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Stockholm workshop GRI North-West Investment workstream 24.09.2009

Manual – the overview of regional investment climate in the NW-region Summary and discussion Erik Rakhou , projectleader Investment I1. Stockholm workshop GRI North-West Investment workstream 24.09.2009. Contents. What is the relevance of Manual for lessons learned in Virtual Test?

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Stockholm workshop GRI North-West Investment workstream 24.09.2009

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  1. Manual – the overview of regional investment climate in the NW-regionSummary and discussionErik Rakhou, projectleader Investment I1 Stockholm workshop GRI North-West Investment workstream 24.09.2009

  2. Contents • What is the relevance of Manual for lessons learned in Virtual Test? • What is the regional investment climate? • Discussion of elements “Manual” • Conclusions for discussion

  3. 1. Link between Virtual Test, Manual and final project outcome Virtual Test shows lessons learned at high level on regional investment framework in 4 involved countries (principles, not numbers) Manual shows ‘static’ overview (photo final by RCC of 29.09.2009) of regional investment framework in all 9 countries The Manual (and its overview potentially showing difference and similarities in the region) should allow to determine if lessons learned in Virtual Test can be rolled to the regional level The final project product shall be in a form of advise letter to relevant stakeholders of GRI with “Journal of findings” and “Manual” as annexed ‘subproducts’, used to build the final advise. Final advise letter is subject to RCC approval and comments by stakeholders, delivered by 31.12.2009

  4. 2. What is the regional investment climate? Main (Sub)elements summed up based on Manual: • Investment planning (approach to signalling and co-ordinating demand) • Type of investment (transito/domestic/hybrid => tariffs effect) • Co-ordination (TSOs, Regulators) • Regulatory (risk sharing) model (investment trigger) • Allocation of risks cross border • Allocation of costs cross border. • Determining whether an investment proposal is efficient, required and sufficient ((dis)allowing investment) • Bearing the costs and risks • Determining allowed return

  5. 3. Discussion of elements of “Manual” 1. Regulatory model Ex-post and ex-ante cost control by NRAs, But mostly no veto on investments by NRAs.

  6. 3. Discussion of elements of “Manual” 2. Type of investment transiting national In an entry/exit systems Investments have elements of both

  7. 3. Discussion of elements of “Manual” 3. Investment planning and 4. Determining if investment is ‘needed’. To build or not to build? Who knows and when? No ‘ready’ answer.

  8. 3. Discussion of elements of “Manual” 5. Allocation of risks and 7. Bearing the costs and risks (of especially stranded assets). Shippers ? Innovative solution ? TSOs ? Innovative solution ? End-consumers

  9. 3. Discussion of elements of “Manual” 6. Allocation of costs/co-ordination Co-ordination seems under way, But no practice is in place For regional cost-sharing of Investments (and its risks). border border

  10. 3. Discussion of elements of “Manual” 8. Determining allowed return Comparable methods Exact figures differ on circumstances (eg depreciation, price control period; enhancement or existing investment) Reward must balance the risk (without overrecovery).

  11. 4. Conclusion for discussion • Based on the performed analysis , we find that it is possible to roll out lessons learned in the Virtual Test to the regional level, based on careful consideration and further consultation of relevant stakeholders. • There are sufficient commonalities in structure of the national investment frameworks, especially at the questions of the Manual which are most relevant to the tested under Virtual Test regulatory framework innovations, eg like: • Signalling and co-ordinating regionally the bidding process, • Ideas of cross-border approach to shared risks and • (Lack of) reasonably predictable investment triggers for cross-border pipes.

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