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

2 7th IG Meeting, Milan, Italy, 26 March Agenda 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 Co-chairs 2.Updates Co-chairs 3.Guidelines for CAM & CMP & Next steps Co-chairs 4.Mercados Recommendations & Work Programme Co-chairs 5.GRI SSE Position on Cost Allocation Co-chairs

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

4 7th IG Meeting, Milan, Italy, 26 March b) Approval of minutes of 7th SG meeting in Vienna regulators.eu/portal/page/portal/EER_HOME/EER_INITIATIV ES/GRI/South_South_East/Meetings1/SG_meetings/7supth sup%20SSE%20SG/AD

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

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

7 17th RCC Meeting, Milan, Italy, 25 March Austria - TGL Tauern Gas Pipeline withdraws application for exemption On 23 June 2009, Tauerngasleitung GmbH (TGL) has submitted an exemption application under Section 20a of the Austrian Gas Act (Gaswirtschaftsgesetz) (Section 22 Directive 2003/55/EC) with the regulatory authority, the Energie-Control On 26 February 2010 TGL withdrew its application for exemption with the following arguments: No legal possibility yet for an exemption from ownership unbundling Design of entry-exit system not yet clear After clarification of these and other open issues TGL plans to submit a new application for exemption

8 17th RCC Meeting, Milan, Italy, 25 March Austria - CEGH CEGH launched Gas Spot Market on Dec.11 ‘09 In Q3, Futures Market will be launched

9 17th RCC Meeting, Milan, Italy, 25 March Austria – Storage Facility Schönkirchen Until 18/06/2010 new storage capacity will be OMV Storage Schönkirchen Finalization Marketable Working Gas Volumes 900 Mio. m³ Mio. m³ Bookable Injection Capacity m³/h m³/h Bookable Withdrawal Capacity m³/h m³/h

10 7th IG Meeting, Milan, Italy, 26 March 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

11 7th IG Meeting, Milan, Italy, 26 March Involvement of Member States’ ministries  National competencies often split between the NRA and the Ministry  SSE suggests involving representatives of the Ministry in the work of the GRI  “Technical Committees” composed by ministries, the TSO/ISO/ITO and NRAs  TCs work on regional solidarity or regional emergency plans between MS (SoS) 2.Interaction with the Commission and Member State representatives  Importance of coordination between EC, MS and RIs (through Agency/TCs)  “Plenary sessions”, including all regions, EC and MS as platform for RIs to raise focus of EC and MS or MEPS on current cross-border issues 3.Efficiency of the Regional Approach  GRI SSE is open to adjustment of the geographical areas for TCs for mixture of countries will allow MS, NRAs, Traders, and TSOs  Coherence and Convergence between the regions, through Coordination- or Management Officer, possibly designated by the Agency 4. Regional Initiatives inside the 3rd Package I

12 7th IG Meeting, Milan, Italy, 26 March Bridge between the structures of the Agency and ENTSO  RIs as “bridge between the structures of the Agency and ENTSO”  Shall provide assistance during preparation of FG and the Network Codes (consulting & discussion forum including traders and shippers)  Monitoring the implementation of Codes based on the FG  Report cross border issues to EC and to the Agency 5.Topics for the future  Streamlining of tasks  Technical issues  Identification of need for regulatory harmonization  other Cross-border issues 4. Regional Initiatives inside the 3rd Package II

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

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

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

16 7th IG Meeting, Milan, Italy, 26 March 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

17 7th IG Meeting, Milan, Italy, 26 March 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

18 7th IG Meeting, Milan, Italy, 26 March 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.

Cost recovery mechanisms No market demand for SoS 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 SoS Investment –Evolving needs of countries CZ GIE position on cost recovery of infrastructure for SoS

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

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 SoS 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 SoS

Suggestions for involvement of more than 2 MS Efficiency of Multi-lateral/Regional/European Mechanism: SoS 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 SoS

23 7th IG Meeting, Milan, Italy, 26 March IP Arnoldstein / Tarvisio On 10 march 2010 a meeting gathering TAG GmbH, SNAM Rete Gas, and AEEG, ECG has been organized to assess the status of the IPA process TAG GmbH 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.

24 7th IG Meeting, Milan, Italy, 26 March 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.

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

GTE Interconnection points – update status ( )

Survey on TSOs coordination activities at IPs – status as of Legend: OBA OBA in preparation Others

Survey on TSOs coordination activities at IPs 28 Survey on TSOs coordination activities at Ips (status as of ) Interconnection pointTSOIPA Comments/ Next Steps Hora Svaté KateřinyNET4GASWingas TransportPro Rata/SBA1OBA 10/2010 ISO 2003 to be applied in whole chain 9/2010 LanžhotNET4GASeustreamPro Rata/SBA2OBA 10/2010 ISO 2003 to be applied in whole chain 9/2010 WaidhausNET4GASE.ON/ Gaz de FrancePro Rata/SBA3OBA 10/2010 ISO 2003 to be applied in whole chain 9/2010 Olbernhau IIWingas TransportNET4GASOBA4 Hora Svaté KateřinyOntrasNET4GASOBA5 MallnowEuRoPolGaz S.A.Wingas TransportPro Rata6 Lasow (Görlitz)OntrasGaz SystemOBA7 OberkappelBOGEGT/ GRTgaz Deutschland GmbHBS9IPA in discussion - in parallel, discussions on ISO 2003 ÜberackernOMV GasWingas TransportOBA10 ÜberackernOMV GasbayernetsOBA11 GriespassSnam Rete GasEnl /SwissgasMix13 Mazara del ValloTPMCSnam Rete GasMix14 TarvisioSnam Rete GasTAG GmbHMix16 Gorica/GoriziaGeoplin plinovodiSnam Rete GasMix17IPA in discussion Murfeld/CeršakOMV GasGeoplin plinovodiOBA18 GelaGreen Stream NetworkSnam Rete GasMix19 MosonmagyarovarOMV GasE.ON/FöldgázOBA21 BaumgartenOMV Gaseu - streamOBA22 BaumgartenBOGeu - streamOBA23IPA finalised with OBA - Discussions on ISO 2003 started BaumgartenTAG GmbHeu - streamOBA24 Velke KapusanyNaftoGazeu - streamPro Rata25no EU-internal IP DrozdowiczeNaftoGazGaz SystemMix26no EU-internal IP WysokojeBieltransgasGaz SystemMix27no EU-internal IP TietierowkaBieltransgasGaz SystemMix28 Negru VodaTransgazBulgartransgaz 29 MalkoclarBulgartransgazBotas 30no EU-internal IP Kula/SidirokastronBulgartransgazDESFA 31 ZidilovoBulgartransgazMakpetrol 32no EU-internal IP KondratkiBieltransgasEuRoPolGaz S.A.Pro Rata33(newly added) KipoiBotasDESFA 34

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

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/ Milano

GRI SSE – p 31 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): Impact on the TSOsImpact on shippers Matching procedures (information exchange) + (IT impact) ++ (nomination scheme and schedule) Flow control + (OBA steering, operations) Measurement procedures + (operations, losses in TSO) Gas Spec, Min and Max delivery pressure ++ (in particular operation conditions) + (refusal of off-spec gas) Allocation rules +++ (OBA, Balancing Shipper or pro-rata) Coordination of operation ++ (windows for maintenance and tie- ins) + (limitation of reduction periods) Information exchange Exceptional events + (operations, crisis) + (consistency between TSOs)

GRI SSE – p 32 Baumgarten IPA Issues with the matching process: Units and gas day

GRI SSE – p 33 Two different unit systems, 2 different gas days Issues: how to transform slovak nominations (Sm3/d) in EASEE-gas CBP standard? (kWh/h)  3 GCV forecast (one for each downstream system (OGG, TAG, BOG))  Transforming Nm3(15°) into Sm3(20°)  8.00 to 8.00 day vs 6.00 to 6.00 Solutions:  All TSOs agreed on a common forecast GCV. Based on this GCV, eustream transforms its shipper´s nominations into kWh for matching.  Austrian TSOs provide eustream with the calculation in Sm3(20°) as an additional information+ defined kWh based on Nm3(15°) as the reference.  Austrian TSOs request their shippers for 6.00 to 8.00 nominations.  The „lesser rule“ hourly matching, the 2h renomination lead time and the OBA between the TSOs allow the compatibility with eustream´s daily matching. Slovakia: Sm3(20°C) – 8.00 to 8.00 Austria: kWh based on forecasted GCV – 6.00 to 6.00.

GRI SSE – p 34 Issues in matching process: Matching the nominations for each shipper pairs

GRI SSE – p 35 Gas Day D+1 Daily matching process Gas Day D+1 A SKSK Gas Day D Gas Day D-1 6h8h10h12h 14h 16h18h 20h 22h24h 2h 4h6h Gas Day D 8h Gas Day D-1 8h = or ≠

GRI SSE – p 36 Gas Day D+1 Hourly matching process 8h Gas Day D+1 A SKSK

GRI SSE – p 37 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 – p 38 Impact of the decision + = Hourly matching + = Baumgarten Slovakia Austria Typical transit profile or balancing- compensated domestic profile Typical non balancing- compensated end-consumer profile

GRI SSE – p 39 Impact of the decision: lesser rule + = Matched Slovak Side Austrian Side 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 – p 40 Matching process: Matching between the systems, integration of CEGH trading platform

GRI SSE – p 41 Possible nominations at the SK/AT border Eustream BOG OMV Gas TAG WAG ICP Q1 Q2 Q´2 Q´1a Q´1b Q´4 Q3 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 MS3 MS1 MS4 MS2 OMV ICP TAG ICP 2,3 km Baumgarten station March/Morava: limit of responsibility between the TSOs Flange trading OTC or Gas exchange CEGH trading Combination of CEGH trading

GRI SSE – p 42 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).

43 7th IG Meeting, Milan, Italy, 26 March 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

Transparency Plattform SSE TSO Participants Participant as of beginning: Snam Rete Gas OMV Gas NET4GAS Participants since last year: Eustream Geoplin Plinovodi FGSZ In a testing phase: BOG Preparing for participation: TAG

45 7th IG Meeting, Milan, Italy, 26 March Any other Business Next Meeting Date scheduled for 20th of May – we propose another date, either for Regional Cooperation & Regional Solidarity or Transparency GroupDatePlace 1.3 RCCs 16.Jun/10.Nov Rome/Vienna 2.3 focus IGs: -SOS 10. NovVienna 3. 1 SG/IG: -Wholesale Trading and Transparen y16. & 17. JunRome (rotative venue)

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

47 7th IG Meeting, Milan, Italy, 26 March 2010 Michael Schmöltzer Head of Gas Department E-Control gmbH +43(0)1 – / Contact