Benoît Esnault (CRE) NW Region – governmental meeting 6 May 2010 Pilot framework guideline on capacity allocation mechanisms

2NW governmental meeting, 6 May 2010 Introduction Context: need to improve the access to cross border points Different allocation rules on the two sides of borders Different types of capacity products Domination of First Come First Served  More integration to the benefit of competition and security of supply Preparation of the implementation of the third package: pilot framework guideline CAM selected for the pilot project at the 16th Madrid Forum Letter from the Commission received on September 22, 2009 Consultation on the draft framework guideline launched on December 18, 2009 Final version expected by end of March 2010 ERGEG principles on CAM & CMP published in January 2009 & public consultation provided the basis for the pilot framework guideline

3NW governmental meeting, 6 May 2010 Target model and how to reach it Scope of the Framework guideline: interconnection points between entry-exit zones within the EU ( ) General principles All market areas organized as entry-exit zones with virtual hubs FCFS forbidden if congestion Limited number of capacity products Coordinated allocations throughout the EU Auctions as preferred CAM; pro-rata allowed if conditions are not met for efficient & fair auction procedures Towards uniform capacity allocation procedures at interconnection points throughout Europe in 2 steps: Harmonisation of procedures at every IP: towards bundled products between market areas Harmonisation at the EU level: same products & CAM everywhere

4NW governmental meeting, 6 May 2010 Framework guideline proposals Improved TSO cooperation for capacity calculation and allocation Adjustment of transmission arrangements (if necessary) Capacity products Harmonisation throughout Europe Small number of products, from short term to multi-annual Firm and interruptible products Towards “bundled products” at IPs (1 stop shops) Capacity allocation procedures If no congestion, capacity is allocated as requested by shippers Auction as standard allocation methodology Pro-rata as interim step when necessary Priority: same CAM on the two sides of interconnection points

5NW governmental meeting, 6 May 2010 Public consultation and next steps ERGEG public consultation on the pilot framework guideline 34 responses (incl. 4TSOs and 24 shippers) Workshop held in Brussels on 2 February 2010 Main points raised by respondents High concern about the amendment of Existing contracts Want more details about auction design and procedure to arbitrate in favour of pro-rata Bundled products: concern about the elimination of trading at the border and about the interim period Need for stakeholders’ consultation Way forward Discussions with ENTSOG on technical issues Finalisation of the framework guideline by June. Last discussions on: Implementation process of bundled products Capacity allocation when no congestion

6NW governmental meeting, 6 May 2010 What involvement for the NW Region? Main market in Europe and target model largely based on NW market’s potential for integration Guidelines and codes will deeply change market conditions in the region Important to develop a debate on target models at the level of the region Get a feedback on patential problems and obstacles ENTSOG is mainly led by NW TSOs Stakeholders representatives at the Madrid Forum belong to the region Lessons for future framework guidelines NW region should contribute to gathering views of stakeholders Test some proposals in the region Try to involve the NW region in the early steps of drafting processes

7NW governmental meeting, 6 May 2010 Thank You!