Madrid, 7 th May th SG Meeting South Gas Regional Initiative

2 12th SG meeting S-GRI- Agenda

3 II. Open Season 2015: history The second phase of the OS 2015 is the final part of the project developed in the framework of the SGRI to build new interconnection capacities between Spain and France and inside France after 2012 The second phase of the OS 2015 includes: Construction of a new interconnection point, called MIDCAT (Eastern corridor), reaching GRTgaz North Increasing existing capacity at the Western corridor (Irún/Biriatou). It corresponds to capacity offered and not decided due to lack of demand in the first phase of the OS. Larrau MidCat Irún/Biriatou

4 II. Open Season 2015: history Results of the non-binding phase The OS 2015 comprises two phases: Non-binding phase: launched in September 2009, at the same time that the OS 2013 Binding phase: to be launched before summer 2010

5 Economic tests to validate capacity allocations in France In order to guarantee a minimum cost recovery for the capacities potentially developed following the OS 2015, 2 economic tests will be used to validate capacity allocations in France:  One test to validate allocations at the Spanish- French border and at TIFG-GRTgaz South interconnection points (IPs 1, 2, 5 and 6)  One test to validate allocations at GRTgaz North-GRTgaz South interconnection point (IPs 3 and 4) Capacity allocations in France will be validated if the revenues generated by these allocations cover 70% or more of the costs of the infrastructures associated with these allocations

6 The 2 economic tests will be applied to the aggregated capacity allocation as communicated by TSOs to regulators after the first run of the allocation rules The 2 economic tests will be performed independently Possible interactions with the minimum capacity requests and the coordinated capacity requests Economic tests to validate capacity allocations in France

7 Economic test for investments at the Spanish-French border 1.The test will be applied in this order to : MIDCAT + Irún/Biriatou (MC2+B1, MC2+B0, MC1+B0, and MC0+B0) MIDCAT (M2, M1, M0) Irún/Biriatou (B1, B0) 2.Solutions based first on capacity maximisation and then on investments optimisation (reduction of the capacity offered from France to Spain to minimise investments) are tested for the three alternatives 3.If 2 or more investments scenarios can equally satisfy the aggregated capacity demand communicated by TSOs, then the economic test will validate the scenario which minimises the price at IP 1. In any case, the scenario validated is the one allocating the highest amount of capacity Economic tests to validate capacity allocations in France

8 Economic test for capacity allocation at the Spanish-French border Economic tests to validate capacity allocations in France Allocated Demand Priority 1 : Test for MidCat + Biriatou Priority 2 : Test for MidCat Priority 3 : Test for Biriatou 6 possible price steps at IP 1: 1.Equalised entry tariff 2.Eq. entry tariff +10 €/MWh/d 3.Eq. entry tariff +20 €/MWh/d 4.Eq. entry tariff +30 €/MWh/d 5. Eq. entry tariff +40 €/MWh/d 6.Eq. entry tariff +50 €/MWh/d For each step, 4 sub-steps of investments optimization upon demand: a.Full Investment b.Investment w/out Montpellier CS c.Investment w/out Midi pipeline d.Investment w/out Midi pipeline and Montpellier CS 6 possible steps For each step, 3 sub-steps of investments optimization upon demand: a.Midcat + Midi pipeline b.Midcat + Montpellier CS c.Midcat 6 possible steps For each step, 2 sub-steps of investments optimization upon demand: Economic Test Perimeter If 2 or more scenarios which pass the economic test can equally satisfy the provisional aggregated capacity allocations communicated by TSOs, then the economic test will validate the scenario which minimises the price at IP 1. No Investment a.Biriatou + Montpellier CS b.Biriatou Negative Results

9 Economic test examples: If capacity requested are the same as in the Non-binding phase, the economic test provides M1+B0 as solution at 90 €/MWh/day at IP1 If shippers request 100% of maximum capacity offered in the direction S-N, both at IP1 and IP2, and no capacity in the direction N-S, the economic test provides M0+B0 as solution at 90 €/MWh/day at IP1 If capacity requested in the direction S-N is the same as in the non binding phase, both at IP1 and IP2, and no capacity is requested in the direction N-S, the economic test provide B0 as solution at 90 €/MWh/day at IP1 Economic tests to validate capacity allocations in France

10 The OS 2015 is launched in the current transmission tariff structure, in force since the 1st January 2009 Tariff visibility is the same as for the OS There are 2 options, depending on the outcome of the network study currently undertaken by GRTgaz and TIGF: Continuation of the current tariff structure A tariff for capacity between TIGF and GRTgaz South of 0 €/MWh/day/year If, as a result of the OS, the entry tariff in France from Spain is increased at IP 1 following the application of the economic test:  The price of the capacity allocated in the OS 2013 would not be affected by this tariff increase  Every other S  F capacity from 2015 would be marketed at the same price as for the OS 2015 (including short term capacities) Tariff visibility in France

11 Since 2008 tariffs are proposed by the CNE and approved by the Ministry of Industry. Principles governing tariff design are defined in the Law 34/1998. TPA tariffs are based in costs in order to assure investment recovery and a reasonable profit. These principles are developed in the Royal Decree 949/2001, which is published in the Official Gazette. TPA tariffs will be defined under the principles of objectivity, transparency and non-discrimination. Tariff visibility in Spain

12 Calendar DateMilestone 7 th May 2010SG meeting for information on the OS th May 2010Publication of final documents regarding 2015 capacities: Information Memorandum including:  General Information on the Open Season  Allocation Rules.  Application Form  Letter of Commitment.  Non-Disclosure Agreements between each TSO and interested subscribers (to be signed only by new participants). Capacity booking contracts between each TSO in and subscribers interested in capacities between GRTgaz South-TIGF and/or TIGF-Spain Transmission contracts between each TSO in and interested subscribers May 2010 (TBC) Information meetings for stakeholders organised by TSOs in Spain-Madrid (20 th ) and France-Paris (26 th ) 1 st June 2010 Signature of Confidentiality Agreements (NDA) between each TSO and interested subscribers not participating in the First Phase to be signed before the referred date 7 th June 2010Starting date for capacity requests reception. 25 th June 2010Closing date for capacity requests reception. 9 th July 2010Publication of results of the OS and communication of individual allocations. 31 st July 2010Deadline for the signing of contracts 31 st January 2011 Deadline for approval of GRTgaz and TIGF global investment programs by their respective Boards of Directors and by CRE.