1. Michele RONCHI Paris, 23rd October 2003 Experience with liberalisation

2. Agenda Tariffs & Capacity Network Code National Balancing Point LNG 2

3. The key Success Factor: Convergence of Interests between TSOs and Regulator Autorità per l’energia elettrica e il gas Competition: market opening and tariffs reduction VALUE GENERATION: growth and efficiency Incentives on Throughput Gas Flows Optimisation Incentives/Productivity Targets Management Optimisation Criteria for Market Development IT Platforms Network Utilisation Incentives on Development CAPEX Investments in Network Expansion Capacity Utilisation Maximisation Increasing Efficiency Increasing Market Dynamics Network Development 3

4.  Thermoelectric  Pulps  SM Industry  Thermoelectric  Household  Handcrafting Current SRG tariffs lower more than 15% vs. the 1st Thermal Year Tariffs Lowered Consumer 50 Mcm/y Distance 200 Km MTS + RTS 4

5. PASSO GRIES TARVISIO GNL PANIGAGLIA MAZARA DEL VALLO GORIZIA 2003/04 Interruptible Capacity Offered (Total Capacity in MScm/d) 5 Third Thermal Year 2003/2004

6. Total Shippers’ Demand Fulfilled (Scm/d - 15° C; 1,01325 bar) PASSO GRIES TARVISIO GNL PANIGAGLIA MAZARA DEL VALLO GORIZIA Assignments August 2003 6

7. 12 Pressures at exit points 5 Transportation Capacity Assignment Transportation Service: ACCESS 7 Capacity transactions 2 Description of the network and its management General Information Transportation Service: DELIVERY 8 Capacity booking, assignment and re-assignment 9 Balancing 10 Gas Measures 11 Gas Quality 3 Description of the services 4 Procedures of informative coordination 6 Implementation and management of exit points 1 Normative Context ChapterSection Network Code Approved and in Force Planning Emergency Network Code Updating Quality of the Service Admini- stration Section 16 Information needs for transportation capacity planning 14 Planning and management of maintenance 21 Emergencies management 22 Rules for shifting from normal operations to crisis management 23 Network Code updating 13 Quality of the service 15 Operational coordination 17 Fiscal and Duane rules 18 Invoicing and payment 19 Responsibilities of the parties 20 General rules Chapter 7

8.  The Delibera 137/02 has considered the cession/exchange of the gas in the network and has removed the constrain on the capacities.  In the Network Code context, Snam Rete Gas has considered a new function accessible to our users: the exchange of the gas running in the network, at a VIRTUAL EXCHANGE POINT (National Balancing Point).  The “Entry/Exit” System is obviously consistent with the NBP. National Balancing Point in Operation Entry 1 Entry 2 Entry N Exit 1 Exit 2 Exit M NATIONAL NETWORK REGIONAL NETWORK NBP Shipper AShipper B 8

9. Characteristics of the Portal: It helps the users to Balance It may be Equivalent to daily capacity booking; It is of great utility in the case of interruption/reduction of capacity; SRG will not have knowledge of the economic terms of the transactions which will be se by the Users externally to the System; SRG will have only the role of Portal Administrator. 9 National Balancing Point in Operation

10. “STOCK EXCHANGE” The current trends CAPACITY EXCHANGES NATIONAL BALANCING POINT DISTINCTIVE KNOW-HOW: Business Information Processes Integration Problem-solving for the shipper Increasing Market liquidity Spot market for capacity and commodity Gas-to-gas competition 10 Today

11. Market Development in Italy TARVISIO Mazara Power - New CCGT: 20 GW expected by 2006/07 of which: 11 GW under construction 3,43 GW start up this year La Casella (Enel) 1,52 GW Porto Corsini (Enel) 0,76 GW Pietrafitta (Enel) 0,37 GW Priolo (Enel) 0,78 GW 2,71 GW start up in 2004 Sermide (Edipower) 0,76 GW Ostiglia (Endesa) 0,38 GW 3 CCGT Enipower 1,56 GW In 2003 In 2004 By 2006/7 Rovigo Brindisi Taranto Gioia Tauro Livorno Algeria- Sardinia Gela P. Gries 11

12. 1st Priority GTE’s LNG Working Group Action Plan  Business Rules  Quality specifications  Capacity Calculation 2nd Priority IN PROGRESS Published on the GTE Website  Ship Approval Procedure (S.A.P.)  Technical characteristics/ Map GTE Working Group on LNG created in early 2002 12

13. Michele RONCHI Paris, 23rd October 2003 Experience with liberalisation