Madrid, 11th September st RCC Meeting South Gas Regional Initiative

2 Part 1. Introduction and organisational issues Part 2. Technical issues Action plan and definition of priorities. Next steps 1. Opening 2. Gas Regional Initiative 3. Composition Roles and responsibilities for RCC, IG, SG, EC and Ministries 4. Rules of procedure 5. Draft action plan. Definition of priorities 6. National press releases 7. Next meetings 8. AOB Part 1. Introduction and organisational issues Part 2. Technical issues Action plan and definition of priorities. Next steps Presentation

3 Part 1. Introduction and organisational issues Part 2. Technical issues Action plan and definition of priorities. Next steps Part 1. Introduction and organisational issues Presentation

4 1. Opening Welcome. Approval of the Agenda: Part 1. Introduction and organisational issues I. Opening: approval of the agenda. (for approval) Welcome Approval of the agenda II. General Presentation of the S-GRI (for information) Presentation about the scope, proceedings and targets III. Role and composition of different sub-groups: RCC, IG and SG. EC and Ministries role (for decision) Composition of SG (Composition of IG already decided) Roles and responsibilities of RCC, IG, SG, EC and Ministries (consider coherence with other RCC’s on this matter) IV. Rules of procedure (consider coherence with other RCC’s) (for decision) Decision making rules for RCC, IG and SG Consultation process with IG and SG Reporting to TF GMI

5 1. Opening Approval of the Agenda (cont).: Part 2. Technical issues: Action plan and definition of priorities. Next steps V. Main topics to tackle. Draft action plan (for discussion and decision) Identification of possible obstacles to the creation a Regional Market Definition of priorities. Draft a consultation document for IG and SG Tentative milestones and draft action plan. VI. National Press releases (for decision) Publication on national level Writing proposal VII. Next meetings (for decision) Next RCC, IG and SG meetings VIII. AOB

6 2. ERGEG Regional Initiative. General presentation Background ERGEG published its gas roadmap for consultation in November 2005 The roadmap sets out ERGEG‘s view on the key issues inhibiting the development of competitive gas markets ERGEG proposed a gas regional initiative to push forward market integration at a practical level 26 responses were received - non-confidential responses are published on ERGEG‘s website Support from all respondents for the gas regional initiative Lack of market integration identified by DG Competition & DG TREN as key issues Launch of the gas regional initiative in April alongside a gas roadmap conclusions paper Presented in the last Madrid Forum

7 AIM: foster the creation of regional gas markets as a stepping stone towards a single competitive market FOCUS: trading at and between gas hubs and other issues impacting market integration e.g. transparency, network access SCOPE: address the shortcomings identified by DG COMP´s Energy Sector Inquiry Interim Report Market concentration, vertical foreclosure, lack of market integration, lack of transparency,price formation INVOLVEMENT: ensure that all key stakeholders are involved 2. ERGEG Regional Initiative. General presentation Motivation

8 2. ERGEG Regional Initiative. General presentation Goals Practical output.  Identify existing obstacles and potential solutions, to increase:  Availability of transmission capacities.  Harmonized TPA rules  Market liquidity and competition in the region  Security of supply  Develop and implement an action plan in the medium term Coordinated developments with other Gas Regional Inititiatives

9 (*) Initially the North and North-West REMs will be run jointly, i.e. under the lead of DTe (The Netherlands). Once the first phase of the REMs has been completed it is intended that the North REM will revert to the leadership of BNetzA (Germany) and will be separated from the North West REM. 2. ERGEG Regional Initiative. General presentation Which are the Regions RegionCountriesLead Regulator North- West Netherlands, Belgium, France, Great Britain, Ireland North Germany, Denmark, Netherlands South Spain, Portugal, Southern France Spain South- South East Italy, Austria, Slovakia, Hungary, Slovenia, Greece, Poland, Czech Republic Italy & Austria Netherlands

10 2. ERGEG Regional Initiative. General presentation Structure Regional Co-ordination Committees ERGEG established RCCs. Each RCC : - comprises regulators from the region; - has autonomy, & adopts its own decision making process IMPLEMENTATION GROUP (IG) Includes TSOs, Market Operators (where appropriate) This is the ‘do-er’ for each Regional Initiative Chaired by RCC STAKEHOLDER GROUP(SG) Wide participation including market players Chaired by RCC and used for consultation MADRID FORUM Overall forum for discussing progress in progressing regional initiatives and pan- European consistency MEMBER STATES Input identifying and solving market integration issues – e.g. legislative proposals, EU COMMISSION

11 g/portal/page/ portal/ERGEG _HOME/ERGE G_RI/Gas_Reg ional_Initiative ERGEG website  regional initiatives 2. ERGEG Regional Initiative. General presentation Information, Access to documents, transparency

12 TimingAction April 2006Finalise scope of gas REMs May 2006ERGEG presents establishment of gas REMs to the Madrid Forum June st meeting of RCC: Establish governance structure; Identify tentative priority actions based on roadmap paper and CEER/ERGEG workplan, DG COMP Sector Inquiry, EC Benchmarking report, stakeholders´ input; report to ERGEG June/July 2006RCCs to decide/establish/convene meetings of implementation Group and Stakeholder Group Aug/Sept 2006 Sept/Oct 2006 Post Autumn 2006 RCC to develop forward Action plan in consultation with implementation and Stakeholder Group RCC reports to ERGEG on Action Plan ERGEG compiles report for 4 REMs and reports to Madrid Forum RCC’s begin to implements Action Plan. Continued liaison with Implementation and stakeholders Groups 2. ERGEG Regional Initiative. General presentation ERGEG Timetable

13 Regional Coordination Committee (RCC): National Regulators + EC Implementation Group (IG): RCC + TSOs, SSOs and LNG Operators. Stakeholders Group (SG) (example Spain): - National authorities: Ministry of Industry, Trade and Tourism - National industry: TSOs and LNG op.: ENAGAS, Naturgas, BBG, SAGGAS… SSOs: ENAGAS Shippers: Gas Natural, Iberdrola, BP, U.Fenosa, Endesa… Distributors: Gas Natural, Naturgas, Endesa… Hub: N/A Suppliers: N/A Technical Associations: Sedigas - European associations (EUROGAS, EFET, etc)? 3. Composition, roles and responsibilities. Composition

14 Regional Coordination Committee (RCC)  Primary drive & motivation  Establishment and lead of regional projects  including way of work, decision making, consulting stakeholders, convene Implementation Group/Stakeholder Group, involve Member State governments and EC  Reporting and monitoring of progress  Prepare/commission discussion papers, gather information, distil/develop conclusions/way forward, develop action plan  ERGEG report to Madrid Forum Member States  Relevant powers often rest with Member State government  new national legislation may be needed  political support is crucial European Commission  Key role in supporting each gas REM project and helping to deliver objectives  Co-Chair (of which group?) 3. Composition, roles and responsibilities. Roles and responsibilities

15 Implementation Group (IG)  Agreed proposals need to be implemented in a practical and efficient way  Can be invited to put forward proposals for solutions, actions  Regular dialogue with RCC – e.g. regular formal meetings Stakeholders Group (SG)  Stakeholders views and input crucial for progress  Stakeholders will be involved in definition of detailed objectives and timetable  regulators will ensure full transparency and consultation  formal and informal dialogue 3. Composition, roles and responsibilities. Roles and responsibilities

16 4. Rules of procedure. Decision making rules Decision making rules (consider coherence with other RCC’s) : -Voting criteria: normally by consensus in RCC and IG. Only in special cases and if agreement cannot be reached voting by ERGEG weights (RCC) or EU weights (IG, by country). Dissenting positions officially recorded. No votes in the SG -Consultation. A consultation document/s should be issued by RCC. Public hearing. Regulators chair the session and operators, stakeholders present their views on the proposed issues. Discussion may be solicited.

17 4. Rules of procedure. Consultation with other agents and reporting How to consult IG and SG? Consultation Paper circulated and published on ERGEG Website Bilateral Meetings Meetings with public hearings of stakeholders, discussion Reporting to ERGEG TF GMI By contact persons Reporting to Madrid Forum By chairmen

18 Part 2. Technical issues Action plan and definition of priorities. Next steps Part 2. Technical issues Action plan and definition of priorities. Next steps Presentation

19 5. Main topics to tackle. Draft action plan. Priorities Identification of obstacles and definition of priorities Main topics to tackle. 1. Implementation status of Gas Directive. Market opening and competition level 2. Interconnection capacity. Further developments 3. Transparency 4. Capacity allocation mechanisms. Secondary markets for capacity. congestion management procedures. 5. Balancing rules and penalties 6. Operators coordination 7. TPA tariffs regime. 8. Gas quality and interoperability 9. Secondary markets 10. Description of practical (or virtual) cases of transit among the three countries

20 5. Main topics to tackle. Draft action plan. Priorities Identification of obstacles and definition of priorities Main topics to tackle. 1. Implementation status of European legislation. Market opening and competition level Is there any article that hasn’t still been transposed into national laws? Market opening schedule. Level of real competition (switching levels, etc.) … 2. Interconnection capacity. Further developments Existing interconnections. Capacities, experience of use (problems?), possibility of Backhauls… New projects: capacities, starting dates, etc. …

21 5. Main topics to tackle. Draft action plan. Priorities Identification of obstacles and definition of priorities Main topics to tackle. 3. Transparency Level of transparency in each country: directly, available on the website, in English, under request, free of charge… Implementation of Gas Regulation 1775/2005 concerning transparency … 4. Capacity allocation mechanisms. Congestion management procedures. CAM to transmission, regasification and storage capacities Usit or lose it provisions? Long/short term contracts Interruptible capacity? Congestion management procedures …

22 5. Main topics to tackle. Draft action plan. Priorities Identification of obstacles and definition of priorities Main topics to tackle. 5. Balancing rules and penalties Balancing period Tolerance levels … 6. Operators coordination Fluent communication and coordination among operators? Existing Operational Business Agreements 7. TPA tariffs regime TPA Tariff system Does domestic transport differ from transit tariffs? Flexibilities included in tariffs Compatibility of tariffs …

23 5. Main topics to tackle. Draft action plan. Priorities Identification of obstacles and definition of priorities Main topics to tackle. 8. Gas quality and interoperability Is there any interoperability problem between countries? Coherent quality specifications (take into account EASEE-Gas CBP … 9. Secondary markets Liquid secondary markets for capacity? Liquid secondary markets for gas? … 10. Description of practical (or virtual) cases of transit among the three countries Cases of transit between countries: France from/to Spain and France from/to Portugal Identify barriers, difficulties, problems to transit, derived from the study of concrete and practical cases

24 5. Main topics to tackle. Draft action plan. Priorities Tentative milestones and draft action plan Action plan and milestones Draft a short written report (2 pages) for the GMI TF meeting on Complete the technical report to be submitted to the IG members, for discussion at the IG meeting on Complete…

25 6. National Press releases Publication on national level. Writing proposal PRESS RELEASE (See doc attached) The Gas Regional Initiative for the “South Region”: Portugal, Spain and South of France - New Gas Regional Initiative launched by EU regulators - Initiative supports European Commission’s policies on competition and security of supply - Initiative designed to identify and remove barriers to competition in the initial four EU regions - Gas Regional Initiatives (GRI) projects as stepping stones towards a single competitive market -The GRI South “The European Regulators’ Group for Electricity and Gas (ERGEG) of Southern countries of the European Union launched on September 11th in Madrid. The new Gas Regional Initiative for South Europe (GRI-S), […]”

26 7. Next meetings - 21st September IG meeting - 3rd October SG meeting - …

27 8. And Other Business …