1 Gas Regional Initiative Regional Energy Market South-South East Hub development as a regional balancing market Italian Balancing Point TF

2 The Italian Balancing Point Task Force The way so far  The Italian Balancing Point TF aim is to provide a concrete contribute to one of the GRI-SSE key issues Hub development as regional balancing market  IBP TF members come from AIGET (the Italian Association of energy traders), EFET (The European association of energy traders) and Eurelectric (The Union of the Electricity Industry) Expresses the view of gas traders and thermoelectric consumers

3 The implementation of a balancing point would positively impact the functioning of the gas market:  market based balancing mechanism is more effective and economic than fixed imbalance charges  shipper imbalance charges reflect the effective net costs caused to the system operation  The balancing market mechanism contributes to improve the liquidity of the hub and the trading of gas Hubs development as a regional balancing point The TF point of view

4 In principle the balancing point should have a regional extention In practice however the SSE regional market lacks: - an harmonized business environment - a well meshed gas grid - adequate available interconnection capacities Two/three balancing points in the SSE region is a more realistic objective

5 Hub development as a regional balancing point The TF point of view  As a first immediate step develop two/three hubs in the region acting as balancing points for their reference area.  In the longer term the local balancing points could evolve to a regional dimension.

6 A balancing point for the Italian gas market Some aspects of the Italian gas market could interfere with the well-functioning of the balancing market:  Limited availability of flexibility instruments for shipper to correct their imbalance position.  Inadequate availability of storage capacity.  Few dominant players might influence price level  The arrangements for the balancing market should duly take into account these limits

7 A balancing point for the Italian gas market IBP TF Preferred features  Daily balancing mechanism  Independent Market Operator  Anonymous exchanges  Clearing price published ex-post

8 A balancing point for the Italian gas market IBP TF Preferred features  Information reliable, transparent and non discriminatory.  Tolerance level: fixed or decreasing with the amount of demand  Ex-post trading: as long as the market is not well- functioning and liquid  Back-up back-down services provided by the market  Dedicated area on the PSV platform

9 A balancing point for the Italian gas market A Proposal for the Action Plan  september 2007  October/December 2007  March 2008  Consultation Jan 2008 Definition March 08  Consultation April 2008 Definition May 2008  October 2008  Definition of a set of IBP TF preferences  IBP TF/ AEEG meeting  IBP TF / SRG meeting  Independent Market Operator for the balancing point  Dedicated Area on the PSV web site  Balancing Market Organisation  Balancing Market Rules  Full implementation of the market balancing mechanism