked up under the Long-term Planning Process of AGGM ( OMV Gas (1)

OMV Gas (2)

DevelopmentsLength [km] Diameter [mm]Pressure [bar]Notes M2/1 Rogatec – Rogaška Slatina Under construction R25D Šentrupert – Šoštanj Under construction M1/1 Kidričevo – Rogatec M1/1 Ceršak – Kidričevo M2/1 Rog. Slatina – Trojane M2/1 Trojane – Vodice M3/1 Vodice – Šempeter M3B/1 Šempeter – Miren M5 Vodice – Jarše M5 Jarše – Novo mesto M6 Ajdovščina – Lucija M8/1 Jelšane – Kalce M8/2 Brod na Kolpi – Ljubljana (alternative) M8/3 Vinica – Ljubljana (alternative) R25A Trojane – Hrastnik R45 N. mesto – B. krajina R38 Kalce – Godovič Planned developments -- different stages: Geoplin Plinovodi (1)

Geoplin Plinovodi (2)

DevelopmentsLength [km] Diameter [mm]Compressor Station [MW] Notes Reinforcement of infrastructure in Sicily Under construction Reinforcement of infrastructure in North- West of Italy Under construction Reinforcement of infrastructure in North- East of Italy --100Planned Reinforcement of infrastructure in South Italy /120088Planned Adriatica Tirrenica Development of Entry point of Panigaglia Planned Information on respective increases in transmission capacity is available on Snam Rete Gas’ web site Snam Rete Gas (1)

Entry Point North-Est Italy Entry Point Panigaglia Entry Point Passo Gries Entry Point South Italy Entry Point Mazara del Vallo Snam Rete Gas (2)

37 Presentation of the GSE website with all actual expansion projects in storage

38

39 Details for Austria and Poland

40 Gas Demand forecast in Austria

41 Congestion in the Domestic Transmission system

42 Plant power stations (4.000 MW till 2015?) KW Geplant bis 2010 Geplant bis 2015 Geplant bis 2020 KW angedacht Zeltweg Mellach KW Peisching KW Riedersbach Timelkam KW Ennshofen Theiß II Dürnrohr

43 Feasibility Study to increase domestic capacity

44 WAG TAG I + II SOL PENTA West HAG Baumgarten Oberkappel Arnoldstein Murfeld Burghausen SLO HR H CZ SK D I Capacity expansions in gas transit Existing pipelines planned expansions TGL (2010) Nabucco (2012) bcm/y new compressor stations Weitendorf (2008) 3.2 bcm/y Eggendorff (2008) 3.3 bcm/y Rainbach (2011) 1.4 bcm/y

45 Storage projects in Austria Haag Storage site Puchkirchen wgv 850 mcm Withdrawal rate cm/h Storage site Thann wgv 250 mcm Withdrawal rate cm/h Storage site Schönkirchen wgv bcm Withdrawal rate cm/h Storage site Tallesbrunn wgv 300 mcm Withdrawal rate cm/h Tallesbrunn Expansion project „Schönkirchen Tief“ Wgv minimum 1 bcm, High withdrawal rate Completion expected 2011 Expansion project „Puchkirchen/Haag“ wgv 400 mcm Withdrawal rate cm/h Completed 2010 Expansion project „Haidach“ First expension phase wgv 1.2 bcm Completion wgv 2.4 bcm Commissioning 2007 RAG OMV Gas Storage site Haidach 5 WGV 13.5 mcm Withdrawal rate cm/h Existing storage facilities Storage projects RAG

Piotr Seklecki Chief Expert Department of European Integration and Comparative Studies Energy Regulatory Office e–mail: tel. (+48 22) , fax (+48 22) Address:: Chłodna 64, 00–872 Warsaw Investments and Planning 2nd Implementation Group Meeting of the Gas Regional Initiative for the South-South East Region

The structure of gas supplies in 2006 (in mcm)

The structure of gas supplies in near future POGC is now importing gas within the frames: a long – term contract for the supplies of the Russian gas of 25th September 1996, with Gazexport, valid until 2022, a long – term contract for the supplies of the Russian gas of 25th September 1996, with Gazexport, valid until 2022, the contract between PGNiG and VNG AG on 17 August 2006 and valid until 2016 (for annual gas supply volume ranging from 400 to 500 million m³) and the contract between PGNiG and VNG AG on 17 August 2006 and valid until 2016 (for annual gas supply volume ranging from 400 to 500 million m³) and the contract of 17 November 2006 concluded with RosUkrEnergo AG until 2009 (for purchase of 2.5 billion m³ of gas per annum) with an extension option for further 2 years.) the contract of 17 November 2006 concluded with RosUkrEnergo AG until 2009 (for purchase of 2.5 billion m³ of gas per annum) with an extension option for further 2 years.)

LNG Terminal in Świnoujście The first deliveries of LNG to the terminal are planned for the year The regasification capacity of the terminal will be developed by stages to reach the target capability of receiving up to 7.5 bcm of natural gas per year from the terminal by the year PGNiG set up a company - Polskie LNG (PLNG)- to build the terminal and, subsequently, to provide the regasification service. The company is based in Świnoujście and controlled by PGNiG.

The domestic production (1996 – 2006)

Expansion of storage capacity

Investments planned by the TSO

53 Action POINT 2 – Overview capacity expansions in SEE Suggested next steps  Coordinator: RCC/E-Control  Next steps:  inclusion of received information (TSOs and GSE) on expansion projects (Transmission&Storage) into the survey  Timing:  present the results at the next IG meeting

54 Agenda

55 Further improvment since March 07 ? SPP Preprava SK RTN CZ BOG A TAG A OMV A Geoplin plinovodi SI SRG I GAZ System PL route 1 UK-SK-CZ-GER under negotiation route 2 UK-SK-A-SI-I in testing phase route 3 UK-SK-A-I in testing phase route 4 UK-SK-A-GER in testing phase route 5 BE-PL-GER no route 6 AL-I-A-SK under negotiation

56 Removing remaining obstacles to implementation of IPA/OBA RegionNumber of IPs (GTE map) number of OBAs at IPs in % NNW553360% S171270% SSE29828%

57 Removing remaining obstacles to implementation of IPA/OBA Interconnection point (GTE map) affected TSOsreported statusactual implementation? Lanzot (54)RTN SPP under negotiation Hora Svate Kateriny (22b)RTN WINGAS in placeOK Waidhaus(24)RTN EON GT, GDF DT under negotiation Oberkappel (25)BOG EON GT, GDF DT under negotiation Velke Kapusany (55)NAFTOGAZ SPP in placeOK Tarvisio (49)TAG SRG in placeOK Murfeld (51)OMV GEOPLIN under negotiationmid 2007? Gorizia (48)GEOPLIN SRG under negotiationmid 2007? Baumgarten (55)SPP OMV, TAG, BOG under negotiationmid 2007?

TAG c HUB central matching station in between Transportation Systems one step towards harmonization ccccc WAG Regulatory Zone Austria HAG MABStorage SPP

Baumgarten March 2007 Graphical illustration of hub trade in Baumgarten

SPP System BOG System OMV Gas System TAG System SPP System Technical ICP Agreements Bilaterally conclusion Business ICP Common agreement SPP System CEGH System BOG SystemTAG System OMV Gas System OBA: Contractual structure

Integration of CEGH in OBA Carrier SPP Carrier OMV Carrier TAG Carrier BOG Operator SPP Operator OMV OBACEGH Shipper upstream Shipper downstream Trader Operator OMV

CEGH SPP System BOG System OMV Gas System TAG System Trading Shipper CEGH Shipper OMV GAS Shipper WAG Shipper TAG Trading Shipper CEGH Systems of Austrian Side Systems of Slovakian Side Shipper SPP

SPP System BOG System OMV Gas System TAG System Shipper 1 Shipper 2 Shipper 3 Shipper xy ShipperShipper 1 Shipper 2 Shipper 3 Shipper Shipper xy Shipper Shipper xy Shipper Shipper xy CEGH System Detailed illustration of matching operation

64 Action Point 3: Removing remaining obstacles to implementation of IPA/OBA Suggested next steps  Affected TSOs:  Next steps:  further update on implementation: TSOs will focus on concluding IPAs where these are not yet in place; Implementation of an OBA regime is dependent on certain prerequisites and will always be conditional; Shippers must be equally involved in the implementation process by complying with the nomination rules set up by the TSOs  Baumgarten: all involved stakeholders work on a solution within the next 3 months incl. a list of remaining obstacles  Timing:  CEGH will coordinate a solution for Baumgarten within the next 3 months and present the results at the next IG meeting

65 Agenda

66 Best practice provision of OSS service  What is expected:  Practical implementation of a voluntary one-stop-shop (OSS) service based on the recommendations of the OSS study  Information requirements  Capacity information  Cumulative transportation tariff for the requested route  Contract information to be signed with different parties  Service fee for the OSS service

67 Regional one-stop-shop service provider Step 1 – no new legal basis:  requirements on a regional OSS provider  capacity information  tariff information  contract information  service fee  Standardized secondary market trading platform (Step 2 – enhanced inter-TSO-cooperation)  establishment of a regional entity set up by TSOs (RGM)  main tasks of a RGM  Grid access and Capacity Management  Gas Flow Control & Optimizing  Investment (regional long-term planning)

68 Step 1: Coordination function of OSS provider TSOshipper transportation request  one stop shop TSO2  CASE 1: transport through network of one TSO  CASE 2: transport through networks of more than one TSO shipperTSO1 TSO3 transportation request  one stop shop individual contracts with TSO1, 2... coordination function of TSO1

69 Step 1: Responsibilities of OSS provider  OSS service is offered on a voluntary basis if shippers request for such a service (shippers are not obliged to use it)  In case a shipper requests the service, the regional OSS provider shall be responsible for  replying within a certain number of working days  presenting the available capacity or for alternative routes  calculating the network tariff  publishing unused committed capacity on the internet  Arrange necessary contracts

70 Best practice provision of OSS service – examples  OMV Gas for all Austrian transit systems  Ontras and RWE Transgas Net

One-Stop Shop Provider

TSOs see the first stage of a process that may in the end lead to a one-stop shop provider in creating one common webpage where all relevant information concerning capacity would be available Action has been taken by TSOs at the European level within the framework of GTE, independent action at the regional level would therefore be superfluous and possibly distortive. In case of delay in the process, appropriate actions at regional level could be taken One-Stop Shop Provider TSOs will make every effort to contribute to the creation of a European-wide Transparency Platform

Obstacles to Implementation of IPAs/OBA

Process-related obstacles Determination of norms and units to be used for communication between the relevant TSOs* in connection with the operation of the respective delivery/redelivery station(s) and metering Determination of the counter-party (e.g. at interface btw Slovakia-Austria) Obstacles to Implementation of IPAs * The units agreed are then to be used by Shippers entering and exiting the system at the respective points

Process-related obstacles To be able to ensure allocation equalling nomination, TSOs need to be able to steer the flows at IPs accordingly. This is only possible if 1) matching of nominations may be executed with the neighbouring TSO, 2) nominations are given sufficiently in advance of the relevant Gas Day, 3) these nominations do not significantly differ from any renominations later on, esp. during the relevant Gas Day (“yo-yo flows” would lead to a very inefficient operation of the system) Risk-related obstacles Some TSOs may not have access to any other flexibility but linepack. Additional flexibilities exceeding linepack might generate additional costs. In any way TSOs may not take on unlimited risks and therefore the OBA will remain limited. In case of extraordinary events, in particular unplanned breakdowns on the (upstream) system or unexpected cuts in supply by the producers, the TSOs will need to revert to pro-rata allocation regime. Obstacles to Implementation of OBA

Obstacles to Implementation of IPAs/OBA TSOs would like to note that primarily it is necessary to conclude IPAs as such. Their existence is already a significant contribution to ensuring non-discriminatory, transparent and objective third-party access conditions to gas grids. Implementation of an OBA regime is dependent on certain prerequisites and will always be conditional. Shippers must be equally involved in the implementation process by complying with the nomination rules set up by the TSOs.

77 Action Point 4: Best practice provision of OSS service Suggested next steps  Coordinator: TSOs  Next steps:  Transparency platform (GTE pilot project)  TSOs offer OSS service to shippers who request the service  Best practice OSS (OMV Gas,  Timing: update next meeting

78 Agenda

79 Regional Entry Exit Tariff System (REETS)  Expected Deliverables:  Theoretical considerations on the stepwise introduction of a REETS in the regional energy market SSE

80 Work plan of REETS study  Will deal with main transportation routes  Following and completing analysis of the routes undertaken in Vienna Workshop and Milan Stakeholder Group meeting  Benchmarking of current tariffs  Simulation of alternative approach (REETS)  Simulation and comparison with today will show feasibility, benefits, and costs of REETS

81 Scope of the study: existing routes Routes already considered in the GRI for SSE: 1. UKR-SK-CZ-GER (Vel'ké Kapušany - Waidhaus or Hora S. Kateriny) 2. UKR-SK-A-SI-I (Vel'ké Kapušany – Baumgarten – Murfeld - Šempeter/Gorizia) 3. UKR-SK-A-I (Vel'ké Kapušany - Baumgarten - Tarvisio) 4. UKR-SK-A-GER (Vel'ké Kapušany – Baumgarten - Oberkappel) 5. BELARUS-PL-GER-CZ (Kondratki – Mallnow - HSK) 6. ALGERIA-I-(SI)-A-SK (- CZ, -H) (Mazara-Tarvisio (Gorizia–SI) - Baumgarten – Slovakia/Czech Rep./Hungary)

82 Scope of the study: other routes Routes to be added 7. UKR–H-Austria (Beregdaroć-Mosonmagyarovar-Baumgarten) 8. CH-I-A/SI (Griespass-Minerbio-Route 6) 9. Italian LNG terminal connection (Panigaglia-Minerbio-Route 6) 10. UKR-RO-BG-GR (Isaccea–Negru Voda-Kula-Revithoussa) 11. UKR–H-Serbia (Beregdaroć-Szeged) 12. UKR-PL (Drozdowice-Mallnow) Future Routes ● - TR-BG-RO-H-A (Nabucco) ● - TR-GR-I (IGI) ● - New LNG terminals in Italy, Croatia and related pipelines

83 Scope of the study: entry and exit points Entry points ➢ SSE import-export points (Kondratki, Vel'ké Kapušany, Beregdaroć, Griespass, Panigaglia, Mazara, Gela, Isaccea, Negru Voda, Kula, Revithoussa, Oberkappel, Szeged) ➢ Main domestic production and storage areas (Baumgarten area, N. Adriatic, Po Valley, Central - S. Romania, S. Hungary, Silesia...) Exit points ➢ SSE import-export points ➢ Representative consumption points close to the routes (Warsaw, Krakow, Poznan, Bratislava, Košice, Brno, Prague, Vienna, Linz, Klagenfurt, Milan, Bologna, Rome, Messina, Ljubljana, Budapest, Szeged, Bucharest, Constanta, Sofia, Thessaloniki, Athens)

84 Main transportation profiles ● Standard profiles to be defined for current tariff benchmarking and REETS simulation ● Current tariffs to be calculated for all entry-exit pairs, for standard transportation profiles ● Based on ongoing CEER benchmarking study ➢ performed for B, F, DK, H, NL, forthcoming ➢ Balancing regimes and charges included in the study ➢ Volumes: 5 Gm 3, 500 Mm 3, 50 Mm 3 ➢ Load factors 0.88, 0.71, 0.57, 0.34 (on hourly basis)

85 Current average tariffs for main routes/TSO

86 REETS simulation: allowed revenues Calculation of revenue requirements for each route and TSO ➢ Based on allowed revenue approved by National Regulator for each TSO ➢ Based on current balance sheets ➢ After benchmarking and harmonisation of revenue calculation criteria

87 REETS simulation: tariff structure ● Simulation of common entry-exit system with interlinks between balancing zones ● Identification of bottlenecks & balancing zones ➢ where present red lights at TSO border ● Simulation of entry and exit tariffs within each balancing zone ➢ average cost vs. long run marginal cost ● Regulated interlinks between zones ● Single zone may be simulated assuming current bottlenecks are removed

88 REETS simulation: new investment ● Based on investment plans delivered by TSOs ● Including investment required for bottleneck removal ● Simulation of the new major infrastructure impact (Nabucco, Greece-Italy, Algeria-Sardinia-Italy, new LNG terminals), possibly subject to partial TPA exemption ● TPA exemption enhances sponsor/TSO responsibility, reduces impact on EE tariffs

89 Action Point 5: Regional Entry Exit Tariff System (REETS) Suggested next steps  Coordination: RCC/AEEG  Next steps:  presentation of benchmarking results  simulation of implementation REETS  Timing: update next meeting

90 Agenda

91 Hub development as regional balancing market (I)  What is expected  Step 1: Plan for development the Hubs in the region as a regional balancing point  Step 2: Suggestions for practical implementation of the concepts developed under step 1

92 Hub development as regional balancing market (II)

CEGH SPP System BOG System OMV Gas System TAG System Trading Shipper CEGH Shipper OMV GAS Shipper WAG Shipper TAG Trading Shipper CEGH Systems of Austrian Side Systems of Slovakian Side Shipper SPP

SPP System BOG System OMV Gas System TAG System Shipper 1 Shipper 2 Shipper 3 Shipper xy ShipperShipper 1 Shipper 2 Shipper 3 Shipper Shipper xy Shipper Shipper xy Shipper Shipper xy CEGH System Detailed illustration of matching operation

Heart pace maker for liquidity optimized utilization of transport capacities harmonized business environment storage price quotations back up /down services market maker functionalities availability flexibility of gas interface with local balancing mechanism physical balancing of network liquidity buy and sell to the market Transparency GRP Online Bulletin Board price index

AGCS Provider 4 Provider 3 Provider 2 Provider 1 30€ 25€ 20€ 15€ Merit Order list Provider 1 Provider 2 Provider 3 Provider 4 Balancing Energy Market Back UP/Down Market Merit Order list CEGH 27€ 23€ 18€ 13€ Shipper 1 Shipper 2 Shipper 3 Shipper 4 Shipper 5 Shipper 6 Shipper 7 Shipper 8 Shipper 9 Shipper 10 Shipper 11 Shipper 12 Shipper 13 Shipper 14 Shipper 9 Shipper 10 Shipper 11 Shipper 12 Shipper 13 Shipper 14 Shipper 15 Shipper 16 Shipper 17 Shipper 1 Shipper 2 Shipper 3 Shipper 4 Shipper 5 Shipper 1 Shipper 2 Shipper 3 Shipper 4 Shipper 5 HUBHUB Control area WAG TAG SPP HAG MAB storage Shipper Shipper 9 Shipper 10 Shipper 11 Shipper 12 Shipper 13 Shipper 14 Shipper 9 Shipper 10 Shipper 11 Shipper 12 Shipper 13 Shipper 14 Shipper 13€ 15€ 18€ 20€ 23€ 25€ 27€ 30€ Combined Merit Order list

EFET – PLAN next steps back up back down services Hub as Balancing Point OBA ERGEG - Issues

Back up/down Service provision Back up/down Service Request for tender Contract with providers Contract with OTC - customers Prepared for discussion with EFET

100 Action Point 6: Hub development as regional balancing market (I) Suggested next steps  Lead: PSV/EFET and CEGH/EFET  Next steps:  Separate workstreams and update on implementation of next steps according schedule  Timing:

Gas Regional Initiative Regional Energy Market South-South East Hub development as a regional balancing market PSV implementation TF

Hub development as regional balancing points: TF considerations  The TF shares the ERGEG objective of developing the hubs as balancing points  Market based balancing more effective and positive for liberalisation than fixed penalties  Helps to increase the liquidity at the hubs in SSE  Reduces the risk of exposure for traders  In principle the TF also shares the objective of setting regional balancing points

Hub development as regional balancing points: TF considerations  In practice the SSE regional market lacks:  harmonized business environment (contractual conditions, operational procedures, balancing mechanism and procedures etc…)  well meshed gas grid. For instance there is no interconnection between Poland and the southern SSE countries  available capacities: gas flows throughout the whole region limited by physical/contractual congestion on the interconnection routes

Hub development as regional balancing points: Balancing points in the SSE Region As a first immediate step the TF suggests the development of two/three hubs in the region acting as balancing points for their reference area. In the longer term the local balancing points could evolve to a regional dimension.

PSV Implementation Task Force The way forward  Set users priorities for the development of PSV as a balancing point  Meet with other stakeholders (hub operator, regulators, other interested parties)  Plan for the development of PSV as balancing point

106 Agenda

107 Action Points 1-3 Implementation TFActions Responsible/ Result until Best-practice standardised bulletin board - harmonized content for individual TSO platforms accordnig TAG and OMV best practice TSOs presentation at next IG meeting Summary of planned investments in the region (incl. Storage) - inclusion of information on expansion projects (Transmission&Storage) into the survey RCC presentation at next IG meeting Removing remaining obstacles to implementation of IPA/OBA - further update on implementation :TSOs will focus on concluding IPAs where these are not yet in place; Implementation of an OBA regime is dependent on certain prerequisites and will always be conditional; Shippers must be equally involved in the implementation process by complying with the nomination rules set up by the TSOs - Baumgarten: all involved stakeholders work on a solution within the next 3 months incl. a list of remaining ostacles TSOs, Shippers CEGH presentation at next IG meeting

108 Action Points 4-6 Implementation TFActions Responsible/ Result until Best-practice standardised bulletin board - harmonized content accordnig TAG and OMV best practice TSOs presentation at next IG meeting Summary of planned investments in the region (incl. Storage) - inclusion of information on investments into survey RCC presentation at next IG meeting Removing remaining obstacles to implementation of IPA/OBA - further update on implementation and - Baumgarten: all involved stakeholders work on a solution within the next 3 months incl. a list of remaining ostacles CEGH presentation at next IG meeting Best practice provision of OSS service - Transparency platform (GTE pilot project) - TSOs offer OSS service to shippers who request it - best practice OSS (OMV, TSOs presentation at next IG meeting REETS - presentation of benchmarking results - simulation of introduction of REETS RCC presentation at next IG meeting Hub development as regional balancing market - update on implementation of next steps according schedule CEGH/EFET PSV/EFET presentation at next IG meeting

109 Any other business-AOB Proposed date of next meeting  Suggestion: Next meeting (Stakeholder Group Meeting) end of September in Maribor proposal  Key: Progress report by implementation group members  Regulators only to facilitate the process Context of regional activities  Next Madrid Forum on 16th/17th October 2007  ERGEG to report on progress  Update on issues regarding transparency (Outcome of recent survey)