FUI Electricity region: Update on Congestion management CRE SG Meeting - 3 December 2008

Background on Regulators’ objectives  Compliance with the European regulation (Regulation 1228/2003, CM Guidelines)  Regulators are confident: (implementation of firm nominations stage, netting, UIOSI, infra, etc.)  Harmonisation with the rest of Europe  Some concerns regarding the intraday reassignments (i.e. bilateral transfers within the intraday timeframe) and firmness of programmes

Intraday reassignments  Why such IT developments?  Very far from the target mechanism (implicit, obligatory use and continuous)  No consensus from Stakeholders  High probability that Stakeholders will not use this service  Costs of development? operational cost?  What is the added-value of this service?

Firmness of programmes (1/2) ERGEG published a very clear Position Paper (July 2008)  “In the context of explicit auctions, firmness of capacity rights ensures a clear contractual element for market players by defining risks and costs associated with cross-border trade. This is especially important for traders on either side of a border who have no physical generation and thus have to rely on wholesale markets to balance their positions.”  “Firmness is an important prerequisite for market coupling to develop.”  Absence of firmness induces a risk premium for market actors. This is an “extra cost to the system that can restrain the development of cross-border trade, effective competition and, more generally, the efficient functioning of the market to the detriment of end-consumers.  Firmness promotes market integration and fosters competition on both sides of the congested interconnection, thus benefiting end-consumers.

 RTE: NGIL licence as a limitation  NGIL: ERGEG position not applicable on IFA due to technical specificities (DC cable)  Firmness of programmes is in place on a majority of interconnections (except in CEE and FUI regions)  Firmness of programmes is in place on DC cables (Kontek and Norned)  Firmness is a pure financial issue (who should bear the risk?)  Regulators are working to make the ERGEG’s position applied on FUI interconnections before the go-live of CMS Firmness of programmes (2/2)

Next steps  Regulators’ common position on firmness of programmes in January 2009  TSOs to submit new allocation rules in January  Public consultation by written procedure during one month  Formal rules approval by CRE  Come into force of the new IFA rules in the summer 2009