1. Jonas Törnquist Jonas.Tornquist@edftrading.com EFET Gas Market Transparency Requirements ERGEG Enabler Group Meeting Dublin, 23-24 April 2007 Törnquist European Federation of Energy Traders 1 Dublin, 23-24 April 2007

2. 2 Törnquist EFET and Transparency  EFET Paper published in August 2006: Information Transparency in Gas Markets. See www.efet.org/default.asp?Menu=283www.efet.org/default.asp?Menu=283  This paper sets out transparency requirements more broadly  General requirements – timing, formats, etc  Gas flow allocations  Balancing  Supply and demand information  Price and trading information  Gas quality information  In this presentation we focus on just three aspects  Transmission transparency  Storage transparency  The ‘less than three’ rule

3. 3 Dublin, 23-24 April 2007 Törnquist Why transparency is vital  To inform market participants  Creates market confidence in prices and price formation  Improves liquidity as confidence grows  Enables competition on an equal footing  To aid capacity purchases  To enable regulators to carry out market monitoring and regulation of network companies and tariffs  To assist security of supply

4. 4 Dublin, 23-24 April 2007 Törnquist Transparency requirements  There is a balance between transparency and proprietary commercial information  Information should be released unless there is a very good reason not to release it  Incomplete information restricts its usefulness  Materiality thresholds should be as small as practicable – let the market decide what is material and not

5. 5 Dublin, 23-24 April 2007 Törnquist Transmission Transparency  Booking capacity  How much is booked/sold? When do these bookings expire?  How much is left to buy? How can I book it?  Timelines must be sensible - 10 days to hear back for buying daily capacity is unacceptable. Virtually instant notification should be possible  If there is congestion, how is this managed?  What allocation method will be used when capacity becomes available? Market participants need to know about what type of capacity is available when and how.  Firmness of capacity  How oversold is the capacity versus physical capability? 110%? 150%?  Preference for having aggregate flows and when interruptions take/took place. This allows independent analysis  But time, location and duration of interruption should at least be published with a short time lag, possibly D+1, but in any case in line with the balancing regime Market participants need to be able to assess the likelihood of interruption

6. 6 Dublin, 23-24 April 2007 Törnquist Transmission Transparency  Upstream flows, at least in aggregate form at all system import points  Gas demand. Actual demand and forecasts in at least aggregate form for each balancing zone and system as a whole  Information that may materially affect gas supply and demand availability at entry and exit points in aggregate form, including information on unplanned outages  Actual and historic line pack data  Actual pipeline flows across borders/between traded hubs in at least aggregate form  Timing: May depend on market situation but aim is at least daily

7. 7 Dublin, 23-24 April 2007 Törnquist Transmission Transparency  Interruptions/unplanned outages  Per entry/exit point as soon as possible, but no later than after X (depends on market conditions)  Staged publication as more information comes to light (e.g. about duration/severity of outage)  Publication of factual situation and causes  Of course planned outages should be disclosed well in advance Market participants need this information to derive the amount of gas in the system. This influences important decisions on purchase/sale of gas and flowing gas into/out of storage and increases reliability of the available market data because it enables market participants to undertake their own analysis.

8. 8 Dublin, 23-24 April 2007 Törnquist Storage transparency  Required storage information  Gas inflows  Gas offtakes  Gas in store levels  Granularity and timing  Preferably information per site, but at least by trading zone/hub  Daily information updated at D + 1 (early during the trading day) for D  Interruptions/unplanned outages  Per facility as soon as possible, but no later than after X (depends on market conditions)  Staged publication as more information comes to light (e.g. about duration/severity)  Publication of factual situation and causes Market participants use storage flow information for optimization of their positions (purchase/sales, storage use)

9. 9 Dublin, 23-24 April 2007 Törnquist Storage transparency  Information about available capacity need revision  Traffic light system not always helpful  What is technical level of storage available?  How much storage capacity is available now?  How much storage is available in the future? Say three years out?  Beyond this timeframe, what do I need to do to get storage capacity? More of an open season like process if above the technical capacity for example?  What is the indicative price? Market participants need to be able to assess available storage capacity (current and into the future)

10. 10 Dublin, 23-24 April 2007 Törnquist Good practice in transparency Transmission information  National Grid Storage information  Centrica Storage  GDF DGI has improved recently by publishing storage flow data (but only actual, no historical values)

11. 11 Dublin, 23-24 April 2007 Törnquist ‘Less than three’ rule  The less than three rule as we understand it  Fewer than three participants  Users have to request non-disclosure  Regulator has to approve the request  In practise, a huge amount of information is withheld as a result Example GTS network: Bocholtz (no data), Oude Statenzijl, s’Gravenvoeren and Zelzate (incomplete data)  Market participants do not know where and why information is withheld  Contractual clauses requiring non disclosure?  Regulator approved less than three case?

12. 12 Dublin, 23-24 April 2007 Törnquist ‘Less than three’ rule – suggested ‘fixes’  More strict application by regulators  We think there is a lot of scope here  E.g. storage: Information about the physical operation (even if only one user) may not reveal commercial position if some virtual storage has been sold)  E.g. Transit capacity: If a transit pipeline operated by fewer than three have sold gas swaps or virtual capacity this may pave way for publication of the physical use of the pipeline  E.g. Transmission to and from traded hubs. If more than two the commercial sensitivity diminishes significantly to keep physical transport information confidential  The devil is in the detail  The onus of proof in on the owners that their commercial position is significantly compromised  Regulators must publish where/why information is confidential for each case

13. 13 Dublin, 23-24 April 2007 Törnquist ‘Less than three’ rule – suggested ‘fixes’  Potential to redefine zones more broadly  E.g. publishing storage information by hub/zone/region/country  In some places (e.g. Germany) the issue may still remain as zones are arranged around incumbents  So may also need to redefine hub zone boundaries in some cases  Cross border flows – is it always possible to disclose?  Require publication of exactly what contractual non-disclosure clauses say and where they are applicable  Commercial confidentiality clauses: Need transparency on exactly what those clauses say  Less than three rule may not apply to real time interruption information (no commercial sensitivities given a small time lag

14. 14 Dublin, 23-24 April 2007 Törnquist Thanks for your attention European Federation of Energy Traders Amstelveenseweg 998 1081 JS Amsterdam Tel: +31 (0)20 5207970 Email: secretariat@efet.orgsecretariat@efet.org www.efet.org