N-W Regional Initiative: Transparency Questionnaire Results Sonia Brown Director – European Strategy & Environment 19 September 2007

2 Welcome Thank you to all those operators who have responded 18 TSO responses received – good quality of responses Intention today is to discuss responses received  Explain how responses have been assessed against EFET wish-list – i.e. traffic light approach  Discuss possible areas for improvement in transparency – i.e. potential ‘quick wins’ where information could be released  Discuss the process going forward – i.e. RCC to discuss which information should be released

3 Key findings … Most TSOs are providing the static information requested Most TSOs are providing some dynamic data More capacity information available than flow data (although some TSOs publish historic flows) Some TSOs already improving transparency TSOs have indicated willingness to look at further improvements  A lot of information provided on online booking systems vs. public websites  Most TSOs say line-pack data not relevant to systems

4 Areas for discussion today Prioritisation  Which are the ‘quick wins’ and which are the highest priorities – are these the same? Timing for delivery Can we deliver improvements this year? What could be delivered in 2008? Barriers  What – if any – are the barriers to progress this? Discussion needed to take forward with regulators where appropriate Not for discussion today = costs  Identify only where this is a barrier – then we can discuss priorities together with RCC

5 How we have displayed information here Red light indicates:  information identified as a key priority for EFET/IFIEC Amber light indicates:  information identified as a medium level priority for EFET/IFIEC Green light indicates:  information identified as lower level priority for EFET/IFIEC

6 Summary of responses

GB Case Study Release of gas flow information

8 GB case study – gas flow data Sub-terminal flow info D+2 Sub-terminal flow info aggregated to north-south split hourly Sub-terminal flow info updated every 12 minutes Covers NTS terminals and other terminals >10mcm/day Aim - to provide close to real time data on gas flows into NTS At end 2004, a proposed enhancement of information provision relating to flows into the NTS was raised Would increased gas flow information benefit customers? Ofgem conducted cost-benefit analysis to inform decision

9 GB case study approach Assume prices include a risk premium which reflects the uncertainty which exists when an offshore outage occurs Model impact of near real-time flow data on prices Near real-time flow data reduces uncertainty and the risk premium …... leads to lower prices and costs to consumers High impactMedium impactLow impact Reduction in consumer costs £59.08m£46.06m£20.03m

10 Impact – outage example Unexpected closure of CATS pipeline reduces flow into Teesside to zero Information would only have been available to market via rumour/speculation in real time previously

11 Short-term price effects Two CATS outages compared  Pre-info release: more volatility, greater increase in price  Post-info release: less volatility, lower increase in price

12 Long-term price effects Similar impact for longer-term prices

13 Customers and markets can benefit from increased information transparency Need to consider costs and benefits of releasing information to market Once it is clear that information can be released – then it is a question for regulators … should the information be released? Reduces risk premium linked to uncertainty Lowe r price s and volat ility in short term Lowe r price s and volat ility in long er term too Bene fits to cons ume rs GB case study shows value of enhanced information provision … Clear er econ omic sign als

Moving forward… Considering the ‘quick wins’

15 Process from here …  Discussion today regarding what is possible – i.e. what info could be released  Discussion of findings with RCC on areas of potential improvement – establish what info should be released – considerations of costs/benefits  TSOs to develop plans to take actions forward - areas identified as ‘quick wins’  TSO plans reviewed – RCC / stakeholder input  Plans to be signed off by RCC  RCC to monitor progress towards implementation

16 Thank you  Thanks once again for all the helpful responses received – feedback has been very constructive  Potential to make real progress as part of the Gas Regional Initiative  October stakeholder meeting will be key to demonstrate work and progress made to date Today is a real step in that direction

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