Tom Maes, ERGEG Gas Working Group 19th Madrid Forum 21 March 2011 Transit contracts

219th Madrid Forum, March 2011 Agenda Background Enquiry of the TSOs Set-up Results Response of the Commission Way forward

319th Madrid Forum, March 2011 Background Gas transit is crucial Depleting indigenous sources calls for additional and diversified imports; Fragmented and monopolistic markets need to be interconnected; Bidirectional flows increase security of supply. 18th Madrid Forum invited ERGEG to provide an overview per Member State of the transit contracts which are still in force; a proposal as to how these contracts will be brought in line with the provisions.

419th Madrid Forum, March 2011 Enquiry – Set-up Letter sent to 32 ENTSOG members As not to exclude any type of contract Intentionally open definition Two general questions Two reminders, one with copy to NRA Response of 29 TSOs

519th Madrid Forum, March 2011 Enquiry – Results / Legal Analysis Directive 2003/55/EC allowed a limited number of contracts to persist under the terms of Directive 91/296 As from 1 July 2006 (Regulation 1775/2005) access based on non-discriminatory, transparent and cost reflective tariffs is fully applicable to the so-called (historical) transit contracts Regulation 715/2009 From 3 March 2011 tariffs shall be set separately for every entry and exit point; By 3 September 2011, network charges shall not be calculated on the basis of contract paths.

619th Madrid Forum, March 2011 Enquiry – Results / TSO responses Collected data is not complete and potentially ambiguous Only few TSOs acknowledge holding transit contracts Even less assume possible conflicts with European law No legal obligation to provide this information to ERGEG Not all NRAs have access to this kind of data

719th Madrid Forum, March 2011 Enquiry – Results / Suggestions Commission takes every opportunity to Address this issue; Pursue existing or open new infringement procedures; Cooperate with NRAs both in preliminary and litigation procedures. Commission further analyses this issue under the auspices of ACER.

819th Madrid Forum, March 2011 Response of the Commission Shared view that elimination of transit contracts not compliant with EU law is needed for achieving internal market; Follow-up needed on this issue; Additional assessment by ERGEG is necessary pinpointing for which countries/TSOs it continues to have doubts.

919th Madrid Forum, March 2011 Way forward Assistance of respective NRAs is needed for sound evidence Double scope Does the same regulated tariff / methodology apply for all transmission activities without exception for border-to-border transmission? Does the same capacity allocation methodology apply at cross- border interconnection points irrespective of the origin or destination of the gas? Is this organised in a fully decoupled entry- exit model?

1019th Madrid Forum, March 2011 Thank you for your attention!