1. Gas Regional Initiative North West Region - Short Term Capacity 7th Stakeholder Group Meeting The Hague – 6 and 7 May 2010

2. 2 7th Stakeholder Group Meeting The Hague – 6 and 7 May 2010  According to Roadmap project shall focus on short-tem capacity issues: -maximising use of existing capacity including reserve capacity through examination of how unused capacity could be released day-ahead and -investigating into how TSOs could be incentivised  Aim: make available firm primary capacity on day-ahead market Strategic rationale

3. 3 7th Stakeholder Group Meeting The Hague – 6 and 7 May 2010 Day-Ahead Oversubscription  TSO has good knowledge on how much capacity will be used  TSO slightly oversubscribes the system‘s capacity  In (rare) cases where flows exceed the system‘s capability TSO buys back the usage rights from shippers Short-Term Calculation  TSOs calculate available firm capacity based on long term assumptions and scenarios  In the period running up to real time TSOs have more certainty about network conditions, e.g.  Can release additional firm capacity to the market day-ahead Discussed Models

4. 4 7th Stakeholder Group Meeting The Hague – 6 and 7 May 2010 Incentivisation  TSOs: Incentive mechanism that compensates the additional financial risks coming along with providing additional capacity is needed  If not fulfilled, how does it impact the project?  The alternative of an ex-ante cost recovery guarantee requires a high level of detailing (no quick-win)  An agreed methodology will probably prove to be sub-optimal for each IP  No incentive for the TSO to do more than absolutely required/covered  TSOs see incentive mechanism as prerequisite for further steps

5. 5 7th Stakeholder Group Meeting The Hague – 6 and 7 May 2010  France: Regulatory system incorporates an incentive to oversell capacity as long as regulator does not increase its sales forecast each year  Belgium: Regulatory system not specific to additional revenues generated from extra sales of capacity. No ex-ante guarantee that TSO would be allowed to retain extra revenues  Germany: Additional costs for establishing short-term capacity market are not covered in revenue cap and will in practice lead to lower earnings of the TSO  Netherlands: revenues resulting from capacity sold above this estimated quantity can be kept by the TSO Status Quo – according to TSOs

6. 6 7th Stakeholder Group Meeting The Hague – 6 and 7 May 2010  European Process coincides with GRI NW STC process  Framework Guidelines Capacity Allocation contain proposals to strengthen short term markets  Aims at harmonised standards on certain capacity related issues  Potentially impacts STC pilot  Finalised Document to be expected in May 2010  ENTSOG to draft network codes  Incentivisation is closely linked to national regulators practices  National processes e.g. in Germany Status Quo – The Wider Picture

7. 7 7th Stakeholder Group Meeting The Hague – 6 and 7 May 2010  April to August 2010  Workshop on incentives for TSOs to maximise available short-term capacity  September 2010  Re-evaluate and if needed adapt project in light of recent developments on European and national levels  October 2010  Core Group to propose detailed project  Update Programme Board  November 2010  Stakeholder Workshop  Draft implementation plan to be prepared by Core Group Proposed Way Forward

8. 8 7th Stakeholder Group Meeting The Hague – 6 and 7 May 2010 Thank You!