1. Walter Boltz, Chairman ERGEG Gas Working Group 18 th Madrid Forum 28/29 September 2010 Draft framework guideline on balancing in natural gas transmission networks

2. 218 th Madrid Forum, 27/28 September 2010 Problem Identification - I System users say that Relevant balancing rules do not reflect their needs and do not take into account their available resources (69% of respondents) Users were not consulted in the drafting/change process of the balancing rules (65.5% of respondents) Balancing regime suffer (list not exhaustive): non market-based balancing regime: penalties instead of market prices lack of harmonisation between balancing regimes hourly balancing period lack of real-time information imbalance cost and penalties too high insufficient access to storage insufficient access to transport capacity Results from ERGEG 2008 monitoring report

3. 318 th Madrid Forum, 27/28 September 2010 Problem Identification - II Sector Inquiry found that Balancing markets often favour incumbents and Create obstacles for new entrants; and that Small size of balancing zones leads to increased costs and protects the market power of incumbents Many differences between balancing regimes / systems exist currently Physics should determine size of balancing zones not politics

4. 418 th Madrid Forum, 27/28 September 2010 Basic timeline based on Gas Regulation EC defines priorities for network codes 6 Months EC requests ACER to submit framework guidelines Agency prepares Framework Guidelines ENTSOG prepares network codes 12 Months EC requests ENTSOG to submit network code 3 Months ACER approves network codes COMITOLOGY ENTSOG submits network code to ACER ACER submits network code to EC when satisfied, recommendin g approval via Comitology

5. 518 th Madrid Forum, 27/28 September 2010 Where are we now 17 th Madrid Forum invited ERGEG to develop input to FG on gas balancing rules Preparatory work started subsequently Establishment of ad hoc expert group in March 3 meetings with expert group and on-line discussions Several meetings and on-line discussions with ENTSOG Invitation letter from EC received on 6 August Launch of Public Consultation on 19 August Public Workshop on 12 October, Brussels End of Public Consultation on 28 October Submission of Draft FG to EC February 2011

6. 618 th Madrid Forum, 27/28 September 2010 Thank you!