1. Electricity Regional Initiative Central Eastern European Region Congestion Management – Status & Prospects Tahir Kapetanovic E-Control CEE Stakeholder Group Meeting 7 th November 2007

2. 2 ERI Central Eastern Europe CEE Stakeholder Group Meeting, 7th November 2007 Retrospective 1st CEE SG Meeting 27. January 2005: „… Coordinated explicit auction for the capacity allocation in the whole CEE Region shall become operational by the end of 2005, to be used for the yearly, monthly and daily allocation with the target date for implementation in January 2006 …“ Key questions and issues to be resolved:  Commmercial/technical solution(s) reflecting reality?  TSO Agreement compliance with national legal requirements?  Compliance with CM Guidelines after their formal adoption by the EC? 1st CEE CM IG on 25. April 2006:  Detailed requirements specification by regulators (www.ergeg.org)www.ergeg.org  TSOs propose the development of the load flow based system  2 WGs established by TSOs for: (i) flow based allocation and (ii) coordinated auction  Regular information exchange TSOs NRAs

3. 3 ERI Central Eastern Europe CEE Stakeholder Group Meeting, 7th November 2007 Retrospective (cont‘d) 2nd CEE SG Meeting 22. June 2006:  „… NRAs support TSOs in their effort  Implementation of new system at the beginning of 2007  Further analysis of possible deficiencies of commercial/technical solutions  Market monitoring to avoid gaming and ensure compliance with national laws …“ Entering into force of CM Guidelines in December 2006 7th CEE CM IG on 11. September 2007:  Project is running  Some old and some new challenges, delays  Antitrust and merger regulation issues  Project Office, Project Manager  Updated Project Plan, Articles of Association, Business Plan Figures  Grid model adequacy ?

4. 4 ERI Central Eastern Europe CEE Stakeholder Group Meeting, 7th November 2007 CEE Regulators‘ Decision on Capacities 2008 Following the presentation by the TSOs at the 7th CEE CM IG, two options for the long-term (annual) capacity allocation 2008 have been evaluated: 1.Maintain the current system during the entire year 2008 and allocate maximum possible capacities in annual auctions 2.Shift certain capacities from annual to short-term allocation in order to ensure the implementation of the new flow based system during 2008

5. 5 ERI Central Eastern Europe CEE Stakeholder Group Meeting, 7th November 2007 Regulators‘ Decision (cont‘d) Discussing the two options, regulators have further consulted the Stakeholders, notably EFET and Eurelectric The regulators came then to the following conclusions at the 4 th CEE RCC on 27. September 2007: The regulators regret the new delay announced in June 2007 that cumulates to the already existing delay in the project The regulators finally decide that the first option, i.e. maximizing annual capacities for 2008 with no pre-reservation of capacity for short-term allocation is the preferable one

6. 6 ERI Central Eastern Europe CEE Stakeholder Group Meeting, 7th November 2007 Regulators‘ Decision - Background Monitoring & analysing the data provided by TSOs reveals that at some interconnections significant amounts of capacity have been available for the daily auctions in the first half of 2007. Identify the source of these capacities (e.g. not allocated in annual auctions, allocated but unused, better short term information on grid situation available for calculation etc.) Day-ahead capacity for “testing and customizing” the new flow- based solution could be available also in 2008

7. 7 ERI Central Eastern Europe CEE Stakeholder Group Meeting, 7th November 2007 Prospects and Way Forward Regulators encourage further the TSOs to resolve the open issues, and restructure the work in specific aspects After having elaborated a proper capacity calculation model and with inputs from consultant (Consentec study), the draft Auction Rules and SLA should be available in February 2008 Regulators shall receive the 1st version of documents as soon as possible in order to have preliminary early discussions and enabling so to keep the tight project plan (many elements of the existing Auction Rules will be “reused”, what would enable drafting the remaining elements beginning of 2008) This way, a proper testing phase of the system for market participants in the second half of 2008 will be facilitated