1. Dipl. Ing. Dr. Stephan Ressl Vice Chairman EFET Europe Gas Chair EFET SSE Head of Business Development EconGas GRI SSE Vienna, 08.04.2008 European Federation of Energy Traders

2. Stephan Ressl Vienna, 08.04.2008 2 EFET R_ISO Model – Why? R_ISO (multi-TSO) and aspects of security of supply  physical capacity available from source to final customers?  Transport cost clearly calculable at point of supplier‘s decision on where to source gas from?  Historically, many major investments happened because of international (cross-border) consortia/cooperation (e.g. Megal, TAG, BOG,…)  Aim must be that at least some different supply sources must potentially physically arrive in each area – no security of supply without physical interconnection (long term and short term)

3. Stephan Ressl Vienna, 08.04.2008 3 EFET R_ISO Model – Benefits for competition R_ISO and aspects of competition  final customer  Pooling of consumption within one balancing area – increase of negotiating power  Larger netting of imbalance positions reduces opportunity costs for suppliers  More potential suppliers, reduction of market concentration  for shippers/suppliers  More similar customers in one market area  Reduced opportunity cost: nomination, balancing, registration, etc.. reduced risk to deliver  Macro-economic/political  Potential of economies of scale for system operation  Eg potential for higher capacity provision through larger flow optimisation  Reduced national influence Grid 2007

4. Stephan Ressl Vienna, 08.04.2008 4 GRI SSE: EFET R_ISO Model – Comments received  A stakeholder consultation on R_ISO model took place, the deadline was 10 January 2008  Comments from following parties has been received so far:  CEER – supportive, asks for more details  OGP – rather supportive, wants to avoid inefficient structures and more detail on the economies  Eurelectric – supportive  Eurogas – supportive  GTE – does not want to make effort before 3rd package, however acknowledges benefits of European integrated flow optimisation (winter outlook)  Based on the first reaction during the WS in Prague the GRI SSE decided to launch an impact assessment analysis ---> results to be presented in June at SG GRI SSE  EFET has prepared an evaluation paper of the comments received

5. Stephan Ressl Vienna, 08.04.2008 5 GRI SSE: Benefits of integrated flow pattern  GTE presented benefits of European flow optimisation in its winter stress presentation at last meeting in Prague 22.01.2008  EFET SSE welcomes the integrated flow optimisation approach by GTE

6. Stephan Ressl Vienna, 08.04.2008 6 Proposed timeline for establishment of a regional E/E model in SSE Harmonisation of rules at regional level (common transmission model) Regional auction platform and market based balancing Harmonised regional network access Coordinated investment planning and regional balancing Joint regional network operation Regional entry-exit model Interconnection agreements (incl. operational balancing accounts) end 2011 mid 2011 end 2010 mid 2010 end 2009 mid 2009 end 2008

7. Stephan Ressl Vienna, 08.04.2008 7 EFET R_ISO Model - Conclusion  EFET is going to contact all interested associations in order to get to a common view on the possible development of the regional model – within next month  EFET believes that starting implementation of such a model now is key for further development of the liberalised market and taking already the elements of the 3rd package on board  For SSE: Wait on the results of the PWC multi-client study (PWC sent out questionnaire to traders and shippers)  For SSE: Establish an advisory panel for additional help  Regions must be established on a pragmatic basis, CEGH finally established, Italy should also introduce a balancing market  Regions obviously must be compatible with each other  Germany is moving:  E-ON CEO Bernotat statement for electricity;  EGT and Bayernet  MOL proposal goes even further