3rd RCC Meeting – Region South-South East 26th September 2006, Bratislava

1. 3rd RCC Meeting – Region South-South East 26th September 2006, Bratislava

2. Agenda

3. A first assessment • Gas Regulation 1775/2005 – problems monitored • Transport routes – overview

4. Gas Regulation 1775/2005 – TSOs affected • 11 TSOs are affected by the Regulation in the REM SSE

5. Gas Regulation 1775/2005 – tariffs (1)

6. Gas Regulation 1775/2005 – tariffs (2)

7. Gas Regulation 1775/2005 – TPA services • where TPA services are not yet implemented, implementation is scheduled for beginning of 2007

8. Gas Regulation 1775/2005 – CMP and CAM

9. Gas Regulation 1775/2005 – Capacity trading • bulletin boards are implemented only by few TSOs

10. Gas Regulation 1775/2005 – Transparency • transparency requirements are implemented to different degrees • ERGEG TF Transperency examines status of compliance with transparency requirements

11. Gas Regulation 1775/2005 - penalties • Adequate and effective sanctions/penalties in case of non-implementation of the requirements of the Regulation are missing in most countries        

12. Terms and conditions for TPA services approved? PL: part II of grid code approved by NR (part regarding balancing and congestion management) CZ: no (TPA for transit not regulated) SK: in process HU: yes GR: in process (2007) SI: approved (commercial conditions for transportation) I: approved (network code) A: approval in process

13. Gas Regulation 1775/2005 – conclusions • delayed implementation of the requirements of important requirements such as TPA services, transparency, CAM, CMP, regulatory sanctions • in some countries implementation is expected for January 2007 (e.g. Austria, Hungary, Slovenia) • further monitoring (e.g. Transparency, GGPSSO) on ERGEG level • ERGEG discussing detailed guidelines on balancing, transparency, secondary market trading, open season • stakeholders are invited to explain reason for non-implementation and date of implementation

14. Transportation routes • RUS-SK-CZ-GER: Velke Kapusany - Waidhaus or Hora Svate Kateriny • capacity is adequate ? • no capacity information (available in SK yes but no capacity information in CZ due to application of 3 minus shipper rule) • route section in SK only partly available for TPA ? • problems at border points (e.g. allocations, OBA)

15. Transportation routes • RUS-SK-A-SI-I: Velke Kapusany – Goricia • capacity information is published on all parts of the route • physical capacity is inadequate • interoperability problems • long-term capacity rights are a problem

16. Transportation routes • RUS-SK-A-I: Velke Kapusany – Tarvisio • capacity information is published on all parts of the route • physical capacity is inadequate • interoperability problems • long-term capacity rights are a problem

17. Transportation routes • RUS-SK-A-GER: Velke Kapusany – Oberkappel • capacity information is published on all parts of the route • no firm capacity is available

18. Transportation routes -conc • RUS-PL-GER-CZ: Bobrowniki or Kondratki – Mallnow - Hora Svate Kateriny • capacity information not published • “governmental agreements concluded in the past are not subject to TPA”

19. routes – conclusions • the transportation for new shippers on either of the 5 routes is not possible mainly due to • no available firm capacities • lack of transparency (information on available capacity) • interoperability problems (OBAs, nomination procedure) • detailed analysis between regulators and TSOs are necessary • tariff calculation • proposal: organize a workshop to assess problems and possible solutions

20. Agenda

21. Discussion point 1 – Priorities • Stakeholder Position Summary • No stakeholder disagreed with suggested priorities • Some stakeholders recommended the inclusion of additional action points • Preliminary Conclusions • additional points should be considered: • investment climate issues • SOS • hub development and • implementation of interconnection agreements and OBAs

22. Discussion point 2 – Regulation Implementation • Stakeholder Position Summary • Stakeholder comments on the implementation of the Regulation differ in accordance from which country they are coming • Most TSOs affirm that they are complying with the requirements of the Regulation • Preliminary Conclusions • Stakeholders should be invited to explain reasons for non-implementation of requirements of the Regulation and date of implementation • The implementation process should be monitored within the REM SSE • Monitoring (e.g. Transparency, GGPSSO) on ERGEG level should not be duplicated

23. Discussion point 3 – Directive Implementation • Stakeholder Position Summary • Most stakeholders agree that correct implementation of the 2nd Directive is essential • Gaps in implementation were identified with regard to unbundling • Preliminary Conclusions • Within the REM SSE implementation gaps should be monitored

24. Discussion point 4 – Five transportation routes • Stakeholder Position Summary • Some stakeholders found the scope of case studies too narrow and proposed to include: • upstream infrastructure • diversification of supply routes • Transportation for new shippers on either of the 5 routes is not possible mainly due to no available firm capacities, lack of transparency (information on available capacity) and interoperability problems (OBAs, nomination procedure) • Preliminary Conclusions • Detailed analysis between regulators and TSOs to identify the key barriers • The role of Hubs in supporting the utilization of interruptible transportation services by establishment of a backup trading platform should be added to the details analysis. • Network users are invited to provide examples of successful or failed gas shipping cases for the suggested routes

25. Discussion point 5 – Availability of Storage and Hub services • Stakeholder Position Summary • All stakeholders support the development of efficient trading activities at hubs feasible by harmonizing the business environment. • Main barriers are seen in different nomination procedures, gas quality, gas day and missing OBAs. • Additional gas sources as a precondition for liquid hub trading is linked with the question of incentives for new infrastructure investment in the regulatory regime. • Different prices for same storage services • Preliminary Conclusions • Harmonizing the business environment and Interoperability issue should be prioritized to enable efficient trading activities. • Regulators and TSO of the Region should work on harmonization of nomination procedures, gas quality requirements and gas day definitions in Standard Transportation Contracts of neighboring TSOs • pressure should be put on finalization of OBAs between Transit TSOs in the Region

26. Discussion point 11 – Transparency • Stakeholder Position Summary • All stakeholders except Eurogas state that the existing requirements of the Regulation and GGPSSO are sufficient in context of transparency • Preliminary Conclusions • It is recommended to assess the status quo of compliance with the transparency requirements of the Gas Regulation • To identify the need for possibly more detailed transparency requirements and/or modification of existing provisions of the Gas Regulation relevant information will be collected within the Regional Initiative

27. Discussion point 6 – Interoperability issues • Stakeholder Position Summary • All of the stakeholders think that interoperability issues are generally hindering competition in the region • enforcement of OBAs, more consistent and coherent approaches and harmonized regimes and procedures are necessary to more liquid trading activities • gas quality is not a problem, but in the future it may be because of changing flow patterns • Preliminary Conclusions • OBAs are definitely necessary at all interconnection points between neighboring TSOs • All TSOs in the region should indicate when they will conclude Interconnection Agreements with operating and balancing regimes at all interconnection points with the neighboring TSOs

28. Discussion point 7 – Capacity reservation, One-stop-shop • Stakeholder Position Summary • All stakeholders favour a service which would facilitate gas transportation through different TSOs • Most stakeholders propose the performance of the one stop shop service should be left to market initiative in a harmonized regulatory framework • Preliminary Conclusions • To clarify the concept it is suggested to work on the model in two steps: • analysis to introduce the concept under the current legal framework in the sense of an one-stop-shop provider acting as an agent for cross-border shippers • according to the ongoing discussion on the Green Paper concerning EU Grid/Grid Code and Inter TSO-Cooperation to enable network use over more than one TSO system

29. Discussion point 8 – Tariffs • Stakeholder Position Summary • TSO’s reject the development of a regional entry exit tariff model • Shippers support the idea of a regional entry-exit system but also warn against the risk of cross-subsidies, standard costs, and stranded costs • Preliminary Conclusions • Regulators should undertake a feasibility study for a regional entry-exit tariff model and intermediate steps towards it, with a view to avoiding cross subsidies, and submit it to Stakeholders • In addition the legal requirements to establish such a Regional Entry Exit System for cross border flows should be evaluated

30. Discussion point 9 – Investments • Stakeholder Position Summary • All stakeholders agreed that investment is the key to improved competition and security of supply • TSOs see the award of exemptions as the main way to promote investment • Most respondents support the adoption of Guidelines as a way to stabilise and harmonise regulatory regimes • Preliminary Conclusions • It is proposed to follow the concept of Common Guidelines for the treatment of new gas infrastructure with common conditions to award exemptions from TPA rights • The application of this approach should be based on work already undertaken for the Energy Community

31. Discussion point 10 – Balancing • Stakeholder Position Summary • Most of the stakeholders think that harmonization of balancing rules are essential • Traders demand market-based balancing is needed on regional basis • possible initial role of hubs, as regional balancing points is emphasized • Preliminary Conclusions • It is recommended to monitor the implementation of the ERGEG Balancing Guidelines and whether modifications are necessary from the Regional level point of view • Hubs can serve as regional balancing points

32. Discussion point 12 – Intergovernmental agreements • Stakeholder Position Summary • Most of the stakeholder expressed the opinion that special intergovernmental agreement between SSE countries are not necessary under the current EU legal framework • Preliminary Conclusions • It is recommended not to follow on that issue

33. Consultation Conclusions – next steps (1) • completion of OBAs asap is necessary • Invitation SG when implemented • Monitoring of implementation of the requirements of the Regulation 1775/2005 and Directive 55/2003 • 30 Oct. 2006 • Checklist • E-Control

34. Consultation Conclusions – next steps (2) • Workshop (IG) assessing detailed barriers for transport through the region (5 routes) to be held between regulators and TSOs • 24 Nov 06 • Vienna

35. Consultation Conclusions – next steps (3) • Assessment of the role of hubs as regional balancing points • Draft till end 2006 • AGEN • Survey on requirements to introduce a regional entry-exit system • Draft till end 2006 • AEEG • Survey on requirements in the sense of an one-stop-shop provider acting as an agent for cross-border shippers • Draft till end 2006 • E-Control