1. Transparency Workstream Gas Regional Initiative North West Region By: Cemil Altin Workstream Leader Bonn Workshops 8-9 February 2007 NRA logo

2. 2 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Background North West identified transparency as a priority area of work The North West RCC issued a questionnaire to market participants in November. Also published on ERGEG website 26 Responses were received, 7 of which were confidential. Non- confidential responses on the ERGEG website Many respondents only commented on one or two parts of the questionnaire but a number of respondents provided responses on all areas A “facilitation paper” for this session has been prepared and circulated by the RCC alongside a “data appendix”

3. 3 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Purpose of this session Discuss the responses to the questionnaire Discuss the key issues that arise Discuss what the possible next steps should be Important opportunity for all stakeholders to express their views

4. 4 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo The questionnaire and responses (1) Responses received from TSOs, SSOs, shippers, traders, customers, suppliers Respondents were asked a number of questions relating to transparency: To identify the information needed along the “value chain” (e.g. transmission, storage, LNG, gas hubs etc Whether the use of guidelines can help improve the implementation of existing transparency requirements under the Gas Regulation What the best way of securing the provision and consistency of information would be Whether there was a need to review the less than 3 rule with regards confidentiality of information How to ensure that commercial confidentiality can be maintained without impinging on market transparency Whether there are any examples of best practice that could be identified and if so any reasons why it could not be rolled out across Europe TSOs were also asked to provide information on the way in which they define/measure certain information on capacity as required under the Gas Regulation

5. 5 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo The questionnaire and responses (2) Some key issues emerging:  There is a lack of effective compliance by TSOs against the transparency requirements in Regulation 1775/2005 (and also of storage operators against the GGPSSO)  The scope and nature of the data across the market could be improved  The frequency of data provision could be improved  The way in which information provided could be improved  The consistency of information provided across the market could be improved  Rule of 3  Issues were raised over its application and its use to constrain transparency

6. 6 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Consistency Questionnaire Consistency of information on capacity published by TSOs The initial analysis shows that there are some differences in the way in which information on capacity is being defined and measured This includes differences in the definition of maximum technical capacity – i.e. level of firm capacity or equipment specifications

7. 7 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Guidelines and securing the provision and consistency Guidelines A number of respondents suggested that guidelines would be useful They could include requirement to publish raw data They would could improve the consistency/harmonise transparency requirements across the Region and Europe A smaller number suggested there was no need for additional guidelines and arrangements should be left to the market Securing the provision and consistency of information Binding commitments Effective unbundling Voluntary guidelines/arrangements Base level of information Arrangements between customer and service provider

8. 8 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Points raised by a large number of respondents suggesting ‘rule of 3’ should be reviewed: Where the rule reinforces the position of the dominant incumbent No exemptions for aggregated flows Publication of parties requesting non-publication and final decisions resting with the competent authority Enforcement should be improved Smaller number of respondents argued no need to review rule of 3 – it maintains appropriate balance between confidentiality and transparency Rule of 3

9. 9 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Examples of best practice A number of respondents indicated that the level of transparency in the UK could serve as a good example – including for Transmission, LNG storage and off-shore GTS in the Netherlands was also highlighted as providing good transparency

10. 10 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Some themes and questions Themes Market participants think greater transparency is needed to improve the way the gas market operates – compliance against existing “mechanisms” & possibly “new information” General feeling that less than 3 rule could be “improved”

11. 11 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Some themes and questions Questions What should be done to improve TSO compliance with Regulation 1775/2005 ? What information is still needed in each area of the market ?  Gas Storage  Hubs  LNG  Interconnector  Balancing Who should be responsible for providing it ? And should they also be responsible for the consistency of the presentation of the information ? What can be done to improve the consistency of the level of data provided by each of the operators ?

12. 12 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Some themes and questions Is there a TSO or operator or country in the region whose examples of best practice in transparency could be rolled out across Europe ? What possible solutions are there where the application of the rule of 3 is having a detrimental affect on the market ? Is it sensible to develop an information template as is required under the gas balancing guidelines for all areas ? Are there quick wins in each area that could be targeted in the short term ? Is a regional one-stop-shop website viable in the medium or long term ?

13. 13 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Possible ways forward? For discussion Development of Action Plans to help meet the issues raised by respondents to the questionnaires to improve the level of transparency What/scope/frequency of information Timeline for making changes etc Potential quick wins Consultation with stakeholders Rule of 3: Possibility publishing aggregated data Development of code of practice/guidelines for better application of rule of 3 Best practice An inventory of best practice that could be “rolled out” on a wider basis

14. 14 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Possible ways forward? For discussion Consistency of capacity information: ERGEG undertaking work on the calculation of capacity – including the possibility of developing high level guidelines for TSOs on how capacity should be calculated Possible Options the information received from the questionnaire on consistency of information could be fed into this process Or TSOs could work together within the GRI North-West region to develop better consistency in the definition of information that is made available to the market

15. 15 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Possible ways forward? Who should do what? RCC IG SG Enabler Group

16. 16 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Information Summary Tables The following summary tables should not be seen as a wish-list that should be delivered by market operators but rather an indication or guide to the information that market participants think is necessary to help underpin an effective and efficient gas market.

17. 17 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Interconnector information requested 1 Frequency Importanc e Booked & Available entry and exit capacity over a 20 year periodMonthlyEssential Booked and available interconnector entry and exit capacity over a 1 year periodDailyEssential Daily aggregate flows including flow directionD+1Essential Hourly flows Hourly, Real TimeEssential Availability of unused capacity Hourly/Daily (dependant on Balancing RegimeEssential Constraints/Interruption of flowReal TimeEssential Gas qualityReal TimeEssential Historic usage pattern - aggregated entry and exit of interconnector capacity (3 years historical period)DailyImportant Tariffs for transport capacity packages capacity prices (inc. auctions/secondary markets) Essential Tariff calculator Important

18. 18 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Interconnector information requested 2 Frequency Importanc e Capacity allocation procedure Important Booking rules and booking statusReal Time Anti-hoarding procedures Re-utilisation procedures Maintenance and planned outage schedule over a 3-year periodASAPEssential Improved information relating to the level of firmness of capacity being offered. This information needs to include historical data and a statement from the TSO about the expected percent of days being interrupted Essential An internet-based system that allows market participants to book or bid for capacity and buy/nominate any unused or unsold capacity Essential Details of interconnector, name, owner and operator etc Essential

19. 19 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Storage information requested 1 Frequency Importanc e Booked injection, withdrawal and working gas capacity over a 20 year periodMonthlyEssential Available injection, withdrawal and working gas capacity over a 20 year periodMonthlyEssential Booked injection, withdrawal and working gas capacity over a 1 year periodDailyEssential Available injection, withdrawal and working gas capacity over a 1-year periodDailyEssential Month ahead forecasts of injection and withdrawal rates (or ratchets) where rate is affected by total reservoir pressuresMonth-1Essential Entry/Exit Capacity (kWh/h, m3/h)Daily End of day stock levelsDay+1Essential Input and output flowsReal TimeDesirable Description of the service provided by the storage owner or SSO, including technical characteristics and available parameters depending on the type of storage services Essential Rules for booking and using the storage and contract details

20. 20 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Storage information requested 2 Frequency Importance All Tariffs and tariff calculatorYearly Booking StatusDaily Aggregate regional/national info for confidential data Real Time - Daily Filling LevelASAPEssential Embedded storage as System StorageASAPEssential Maintenance and planned outage schedule over a 3-year period At least 6 months in advanceEssential Unplanned outages Within an hour Current actual nominations / utilisation rates Every 3-4 HoursEssential Historic usage pattern (aggregated injection and withdrawal of storage capacity) Daily, for last 3 yearsImportant Grid Connection point Important Capacity expansion planASAP

21. 21 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Hubs information requested Frequency Importance Imbalance price mechanismDaily / Hourly Standard contract between hub operator and playersDailyImportant Standard trading terms with clear fee structureDaily / Hourly Trade procedures (with required guarantees to access)DailyEssential Capacity/congestion allocation mechanismDailyImportant Presence of a clearing process and hedging products Organisation of trade (electronic, phone, fax e.t.c)DailyEssential Electronic bid/offer system Offered flexibility serviceDailyDesirable Pipeline connections between hubsDailyDesirable Exchanges/Brokers Physical and financial products

22. 22 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Balancing information requested 1 Frequency Importance System offer and System bidsReal time / h+1Essential information on current flows at main interconnection points (border flanges, interconnectors)Real time / h+1Essential Day ahead demand forecasts regularly throughout the day should be provide for a given balancing zone together with the level of uncertainty associated with such forecasts.Real Time Accurate measured volumes (allocations) Capacity trades (where relevant to the hub and where not separately shown by the TSO)Daily / HourlyEssential Indications of individual shipper system balance Essential Balancing status of userReal timeEssential information on line packReal time to h+1Essential Balancing rulesWhen ChangedEssential Tolerance levelsDaily Cash Out prices: System Marginal Prices (Buy/Sell) - SAP Explanation of all intervention by TSO to establish balance in the market (quantity, price, location and reason)Daily/hourlyEssential Calculations of imbalance chargesWhen ChangedEssential

23. 23 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo Balancing information requested 2 Frequency Importance Cost reflectiveness of imbalance charges When ChangedEssential Ability to calculate likely balancing or cash out penalties or payments based on clear rules for the balancing and cash out regime Essential Quality conversion capacity, availability and advance notice of interruptions where high and low-cal system are connected through quality conversionDailyEssential Total demand volume evolution incl. HubsDaily / Hourly Total supply volume evolution incl. HubsDaily / Hourly Efficient secondary market for flexibility productsDailyImportant Transmission principlesDailyEssential Legal basisDailyEssential Contractual termsDailyEssential Back up availabilityDailyEssential Sufficent flexibility productsDailyEssential

24. 24 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo LNG Information Requested 1FrequencyImportance Available capacity at LNG regasification terminalsDailyEssential Booked berthing slots (1-3 month ScheduleDaily - WeeklyImportant Flow of regasified LNG into pipeline networkDailyImportant Daily updated information of name, size and origin of cargoesDailyImportant Daily updated and historical information on send-out (flows from terminal to transmission system)DailyImportant Send out rate and discharge rate for each capacity holderDailyEssential Clear rules on capacity allocation, availability of slots and prices Important Volume in storage tanks Desirable Aggregated flows on a regional basisReal Time service portfolio Essential service and contract conditions Essential Quality of LNG offered from a given sourceMonthlyEssential

25. 25 GRI – North West Region Bonn Workshops, 8-9 February 2007 NRA logo LNG Information Requested 2FrequencyImportance Regasification capacity in import terminals not exempted from TPAMonthlyEssential Tariffs for services, Regasification tariff in import terminals not exempted from TPAMonthlyEssential Mechanism to enable shippers to indicate interest in buying/selling capacityDailyDesirable LNG quality impact on priceMonthlyImportant Technical Characteristics of facility Important Capacity expansion plans Important Maintenance plans Important Europe up to UK standards