Long term allocation 2011 Italian borders

1. Long term allocation 2011 Italian borders Central-South and Central-West Regions 2nd Joint RCC meeting Milan, September 28th, 2010

2. 2011 CASC operation for CSE region: main content of the MOU • Additional interconnections: • IT – FR • IT – AT • IT – SI • IT – GR • IT – CH • CH – DE • CH – AT With existing auction rules / minor changes • From 2012: CSE/CWE + Swiss borders harmonization Existing CSE Auction rules

3. TSO working groups established Corporate Governance - Tackles legal and financial issues in order to elaborate the Articles of Associations, Shareholders agreement , internal regulations, contribution agreement Technical and Regulatory implementation of the explicit auctions on the Italian Borders – implementation of auction procedures on the basis of current rules applied on Italian Borders and Service Level Agreement (together with the support from the legal persons of Italian borders TSO) Technical and Regulatory implementation of the explicit auctions on the North Switzerland Borders – implementation of auction procedures on the basis of current rules applied on North Switzerland borders and Service Level Agreement (together with the support from the legal persons of North Switzerland borders TSO)

4. Implementation delay At the beginning of September the TSOs have informed the regulators about a possible delay in the implementation of the CASC project due to “IT tool” problems The delay may cause a 4-month shift in the original schedule A new scenario: CASC starting operating CSE monthly and daily auctions during 2011 and becoming financial counterpart for (part of) yearly auction (Similar experiences in the CWE region?) New challenges for Auction rules preparation, a strategy needs to be agreed at the RCC level

5. Issues requiring changes to present CASC operation 1 FIRMNESS: • Currently according to CWE AR CASC sends Capacity Usage Authorization to Users at 14:00 in D-2 working days (Thursday - for Saturday, Sunday and Monday; Friday -> for Tuesday). • In accordance with CWE Auction Rules, after such dead-line CASC does not curtailed PTRs as they are considered firm. • Process to be set up according to existing Auction Rules Italian Borders i.e. D-1 7.00 (with the exception of FR-IT). To be confirmed by TSOs

6. Issues requiring changes to present CASC operation 2 • PTR – product definition: • Yearly • Base: Flat PTRs for the 12 months • Base without maintenance period: Flat PTRs for 11 months (- August) • Peak and Off-Peak (sold from Greece to Italy only) • Monthly • Base: flat PTRs for all calendar days of the months • Peak: for the period 08.00 – 20.00, Mo to Fri • Off-Peak: for the periods 20.00 – 08.00, Mo to Fri, Sat and Sun • Daily (for each hour of the calendar day)

7. Financial issues: CASC CASC asks Users to open a dedicated Business Account a different Bank Account is required to reimburse compensations (curtailment, Resale/UIOSI) When running auctions, CASC auction tool (EXAU) checks the amount of money in the BA: at bidding, for daily auctions and at clearing price, for long term auctions For Monthly/Daily auctions : the amount is blocked after the auction For Yearly auctions, 1/6 of the amount is blocked Invoiced amount automatically debited from bank at M+1 7

8. Financial issues: present CSE • Auction Operator asks to Users to provide a Bank Guarantee (or a Cash Deposit) • No check at bidding(except for daily auctions in direction SLO-IT) • Invoicing time, deadlines for payment and reimburse compensation depend on the product and by Auction Operator • Adopting present CASC rules may lead to harmonized invoicing times, deadlines for payments and compensations • But what market participants think about this important change? 8

9. Nomination • With CASC nomination stays with the TSOs. • The recent benchmarking report on long term capacity allocation has shown a great interest of market participants to “centralize” also the nomination procedure… • Is there an interest in moving towards a centralized nomination procedure?