1. ROMANIA NATIONAL NATURAL GAS REGULATORY AUTHORITY Public Service Obligations in Romanian Gas Sector Ligia Medrea General Manager – Authorizing, Licensing, Regulations and Technical Certification Department ANRGN – ROMANIA 2004 - TIRANA 1

2. ROMANIA NATIONAL NATURAL GAS REGULATORY AUTHORITY Public service obligations (PSOs) are often identified with the narrow set of obligations that a monopoly service provider has to fulfil in supplying its captive consumers.  typically imposed on services of general economic interest (e.g. transport, energy and communication);  provided by non- governmental entities;  often (but not always) associated with exclusive monopoly rights or with special funding;  imposed in some cases also on agents operating in a competitive environment, especially at the early stages of the development of competition when special customer protection measures may be necessary; 2  related to services that markets may have no incentives to provide (e.g. universal service obligations, security of energy supplies, maintenance of infrastructure in the adequate quality and technical state, etc.); Definitions Definitions: PSOs are:

3. ROMANIA NATIONAL NATURAL GAS REGULATORY AUTHORITY PSO’s Generally, PSO’s should reflect the needs of users and the basis of such needs is a guarantee of universal access, high quality and affordability in the provision of services. - clear definition of basic obligations to ensure quality of service; - full transparency on tariffs, contractual conditions, choice and financing the providers; - choice the service and, when appropriate, choice the supplier in a competitive context; - existence, where justified, of independent regulatory bodies; - existence of procedures for complaints handling and dispute settlement. 3 PSOs should be set considering the following best practice principles:

4. ROMANIA NATIONAL NATURAL GAS REGULATORY AUTHORITY  strengthens the provisions set by Directive 1998/30/EC regarding PSOs and consumer protection;  the scope of PSOs -“PSOs may relate to security, including security of supply, regularity, quality and price of supplies and environmental protection” [art. 3(2)]  member States - provide the EU Commission information about all measures taken to carry out public service objectives, regardless these measures require a derogation from the Directive [Art. 3 (9)]  notified PSOs will be checked by the Commission for consistency with general criteria: o clear definition o transparency o non-discrimination o verifiability 4 The EU Gas Directive in 2003

5. ROMANIA NATIONAL NATURAL GAS REGULATORY AUTHORITY 5 Consumer protection measures:  adequate safeguards to protect vulnerable customers, including measures to help avoid disconnection;  high levels of consumer protection, particularly with respect to transparency on contractual conditions, general information and dispute settlement mechanisms;  eligible customers have to be effectively able to switch to a new supplier. 1. information about rights to be supplied; 2. transparent, inexpensive and simple procedures for making complaints and settle disputes 1. Description of provided services, offered quality and time for initial connection; 2. If offered, description of the maintenance service; 3. Transparent information about prices and tariffs and how they are updated; 4. Duration, renewal and withdrawal conditions; 5. Compensations and refund arrangements for not meeting contracted quality; 6. Methods for initiating procedures for dispute settlement; 7. Wide choice of payment methods; 8. No charges for changing suppliers; Overall protection measures Overall protection measures Specific contents of the gas supply contract (fair and well known prior to signature)

6. ROMANIA NATIONAL NATURAL GAS REGULATORY AUTHORITY 6 Public service obligations (PSO) in Romanian gas sector Regulatory framework Gas Law – no. 351/July 2004  Gas Law – no. 351/July 2004 - according to this law the public service in natural gas sector is the obligation consisting in the activity organized and/or authorized by the state in order to satisfy public interest request in natural gas sector; licensees  Natural gas storage, transmission, distribution and supply licensees have the following public service obligations: - ensuring security and continuity of supply, according to legal provisions in force; - ensuring third party access to the systems. - compliance with the provisions imposed by the relevant performance standards; - accomplishment of public service on energy efficiency and environmental protection terms;

7. ROMANIA NATIONAL NATURAL GAS REGULATORY AUTHORITY  Commercial Rules regarding natural gas market  Performance standard for natural gas supplying on wholesale market  Performance standard for natural gas supplying service, achieved by distribution operators  Regulation on programming, functioning and dispatching the natural gas transport system  Framework contracts for transportation, distribution and supply of natural gas  Technical Code in the natural gas sector  Licenses for underground storage, transmission, distribution, supply 7  Regulation on access to natural gas distribution systems - approved by GD –2004  Regulation on access to natural gas national transmission system - approved by GD – 2004

8. ROMANIA NATIONAL NATURAL GAS REGULATORY AUTHORITY PSO for infrastructure operators ( transmission and storage operators) Transmission is defined by the law as public service of national interest  long term demand forecasting and identification of long term capacity investment needs;  elaboration of plans to expand the natural gas system including transmission and storage facilities;  residual physical balancing of the system and resolution of capacity restrictions;  ensuring the efficient functioning and the reliability of the gas system;  build, operate and maintain facilities consistently with the conditions established in their licenses/authorizations and concessions;  provide the service on a regular and continuous basis, according to the quality levels determined by performance standards;  follow the instructions of the System Operator and the technical norms, the TPA regulation and the Technical Code;  facilitate the connection to its facilities by other infrastructure operators and/or by other users (eligible consumers, suppliers);  maintain an attention system to ensure the resolution of emergency situations. 8

9. ROMANIA NATIONAL NATURAL GAS REGULATORY AUTHORITY PSO for distribution companies - two different categories of PSO PSO for distribution companies - two different categories of PSO 1.PSOs that are related to the development and operation of the network;  Build, operate and maintain facilities consistently with the conditions established in their licenses/authorizations and concessions  Expand the distribution network in their concession areas in order to satisfy (reasonably) the expected demand increases  Provide the requested connections to new tariff or eligible users in their concession area on non-discriminatory basis  Provide the service regularly and continuously  Meet the security, reliability and commercial quality standards determined in the service quality regulation  Comply with the regulation of interruptions  Comply with the regulation of connections  Facilitate all information that network users may require  Maintain a permanent operative system to ensure the resolution of emergency situations  Establish an attention service to deal with network users’ complaints and notifications. 9

10. ROMANIA NATIONAL NATURAL GAS REGULATORY AUTHORITY 2.PSOs that are associated with distributors’ role as suppliers on the regulated market  supply gas to all customers demanding it and placed in their concession areas, provided only in case that sufficient capacity is available;  sign the necessary gas acquisition and access contracts (including the usage of storage) in order to supply the regulated market;  facilitate all information that customers may require regarding the gas supply contract;  establish an attention service in order to deal with tariff users’ complaints and notifications. 10

11. ROMANIA NATIONAL NATURAL GAS REGULATORY AUTHORITY PSO’s applicable to suppliers on the free market PSO’s applicable to suppliers on the free market  comply with the legal, technical and economic conditions established in the supply license;  conclude freely negotiated supply contracts with eligible customers or other suppliers (if necessary, use a framework contract);  provide the security of supply agreed with the customer in the supply contracts by signing the necessary gas acquisition and access contracts (including the usage of storage);  transmit information to the competent authority (ANRGN) regarding the prices negotiated with their customers;  facilitate all information that customers may require regarding the gas supply contract;  establish an attention centre in order to be able to address customers’ complaints and notifications;  comply with the performance standard ( quality of service). 11

12. ROMANIA NATIONAL NATURAL GAS REGULATORY AUTHORITY THANK YOU FOR YOUR ATENTION ! Ligia Medrea anrgn@anrgn.ro 12