Gas Regional Initiative North West Region - 6 and 7 May Hague Common effort on making regional investment happen GRI NW Investment

2  Project slide for 7 May meeting.

3  Focus on implementing policy advice Progress of regional projects monitored for ad-hoc action RCC (all rec) -Regulators address stranded asset risk discussion via exchange letters (rec 1) -Share Regulatory best practices on re-numeration via input to FGL tarification (rec 2) -TSO’s clarify investment prerequisites via website publications (rec 4); Regulators clarify GRI NW view on scope of regional plan Where do we go with Investment project? Investment project works on results by Anchoring risk/reward balance dialogue beyond 2010

4  Investment project works on results by  Focus on implementing policy advice Progress of regional projects monitored for ad-hoc action RCC (all rec) -Regulators address stranded asset risk discussion via exchange letters (rec 1) -Share Regulatory best practices on re-numeration via input to FGL tarification (rec 2) -TSO’s clarify investment prerequisites via website publications (rec 4); Regulators clarify GRI NW view on scope of regional plan Investment work - key to success is small steps.. Anchoring risk/reward balance dialogue beyond 2010 How do you eat an Elephant? In small pieces….

5 THANK YOU! Time for some good discussions now…. and afterwards at 4 June Investment workshop.

6  Project slides for 6 May meeting.

7  Project leaders informal summary dilemma. Anchoring risk/reward balance dialogue beyond 2010 Rec. 4 ensures that TSO makes very clear in advance under which conditions she/he will invest Rec. 2 ensures that TSO know how national regulatory system addresses that efficient investments are reimbursed now and in future Rec. 1 ensures that TSO know how national regulatory system discloses risk sharing of stranded assets between involved parties We ask for your explicit support to Policy advice as we need your support on (regulatory) risk debate in Rec 1. Proven via legal analysis first wheel to tune

8 No “blank” cheques to TSOs, BUT.. A cheque with “defined ex-ante revision criteria” … Pro’s “cheque”  Asymmetric risk of underinvestment  Still legal obligation in art 3 of Ro. 1775/2005 to “stimulate” investment in tariffs (art 13 of Ro. 715/2009)  So we should define in each regime stranded asset risk sharing mechanisms and (where appropriate) risk premiums as NRA, but… Pro’s “defined ex-ante revision criteria”  Information asymmetry: best information on risk always with TSO  Therefore, communicate in advance conditions under which we might re- open the comfort we defined Under which conditions do we have your support for implementation in 2010? Closing remarks on implementing sensitive recommendation 1 by project leader:

9  Annex slide for 6 May meeting.

10 Legal analysis summary (NRAs in random order) OfgemNIAURDERACEREKCREGBNetzAEICRE R 1 + ! Exemp- tions +! Case- wise - - N. Law +! Stranded risk varies +/- Policy rule -- N. Law +! TSOs disagree ++ Provided R 2 +++/ Provided R /-- N. Law + Provided R 4 ++ Care ++ Care +- EU level +/- + R 5 +++/ R SOS+++++ R Recommendation 1 most challenging and therefore requiring policy level support

11 Explanatory note on used symbols at legal analysis summary : +/- There maybe an issue. Depends on implementation ++ Major support + No issue + ! No issue but care needed with implementation - Minor issue - - law change needed “R. x” The references in the presentation to the 7 recommendations – for full text see project documentation.