David Halldearn 6 May

Background Programme Board initial discussion last year at Stockholm Since then: Further analysis has been undertaken on impact of 3 rd package on RIs Informal discussions have been held with key opinion formers, including PB members, key member states, project leaders European Commission has announced planned Communication on Regional Initiatives in September 2

3 rd package - regional implications 3 rd package fill ‘regulatory gap’ – the lack of cross border regulatory framework Past voluntary approach of RIs there to be reviewed Key measures: Obligations of regional co-operation on member states, regulators (facilitated by ACER), and TSOs Framework Guidelines, network codes and comitolgy procedure will create binding cross border regulatory framework – the basis for a single European energy market 3

Roles and responsibilities ENTSO-G drafts network code Commission proposal to comitology Member state consideration and then binding guideline Implementation nationally ACER drafts Framework Guideline 4 Stakeholders

Role of GRI NW Two potential roles with significant differences: ‘Implementation’‘Pro-active’ Implementation of (mainly) Framework Guidelines vision and network code rules Regional co-ordination of overall approach to national implementation (as implementation is a cross border issue) Engagement with all parties – including member states Projects which can inform development of Framework Guidelines and network codes on regional specificities projects with can be implemented directly within existing regulatory framework EU 5

Organisation Significant, but subtle, differences for each role: ‘Implementation’ – not voluntary‘Pro-active’ - voluntary Legal implementation responsibility of member states and regulators – not ‘voluntary’ Need for co-ordination across national boundaries ‘Design’ of implementation across the region resulting from consultation and stakeholder involvement RCC could have a more formalised role in regulatory co-ordination. Member states have a legal interest Others may receive legal obligations Voluntary and co-operative activity between stakeholders Not different from existing GRI NW work – structures unchanged No duplication with ENTSO-G or ACER work Must contribute to overall single market objective 6

Scope of regional decisions ‘Implementation’ activity will focus on cross-border coordination and regional differences: EU Regional National Scope Detail 7

Cross border co-ordination may be necessary for implementation Scope to interpret high level EU Guidelines and codes could result in problematic national differences persisting Consultations in neighbouring countries should be co- ordinated to save confusion The overall approach (‘design’) of implementation – both the process and basic model – should be shared across borders as Guidelines and codes will be aimed at cross border issues 8

GRI NW structures – roles ‘Implementation’‘Pro-active’ RCCCo-ordination of development, regulatory implementation, and operation of cross border regulatory framework. Co-ordination of voluntary work with stakeholders Member StatesPolicy oversight of implementation and compliance with EU obligations in liaison with RCC, including on ‘design’ Observer/intellige nt customer where issues of interest Programme BoardNon-executive advice to lead regulator, co-ordination of projects across all participants, and facilitation CommissionComplianceEU ‘vision’ IGPro-active and some implementation work SGConsultative body – supplement to formal consultations 9

Practical effect on organisation Decisions on scope of GRI NW activities in relation to implementation RCC to consider its role and organisation in relation to cross border implementation Member states to be closely engaged on implementation issues – but engagement could encompass whole cycle from Framework Guideline and network code development, through comitology, to implementation issues. 10

GRI NW 2010 Work Plan Clear view that current projects should continue as priority rather than establishing new projects Main focus on: Short term capacity and incentives. FG being drafted, but value can be added on implementation/for network codes by advancing thinking on capacity product definition and incentivisation, and secondary markets Investment – but care is needed here to co-ordinate with EU developments. Value can be added in relation to regulatory co-ordination on investment decisions and feed into tariff Framework Guideline. Key option of addition on open seasons (but already in ERGEG work plan for 2010) Interesting suggestion of project on capacity bundling at Dutch/German border to be considered Some (TSOs) prefer no work in GRI NW other than implementation Implementation work could include: Regional input to Framework Guidelines and network code drafting Assisting ACER on regional co-ordination of implementation 11

Possible discussion points Do you agree that GRI NW is the platform for governments, TSO’s and NRA’s to discuss regional implementation & pro active issues? Do you agree that GRI NW identifies and feeds in regional specifities to the EU level? Do you agree that current bi annual meetings should be extended with pre comitology meetings. The first would be about CMP? 12

David Halldearn 6 May