1st Implementation Group Meeting – Region South-South East 13th 2006, Vienna

2 Agenda

3

4 ERGEG Regional Initiative 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 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 06 alongside a gas roadmap conclusions paper

5 The idea behind AIM: 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 the Commission, MS, TSOs, SSOs, Hubs, traders, shippers, suppliers, consumer organisations,…

6 What do we want to achieve? PRACTICAL OUTPUT: Identify existing obstacles and potential solutions, to increase: market liquidity trading activities and competition, increase number of active traders in the region TPA efficiency through harmonised TPA rules; market oriented and cost-based offer of transport services and flexibility tools; sufficient availability of transport capacities… security of supply and competition through diversification of sources and sufficient availability of transport capacities ENSURE STRONG COORDINATION WITH THE OTHER RCCS AS A FIRST STEP TOWARDS SINGLE MARKET

7 Scope RegionCountriesLead Regulator North- West Netherlands, Belgium, France, Great Britain, Ireland Germany, Denmark, Netherlands NL North (*) SouthSpain, Portugal, Southern France Spain South- South East Italy, Austria, Slovakia, Hungary, Slovenia, Greece, Poland, Czech Republic Italy & Austria (*) 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.

8 ERGEG - Timetable 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 and IG Members begin to implement Action Plan. Continued liaison with Implementation and Stakeholders G.

9 Information – Access to Documents – Transparency g/portal/page/ portal/ERGEG _HOME/ERGE G_RI/Gas_Reg ional_Initiative ERGEG website  regional initiatives

10 4.1/GRI: ERGEG is committed to transparency!

11 Contact Persons

12 Agenda

13 ERGEG established Regional Co-ordination Committees (RCCs). Each RCC : - comprises regulators from the region; - has autonomy, & adopts its own decision making process ERGEG established Regional Co-ordination Committees (RCCs). Each RCC : - comprises regulators from the region; - has autonomy, & adopts its own decision making process IMPLEMENTATION GROUP Includes TSOs, SSOs, Hub Operators, other relevant market players This is the ‘do-er’ for each Regional Initiative Chaired by RCC IMPLEMENTATION GROUP Includes TSOs, SSOs, Hub Operators, other relevant market players This is the ‘do-er’ for each Regional Initiative Chaired by RCC STAKEHOLDER GROUP Wide participation including market players chaired by RCC Consultation on RI activities STAKEHOLDER GROUP Wide participation including market players chaired by RCC Consultation on RI activities MADRID FORUM Overall forum for discussing progress in progressing regional initiatives and pan- European consistency MADRID FORUM Overall forum for discussing progress in progressing regional initiatives and pan- European consistency EU COMMISSION 3.1 Structure A list of all nominated stakeholders will be distributed in the meeting

Organisation of the SSE Region – Roles  RCC  Regulators of the Region  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 State governments  Relevant powers often rest with MS  responsible for national legislation  EC  Key role in supporting each gas REM project and helping to deliver objectives

Organisation of the SSE Region – Roles  Implementation Group  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  Members of IG  Regulators  TSOs, SSOs, Hub Operators,...  Ministries

Organisation of the SSE Region – Roles  Stakeholder Group  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  Members of SG  Implementation Group members  Representatives of all relevant market participants eg. consumers, traders, suppliers, grid operators, producer,....

Organisation of the SSE Region – Rules of Procedure  How to consult stakeholders  Consultation Paper circulated and published on ERGEG Website  Bilateral Meetings  Public hearings of stakeholders

Organisation of the SSE Region – Rules of Procedure  Decision making rules  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 will be issued by RCC asap and Public hearing in Sept. Regulators chair the session and operators, stakeholders present their views on the proposed issues.

19 Agenda

Priorities of SSE Region – Priorities (1) 1) Monitoring of regulatory implementation in the countries, with particular reference to: Implementation of Directive 2003/55, shortcomings and infringement procedures Steps undertaken to ensure compliance with the Regulation 1775/2205 Scope and guidelines of Regulatory Authority powers and actions

Priorities of SSE Region – Priorities (2) 2) Survey and analysis of the regional market and its problems, particularly:  Current development of hubs and other trading activities in the region  Development of the main physical and commercial gas flows  Current and expected infrastructure development and its regulatory framework  Practical case studies of gas transportation through the region for specific profiles by a fictive shipper:  RUS-SK-CZ-GER (Velke Kapusany - Waidhaus or Hora Svate Kateriny)  RUS-SK-A-SI-I (Velke Kapusany - Goricia)  RUS-SK-A-I (Velke Kapusany - Tarvisio)  RUS-SK-A-GER (Velke Kapusany - Oberkappel)  RUS-PL-GER-CZ (Bobrowniki or Kondratki * Mallnow - Hora Svate Kateriny)

RUS-SK-CZ-GER: Velke Kapusany - Waidhaus or Hora Svate Kateriny RUS-SK-A-SI-I: Velke Kapusany - Goricia 3. 3.RUS-SK-A-I: Velke Kapusany - Tarvisio RUS-SK-A-GER: Velke Kapusany - Oberkappel 5 5. RUS-PL-GER-CZ: Bobrowniki or Kondratki – Mallnow - Hora Svate Kateriny Case studies of gas transportation through the region

Priorities of SSE Region – Priorities (3) 3) Transparency requirements covering:  Access to Storage Services  Hub Service

Priorities of SSE Region – Priorities (4) 4) Interoperability issues:  -Gas quality issues  -Infrastructure interconnection agreements  -Operational balancing

Priorities – Allocation of responsibilities RCC prepares (draft) consultation papers, questionnaires and Action Plan National regulators: to define / liaise with stakeholders provide available data consult with national stakeholders discuss and approve drafts TSOs/HOs/SOs: to provide requested information, discuss and implement agreed Action Plan

26 Agenda

27 Agenda

28 6. Timetable of SSE Region  6.1 Milestones  Draft and circulate consultation document– mid July;  Comments no later than 5th September  Fact finding activity by regulators (compliance with directive and regulation, collection of basic market data)  Draft Action Plan circulation 10.10, approval  6.2 Next steps  First SG – Meeting - Public hearings and discussion 27.9 *) *) 28./29.9 GTE-Conference in Bratislava 29.9 GFG/GWG in Vienna