GRI NW Investment - Update on project Common effort on making regional investment happen 21 September 2010

2  By end of 2009 “an agreed framework for (all) new cross border investments and pilot projects underway”  By end of 2009 establish and implement across region these coordinated incentives  By end of 2008 “TSOs should understand how they will be incentivized to make new (additional to immediate demand) regulated capacity available efficiently  During q – 2011 roll-out of Action Plan in order to implement the agreed in Policy paper framework for (all) new cross border investments in the region  Subject to update Roadmap  Combine implementation with pro-active following of EU- developments What were GRI NW Investment objectives?

3 We continue to focus on implementing policy advice in 2010, while pro-actively working towards 3 rd package discussion: -Progress of regional projects monitored for ad-hoc action RCC (all rec) -Regulators address stranded asset risk discussion via documenting solutions in exchange of letters between PB and NRAs (rec 1) => pending, by November 2010 (Joint Statement, subject to comments). -TSO’s clarify investment prerequisites via website publications (rec 4) => by IG presentation of end-results. -Share Regulatory best practices on re-numeration in general via input to FGL tarification (rec 2 and pro-active) => paper submitted by 12 August 2010 to ERGEG. -Regulators clarify GRI NW view on scope of regional plan => paper welcomed with Gasplatform (discussion continued 09 Nov 2010) Where do we stand with implementation? First results by

4  FGL Tarification  See regulators.eu/portal/page/portal/EER_HOME/EER_INITIATIVES/GRI/No rth_West/Priorities% /Projects/Investmenthttp:// regulators.eu/portal/page/portal/EER_HOME/EER_INITIATIVES/GRI/No rth_West/Priorities% /Projects/Investment -Key elements walk through:  Stranded assets mechanism should be clear to TSO  Limiting ex-post refusal of investment (and keeping some risk on TSO)  Minimum investment criteria (hurdle) specified  Accompanying tariff arrangements – which can be reset - specify:  the manner in which investment costs will be calculated  the period over which the investment cost is recovered (also known as the period of depreciation)  the rate of return and  the extent of User Commitment (UC) required to signal investment  Regional plans Pro-active work results in (partial) recording of lessons learned in 3 rd package instruments

5 Question for discussion: So is the work finished and goal achieved? 5 The path to secure and integrated market from Roadmap GRI NW: “The (path to) investment climate should be such that investments in capacity are sufficient and (efficient and therefore) timely and persistent physical congestion is avoided. (…) Investments should facilitate gas supplies from diverse sources to meet the need for secure gas supplies”.

6  Key questions for today:  Comments on Joint Statement?  Stop or continu potential work of GRI Investment after finalization of implementation of Policy Advice? -Subject to pending information on Regional Initiatives paper EU Commission, Infrastructure package content, definitive ERGEG/ACER workplan 2011+, GRI workplan 2011+, Open Seasons and Regional plan work.  Thank you for your attention and time.  Further questions can be ed to: and

7 ANNEX Detailed Policy advice (=the key result) implementation slides

8  For original text of the Policy advice of GRI Investment, February 2010, with the 7 recommendations please consult weblink at regulators.eu/portal/page/portal/EER_HOME/EER_INITIATI VES/GRI/North_West/Priorities1/Investmenthttp:// regulators.eu/portal/page/portal/EER_HOME/EER_INITIATI VES/GRI/North_West/Priorities1/Investment  In this annex we provide walk through the Policy advice implementation…. The key result – Policy advice of February What is the Policy advice, that is being implemented?

9 Recommendations – walk though  Recommendation 1: “Roll in (partially, and with exemption of exempt interconnectors) the new investment in the existing asset base and/or allow shorter depreciation periods and/or increase the WACC to bear the risk, in proportion to TSO risk burden..” (of stranded assets -Joint Statement approach 9

10  Recommendation 2: encourage to agree national regulator and TSOs on the parameters for remuneration of future investments and stimulate this debate on a regional level by sharing good regulatory practices.  The pilot for encouraging (national) agreement is clearly implementation of Recommendation 1 (adressing stranded asset risk). Pilot for sharing regulatory practices on remuneration in 2010 is input to FG Tarification.  Implementation actions in 2010 are therefore addressed via work on Recommendation 1 and input to FG Tarification debate.  As concerning future regional debate, there is a clear need for future “anchoring” regional investment discussions in RCC or e.g. during future Regional Plan discussions. We need to ensure that once GRI Investment is finalized, we DON’T need in 2 years again a Virtual Test II. 10 Implementation actions worked out per recommendation

11  Recommendation 3: Make tariffs or methodology to calculate them transparent.  This is “arranged” as of with approval of Ro. 715/2009. Therefore no implementation action shall be taken by GRI NW unless repeated signals are to be received from market parties.  Recommendation 4: Make elements transparent that help achieve the investment prerequisites (e.g. communicate the minimum level of commitment you need from shippers)  As 1 st implementation action, the TSOs are to publish by end of 2010 the required for investment decisions elements on their websites. The progress with implementation is reported by Operators in IG of 21September This will allow time for implementation during September – December  2 nd implementation 2010 action on this topic in the context of “2010+” is discussion by TSOs, Regulators and Shippers on Regional Plan theme. The output of this discussion should provide a further step on Recommendation Implementation actions worked out per recommendation

12  Recommendation 5:  Recommendation 5: Close co-operation between (adjacent) TSOs and NRAs in the organisation and timing of allocation processes.  No specific implementation action is required at the time. The need for action is being monitored by continuous presentations in workshops and other meetings by TSOs/NRAs on the pending projects (see Rec. 6). 12 Implementation actions worked out per recommendation

13  Recommendation 6: Organise regular ‘3-lateral’ regional co- operation meetings on cross-border investments.  Workshop on 4 June More workshops follow if needed.  Informal meetings and telco’s advisory core group.  Recommendation 7: Ex-post review of cross-border investment projects at regional level every 2 years.  In 2011, subject to GRI-developments. To be addressed in projectplan update in q3- q4 2010, if relevant. 13 Implementation actions worked out per recommendation