28th May 2009, Madrid XVI MADRID FORUM

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

2. GGPLNG – 2009 monitoring exercise INDEX • Level of participation • 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 • Recommendations

3. 1. Level of participation • NRAs’ and LSOs’ responses

4. 1. Level of participation • Users’ responses

5. 2.1 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

6. 2.2 Results:Tariffs USERS‘ RESPONSES

7. 43 % 2.2 Results:Tariffs USERS‘ RESPONSES

8. 2.2 Results:Tariffs • 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

9. 2.3 Results:Roles and responsibilities • 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.

10. 2.4 Results:TPA services. Services offer LSOs‘ RESPONSES

11. 2.4 Results:TPA services. Contracting proccess • Standard contracts and terminal codes are being used orunder definition in all the terminals LSOs‘ RESPONSES

12. 2.4 Results:TPA services. Services offer • 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

13. 2.4 Results:TPA services. Terminal code and scheduling • 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 USERS‘ RESPONSES

14. 2.4 Results:TPA services. LSOs and TSOs cooperation In general, users are satisfied with the cooperation between LSOs and TSOs USERS‘ RESPONSES

15. 2.5 Results:CAMs and CMPs LSOs‘ RESPONSES

16. 2.5 Results:CAMs and CMPs Only 14% of users consider CAMs and CMPs facilitate liquid capacity trading LSOs‘ RESPONSES

17. 2.5 Results:CAMs and CMPs LSOs‘ RESPONSES

18. 2.5 Results:CAMs and CMPs USERS‘ RESPONSES 76% of users prefer secondary capacity markets

19. 2.5 Results:CAMs and CMPs. Antihoarding mechanisms NRAs‘ RESPONSES • Underused and/or underutilised capacity is only defined in three countries

20. 2.5 Results:CAMs and CMPs • Different mechanisms are applied in different terminals • Opinions differamong 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 • Improvementscan 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

21. 2.6 Results:Transparency • 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 • Improvementscan be made on: • Availability of slots • Penalties • Accessibility of information in English

22. 2.7 Results:Trading of capacity rights • While 76% of users prefer secondary capacity markets as the best CMP, according to NRAs,onlythree of the monitored countries have established operative secondary markets LSOs‘ RESPONSES

23. 3. 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

24. Thank you for your attention! www.energy-regulators.eu Mark your diary for the World Forum on Energy Regulation IV October 18-21, 2009 Athens, Greece www.worldforumiv.info