Vienna, 24 november GRI SSE: work done so far 1. Assessment summary on selected transportation routes ongoing 2. Preliminary paper on hubs as regional balancing points ongoing 3. Preliminary paper on requierements to introduce a regional ongoing OSS and E/E tariff system 4. Paper on “Long term planning on a regional level” missing EFET welcomes the work done by regulators so far but now is time for actual improvement on the ground

Vienna, 24 november GRI SSE: one–stop-shop provider and regional entry- exit zones  One of the opportunities for better situation on the market (EFET wants effective unbundling as soon as possible, no matter how)  Simplification of the work for traders and shippers (one counterpart)  Better overview about transit flows and investments (SSE region is facing insufficient access to the network and in-transparent enhancement)  Ensure clear mechanism for capacity increase  EFET calls for:  enhanced inter-TSO co-operation in SSE region ---> enlargement of the E/E zones, in line with European progress  harmonization of regulatory arrangements (all systems to open at same pace, operational procedures, market-based balancing regime on regional level) and establishment of OBAs (supporting development of liquid hubs) ---> firm deadline for the implementation

Vienna, 24 november GRI SSE: hub used as balancing point  Market based balancing more effective and positive for liberalisation than fixed penalties  Help to increase the liquidity at the hubs in SSE and contribute to security of supply due to more choice and offers  Allow for pooling of imbalance positions throughout bigger areas  Baumgarten and PSV (potentially) ideal mechanism for providing market forces with a tool for network balancing  EFET seeks for developing of hubs in SSE as soon as possible  E stablishment of ad hoc CEGH development group (setting of timeline for further steps and common requirements on any given hub

Vienna, 24 november Boost liquidity on CEGH through:  Efficient and stable regulatory framework with respect to system access  functioning operational framework  Firmness  Balancing services  Transparency on available capacities  Transparency on prices  Availability of gas and choice of source  Tightness of bid-offer spread  Standardisation (Gas contracts EFET; others Hub) How to have a well functioning CEGH?

Vienna, 24 november Timeline – CEGH Development Feb 07Oct 2008Oct 07 ►For Bulletin Board the decision on Market Maker (volume? spread? period? rights and responsibilities?) ►Back-up/-down services ►Customer focus OBAs physical nomination < 1 day lead time (now 5 days) Web based nomination ►Workshop CEGH with EFET on products Mar 07May 2007 ►systematic offering of structured products (week ahead, month ahead)  anonymous ►standardised agreements (EFETs) ►(Super-) firm market place ►CEGH takes counterpart risk and makes clearing ►International balancing via CEGH ►online intraday balancing market ►derivative trading with physical hedge/forwards ►gas exchange ►Meeting CEGH with EFET CEGH Working Group (Ressl) Jan 2009 ►Derivative trading ►Regional balancing market Mar/Apr 07 Jan 2008 ►Meeting CEGH with EFET CEGH Working Group (after 20.03) ►day ahead products ►intraday products ►physical nomination < 1 day possible ►web based nomination possible Jul 07 ►Operational Market Maker ►Back up/down service ►completion of contractual specifications

Vienna, 24 november … EFET view – Europe currently Virtual hub (in-grid balancing point) NBP TTF Zeebrugge Physical hub ( e.g border point) Baumgarten Less liquid gas trading locations

Vienna, 24 november European Gas market grid 2010 –allows for enhanced SoS grid  xy The zones in detail: Zonal Spot price indicator (Hub and Gas Exchange) see 3 5 Atlantic bassin LNG Spot price LNG Discussion: Is this possible? Zonal price differentials reflect cross-zonal interconnectivity between regions Border price Border price Border price Border price

Vienna, 24 november Conclusion  GRI necessary intermediate step - but European market goal  Therefore need to include parts of Germany, at least the adjacent systems to SSE, in the assessment  The introduction of legal requirements should be facts and not discussed again in a time consuming manner  (Regional) balancing markets are key for a transparent evaluation of the value of gas and flexibility services and boost Hub liquidity  SSE region lacks availability of gas and physical choice of supply – authorities urged to accelerate the realisation of all projects leading to higher choice of supply and thus security of supply, competition and trade

Vienna, 24 november Backup, not for send out

Vienna, 24 november … transparent information available

Vienna, 24 november … gross vs. net balancing energy

Vienna, 24 november … Balancing markets cheaper than firm storage contract for TSO