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Madrid, 27th Sep 2012

17th SG Meeting South Gas Regional Initiative

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Agenda10:30-10:40 I. Opening

I.1 Welcome

I.2 Agenda and minutes from the last meeting (for approval)

10:40 – 12:00 II. Capacity Allocation Mechanism

II.1 CAM applied in the interconnection Spain-Portugal

TSOs presentation on the auction results

Regulators presentation on the procedure

II.2 Coordinated CAM Spain-France. Proposal for the short and medium term (for discussion). Proposal by the TSOs

II.3 North West Capacity Allocation platform

Presentation by the platform developer

12:00-12:30 III. Congestion Management Procedures

III.1 Implications of new regulation on CMP (for information by Regulators)

III.2 Next steps and calendar (for discussion)

12:30-13:00 IV. Ten-Year Network Development Plan and Project of Common Interest (PCI)

IV.1 Status Record OS 2013-2015 (for information by TSOs)

IV.2 Update on PCI Identification (for information by regulators)

13:00-13:30 V. Tariffs Portugal-Spain. Final document (for information by Regulators)

13:30-14:00 VI. Transparency (compliance with Regulation 715/2009)

VI.1 Final Report on the Supervision of Compliance (for information by Regulators)

VI.2 Next steps and calendar (for discussion)

14:00-14:15 VII. Review of actions considered in the Work Plan 2011-2014 (for discussion)

14:15-14:30 VIII. AOB and next meetings

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II. Capacity Allocation Mechanisms

Area of work Responsible Starting Deadline

CAM harmonisation proposal (CAM pilot testing Sp‐Pt borders)

NRAs-TSOs Jan. 2011 Jun. 2012

CAM harmonisation proposal in the whole region NRAs-TSOs Jan.2012 Dec.2013

Set up a common TSO Allocation Platform TSOs Jan.2014 Dec.2014

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II. Capacity Allocation Mechanisms

II.1 CAM applied in the Portuguese-Spanish interconnection

Auction results(to be presented by TSOs)

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PROCEDURE Project Pilot NC CAM: Annual Transmission Capacity Auction at the

single virtual point between Portugal and Spain. Done between July and September 2012. Capacity to be offered for the gas year 1st Oct. 2012 to 30th Sep.2013. Bundled capacity: each product offered includes the same amount of

capacity, to the same shipper. Capacity in the secondary market remains bundled.

Existing entry and exit capacity between Spain and Portugal. No interruptible Product will be offered if less than 95.00% of firm capacity,

for that period and flow direction, has been allocated at the previous Firm Products Auctions.

Single-round auction, one clearing price to all bidders. Regulated tariff in each country plus auction premium (50/50 split)

II.1 CAM applied in the Portuguese-Spanish interconnection

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II.1 CAM applied in the Portuguese-Spanish interconnection EVALUATION OF CAM PROCEDURE

The pilot has been useful to identify which regulations had to be adapted, which documentation and processes had to be developed, and to raise awareness among shippers of the implications of the NC (bundled capacity, virtual point, standard capacity products,…).

At the time of applying the process there was no congestion, so a significant level of demand was not expected (why booking through this procedure and not before, or after?).

The transition from a FCFS system to an auction system could be questioned, since congestion and lack of competition were not the primary concerns.

It implies for shippers: provision of financial guarantees, more planning... Annual auctions are less flexible for shippers in Spain. Until now, under

FCFS having enough available capacity they could subscribe capacity for any period, from one day to several years, freely choosing the starting and end dates.

Shippers miss the possibility of securing “flat” capacity for a given period.

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II. Capacity Allocation Mechanisms

II.2 Coordinated CAM Sp-Fr. Proposal for the short and medium term (for discussion)

Proposal(to be presented by TSOs)

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II. Capacity Allocation Mechanisms

II.3 North West Capacity Allocation platform

(to be presented by the platform developer)

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III. Congestion Management Procedures

Area of work Responsible Starting DeadlineCMP harmonization proposal between SP-FR NRAs-TSOs Jan. 2011 Dec. 2012

CMP harmonization proposal between SP-PT NRAs-TSOs Jan. 2012 Jan. 2013

III.1 Implications of new regulation on CMP (for information by NRAs)

III.2 Next steps and calendar (for discussion)

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III.1 Implications of new regulation on CMP

EC Decision amending Annex I of Regulation (CE) 715/2009 on Guidelines on CMP has been recently approved (24th August).

Mechanisms considered in the Guidelines on CMP are:1. Oversubscription and buyback2. Surrender of contracted capacity3. LT UIOLI4. Firm day-ahead UIOLI

They will apply to physical and virtual international connection points and connections between different balancing zones.

These mechanisms must be implemented before October 2013, except Firm day-ahead UIOLI, for which the deadline is July 2016

ACER will annually monitor congestion. First ACER’s monitoring report will be done in 2014.

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1. Oversubscription and buyback

Proposed by TSOs and approved by NRAs. Based on incentives to offer additional capacity on a firm basis. Taking into

account technical conditions: calorific value, temperature, expected consumption…Reflecting the risks of TSOs. If renomination is higher than available capacity, additional capacity will be bought back.

Revenues from selling additional capacity and costs from buying back capacity are shared between TSOs and users ---- NRAs decide on the % distribution.

Technical capacity (in particular surrendered capacity or capacity increase by application of CMP) must be allocated before any additional capacity.

NRAs assess the mechanism. TSOs must provide all relevant data.

III.1 Implications of new regulation on CMP

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2. Surrender of contracted capacity

TSOs will accept any surrendered firm capacity contracted by users. Exception of capacity products with a duration of a day and shorter. Primary capacity holder owns contract’s rights and obligations referred to

the released capacity until this capacity is contracted by a third party. Surrendered capacity will be reallocated only after all available capacity

has been allocated. Specific terms and conditions approved by NRAs.

III.1 Implications of new regulation on CMP

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3. LT UIOLI

TSOs will withdraw systematically underutilised contracted capacity if there are request for capacity

Underutilised capacity is considered if:o Network user uses less than on average 80% of its contracted capacity from 1

April until 30 September and from 1 October until 31 March, in contracts duration more than 1 year.

o Network user systematically nominates close to 100% of its contracted capacity and renominates downwards to avoid the rules of ST UIOLI.

Primary capacity holder will lose the underused capacity for a specific period of time, or until the end of the contract

Users retains its rights and obligations until capacity is reallocated.

NRAs monitor the mechanism. TSOs must provide all relevant data.

III.1 Implications of new regulation on CMP

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4. Firm day-ahead UIOLI

Application mandatory based on yearly monitoring report of ACER. If demand exceeds offer in the year or in one of the next two years:

o for at least 3 firm capacity products of 1 month oro for at least 2 firm capacity products of 1 quarter oro for at least 1 firm capacity products of 1 year or more oro where no firm capacity product of 1 month or more has been offered.

In these cases, firm renomination is permitted up to 90% and down to 10%. However:o If the renomination exceeds 80% of the contracted capacity, half of the non-

nominated volume may be renominated upwards.o If the nomination does not exceed 20% of the contracted capacity, half may be

renominated downwards.

III.1 Implications of new regulation on CMP

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Next actions to be defined:

So far in the SGRI, work was done on Long Term Use It Or Lose It

Harmonized mechanism to be applied in two borders of the Spanish system with Portugal and France Coordinated work in the Regional Initiative in the coming months

Need to develop common criteria for oversubscription and buy-back, surrender and allocation, and UIOLI short term in the three countries

Implications on developing/amending national regulation.

III.2 Next steps and calendar

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IV. Ten-Year Network Development Plan and Project of Common Interest (PCI)

Area of work Responsible

Starting

Deadline

Regular update and publication in CEER website of project status of OS 2013 and 2015

TSOs - NRAs Dec. (yearly)

Jun. (yearly)

Creation of a working group in the region in order to test the process of PCI identification

NRAs-TSOs Apr. 2012 Dec. 2012

IV.1 Status Record OS 2013-2015 (for information by TSOs)

IV.2 Update on PCI Identification (for information by regulators)

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Working group created by the CE with the aim of identifying PCIs in the N-S corridor in Western Europe according to draft Regulation for trans-European energy infrastructure.

The group is formed by Governments, NRAs and infrastructure promoters of 11 European countries. Non-European countries (Algeria, Norway and Switzerland) have also been invited to take part in the meetings.

The work of the group is supported by an external consultant to assist it in evaluating potential PCIs.

The TYNDP and the GRIPs are the starting points to select PCIs, although others infrastructures may be analysed.

CNE to report AWG on PCIs selection process in the gas Western corridor

IV. TYNDP and PCIs

IV.2 Update on PCIs identification North-South gas interconnections in Western Europe

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Kick-off meeting on 30 March Presentation of draft ToR and the working plan. List of PCIs to be ready by November 2012

2º meeting on 7 June• Design of questionnaires to collet information on possible PCIs from promoters• Assignment of weights for the criteria considered in the draft Regulation to evaluate

infrastructures (market integration, competition, SoS and sustainability)• Preliminary list of candidates to PCIs: 42 projects (26 related to pipelines, 8 related to LNG

infrastructure and 7 related to storage). 20 projects in the South Region. The indicative number of PCIs mentioned in the draft Regulation is 50 for all Europe.

• Public consultation on PCIs list, which was opened until 20 September. 3º meeting on 10 July

• Presentattion of consultants’ methodology and simulator tool to assess projects proposals• New list of PCIs: 52 projects (30 pipelines, 10 LNG, 12 storage)

EC’s open information session on 17 July Next meeting on 28 September

Presentation of the preliminary results of the PCI assessment

IV. TYNDP and PCIs

IV.2 Update on PCIs identification North-South interconnections in Western Europe

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V. Tariffs Portugal-Spain. Final document

Area of work Responsible

Starting

Deadline

CNE-ERSE joint study on tariff regimes in Spain and Portugal

NRAs 2010 Dec. 2011

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Area of work Responsible

Starting

Deadline

Supervision of compliance with the implementation of the new provisions on transparency in the Regulation 715/2009/CE, for transmission, LNG and storage infrastructure operators

NRAs Sep. 2011 Jun. 2012

VI. Transparency

VI.1 Final Report on the Supervision of compliance (for information by NRAs)

VI.2 Next steps and calendar (for discussion)

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VI.1 Final Report on the Supervision of Compliance with the Transparency requirementsonsulta Pública sobre harmonização das tarifas de interligação de gás natural entre Portugal e Espanha

BACKGROUND Transparency questionnaires are designed by NRAs according the

transparency obligations established in Regulation (EC) 715/2009. Following NW Initiative but including LSOs and SSOs supervision.

Chapter 3 of Annex I of Regulation Article 15, 19 and 20 of Regulation

All operators in the region have filled out the questionnaires. Content of publication Scope of information published Format of publication

TSOs LSOs SSOs

Portugal REN REN RENGALP

France TIGFGRTgaz

ELENGYSTFMC (Fos Cavou)

STORENGYTOTAL (TIGF)

Spain NATURGASENAGAS

ENAGASBBGREGANOSA SAGGAS

ENAGAS

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VI.1 Final Report on the Supervision of Compliance with the Transparency requirementsonsulta Pública sobre harmonização das tarifas de interligação de gás natural entre Portugal e Espanha

Key steps ResponsibleDeadline

foreseen in the Project Plan

Work developed

Agree information template NRAs Nov 2011 Regulators of the 3 countries agree the content of the questionnaires to be

sent to operators (transparency requirements are the basis to elaborate

the questions)

Template to be filled in by TSOs, LSOs, SSOs TSOs, LSOs,

SSOs

15 Jan 2012 Questionnaires sent to all operators in the Region - 2 Dec 2011

Deadline to answer: 15 Jan 2012

Mail reminder sent 16 Jan 2012

Project presented in 18th IG Meeting – 16 Dec 2011

SGRI to assess/ clarify and consolidate

responses

NRAs 31 Jan 2012 Preliminary assessment made by NRAs

Regulators contact operators to clarify misunderstanding

Publish preliminary report and invite

stakeholders to comment on the responses

NRAs/

stakeholders

Feb 2012 Preliminary assessment presented in 15th SG Meeting – 07th Feb 2012

Preliminary Findings presented by ACER in Madrid Forum – 21 March

2012

Preliminary assessment presented in 19th IG Meeting – 28 March 2012

Public Consultation launched in ACER website –in March and April

(deadline extended until June 2012)

Publish conclusions NRAs Mar 2012 Preliminary Results of the Public Consultation presented in 16th SG

Meeting – 31 May 2012

Reminder sent in order to encourage stakeholders to participate in PC –

01 Jun 2012Final Report on Third Package Transparency Compliance

Made by NRAs – July 2012

WORK DEVELOPED

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VI.1 Final Report on the Supervision of Compliance with the Transparency requirementsonsulta Pública sobre harmonização das tarifas de interligação de gás natural entre Portugal e Espanha

MAIN FINDINGS (I) In general, a significant level of compliance is reported on all transparency requirements in Regulation,

although it is not the same for the three types of operators or in the three countries. The degree of competition in the gas market might also play a significant role when pushing operators to

disclose information. Small or independent operators from the TSOs register lower levels of compliance. Individual contact between the NRA and the operator is needed to check full compliance ASAP. Subjective criterion, misunderstandings and particular national conditions can lead to different

interpretations.

High level of compliance is particularly referred to publishing information on:

Gas system description. Services description and contracting process. Nomination and matching procedures. Balancing rules and imbalance charges. Flexibility and tolerance levels. Emergency mechanisms. Procedures agree at interconnection points.

In some TSOs websites the relevant information is not easy to find. Also, there is a need to improve frequency of publication, historical data, language and formats

TSOs’ compliance LSOs and SSOs’ compliance

Some of them reflect the available information, mainly on:

Service description. Contracted and available storage facility

capacity. Use and availability of third-party access

services. Form of publication.

There is room for improvement in easy and direct access, friendly manner and more information published in English.

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VI.2 Next steps and calendarnsulta Pública sobre harmonização das tarifas de interligação de gás natural entre Portugal e Espanha

NRAs to take action to assure compliance with requirements, analysing provisions together with TSO in each country.

NRAs to continue working on supervision compliance. To inform and monitor on new requirements laid down in new regulation (Decision on 24 August amending Regulation (CE) 715/2009)

TSOs to implement new requirements by Oct 2013.

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VII. Review of actions in the WP 2011-2014 (I)

Capacity allocation mechanisms ()

I.1. OSP France-Spain: annual allocation of short-term capacities TSOs Nov. (yearly) Dec. (yearly)

I.2. CAM harmonisation proposal between and NRAs-TSOs Jan. 2011 Jun. 2012

I.2. CAM harmonisation proposal in the whole region NRAs-TSOs Jan. 2012 Dec. 2013

I.3. Set up a common TSO Allocation Platform: Roadmap and Implementation TSOs Jul. 2012 Dec. 2014Congestion management procedures (CMP)

II.1. CMP harmonisation proposal between and NRAs-TSOs Jan. 2011 Dec. 2012

II.2. CMP harmonisation proposal between and NRAs-TSOs Jan. 2012 Jan. 2013

Investment in new infrastructure. Ten-Year Network Development Plans and projects of common (European) interestIII.1. Regular update and publication in CEER website of project status of OS 2013 and 2015 TSOs-NRAs Dec. (yearly) Jun. (yearly)

III.2. Drafting of the South Regional Investment Plan 2012 TSOs Jul. 2011 Jan. 2012

III.3. Feedback to ENTSO-G on contents and methodology of the regional investment plan NRAs Jan. 2012 Jul. 2012

III.4. Input to ENTSO-G for the Community-wide TYNDP 2013 TSOs Jan. 2012 Jan. 2013III.5. Creation of a working group in the region in order to test the process of PCI identification NRAs -TSOs Mar. 2012 Dec. 2012

III.6. Drafting of the South Regional Investment Plan 2014 TSOs Jan. 2013 Jan. 2014

Security of Supply (SoS)

IV.1 Periodically update on progress on Regulation 994/2010 implementation Competent Authorities Permanent

IV.2 Promotion of market’s participation through public consultations in the development of preventive action plans NRAs Permanent

Areas of work Responsible Starting Deadline

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VII. Review of actions in the WP 2011-2014 (II)

BalancingV.1. Contributing to the FG and NC, by raising the regional experience and lessons learned NRAs-TSOs Permanent

V.2. Investigation of the use of the gas markets in the region for balancing purposes NRAs-TSOs Jun. 2012 Jun. 2013

V.3. Analyse the current configuration of balancing zones and possible merging of certain areas NRAs-TSOs Jan. 2013 Dec. 2013

V.4. Pilot project for a common balancing platform in the three countries TSOs Jan. 2014 Dec. 2014

TariffsVI.1. CNE-ERSE joint study on tariff regimes in Spain and Portugal NRAs 2010 Dec. 2011

VI.2. CNE-ERSE proposal for tariff harmonization in Spain and Portugal NRAs 2010 Dec. 2012

V.I3. Further studies to evaluate the current tariff structures and propose improvements NRAs Jan. 2012 Dec. 2012

InteroperabilityVII.1. Contribute with the regional experience to the development of the FG and the NC NRAs-TSOs Permanent

VII.2. Analysis of interoperability aspects and procedures that need to be harmonised among the three countries (in line with the FG-NC)

TSOs Jan. 2013 Jan. 2014

VII.3. In particular, harmonisation of gas day, communication protocols between TSOs, quality standards, programming and nomination schedules, etc.

TSOs Jan. 2014 Dec. 2014

Implementation of the 3rd PackageVII.1. Supervision of compliance with the implementation of the new provisions on transparency in the Regulation 715/2009/CE, for transmission, LNG and storage infrastructure operators

NRAs Sep. 2011 Jun.. 2012

Developing hub-to-hub trading in the South region

IX.1. Hub development NRAs-TSOs-stakeholders

Jan.2013 Dec. 2013

IX.2. Hub-to-hub gas trading in the region NRAs-TSOs-stakeholders

Jan.2014 Dec. 2014

Areas of work Responsible Starting Deadline

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VIII AOB and next meetingssobre harmonização das tarifas de interligação de gás natural entre Portugal e Espanha

Next SG meeting Next IG meeting

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Calendar 2nd semester 2012 - SGRIAPRIL MAY JUNE

M Tu W Th F Sat Sun M Tu W Th F Sat Sun M Tu W Th F Sat Sun1 1 2 3 4 5 6 1 2 3

2 3 4 5 6 7 8 7 8 9 10 11 12 13 4 5 6 7 8 9 109 10 11 12 13 14 15 14 15 16 17 18 19 20 11 12 13 14 15 16 17

16 17 18 19 20 21 22 21 22 23 24 25 26 27 18 19 20 21 22 23 2423 24 25 26 27 28 29 28 29 30 31 25 26 27 28 29 3030

JULY AUGUST SEPTEMBERM Tu W Th F Sat Sun M Tu W Th F Sat Sun M Tu W Th F Sat Sun Jul: CAM Portugal - Spain

1 1 2 3 4 5 1 22 3 4 5 6 7 8 6 7 8 9 10 11 12 3 4 5 6 7 8 99 10 11 12 13 14 15 13 14 15 16 17 18 19 10 11 12 13 14 15 16

16 17 18 19 20 21 22 20 21 22 23 24 25 26 17 18 19 20 21 22 2323 24 25 26 27 28 29 27 28 29 30 31 24 25 26 27 28 29 3030 31

OCTOBER NOVEMBER DECEMBERM Tu W Th F Sat Sun M Tu W Th F Sat Sun M Tu W Th F Sat Sun

1 2 3 4 5 6 7 1 2 3 4 1 2 Dec: OSP France-Spain8 9 10 11 12 13 14 5 6 7 8 9 10 11 3 4 5 6 7 8 9 Dec: CMP France-Spain

15 16 17 18 19 20 21 12 13 14 15 16 17 18 10 11 12 13 14 15 1622 23 24 25 26 27 28 19 20 21 22 23 24 25 17 18 19 20 21 22 2329 30 31 26 27 28 29 30 24 25 26 27 28 29 30

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2012

Jul: Feedback ENTSOG on contents and methodology of RIP

Dec: NRAs analysis on tariff regulatory harmonization between Portugal and Spain

2012

IG meeting Green Spanish Bank HolidaySG meeting Purple Portuguese Bank HolidayDeadlines Blue French Bank Holiday

Proposal:• 6 November: 21st  IG • 13 December: 18th SG