PROPOSAL FOR SETTING-UP THE IBERIAN GAS MARKET (MIBGAS) Harmonization of trading licenses in the Iberian area Terms of reference 10 July 2008

2 CNE-ERSE: Agreement of setting-up the Iberian gas market (MIBGAS) On January 16th, CNE and ERSE approved the final document about "The proposal for the Organization Model and Principles of the Iberian Gas Market (MIBGAS). According to the decisions of the Iberian Agreement in Badajoz, the governments of Spain and Portugal agreed on 8 March 2007 to develop a plan for regulatory harmonization whose objective would be the establishment of the Iberian Gas Market. The proposal for the Organization Model and Principles of the Iberian Gas Market (MIBGAS) is the final document resulting from the public consultation which was held by both Regulatory Commissions (CNE and ERSE). Nineteen companies and organizations sent contributions and comments. The final document has been published along with the views of companies and organizations and analysis thereof.

3 Action plan for the construction and implementation of the MIBGAS (2008): An action plan for 2008 has been proposed in order to develop the Iberian Gas Market, which is focused on: The harmonization of trading licenses in the Iberian area Convergence in the structure of access tariffs, Coordinated planning of networks. CNE-ERSE: Agreement of setting-up the Iberian gas market (MIBGAS)

4 In the development of market activity, it should be granted the non existence of administrative barriers to grant a gas market licence in an Iberian level. It is important to harmonise procedures, rules, obligations and rights adopted by both countries, by a mutual recognize of licences. The objective of this task is to establish an authorisation procedure of suppliers consisting of a single register or gas trading licence in the Iberian area, which would replace current national licences. This measure would involve an important step of opening up the market, since any supplier could access the infrastructures and sell gas throughout the entire Iberian market. The harmonization of trading licenses in the Iberian area

5 CASE EXAMPLE: European driving licence 1 Exam 1 European Driving Licence You can drive in EU -27 countries. To Drive in Europe:

6 To trade in European Gas Market: ACTUALLY 1 Exam in SPAIN 1 Gas Trading Licence (Spain) 1 Exam in PORTUGAL 1 Gas Trading Licence (Portugal)

7 1 Exam in SPAIN 1 Gas Trading License (Spain) To trade in MIBGAS: Proposal 1 Exam in PORTUGAL 1 Gas Trading License (Portugal) OPTIONAL HOMOLOGATION

8 The following tasks are proposed as steps to create the Iberian trading licence : 1 Creation of a task- force to make the Analysis of the legal, technical and economic conditions to perform the trading activity in Spain and Portugal. The CNE and the ERSE must prepare a study with a comparative analysis of the conditions to obtain the trading licence in both countries. 2 Analysis of suppliers obligations and rights when performing their activity. The CNE and the ERSE will prepare a study with a comparative analysis of the suppliers obligations and rights when performing their activity: availability of supply contracts, maintenance of security stocks, obligations of information to regulators, etc.). The harmonization of trading licenses in the Iberian area

9 3 Definition of the requirements to obtain the trading licence and proposal for regulatory modifications. A common gas trading licence requires regulatory harmonisation of the requirements and conditions currently required by each country to obtain the licence and to perform the trading activity. The document will propose an agreement for mutual recognition of gas trading licences and the necessary regulatory changes 4 Public consultation process of the document made by CNE and ERSE. 5. Adoption of the proposal by the two countries. The harmonization of trading licenses in the Iberian area