1. Directorate General for Energy and Transport Johannes ENZMANN Administrator DG Energy and Transport European Commission GTE 2nd Annual Conference 23 September 2004, Copenhagen Completing the Internal Energy Market for Gas

2. Directorate General for Energy and Transport EU Market share of natural gas

3. Directorate General for Energy and Transport Implementation – state of play  Transposition until 1st July 2004  Obligation of Member States to notify pursuant to Art 33(1)  State of play 1st July 2004:  2 MS have notified, another one has finally transposed the Directive  another 2 MS presumably until end of September  14 MS presumably by end of 2004  5 MS in 2005  derogations

4. Directorate General for Energy and Transport Key provisions of the 2nd Internal Gas Market Directive  Underlying principle: non-discrimination and transparency;  Legal and functional unbundling of networks (natural monopolies)  Unbundling of accounts of integrated companies;  TPA on the basis of regulated tariffs (ex ante approval)  TPA to gas storage facilities (negotiated or regulated)  Full market opening by 2007; all non-households from July 2004;  Regulatory authorities with certain minimum powers

5. Directorate General for Energy and Transport  Complementary measure to Directive 2003/55/EC: it aims at setting minimum requirements for conditions for access to the gas transmission networks  Qualitative market opening as important as quantitative market opening  crucial importance of TPA as the principal tool to open the market and introduce competition  Regulation defines certain minimum requirements with respect to a key element of the Directive, i.e. TPA  level playing field and principles of non- discrimination and transparency Regulation on Access Conditions: objectives

6. Directorate General for Energy and Transport  Adoption of the proposal by the Commission in December 2003  1st reading of the European Parliament in April 2004  Political agreement of the Council in June 2004  Common Position expected in November 2004  2nd reading of the European Parliament  Final adoption presumably in 1st half of 2005 Regulation on Access Conditions: state of play

7. Directorate General for Energy and Transport Regulation on Access Conditions: main topics  Submitted in December 2003, political agreement achieved in June 2004  Topics:  Tariffs  TPA Services  Capacity allocation and congestion management  Transparency requirements  Balancing  Secondary markets  Comitology procedure

8. Directorate General for Energy and Transport Security of Supply Directive – Safeguarding SoS in the internal market  Ensuring the well-functioning of the internal market by  safeguarding security of gas supply  adapting to new market environment  This is achieved by  definition of security of supply policies  determination of roles and responsibilities of market players  determination of minimum output standards

9. Directorate General for Energy and Transport  The EU Gas Regulatory Forum  Latest meeting July 2004  Discusses complementary measures to the Gas Directive i.e. how in practice to ensure competition and non-discrimination;  The European Group of Regulators  Advisory Group  Heads of national regulatory authorities  Assist Commission in consolidating the Internal market for gas and electricity Regulatory Groups

10. Directorate General for Energy and Transport Access to storage  Directive 2003/55/EC: Art 2(9) and 19  Interpreting note on TPA to storage  Conclusions of the 7th and 8th Madrid Forum  Need for non-discriminatory and transparent accesss conditions to storage facilities  Guidelines for Good TPA Practice for Storage System Operators (GGPSSO)  Inventory on access conditions stressed the need for GGPSSO covering the issues identified by the Commission and the Regulators, such as  Necessary TPA services, capacity allocation and congestion managment, confidentiality and transparency requirements, tariffs structure, market based mechanisms etc

11. Directorate General for Energy and Transport Overview negotiated – regulated TPA BEBnegotiatedNAMnegotiated BPnegotiatedOMVnegotiated CSLregulatedRAGnegotiated DONGnegotiatedEON-RGnegotiated EdisonregulatedStogitregulated EnagasregulatedRWE-TGnegotiated FluxysregulatedVNGnegotiated GdFnegotiatedWingasnegotiated

12. Directorate General for Energy and Transport Overview services Bundled ServiceUBSSecondary MInterruptibleReverse flow BEB SBU10% of I/WEBE, cap&comDem > avail. BP SBUcap CSL SBUEBEany unusedff capacity DONG SBUdifferent IWScap&comfollowing neg Edison cap&com Enagas SC to book Fluxys SBUsSBU tradingoperationalltd, but possible GdF basic servicelinked to BS NAM SBUcap, poss EBEovercome min. OMV range of SBUsmin. capacitiescommodityflexible service RAG I=Wtailor madenot yet Ruhrgas SBUconfirmed Stogit cap&comDem > avail. RWE/TG cap, creditw.if insuffic. I\Wconfirmed VNG WC and SC ratioconfirmedadditional 10%confirmed Wingas confirmedfollowing negconfirmed

13. Directorate General for Energy and Transport Summary  Also the overall picture looks relatively positive with respect to the range of services offered, there is considerable room for improvement for some operators.  In terms of capacity allocation and congestion management, the prevailing practice might not comply with the requirements of a well functioning competitive market  Transparency requirements need to be clearly defined  Clear rules should ensure non-discrimination  Negotiated tariffs: do they reflect the market value of the service in all cases?

14. Directorate General for Energy and Transport Conclusions  Opening of energy markets key aspect of the Lisbon objective  Proper implementation of 2nd internal gas market directive indispensable, but must be complemented by measures such as the regulation on access conditions  Sufficient?...  … Commission report on progress on the internal market for energy