IFE-CASC long term auctions Project status

1. IFE-CASC long term auctionsProject status Implementation Group Meeting - Lisbon, 3-12-2013

2. Plan Initial Project perimeter Initial Project planning Project Status Potential Impacts on the SWE coupling project Ways forward - Options

3. Project perimeter • CASC will manage yearly and monthly auctions • RTE willkeepmanagingdaily auctions (untillcoupling) • REE willkeepmanagingintraday auctions REE Rte Rte REE

4. Planning (as for July 2013*) GO LIVE : November 2013 MoU signature Comfortletters Submission for approval Forum Comfortlettersdemand IFE and HAR rules Consultation Regulatoryapprovals Design, IT specifications IT developments Common tests RTE / REE / CASC Contracts *as for RegionalRoadmaps, go-live wasinitiallyscheduled for mid-2012

5. Work already carried out • Letters of comfort received from regulators / Spanish ministry • Design of auctions • IT specifications • Signature of MoU • Public consultation of HAR including France-Spain border • Public consultation of IFE rules for short term timeframes • Forum with market parties • IT developments started (RTE-REE) • IT developments expected to be ready for common testing from 1st October

6. Milestones - Regulation • Submission of HAR and IFE rules to regulators  July 2013 • the approval time is 4 months in some countries, and the HAR needs to be approved in all involved countries • HAR 2.0 have been submitted in all involved countries, except for Spain • HAR 2.0 have been downgraded to a 1.1 version, excluding French-Spanish border but keeping all other relevant evolutions. REE has contributed to HAR 1.1 (e.g. rules now clarify that approval can be issued by NRAs and/or relevant ministries) • HAR 1.1 approved in France, CRE requesting coordination between RTE and REE to submit Harmonized Auction Rules • Spanish Operational Procedures  Work in progress, to be submitted by July 2013 (?) • High level Spanish regulation (Ministerial order 4112/225)  Evolutions needed by November 2013, out of TSOs responsibility

7. Milestones - Contracts • Cooperation Agreement REE-RTE  Need updates, work in progress • Service Level Agreement REE-RTE-CASC or RTE-CASC  Work in progress, template and procedures ready • CASC shareholdership issue • Different perceptions of the situation • Rules of internal order of CASC: principle of equality of treatment for TSOs • Not a prerequisite for the finalisation of the project, it can be implemented in a second step. CASC has no control over Auction Rules.

8. Milestones - IT • Finalization of the test Master plan  July • IT developmentsstarted • Internal tests  RTE: May-July •  REE: (?) • Common tests REE-RTE-CASC  Scheduled for :October-November, but not performedyet. Only tests between RTE and CASC have been succesfullycarried out

9. Interactions with SWE coupling project •  DELAY of IFE-CASC project • Day-ahead Coupling SWE • Interdependencies between the two projects exist • Same IT tools and regulation are impacted by the two projects, therefore: • Need to keep the sequence (1) IFE-CASC, (2) coupling SWE, otherwise, IT development cycles and regulatory evolutions sequence hugely impacted; • Simultaneous go-live of the two project non-feasible (operational and IT constraints).

10. Impacts on SWE coupling : scenarios discussed with projet partners and Regulators Scenario 1 : long-term auctions project is implemented by february-march 2014  No major impacts on SWE coupling Scenario 2 : long-term auctions project is delayed of few months  SWE coupling delayed of appoximately the same period Scenario 3 : long-term auctions project is not implemented before the SWE coupling  SWE coupling no earlier than end 2014 (new IT cycles, costs…)  Agreement for avoiding scenarios 2 and 3

11. Ways-forward A modification of the perimeter of the IFE-CASC project is currently being discussed between REE, RTE and CASC, in order not to impact the SWE coupling These solutions must be coherent with IT, legal, fiscal, regulatory and timing constraints (i.e. : no impacts on SWE coupling) Possible solutions : CASC as Service Provider of both RTE and REE, using HAR CASC as Service Provider of both RTE and REE, using adapted IFE Rules REE keeps performing yearly auction, RTE outsources monthly auctions (and Resales, UIOSI, management of reductions…) to CASC, using adapted IFE Rules

12. Solution A – CASC as service provider and HAR REE and RTE would keep control of auction rules REE could become CASC shareholder in a second step In line with Regional Roadmaps In line with Market needs Contracts almost finalized Public consultation already carried out, approval already obtained in all other involved countries. Need of fast approval in Spain and France – Need of updating Ministerial Order Need of updating Royal Decree ? Outsourcing to CASC cost-efficient (transparency regulation…), CASC offer in line with comfort letters

13. Solution B – CASC as service provider of RTE and REE and specific IFE rules REE and RTE would keep control of auction rules REE could become CASC shareholder in a second step Delegation to CASC by RTE and REE should be similar to the delegation clauses of HAR Moderately in line with Regional Roadmaps and Market needs (no HAR, but yet single platform for long term rights) Contracts almost finalized Need of new Public consultation – Need of updating Ministerial Order. New rules should include evolutions needed for SWE coupling. Outsourcing to CASC cost-efficient (transparency regulation…), CASC offer in line with comfort letters

14. Solution C – CASC managing only monthly auctions and secondary markets + specific IFE rules • REE and RTE would keep control of auction rules • REE could become CASC shareholder in a second step • Delegation to CASC by RTE should be similar to the delegation clauses of HAR • Not in line with Regional Roadmaps and Market needs (no HAR, nor single platform for long term rights) • Need of new Public consultation – Need of updating Ministerial Order. New rules should include evolutions needed for SWE coupling.

15. 2013 2014 Possible implementation plan New project perimeter definition GO-LIVE SWE Full Coupling Go live window Approval New IT developments (C) RTE internal testing RTE-CASC testing RTE-REE-CASC testing Rules modifications (B and C) Public consultation (B and C) Submission for approval Approval • Planning is extremely tight • 1 month contingency may be needed for Regulatory approvals (go-live in March for April auction)

16. Conclusions RTE supports option A : CASC as service provider and use of Harmonized Auction Rules Options B and C could be implemented too in order not to delay the SWE Coupling Option C should be considered and agreed as a temporary solution Decision needs to be taken in the next days, otherwise the SWE coupling will be impacted Guidance is therefore expected today from NRAs