1. Erik Sleutjes (Ofgem) GRI NW Government Meeting The Hague, 6 May 2010 Pilot framework guideline on gas balancing – ERGEG initial steps

2. 2GRI NW Government Meeting, The Hague, 6 May 2010 Overview What is gas balancing? What are the requirements of the Gas Regulation for gas balancing? What are the key issues? What has been the process to date? What are the next steps?

3. 3GRI NW Government Meeting, The Hague, 6 May 2010 What is gas balancing? Each shipper balances its portfolio (inputs and off-takes) TSOs address the “residual” imbalances TSOs also take actions for system reasons which are unrelated to shippers’ imbalances The overall amount of gas put onto a transportation system needs to match the amount of gas taken off the system

4. 4GRI NW Government Meeting, The Hague, 6 May 2010 Requirements of Gas Regulation (715/2009) Article 21: Balancing rules & imbalances charges Balancing rules shall be fair, non-discriminatory, transparent, market-based and reflect genuine system needs TSOs shall provide information on balancing status of users Imbalance charges shall be cost-reflective & provide incentives on users to balance their inputs and off-takes Member States to ensure that TSOs endeavour to harmonise balancing regimes to facilitate gas trade Article 8.6(j): Network codes shall cover the following areas balancing rules (including nomination procedures) rules for imbalance charges rules for operational balancing between systems

5. 5GRI NW Government Meeting, The Hague, 6 May 2010 Key issues (for consultation) Shippers have limited access to flexibility (required to balance their portfolios) TSOs’ limited use of market based procurement of residual balancing gas/products High imbalance charges hamper new entry vs. low imbalance charges do not incentivise shipper balancing Shippers have insufficient information to balance their portfolios Fragmentation of balancing zones; different balancing periods and gas days Questions for consultation include: What should be the scope and objectives of the gas balancing framework guidelines? To what degree do balancing regimes need to be harmonised to achieve these objectives?

6. 6GRI NW Government Meeting, The Hague, 6 May 2010 Process to date & next steps January 2010 Madrid Forum: ERGEG to start process of preparing a pilot framework guideline for gas balancing ERGEG is preparing for public consultation (‘Pilot Framework Guideline & Initial Impact Assessment’) – planned for summer 2010: problem identification policy objectives for balancing framework guidelines policy options for balancing rules & imbalance charges ERGEG discussions of pilot framework guideline with: ad-hoc expert group on gas balancing (Chatham House rules) ENTSOG (in preparation for pilot network code) ERGEG presentation at September 2010 Madrid Forum

7. 7GRI NW Government Meeting, The Hague, 6 May 2010 Thank you!