28th May 2009, Madrid XVI MADRID FORUM ERGEG GGPLNG : 2009 monitoring exercise

2Madrid Forum XVI, 28th May 2009 GGPLNG – 2009 monitoring exercise INDEX 1.Level of participation 2.Results: 2.1. General information 2.2. Tariffs and tariff methodologies 2.3. Roles and responsibilities 2.4. TPA services 2.5. Capacity allocation mechanisms (CAMs) and congestion management procedures (CMPs) 2.6. Transparency 2.7. Trading of capacity rights 3.Recommendations

3Madrid Forum XVI, 28th May Level of participation  NRAs’ and LSOs’ responses NRACountry BELGIUM Commission pour la Régulation de l'Electricité et du Gaz (CREG) FRANCE Commission de Regulation de l'Energie (CRE) GREECE Ρυθμιστική Αρχή Ενέργειας / Regulatory Authority for Energy (PAE / RAE) ITALY Autorità per l’Energia Elettrica e il Gas (AEEG) PORTUGAL Entidade Reguladora dos Serviços Energéticos (ERSE) SPAINComisión Nacional de Energía (CNE) UNITED KINGDOM Office of Gas and Electricity Markets (Ofgem) TOTAL: 7 NRAs (100%) LSO Name Number of terminals Country Bahía de Bizkaia Gas (BBG)1Spain ENAGAS S.A.3Spain Regasificadora del Noroeste, S.A (Reganosa) 1Spain Planta de regasificación de Sagunto S.A. (SAGGAS) 1Spain ELENGY2France Societé du Terminal Méthanier de Fos Cavou 1France GNL Italia S.p.a.1Italy Terminale GNL Adriatico S.r.l.1Italy Fluxys LNG1Belgium Hellenic Gas Transmission System Operator S.A. 1Greece National Grid Grain LNG1United Kingdom REN Atlantico, S.A.1Portugal TOTAL: 12 LSOs, 15 terminals (86%)

4Madrid Forum XVI, 28th May Level of participation  Users’ responses UserCountry User 1Italy, Spain User 2Spain User 3Spain, UK User 4Greece User 5Portugal User 6France, Spain User 7Italy User 8Italy User 9Portugal User 10France, Italy, Spain User 11France User 12France, Portugal Spain. User 13Spain User 14Spain TOTAL: 14 business groups, 21 questionnaires received

5Madrid Forum XVI, 28th May Results: General information More than half of LSOs are also TSOs and 36% are supply undertakings as well. Only 2 LSOs report to be exclusively dedicated to managing their LNG terminals. 38% of users indicate that they are part of the same vertically integrated undertaking with the LSO to which the completed questionnaire applies Only 3 NRAs state having implemented measures to assure confidentiality and avoid competitive imbalances Only 17% of LSOs identified potential incompatibilities between GGPLNG and national regulations

6Madrid Forum XVI, 28th May Results: Tariffs USERS‘ RESPONSES

7Madrid Forum XVI, 28th May % 2.2 Results: Tariffs USERS‘ RESPONSES

8Madrid Forum XVI, 28th May 2009 While NRAs are generally satisfied with the degree of compliance with GGPLNG on tariffs, users believe that there is room for improvement, so an effort needs to be made concerning: Tariff methodology transparency Cost-reflection Efficient tariff incentivising terminal utilisation How to manage congestion revenues 2.2 Results: Tariffs

9Madrid Forum XVI, 28th May 2009 Good degree of GGPLNG implementation on these issues. Room for improvement regarding: Implementation of IT systems by users Cost-reflection in penalties design Development of a balanced framework regarding responsibilities and penalties of LSOs and users. 2.3 Results: Roles and responsibilities

10Madrid Forum XVI, 28th May Results: TPA services. Services offer LSOs‘ RESPONSES

11Madrid Forum XVI, 28th May Results: TPA services. Contracting proccess Standard contracts and terminal codes are being used or under definition in all the terminals LSOs‘ RESPONSES

12Madrid Forum XVI, 28th May 2009 Important degree of harmonisation and transparency when defining bundled services, which almost always include: ship reception and unloading, LNG storage and regasification capacity Interruptible services are not being offered in most of the cases 48% of users indicate that services are defined without market consultation 52 % of users explain that services offered do not accommodate their needs, pointing out other services required as bundled or unbundled (trucks loading, extra LNG storage…). Services to be defined at market request and with market collaboration, preventing distortions among terminals Contracting process to be clearly detailed 2.4 Results: TPA services. Services offer

13Madrid Forum XVI, 28th May 2009 Users view of terminal code show that, 70% comply with the GGPLNG. Aspects that can be improved: To include rules for secondary capacity markets Better definition of CMPs Tolerance levels of services and imbalances Liabilities Users identified lack of visibility regarding available slots GLE to analyse the need to standardise notice periods 2.4 Results: TPA services. Terminal code and scheduling USERS‘ RESPONSES

14Madrid Forum XVI, 28th May 2009 In general, users are satisfied with the cooperation between LSOs and TSOs 2.4 Results: TPA services. LSOs and TSOs cooperation USERS‘ RESPONSES

15Madrid Forum XVI, 28th May Results: CAMs and CMPs LSOs‘ RESPONSES

16Madrid Forum XVI, 28th May 2009 Only 14% of users consider CAMs and CMPs facilitate liquid capacity trading 2.5 Results: CAMs and CMPs LSOs‘ RESPONSES

17Madrid Forum XVI, 28th May Results: CAMs and CMPs LSOs‘ RESPONSES

18Madrid Forum XVI, 28th May Results: CAMs and CMPs 76% of users prefer secondary capacity markets USERS‘ RESPONSES

19Madrid Forum XVI, 28th May 2009 Underused and/or underutilised capacity is only defined in three countries 2.5 Results: CAMs and CMPs. Antihoarding mechanisms NRAs‘ RESPONSES

20Madrid Forum XVI, 28th May 2009 Different mechanisms are applied in different terminals Opinions differ among stakeholders, not only on their understanding of the current type of mechanism, but also on the opportunity for developing new ones Market consultation is not used broadly when designing CAM and CMP. Also a majority of users consider them non market-based Improvements can be made developing: Effective, simple and consistent CAM and CMP Information provided on how mechanisms in place work CAM and CMP compatible with liquid trading and spot markets Clear definition of underused and systematically underutilised capacity 2.5 Results: CAMs and CMPs

21Madrid Forum XVI, 28th May 2009 User’s opinions concerning effective publication of transparency criteria, services offer, used and available capacities, tariffs, etc. indicate global recognition of an adequate transparency level Improvements can be made on: Availability of slots Penalties Accessibility of information in English 2.6 Results: Transparency

22Madrid Forum XVI, 28th May 2009 While 76% of users prefer secondary capacity markets as the best CMP, according to NRAs, only three of the monitored countries have established operative secondary markets 2.7 Results: Trading of capacity rights LSOs‘ RESPONSES

23Madrid Forum XVI, 28th May Recommendations  Users favour greater standardisation, wider services provision and hence, implementation of general practices at the European level  Certain degree of improvement is necessary regarding tariff structures, certain service provision, CAM/CMP definition and anti-hoarding principles  Secondary markets must be fostered for the dynamic and competitive growth of the market, responding to the most common users’ complaint  Rules to avoid congestion problems and the mechanisms to manage them must be settled under consensus-building, taking into account market’s preferences  More time would be beneficial in order to allow NRAs and LSOs the full implementation of GGPLNG provisions in their systems  In some markets the number of users is still low, so new surveys should be undertaken in the future, once market develops

24Madrid Forum XVI, 28th May 2009 Thank you for your attention! Mark your diary for the World Forum on Energy Regulation IV October 18-21, 2009 Athens, Greece