Gas Regional Initiative – North West Region Pierre-Marie Cussaguet (CRE) Dr. Stefanie Neveling (BNetzA) Bonn Workshops 8 and 9 Feb Workshop: Interconnections & Primary Capacity Market

2 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Agenda 10:00 – 10:15 Opening Address 10:15 – 10:45 Presentation of preliminary general findings 10:45 – 11:15 Comments from network operators and stakeholders 11:15 – 11:45 Coffee Break 11:45 – 12:15 Presentation of the situation at selected interconnection points 12:15 – 13:00 Comments from network operators and stakeholders, proposal & discussion on the way forward and workshop results for closing session 13:00Lunch

3 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Content I.Introduction & general / procedural matters II.Preliminary findings on general issues III.Situation at selected interconnection points IV.Way foward / next steps

4 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb I.Introduction & general / procedural matters II.Preliminary findings on general issues III.Situation at selected interconnection points IV.Way forward / next steps Content

5 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb I. Introduction Development Questionnaire / action report for discussion in IG / SG meetings; approved by the RCC on 21st Nov 2006  involved key operators E.ON Gastransport, BEB and GRTgaz (at a later stage) Questionnaire sent on 6th Nov. for answers on 6th Dec.  E.ON Gastransport & Fluxys answered late (mid-january)  Gassco (N) did not answer  Bocholtz & Ellund: questionnaire not sent to all concerned TSOs Therefore only 23 IPs were analysed and assessment of answers by CRE & BNetzA delayed  Answering to questionnaires has to be improved

6 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb I. Introduction Specific difficulties Very large number of confidential data  Reason: 3-minus-rule? Partially imprecise / unclear / missing answers & data

7 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb I. Introduction The following targets have been agreed and have been covered in the questionnaire: Target 1: Capacity products and services offered at interconnections should be compatible so that trade and competition is not distorted - Questionnaire Part 4 Target 2: Allocation rules of capacity and booking rules/procedures at cross-border points should be coordinated by adjacent TSOs so that trade and competition is not distorted - Questionnaire Part 5 & Part 6

8 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb I. Introduction Target 3: Congestion management procedures need to be coordinated so that trade and competition is not distorted – incl. investments issues - Questionnaire Part 7 Target 4: Nomination, re-nomination and matching procedures should be harmonized or at least made compatible at each cross- border point - Questionnaire Part 8

9 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb interconnection points (IP) 14 TSOs involved I. Introduction

10 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb I. Introduction Goals for the workshop Summary of the findings 1.) general 2.) specific findings for selected IPs  details to be found in the report Comments by the TSOs and stakeholders to identify relevant issues and priority setting Selection of IPs of high importance to be dealt with primarily Development of a working schedule

11 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb I.Introduction & general (organizational) matters II.Preliminary general findings III.Situation at selected interconnection points IV.Way foward / next steps Content

12 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb II. Preliminary general findings 1.Data confidentiality 2.Capacity Products & Services offered 3.Capacity Booking Procedures 4.Physical Congestion & Capacity Allocation Mechanisms (CAM) 4.1.Utilization rates CAM for existing capacity 5.Investments in new cross-border capacities / CAM 6.Contractual Congestion & Congestion Management Procedures (CMP) 6.1.Status of booked capacity for Application of CMPs 6.Nomination, Re-Nomination & Matching

13 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Confidentiality on Capacities (2005) 1 IP: only confidential 17 IPs (74% of all IPs): rate of confidential data between 0% and 100% Only 5 IPs (22 % of all IPs): all data requested have been provided 1. Data confidentiality

14 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Confidentiality on Utilization Rates (2005) 16 IPs (70% of all IPs): rate of confidential data between 0% and 100% 3 IPs: only confidential 4 IPs (17% of all IPs): all data requested have been provided 1. Data confidentiality

15 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Confidentiality on Rates of Subscription (2007) 15 IPs (65% of all IPs): rate of confidential data between 0% and 100% 2 IPs: only confidential data 6 IPs (26% of all IPs): all data requested have been provided 1. Data confidentiality

16 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Capacity Products Questions on: type of capacity products offered Entry / Exit capacities Firm / Interruptible capacities Daily / monthly / yearly / multi-yearly capacities General findings: At 14 out of 25 Interconnection Points (IPs) all involved TSOs offer all listed products for the main direction of flow At 6 IPs there are mismatches (different products at each side) At 5 IPs problems exist  Importance of combined capacity products?

17 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Capacity Products Questions on: Capacity Situation 2005 Maximum Technical capacity Firm / Interruptible capacity General findings: Technical (= firm) capacity at IPs where data has been provided does not match between adjacent TSOs Mostly only interruptible capacities available (esp. reverse flow)  Importance of matching of technical capacities? Entry / Exit capacity Contracted / Available capacity

18 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Booking procedures Questions on: Booking Periods Separate booking / coordination of Booking Procedure General findings: At only 2 cross-border points the timeframe for booking matches for daily firm (Entry or Exit) capacity. The shorter the duration for booking is, the less the timeframe for booking procedure is the same. For any given duration, the timeframe matches more frequently for interruptible capacity than for firm capacity Booking at adjacent TSOs always separately and not coordinated  Importance of matching of booking procedures?

19 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Physical congestion & CAM 4.1 Maximum Utilisation Rates 2005  Missing data needs to be delivered to CRE / BNetzA

20 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Physical congestion & CAM 4.2 CAM for existing capacity Questions on: Type of CAM applied (FCFS, Open Subscription) Coordination of CAM between adjacent TSOs General findings: CAM applied or legally required for does not match at 3 IPs FCFS is always applied, except for Fluxys (although legally required – TSO’s answer) FCFS is legally required in D, NL, B, UK (TSOs answers) Open Subscription is only applied in F, UK and legally required in UK (TSO’s answer) At all IPs no coordination of CAM between adjacent TSOs

21 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Physical congestion & CAM Questions on: Auctions Auctions undertaken for existing capacity General findings: Only National Grid (UK) untertakes long & medium term auctions annually, GdFD one auction in 2005, daily short term auctions done by National Grid (UK) and GRTgaz (F) (since 11/06) In Belgium auctions are forbidden by law (TSO’s answer) Auctions are not coordinated between adjacent TSOs

22 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Physical congestion & CAM Questions on: Day ahead capacities auctions (DACA) Auctioning of day-ahead capacity implemented / feasible General findings: Only GRTgaz has implemented day ahead auctions at 3 IPs Feasibility study: Wingas, EGT 3 TSOs: feasible 4 TSOs not feasible: due to implementation constraints (IT-System), conflicting implementation periods  FCFS most frequently used CAM  Rarely other mechanisms  Better coordiniation necessary? FCFS: no? Auctions: yes?  Improvement of CAMs?

23 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Investments / new capacities Questions on: Type of CAM applied for new capacities (Auction, Open Season) Coordination of CAM for new cross-border capacities Auctions General findings: CAM not legally required at 87% of all IPs Where increases are planned, capacities are mostly already allocated Open Season applied by BEB (D), GTS (NL), Interconnector (UK), GRTgaz (F) No auctions applied for new capacity No coordination concerning CAMs for new capacities  Capacity allocation has to be non-discriminatory

24 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Direction of flow 0% <10% Overall Indication for the IPs considered Availability 6. Contractual congestion & CMP Availability of firm capacity in 2005:

25 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Contractual congestion & CMP Rates of subscription in 2007: Direction of flow 0% <10% Availability  insufficient firm capacity available Overall Indication for the IPs considered

26 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Contractual congestion & CMP Questions on: applied CMPs (firm/interruptible UIOLI, sec. Market) UIOLI details, coordination General findings: Booking level at which CMPs are applied: different (e.g. 90%, any level, at each refusal) firm UIOLI often implemented but practically rarely applied Zero-nomination on day before delivery leads to «Lose it» at only 35% of IPs Only 35% of TSOs have seized an amount of capacity by application of UIOLI but offered it to the market only on interruptible basis  Is coordination necessary?  Should capacity be offered as firm capacity?

27 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Nomination & Matching Questions on: Application of Easee-gas CBP concerning nomination, re- nomination and matching General findings: Easee-gas nomination, re-nomination and matching procedures applied at 75% of IPs At the remaining IPs at least one TSO does not apply the procedures  Should Easee-gas CBP always be applied?

28 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Summary Few data have been provided. Missing data to be delivered to CRE / BNetzA Offer of capacity products not everywhere coordinated Booking procedures are not coordinated Allocation mechanism for existing capacities mostly FCFS Day ahead capacity auctions rarely implemented Capacities seized by application of UIOLI are offered on interruptible basis Auctions for allocation of new capacities are an exception

29 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Discussion  What are the key priorities? Importance of matching of products and booking procedures? Improvement of CAMs? Insufficient firm capacity available? Should CMPs be improved? Investment in new cross-border capacities necessary?

30 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb I.Introduction & general (organizational) matters II.Preliminary general findings on main issues III.Situation at selected interconnection points IV.Way foward / next steps Content

31 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb III. Situation at selected IPs Key findings for 6 selected interconnection points 1.Taisnières (F – B) 2.Obergailbach (F – D) 3.Oude Statenzijl (NL – D) 4.Eynatten (B – D) 5.Bacton (UK – UK) 6.(Zevenaar) (NL – D) Selection criteria: Trying to represent the whole region (as many different TSOs as possible) Importance / dimension regarding technical capacity Avoid IPs with missing data / answers from adjacents TSOs (e.g. Gassco, Eni, Dangas)  Importance in the shippers‘ view?

32 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Map: GTE 1. Obergailbach / Medelsheim

33 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb What does not match / problems: Allocation of new capacities not coordinated in 2005, investments in new cross-border capacities on both sides were not coordinated Data on monthly capacities: provided by GRTgaz & EGT, provided for only Q by GDFDT only GRTgaz & GDFDT publish historical capacities on their website Data on rates of subscription: GRTgaz publishes (monthly) booked capacities (2007) on its website EGT and GDFDT publish nothing on their website Utilization rates: EGT provided monthly data on utilization rates (2005). GRTgaz and GDFDT have provided it for only Q In 2006, GRTgaz published daily flows, but EGT and GDFDT published only monthly maximum/minimum utilization rates 1. Obergailbach / Medelsheim

34 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Main issues to be solved: Harmonization of published data on capacities and flows What information on capacities and gas flow are needed? / What information should be published by TSOs on their website? Are maximum/minimum flows sufficient and useful signals for shippers? / Should daily flows be published instead of maximum and utilization rates? Inter-TSO coordination How can CAM for new capacities be coordinated? Possible solutions / Priority goals / Way forward? 1. Obergailbach / Medelsheim

35 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Map: GTE 2. Taisnières/Blaregnies/Quévy

36 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb In 2005 the level of booked capacity was higher than that of firm capacity at Quévy (exit from Finpipe)  What does not match: The levels of booked capacities do not match for 2007 However, the utilization rate was lower than the level of firm capacity 2. Taisnières/Blaregnies/Quévy

37 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb  Main issues to be solved Inter-TSO coordination How can CMP and CAM be coordinated? Harmonization of published data on capacities and flows What information on capacities and gas flow are needed? / What information should be published by TSOs on their website? Are maximum/minimum flows sufficient and useful signals for shippers? / Should daily flows be published instead of maximum/utilization rates?  Possible solution / Priority goals / Way forward? 2. Taisnières/Blaregnies/Quévy

38 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Map: GTE 3. Oude Statenzijl (13E)

39 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb  What does not match: Data on capacity, rates of subscription and utilization rates provided and published by BEB GTS: data confidential CAM for new capacities are different: OSWPR for GTS vs OSWR for BEB CAM for existing capacities: FCFS applied but not coordinated ST and LT UIOLI for existing/new capacities not coordinated At the German border side: 4% < utiliz. rate (Oct.-Dec. 2005) = 67% rates of subscription for 2007 = 100% 3. Oude Statenzijl (13E)

40 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb  Main issues to be solved: Harmonization of published data on capacities and flows What information on capacities and gas flow are needed? / What information should be published by TSOs on their website? Are maximum/minimum flows sufficient and useful signals for shippers? / Should daily flows be published instead of maximum and utilization rates? Inter-TSO coordination How can CMP and CAM for existing/new capacities be coordinated? Day-ahead capacity auctions Should a market day-ahead capacity auction mechanism be implemented?  Possible solutions / Priority goals / Way forward? 3. Oude Statenzijl (13E)

41 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Map: GTE 4. Eynatten

42 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Eynatten Fluxys (B)  RWE (D) / E.ON Gastransport (D) Fluxys (B)  Wingas

43 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Eynatten Key findings Fluxys  EGT/RWE Mismatches: EGT fully booked out: 2005 exit, 2007 both directions Fluxys entry and exit available 2005 and 2007 Confidentiality RWE Fluxys does not offer interruptible products, except domestic entry Fluxys does not offer online booking for non-domestic transports Fluxys does not apply UIOLI for non-domestic transports (although legally required?) Only EGT seized capacities by application of UIOLI and offered it on interruptible basis RWE does not apply Easee-gas CBP

44 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Eynatten Further Problems: No auctions (in Belgium forbidden by law?) No Coordination: booking procedure, (short-term) CAM, UIOLI Key findings Fluxys (B)  Wingas Rate of subscription 2007 exit Wingas % No data on utilisation of Wingas exit and Fluxys entry Basically same problems as for Fluxys / RWE and EGT Priority issues to be solved:  non-combined capacity products?  UIOLI?

45 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Map: GTE 5. Bacton

46 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Bacton Key findings Bacton (H-Gas): National Grid (UK)  Interconnector (UK) Problems & Mismatches: Firm Interconnector capacity sold out until 2018; long term contracts  only interruptible cap. available on an hourly basis, but NG (entry) offers daily capacity No data on contracted Interconnector capacity Interconnector seized no capacity by application of UIOLI, although there was no full utilisation No coordination of CAM, booking, UIOLI, auctions

47 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Bacton

48 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Bacton Further problems: National Grid does not apply Easee-gas CBP UIOLI products not fully compatible (regarding timing) NG raised a modification proposal to reform exit capacity regime Now situation has changed (new import routes (BBL), LNG)? Priority issues to be solved:  non-combined capacity products?  Improve coordination  Offer firm long term UIOLI products?  Interconnector: auctions?

49 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Map: GTE 6. Zevenaar

50 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Zevenaar Key findings Zevenaar (L-Gas): Gas Transport Services (NL)  RWE (D) / E.ON Gastransport (D) Matches: All TSOs offer all capacity products All TSOs apply all listed CMPs Mismatches: RWE does not apply Easee-gas CBP UIOLI procedure not harmonised Zero-nomination on day before delivery leads to ‚lose it‘: only EGT and GTS Booking periods of daily firm capacity: GTS 3 months, EGT 20 working days in advance (acceptable?)

51 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Zevenaar Further mismatches & problems: GTS delivered no data on exit quantities, utilization & subscription rates, amount monthly seized by UIOLI RWE delivered confidential data No auctions implemented (day ahead auctioning would require considerable IT adjustments (GTS)) No Coordination of (short-term) CAM, booking procedure (separate), UIOLI General comments by TSOs: GTS: Primary market needs capacity (not more/different CAMs)  efforts needed to stimulate investment EGT: Reliable and secure services should be kept in mind when discussing methods for firm capacity on the primary market

52 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Discussion Classification by GTELocationinterconnected TSOs 1B, 1C Zeebrugge IZT InterconnectorFluxys 2B Zelzate FluxysGTS 3 Hilvarenbeek GTSFluxys 4 Obbicht GTSFluxys 5 s'Gravenvoeren GTSFluxys 6A, 6B Eynatten FluxysWingas 6C, 6D Eynatten FluxysE.On RuhrgasRWE 9A Quévy GRTgazFluxys 9B Blaregnies GRTgazFluxys 9C Taisnières GRTgazFluxys 10 Bocholtz GTSE.On RuhrgasENI 11A Zevenaar GTSE.On Ruhrgas 11B Zevenaar GTSRWE 12 Winterswijk GTSE.On Ruhrgas 13A Oude Statenzijl GTSWingas 13B Oude Statenzijl GTSE.On Ruhrgas 13C, 13D Oude Statenzijl GTSBEB 13E Oude Statenzijl GTSBEB 13 F Oude Statenzijl GTSEWE 16A, 16B Ellund Energinet.dkE.On RuhrgasBEBDong 17 Dragor Energinet.dkNova Naturgas 28 Obergailbach E.On RuhrgasGRTgazGDFDT 52A, 52B Bacton National GridInterconnector 53 Moffat National GridBord Gais 78A Zandvliet H FluxysGTS 78B Zandvliet L FluxysGTS Important IPs to be dealt with primarily?

53 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb I.Introduction & general (organizational) matters II.Preliminary general findings on main issues III.Situation at selected interconnection points IV.Way foward / next steps Content

54 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb IV. Way forward / next steps responsibilitydeadlinedeliverable Comments by stakeholders on selection of IPs to be worked on primarily CRE / BNetzAFebruary 23List of IPs Comments by stakeholder on priorities for each of the selected points CRE / BNetzAFebruary 23List of IPs and related priorities Comments from stakeholders on the reportCREFebruary 28Report Draft implementation plan containing issues to be solved at each selected IP CRE / BNetzAMarch 1Implementation plan Final reportCREMarch 9 (Workshops on the implementation plan)(April 16 / 17) (Approval on implementation plan)(RCC)(May 2) Implementation phase Meetings by adjacents TSOs (NRAs and further stakeholders if necessary) TSOs Comments to:

55 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb General remarks Prepare a common slide revealing the outcome of this workshop! (15min)

56 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Conclusions Way forward should focus on the details at specific interconnection points Assessment of the situation at specific IP requires an improved data basis (Solution: publishing of (aggregated) data, provide data to NRAs) Investment important issue where contractual (?) and physical congestions occur; efficient CMP for contractually congested IP. Better coordination of capacity products and booking procedures Inter-TSO and inter-NRA coordination Interconnection points: all the IP proposed in the slides plus Ellund, Zelzate; shippers are encouraged to give their priorities No objections on the time schedule proposed

57 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb Way forward / actions responsibilitydeadlinedeliverable Comments by stakeholders on selection of IPs to be worked on primarily CRE / BNetzAFebruary 23List of IPs Comments by stakeholder on priorities for each of the selected points CRE / BNetzAFebruary 23List of IPs and related priorities Comments from stakeholders on the reportCREFebruary 28Report Submit missing data to CRE / BNetzA (esp. utillisation rates) TSOs / NRAsFebruary 28Data Draft implementation plan containing issues to be solved at each selected IP CRE / BNetzAMarch 1Implementation plan Final reportMarch 9 (Workshops on the implementation plan)CRE(April 16 / 17) (Approval on implementation plan(RCC)(May 2) Implementation phase Meetings by adjacents TSOs (NRAs and further stakeholders if necessary) TSOs

58 GRI – NW Workshop in Bonn on Interconnections: Primary Market, 8 Feb. 2007