9th RCC Meeting – Gas Regional Initiative (GRI) Region South-South East 22 January 2008, Prague, Czech Republic

2 Agenda Under AOB

3 Suggested AOB (to be addressed later) Update on CEER/ERGEG related issues: 1. Issue of barriers to market entrance 2. Coherence & convergence 3. Memorandum of Understanding 4. Annual Report of Regional Initiative & Annual conference of the Regional Initiative 5. Joint ERGEG-EFET work shop on R_ISO

4 Action Points 1-3 of the last IG meeting 1. Topic: Best-practice standardised bulletin board Action: harmonized content for individual TSO platforms according to TAG and OMV best practice Responsible/Result until: TSOs/presentation at next SG 2. Topic: Summary of planned investments in the region (incl. storage) Action: Inclusion of information on expansion projects (Transmission & Storage) into the survey Responsible/Result until: RCC/presentation at next SG 3. Topic: Removing remaining obstacles to implementation of IPA/OBA Action 1: further update on implementation Action 2: Baumgarten Responsible/Result until: TSOs, Shippers

5 Action Points 4-6 of the last IG meeting 4. Topic: Best practice provision of OSS service Action 1: Transparency platform (GTE pilot project) Action 2: TSOs offer OSS service to shippers who request it Action 3: best practice OSS (OMV, Responsible/Result until: TSOs/CEGH presentation at next SG 5. Topic: Regional Entry Exit Tariff System (REETS) Action 1: Presentation of benchmarking results Action 2: Simulation of introduction of REETS Responsible/Result until: RCC/presentation at next SG 6. Topic: Hub development as regional balancing market Action 1: Update on implementation of next steps according schedule Responsible/Result until: CEGH/EFET and PSV/EFET/presentation at next SG

6 SG meeting agenda – 1

7 SG meeting agenda – 2

8 SG Meeting: Agenda: Suggested next steps 2007 ECRB South East Europe Gas Survey, table 5, annex

9 GTE approach: Winter outlook (presentation at the SG)

10 Suggested next steps Questions to SG members  Which approach is useful for a regional long term planning?  Could the GTE approach be used as a starting point to define (a) different gas flow scenarios and (b) long term projections e.g. until 2020?  What are likely scenarios that could impact on supply/demand in the region? - Demand side:Supply side: - Power station newbuilt- IGI (Poseidon) - Household demand- Nabucco - Industry demand - LNG Poland - Extension Transmed. - North stream  Update on situation for each country: Priorities infrastructure planning  Report/Presentation at the next IG meeting Aim: To develop a better understanding for natural gas supply/demand in the region and implications for infrastructure investment SG invited to send their comments to Your input needed!

11 4. Closure: Any other business  Any other business?  Further examination of the issue of potential barriers to market entry E.g. Traders, shippers Examination via study Similar study carried out by PwC in electricity Collaboration with EFET to ensure high participation rates Suggestion: Commission of similar study for natural gas Coverage of whole of SSE region Who is interested in participating? Funding: Approximately €5000 per regulator

PricewaterhouseCoopers April 2007 Participation of SEE GRI in PWC MulitClient Study Structure of the PWC Multi Client study 2006/2007 for the Regional Electricity Market: Austria, Czech Republic, Germany, Hungary, Poland, Slovakia and Slovenia 39 traders, with a response of 48%, research was done between June and October Analyse of requirements for traders for an efficient and transparent market 2.Traders where asked directly about their experience Comparison Country by Country The survey covers following main topics: Network access administration and bureaucratic formalities Power exchanges and trade mechanisms Balance Energy Congestion Management Market structure and Timetable Divergent IT Platforms and Data Delivery Overall valuation

13 4. Closure: Any other business  Brief update on findings from coherence and convergence report  Consultation process has ended/evaluation of responses document to be published soon  15 responses received, 3 of them are confidential  Key messages from preliminary analysis of responses: - Sufficient degree of consistency between the regions - Scepticism about current approaches towards interconnection and capacity: not enough consistency, not enough progress made - Divided views on progress w.r.t. transparency - Majority in favour of deleting the 3- shipper rule - More gas hubs as functioning & liquid markets for natural gas are needed - MoU to be rolled out to all regions?

14 4. Closure: Any other business  Discussion of MoU for SSE region Suggested by AEEG In line with conclusions of public consultation from the coherence and convergence report  Background: MoU concluded in GRI REM NW on 23rd of October 2007 Signatories: Belgium, Denmark, France, Germany, Great Britain, Ireland, The Netherlands, Northern Ireland, Sweden (not: Poland) MoU clarifies mutual responsibilities for cooperation Key question: Do we need/would we want such an MoU also for the GRI REM SSE? Suggestion: Circulation of existing NW MoU to all RCC members

15 4. Closure: Any other business  Update on Annual report of the Regional Initiative  Background: Annual conference on 27th February 2008  Agenda available online from ERGEG web page  Annual report has been finalised Timing: - 18 January: draft report submitted to to the GA and Ofgem designers - 23 January: Board approval at Board meeting - 25 January: deadline of GA online approval (small changes, typos etc.) We are still awaiting the input from Commissioner Piebalgs on the joint Foreword.

16 4. Closure: Any other business  Update from joint ERGEG-EFET workshop on R_ISO - Key findings and next steps: - ERGEG presented its view on the R_ISO model in line with its official position - Examples from other areas were reported - Stakeholders were given the opportunity to comment - Examples: EC, EURELECTRIC, EUROGAS, GTE, OGP  EFET will collect all views and revise its paper (new version/conclusions paper)  An updated paper will be available shortly

17 Conclusion  Conclusions of today’s workshop - Practical examples of regional TSO cooperation already exist  Identification of costs and benefits for regional market integration/of a R_ISO based on existing examples  Parallel process to 3rd Package - Workshop participants identified scope for the regional cooperation in the following areas where regional TSO cooperation delivers the greatest benefits to market integration - Access to capacity/Congestion Management at Cross Border Points - Management of capacities (“one-stop-shop”) - Easier access to the systems through Interconnection Point Agreements - Harmonisation of services - Merging of balancing zones to foster wholesale trading - Regional investment planning to remove physical congestion - Roles and responsibilities - Cost / Benefit analysis

18 Outlook Outlook: Next steps after today’s workshop - EFET to evaluate all comments and draft an evaluation and conclusions paper based on the outcomes of the workshop - TSOs are invited to make a proposal (e.g. MoU on cooperation) covering the identified issues, the envisaged structure for cooperation and a time schedule for implementation - RCC to update progress on Regional TSO-cooperation at next IG meeting WITH ALL STAKEHOLDERS in mid-April Forms of Regulatory Cooperation

19 Operational Conclusions  Approval of agenda and procedures for SG meeting  Review of outcomes from joint ERGEG-EFET work shop: Comments on REETS paper  Next steps Consultancy work Coherence and Convergence MoU  [to be added]