22 – 23 November 2007 GIE Annual Conference

1. How the Third Package might encourage investment 22 – 23 November 2007 GIE Annual Conference

2. Major elements of the 3rd Package • In the draft Directive: • TSOs Independency: Unbundling, ISO, more power to NRAs • In the Regulation : Organisation of the TSOs cooperation • Commission • Cooperation of TSOs within a formal TSO body, ENTSOG • New European regulatory body, ACER • In both documents: Regional cooperation • Today’s focus is on how TSOs organize themselves to cooperate in view of fostering investment

3. COMMISSION ENTSOG ACER TSO NRA TSO NRA TSO TSO NRA NRA TSO Market players Cooperation Architecture

4. Ten Year Statement • ENTSOG has to deliver a Ten Year Investment Plan every two years • Modelling of the network • Scenario development • Supply and demand adequacy report • Assessment of the resilience of the system • The Investment Plan shall identify investment gaps, notably with respect to cross boarders • Regional cooperation should also deliver a TYIP

5. Establishment of TYS: Process (1) • In the first step, ENTSOG will analyse if capacity gaps (if any) exist between networks • In a second step, ENTSOG will carry out a study about the resilience of the European Network • European Supply/Demand scenarios could be compared against the Network resilience study • Theses scenarios will be explained to the market

6. Establishment of TYS: Process (2) • Stakeholders will know about capacity shortages • TSOs should organise Open Season ( or auctions) where and when capacity is needed. The process has to be binding, transparent and non discriminatory

7. The transition period • The issue of investment is a priority for GTE, therefore GTE+ will tackle it in 2008 • 3 GTE+ people will be hired in January 2008 to work on GTE+ priorities. GTE members have committed to cover GTE+ costs.

8. What could impede the efficiency of the process? • There is no buyer for the capacity; shippers consider the price too high compared to expected wins • Pipe could be used for SOS reason • Extreme cold: a shipper might “take the risk” • SOS in case of shortage of one supply source is not an obligation for shippers • Purpose of the pipe is only arbitrage • Price of the capacity is not known • The design of the Open Season is inefficient ( For instance, it is impossible to buy simultaneously entry and exit capacity

9. What could impede the efficiency of the process? • TSO doesn’t organise an Open Season • The price of the capacity offered is low compared with the cost of the reinforcement • Transit is not recognised as such • E/E price don’t reflect the actual cost • TSO doesn’t build after an Open Season • The capacity needed is « uneconomic ».

10. Conclusion • The Third package is helpful in tackling the investment issue • We still have to work with ACER and EC to prevent impediments

11. Establishment of ENTSOG Commission 3. Opinion 2. Opinion 1. Draft statutes (+ members & procedures) ENTSOG ACER 4. Adopt statutes & establishment (possibly after amendment to meet Commission and/or ACER opinion)

12. Annual Work Programme (AWP) & 10-year Investment Plan Commission • 3 bis. Opinion if drafts do not ensure: • non-discrimination • effective competition • efficient market functioning 4. Adopt AWP & 10-YearIP 3. Opinion (optional) ACER ENTSOG 2. Draft AWP (+ results consultation) & 10-YearIP 1. Consultation for AWP Market

13. Technical & Market Codes (by ENTSOG) • 3 bis. Opinion if draft code is: • 1. adopted but does not ensure: • non-discrimination • effective competition • efficient market functioning • 2. not adopted • 3. adopted but not implemented Commission • Adopt Guidelines and/or • codes (comitology) 4. Request advice on guidelines (optional) 3 bis. Recommendation - eg: when not implemented: make code legally binding - eg: modify draft code 0. AWP And/Or 3. Opinion (optional) ENTSOG ACER 2. Draft (+ results consultation) Cooperation with Easee-gas to be sought 4. Adopt & monitor implementation Market 1. Consultation