ERGEG Gas Regional Initiative NW 5th Stakeholder Group Meeting Short-term Capacity Project Current status and TSOs’ position

Introduction Goal of project is to identify how underutilized capacity can be released day-ahead to promote development of a competitive European market for gas. Core group TSOs are strongly committed to work together with regulators and stakeholders to establish new methods for congestion management. Additional firm capacity could possibly be offered at congested interconnection points on a day-ahead basis.

Work of TSOs so far TSO published a paper in April: Description and analysis of different approaches for the provision of short term capacity Development of proposals Concepts described by TSOs only work as a whole and preconditions have to be met beforehand in total. TSOs welcome feedback from regulators and the market.

Necessary pre-conditions Effective, predictable and reliable incentives to promote increased release of firm capacity without need for having very technically based capacity calculation rules. Release of additional firm capacity may create associated risks for TSOs: Changes in legal and/or regulatory frameworks may be necessary since risks may not be covered. Models should not commercially disadvantage TSOs. Additional firm capacity should not be expected all of the time. However, incentive mechanism will determine outcomes and can be used to tease out additional capacity by providing the financial and economic means allowing TSOs to undertake such risks.

Description of proposed models (1) Short-term Calculation (further analysis by TSOs) Recurrent calculation of available capacity at entry and exit points in order to enlarge capacity at congested IPs temporarily. Day-Ahead Over-Subscription (further analysis by TSOs) Maximising access to firm capacity by selling more capacity than technically available considering diversity of shipper flows and using tools to ensure that nominations and resulting flows are consistent with physical system-integrity.

Description of proposed models (2) Limitation of renomination rights (Core Group decision: out of scope of the pilot) Limitation of renomination rights for shippers with long-term capacity leads to free firm day-ahead capacity in amount of difference between existing firm capacity and nomination plus remaining rights to rise nomination. Improvement of interruptible products (further analysis by shippers) New price models for interruptible products. Enable shippers to better estimate risk of interruption through transparent data provision.

Way forward / Conclusions of last Core Group Shippers’ and regulators’ written feedback to TSO proposals expected by July 3rd. TSOs draft input on incentivisation for optimising firm capacity for Gas Platform meeting, discussion with regulators in September. Shippers prepare view on role of interruptible capacity by October. TSOs work on short-term calculation and over-subscription and propose pilot by end 2009 (initial focus on Eynatten and BOS, final decision on IPs to be taken before end 2009, if necessary). Regulators to analyse the issue of cost recovery. Final decision on pilot January 2010, implementation phase starts Q1/2010.

Thank you very much for your attention. Dr. Oliver Kasper oliver Thank you very much for your attention. Dr. Oliver Kasper oliver.kasper@rwe.com