European Transparency Requirements - update Transmission Workstream 1 st May 2008

European Transparency Drivers  Transparency seen as key to liberalization of European gas market  Drivers:  Compliance with existing EC Regulation 1775/2005  3 rd Package of amendments to current Regulation/Directives on gas market liberalization  Gas Regional Initiative (GRI)  GRI NW Roadmap

Gas Regional Initiative  European Regulator’s Group for Electricity and Gas (ERGEG), of which Ofgem is member, established Gas Regional Initiative in April 2006  Promote further liberalisation of national markets  Develop regional solutions as stepping stone to European gas market  UK within GRI NW  Transparency identified as one of the priority areas for GRI NW  Participation in GRI is voluntary, but TSOs are expected to deliver agreed outputs

GRI NW Transparency Project  GRI NW Transparency project  Aim: improve publication of capacity and flow data  Demonstrate commitment to respond to market requirements  Established TSO information release principles  e.g. release will not prejudice any TSO customer, TSO or any other stakeholder  Operators response to EFET “wish list”/Ofgem transparency questionnaire  Agreed information provision extends beyond requirements of EC Regulation 1775/2005

UK Points Relevant for GRI NW  Focus on connections with other TSOs and importation points for “non-indigenous gas”  Identified points for UK:  Entry Points:  Bacton (IUK & BBL)  Easington (Langeled)  Isle of Grain  Milford Haven (Dragon & South Hook)  Exit Points:  Bacton (IUK)  Moffat

UK Way Forward  UK regime largely compliant and frequently exceeds requirements  Only 2 gaps identified concerning exit capacity and day ahead nominations  Addressing these “gaps” requires  provision of day ahead nominations at “interconnectors” and LNG terminals  publication of “technical, contracted and available” exit capacity at interconnectors

UK Way Forward  Raise Mod for Publication of Day Ahead Nominations  Publish aggregate nomination per point at 18:00 D-1  Question: Should we limit publication to GRI NW list or extend to all points to avoid possible discrimination issues?  Option 1: publish data for GRI NW listed points only  Option 2: publish data at all “relevant points” (c.f. EC Regulation 1775/2005) – requirement in draft 3 rd package N.B. Publication of nomination data is voluntary at present

UK Way Forward  Exit Capacity - (technical, contracted and available)  Question: Do we push ahead with GRI NW requirement in light of ongoing Exit Reform?  Option 1: await Ofgem decision re Exit Reform due November 2008  Current route for Regulation compliance, but have used this argument since Regulation came into force  Option 2: proceed and publish “technical, contracted and available” exit capacity at the two GRI NW listed points  Potentially misleading as large proportion of exit capacity not booked but allocated after the day to interruptible meters  Option 3: publish current exit capacity data at all Relevant Exit Points (EC Regulation 1775/2005)  Baselines already published (thus partial compliance with current Regulation)

Relevant Point Consultation Requirement  No matter what options decided, there is still a need consult on relevant points  EC Regulation 1775/2005, Article 6.4:  “The relevant points of a transmission system on which information must be public shall be approved by the competent authorities after consultation with network users.”

Relevant Point Consultation Requirement  EC Regulation 1775/2005, Annex Definition of all relevant points for transparency requirements a) All entry points b) Most important exit points & zones i. Covering at least 50% of total exit capacity in aggregate ii. Points & zones individually covering more than 2% of total exit capacity of network c) Interconnections to other TSOs d) Points connecting to LNG terminals e) Essential points (e.g. likely to experience physical congestion) f) Points of connection to infrastructure providing ancillary services