European Developments

1. European Developments Transmission Workgroup 7th June 2012

2. EU Interoperability & Data Exchange Network Code Transmission Workgroup 7th June 2012

3. The current position ACER published Draft Framework Guidelines on 16 March NG NTS submitted its written response covering all 7 FG themes on 16 May This presentation provides a summary of that response 3

4. Key Messages • Restrict the FG to Interconnection Points only • Minimum harmonisation • Should be a net benefit to industry and consumers • Demanding timescale • Unique GB issues as an island nation

5. 1. Interconnection Agreements NG Response GB IAs limited to TSO-TSO operational arrangements TSO-Shipper rules best addressed in national network codes Minimum list of items has merit but many parameters are IP-specific NRA involvement should be proportionate and specific ACER Proposals Minimum set of requirements as a mandatory ‘model template’ covering TSO-TSO and TSO-Shipper elements Standard Agreement as a default should TSOs not agree on content within 12 months NRA involvement in approval of IAs & dispute resolution 5

6. 2. Harmonisation of Units NG Response In general, lack of common units not a barrier to trade Use of conversion tools is adequatein most cases Common units may be desirable to support future commercial processes/data publication regarding IPs ACER Proposals Lack of harmonisation could be a barrier to cross border trade Harmonised units for energy, volume, pressure and gross Calorific Value 6

7. 3. Gas Quality NG Response Stronger role for NRAs in determining which differences require solutions Provision of information should not be a pan – EU obligation on TSOs ENTSOG may not have access to future gas quality information ACER Proposals Adjacent TSOs agree how to handle gas quality differences at IPs TSOs to provide Users with ‘pertinent’ gas quality information 10 year Gas Quality Outlook by ENTSOG on possible changes in gas quality 7

8. 4. Odourisation NG Response NRAs to work with TSOs to explore options using CBA and safety assessment ACER Proposals Cross border flows of non-odourised gas to be the default rule 8

9. 5. Data Exchange NG Response Gradual approach via ‘roadmap’ towards common solutions Identify requirements that need to be serviced before solutions Phased approach to implementation appropriate ACER Proposals Extend harmonisation to all common TSO-TSO, and TSO-counterparty data communications Common, standardised messaging protocol and standards Selection of solutions using CBA and following industry consultation 9

10. 6. Capacity Calculation NG Response Discrepancies to be expected and not a barrier TSO incentives the key to maximising capacity ACER Proposals Discrepancies between maximum capacities either side of an IP may cause barriers to trade TSOs required to provide detailed description of capacity calculation methods Adjacent TSOs to cooperate to reduce discrepancies Code to define a procedure for dealing with discrepancies ENTSOG to define timeline for discrepancy reduction and reporting role to ACER 10

11. 7. Cross Border Cooperation NG Response Obligation not needed as already covered by Article 4 of the Gas Regulation ACER Proposals General obligation on TSOs to cooperate fully to achieve market integration Regular ENTSOG reviews of TSO practices 11

12. Next Steps Mid June End July Sept 2012 – Sept 2013 ACER currently preparing ‘Evaluation of comments’ paper Impact Assessment delivered to ACER Impact Assessment & final FG provided by ACER to Commission Code development by ENTSOG 12

13. Gas Balancing Update Transmission Workgroup 7th June 2012

14. Gas Balancing Code Consultation • Balancing Draft Code and Consultation issued 13 April • The response deadline is 17:00 CET 12 June • The ENTSOG consultation and other documentation can be found at: http://www.entsog.eu/publications/balancing.html • ENTSOG have requested that responses are: • Focused and succinct as possible and provide supporting evidence where available • Made via the formal consultation response form

15. EU CAM Network Code and CMP Guideline Update Transmission Workgroup 7th June 2012

16. Capacity Allocation Mechanism (CAM) - Update • According to the 3rd Package ACER need to provide an opinion on the CAM Code compliance with the Framework Guideline by 6th June 2012 • A number of meetings have been held between ENTSOG and ACER relating to the content of the CAM Code over the last two months • Discussions have been focused on: • Capacity duration of 15 years • How much Capacity is withheld for the medium and short term auctions (quotas) • The sale of unbundled capacity resulting from: • Technical Interconnection point mismatches • More Capacity already sold on one side of an IP • Additional incentive release

17. Capacity Allocation Mechanism (CAM) - Update • Inclusion of Tariffs in CAM Code • Establishing Virtual Interconnection Points (at two or more adjacent entry exit systems) • ACER’s opinion was discussed by the ACER Board of Regulators at its 22nd May meeting • ENTSOG is preparing to move quickly on those issues formally raised by ACER.

18. Congestion Management Procedures (CMP) Guidelines - Update • CMP Guidelines agreed and approved by Member States at the 2nd Comitology meeting on the 20th April 2012 • Currently undergoing Commission internal processes including the transposition into all Member States languages • Expectation that this will take until Sept 12 • GB has to be compliant with the Guidelines by 1st October 2013 • National Grid are in conversation with Ofgem as to National Grids compliance with the CMP Guidelines.

19. EU Updates Timetable • Timetable aims to highlight the key items (consultations, workshops, decisions, etc.) National Grid NTS expect to cover via this agenda item in the forthcoming months