1. Vienna, 24 november 2006 1 GRI SSE: work done so far 1. Assessment summary on selected transportation routes ongoing 2. Preliminary paper on hubs as regional balancing points ongoing 3. Preliminary paper on requierements to introduce a regional ongoing OSS and E/E tariff system 4. Paper on “Long term planning on a regional level” missing EFET welcomes the work done by regulators so far but now is time for actual improvement on the ground

2. Vienna, 24 november 2006 2 GRI SSE: one–stop-shop provider and regional entry- exit zones  One of the opportunities for better situation on the market (EFET wants effective unbundling as soon as possible, no matter how)  Simplification of the work for traders and shippers (one counterpart)  Better overview about transit flows and investments (SSE region is facing insufficient access to the network and in-transparent enhancement)  Ensure clear mechanism for capacity increase  EFET calls for:  enhanced inter-TSO co-operation in SSE region ---> enlargement of the E/E zones, in line with European progress  harmonization of regulatory arrangements (all systems to open at same pace, operational procedures, market-based balancing regime on regional level) and establishment of OBAs (supporting development of liquid hubs) ---> firm deadline for the implementation

3. Vienna, 24 november 2006 3 GRI SSE: hub used as balancing point  Market based balancing more effective and positive for liberalisation than fixed penalties  Help to increase the liquidity at the hubs in SSE and contribute to security of supply due to more choice and offers  Allow for pooling of imbalance positions throughout bigger areas  Baumgarten and PSV (potentially) ideal mechanism for providing market forces with a tool for network balancing  EFET seeks for developing of hubs in SSE as soon as possible  E stablishment of ad hoc CEGH development group (setting of timeline for further steps and common requirements on any given hub

4. Vienna, 24 november 2006 4 Boost liquidity on CEGH through:  Efficient and stable regulatory framework with respect to system access  functioning operational framework  Firmness  Balancing services  Transparency on available capacities  Transparency on prices  Availability of gas and choice of source  Tightness of bid-offer spread  Standardisation (Gas contracts EFET; others Hub) How to have a well functioning CEGH?

5. Vienna, 24 november 2006 5 Timeline – CEGH Development Feb 07Oct 2008Oct 07 ►For Bulletin Board the decision on Market Maker (volume? spread? period? rights and responsibilities?) ►Back-up/-down services ►Customer focus OBAs physical nomination < 1 day lead time (now 5 days) Web based nomination ►Workshop CEGH with EFET on products Mar 07May 2007 ►systematic offering of structured products (week ahead, month ahead)  anonymous ►standardised agreements (EFETs) ►(Super-) firm market place ►CEGH takes counterpart risk and makes clearing ►International balancing via CEGH ►online intraday balancing market ►derivative trading with physical hedge/forwards ►gas exchange ►Meeting CEGH with EFET CEGH Working Group (Ressl) Jan 2009 ►Derivative trading ►Regional balancing market Mar/Apr 07 Jan 2008 ►Meeting CEGH with EFET CEGH Working Group (after 20.03) ►day ahead products ►intraday products ►physical nomination < 1 day possible ►web based nomination possible Jul 07 ►Operational Market Maker ►Back up/down service ►completion of contractual specifications

6. Vienna, 24 november 2006 6 … EFET view – Europe currently Virtual hub (in-grid balancing point) NBP TTF Huberator @ Zeebrugge Physical hub ( e.g border point) CEGH @ Baumgarten Less liquid gas trading locations

7. Vienna, 24 november 2006 7 European Gas market grid 2010 –allows for enhanced SoS grid  xy The zones in detail: Zonal Spot price indicator (Hub and Gas Exchange) 0 1 2 4 see 3 5 Atlantic bassin LNG Spot price LNG Discussion: Is this possible? Zonal price differentials reflect cross-zonal interconnectivity between regions Border price Border price Border price Border price

8. Vienna, 24 november 2006 8 Conclusion  GRI necessary intermediate step - but European market goal  Therefore need to include parts of Germany, at least the adjacent systems to SSE, in the assessment  The introduction of legal requirements should be facts and not discussed again in a time consuming manner  (Regional) balancing markets are key for a transparent evaluation of the value of gas and flexibility services and boost Hub liquidity  SSE region lacks availability of gas and physical choice of supply – authorities urged to accelerate the realisation of all projects leading to higher choice of supply and thus security of supply, competition and trade

9. Vienna, 24 november 2006 9 Backup, not for send out

10. Vienna, 24 november 2006 10 … transparent information available

11. Vienna, 24 november 2006 11 … gross vs. net balancing energy

12. Vienna, 24 november 2006 12 … Balancing markets cheaper than firm storage contract for TSO