1. TNC Realization of Transmission Contracts Warsaw, 16 October 2012 the system, that connects

2. Implementation of Transmission Contracts Nominations Nomination submission Nomination approval Possible re-nominations and their approval Determination of Realization Measurements – at physical points Allocations between Shippers Balancing Determining total realization for entries and exits Quantitative comparison entries / exits - imbalancing determination HRP Preparation Financial settlements between Shippers and TSO Balancing Capacity Quality

3. the system, that connects Nominations General Principles The nominations are made for the next day for points according to Assigned Aviability (PZ) Nominations contain the following information: Who is making the nomination (Shipper) ID of the relevant point Hourly quantities Contractor at the point (off-taking or supplying) For WPWE GG and WPWY GG nominations on behalf of the Shipper are made by the Gas Exchange Hourly quantities should take the following into account: Assigned Aviability (PZ) at the given point restrictions resulting from the TNC or the provisions of the law No balanced nomination requirement of given Shippers Nominations are subject verification with cooperating operators Lower stream principle

4. the system, that connects ShipperTSODSO/SSO 2:00 pm Nomination (NOMINT) 2:30 pm Nomination (DELORD) 3:15 pm Information on results of matching of nomination (DELRES) 6:00 pm Approval/rejection of nomination (NOMRES) Nominations The Course of the Process (D-1)

5. the system, that connects H0 – Every full hour H1 – hour when DSO, SSO received the re-nomination (DELORD) from TSO ShipperTSODSO/SSO H0 Re-nomination (NOMINT) H0 + 45min Re-nomination (DELORD) H1 + 45 min Information on results of matching of nomination (DELRES) H0 + 120 min Approval/rejection of re- nomination (NOMRES) Re-Nominations The Course of the Process (D-1)

6. Submitted by DSO for MFPWY DSO and MFPWE DSO for each subsequent gas day, Daily from 2:00 pm D - 1, Hourly quantities, Take restrictions into account, 10% accuracy tolerance of forecasts the system, that connects DSOTSO 2:00 pm D-1 Transmission Forecast Transmission Forecasts

7. the system, that connects PWE WPWE OTC Virtual Exit PointsVirtual Entry Points PWY PWE WPWE GG WPWE TSO WPWY OTC WPWY GG WPWY TSO PWE SSO PWE SSO PWY SSO PWY SSO TSO Customer SSO TSO Allocations Entities Performing Allocation

8. OBA the system, that connects PWE SSO PWE SSO PWY SSO PWY SSO Virtual Exit PointsVirtual Entry Points Measure ment R=N WPWE OTC WPWE GG WPWE TSO WPWY OTC WPWY GG WPWY TSO PWE Shipper 1 Shipper 2 PWY Allocations Allocation Methods Measure ment R=N OBA R=N

9. the system, that connects PWE WPWE OTC Virtual Exit PointsVirtual Entry Points PWY PWE WPWE GG WPWE TSO WPWY OTC WPWY GG WPWY TSO PWE SSO PWE SSO PWY SSO PWY SSO WPWY DSO WPWE DSO TSO Customer SSO TSO DSO WR WS WR Allocations Entities Performing Allocation

10. the system, that connects TSO DSO WPWY DSO WPWE DSO WR WS WR P2P2 P1P1 P3P3 P4P4 P5P5 P6P6 Distribution Zone

11. P = Σ P – Σ P k β=1 l δ=0 wy β we δ DSO the system, that connects TSO DSO WPWY DSO WPWE DSO WR WS WR P2P2 P1P1 P3P3 P4P4 P5P5 P6P6 Allocations Measurement for Distribution Zone A = ΣA – ΣA WPWY DSO WPWE DSO DSO ΣA = ΣP DSO

12. the system, that connects Σ A WPWY DSO – Σ A WPWE DSO = Σ P MFPWY DSO – Σ P MFPWE DSO k β=1 l n i=1i=0 m δ=0 Allocations Allocation Process for Distribution Zone TSO DSO WPW Y DSO WPWE DSO WR WS WR P2P2 P1P1 P3P3 P4P4 P5P5 P6P6 A 3 PŹDO > PWR3 imbalancing WPWE DSO PŹDO > PWR3 imbalancing WPWY DSO WPWY DSO WPWE DSO DSO WR1 WS1 WS2 WR2 WR3

13. the system, that connects TSOISO, Customer 10:00 am Provisional allocation for the previous gas day 7 working day of the month (M+1) Settlement allocation for the previous gas month (M) Allocations of estimated quantities of gaseous fuel Allocations of settled quantities of gaseous fuel 5 working day of the month (M+1) Measurement data for the previous gas month (M) Conveyance of measurement data Allocations Information Exchange Schedule

14. the system, that connects Transmission System Balancing Physical balancing - the actions of the TSO in order to ensure security of the transmission system, including: Balancing services market conducted by the TSO Commercial balancing – settlement of imbalancing of Shipper resulting from differences between quantities transmitted and off-take to/from the transmission system; Commercial balancing encompasses the transmission and the distribution systems; Distribution zone mechanisms

15. Shipper balance All entry points: 1.Import 2.Storage Facilities 3.Production 4.Virtual Point All entry points: 1.Import 2.Storage Facilities 3.Production 4.Virtual Point All entry points: 1.Customers (including final) connected to the TSOs system 2.Customers (including final) connected to the DSOs system 3.Storage Facilities 4.Virtual Point All entry points: 1.Customers (including final) connected to the TSOs system 2.Customers (including final) connected to the DSOs system 3.Storage Facilities 4.Virtual Point 1.All entry and exit points of a given Shipper (PZ) are balanced. 2.The balance is established for each day. 3.Settlement of the imbalancing quantity after each gas day. 15 Balancing General Principles the system, that connects

16. 16 Daily Imbalancing Limit Levels Daily Limit – 5% of the quantity introduced into the system According to the "System" Regulation of the Minister of Economy No within day obligations Hourly restrictions resulting from hourly capacity allocation at physical points Balancing Daily Balancing - Limits The Transmission System Entry Points restricted maximum allocated capacity Daily balance: ±5% Exit Points WPWY WPWE restricted maximum allocated capacity the system, that connects 16

17. Balancing Market Model the system, that connects Shipper 1 PWE WPWE OTC Virtual Exit PointsVirtual Entry Points WR WS WR PWY PWE WPWE GG WPWE TSO WPWY OTC WPWY GG WPWY TSO PWE SSO PWE SSO PWY SSO PWY SSO WPWY DSO WPWE DSO 17

18. Balancing Market Model the system, that connects Shipper 2 PWE WPWE OTC Virtual Exit PointsVirtual Entry Points WR WS WR PWY PWE WPWE GG WPWE TSO WPWY OTC WPWY GG WPWY TSO PWE SSO PWE SSO PWY SSO PWY SSO WPWY DSO WPWE DSO 18

19. Balancing Market Model the system, that connects PWE WPWE OTC Virtual Exit PointsVirtual Entry Points WR WS WR PWY PWE WPWE GG WPWE TSO WPWY OTC WPWY GG WPWY TSO PWE SSO PWE SSO PWY SSO PWY SSO WPWY DSO WPWE DSO Shipper D 19

20. Balancing Market Model the system, that connects Shipper 1 Shipper 2 PWE WPWE OTC Virtual Exit PointsVirtual Entry Points WR WS WR PWY PWE WPWE GG WPWE TSO WPWY OTC WPWY GG WPWY TSO PWE SSO PWE SSO PWY SSO PWY SSO WPWY DSO WPWE DSO Shipper D 20

21. the system, that connects Balancing Services Market General Principles Balancing services market conducted by the TSO Only a Shipper can be a Market Participant Separate contract for participation in the balancing services market Framework Contract Offers submitted for each day Standard system services Quantities and prices for given hours in a day that the offer concerns Submitted electronically Subject to the regulations of the Public Procurement Law Offers accepted according to set criteria: Type of service depending on the system demands Each type of service according to the price criterion for equivalent used proportionally to the quantity in the offer Performance through a combination of appropriate (re)nominations subject to the normal approval procedure

22. the system, that connects FPWE FPWY WPWY OTC WPWY GG WPWE OTC WPWE GG WPWE TSO WPWY TSO 1 2 Balancing Services Market Standard system services 1. Supplied to the TSO at the Virtual Point - WPWY TSO 2. Off-take from the TSO at the Virtual Point - WPWE TSO

23. the system, that connects FPWE FPWY WPWY OTC WPWY GG WPWE OTC WPWE GG WPWE TSO WPWY TSO 3 4 Balancing Services Market Standard System Services 1.. 2.. 3. Supplied to the TSO at the Physical Entry Point 4. Off-taken from the TSO at the Physical Exit Point

24. the system, that connects FPWE FPWY Reduction at the entry point WPWY OTC WPWY GG WPWE OTC WPWE GG WPWE TSO WPWY TSO 5 Balancing Services Market Standard System Services 1.. 2.. 3.. 4.. 5. Reduction of supplies at the physical entry point + off-take from the TSO at WPWE TSO

25. the system, that connects FPWE FPWY Reduction at the entry point WPWY OTC WPWY GG WPWE OTC WPWE GG WPWE TSO WPWY TSO 1 2 3 4 5 Balancing Services Market Standard System Services 1. Supplied to the TSO at the Virtual Point - WPWY TSO 2. Off-taken from the TSO at the Virtual Point - WPWE TSO 3. Supplied to the TSO at the Physical Entry Point 4. Off-taken from the TSO at the Physical Exit Point 5. Reduction of supplies at the physical entry point + off-take from the TSO at WPWE TSO

26. the system, that connects Settlement and Fees Connected with the Performance of the Contract Fees resulting from the Tariff provisions Fees resulting from the TNC Settlement of the daily imbalancing quantity DIN x CRG Amounts determined for each day – separate items on invoice Invoices issues every month by TSO and Shipper Settlement of exceeding DLN Quantity at entry points DIN x 0.1 x GRP Quantity at entry points >= 4 mln kWh => DIN x 0.2 x GRP Nomination Accuracy (Shipper) Tolerance 10% Amount exceeded x 0.02 x GRP Fees not charged for points where operator accounts operate WPWY DSO i WPWE DSO Accuracy of Transmission Forecasts (DSO) Tolerance 10% Amount exceeded x 0.01 x GRP First year when TNC applicable - free

27. the system, that connects Thank you for your attention.