Madrid, 19 th February 2014

1. 21stSG Meeting South Gas Regional Initiative Madrid, 19th February 2014

2. Agenda

3. II. Capacity Allocation Mechanisms • II.1. 2014 OSP ST between France and Spain • II.2. Status of regulatory framework to develop auctions in the Region • II.3. Arrangement for the first auction • II.3.1 Using PRISMA: training session, shipper’s registration. • II.3.2 Auction details for yearly products: capacity offered, bidding rounds, price steps, contracts, etc.

4. II. Capacity Allocation Mechanisms II.1. 2014 OSP ST between France and Spain (for information by TSOs)

5. II. Capacity Allocation Mechanisms II.2. Status of regulatory framework to develop auctions in the Region (for information by Regulators)

6. II. CAM II.2. Status of regulatory framework to develop auctions in the Region • Spain: • a CNMC Circular has been approved on 12 February. It will be published in the BOE (Bulletin Official of the State). • “Circular 1/2014, de 12 de febrero de 2014, de la Comisión Nacional de los Mercados y la Competencia, por la que se establecen los mecanismos de asignación de capacidad a aplicar en las conexiones internacionales por gasoducto con Europa” • France: • a CRE Deliberation has been approved on 13 February. • “Deliberation of the Commission de Régulation de l’Énergie of 13 February 2014 on rules for the progressive implementation of the European network code on the allocation of gas transmission capacity at interconnection points between entry-exit systems” • Portugal: • The Information Memorandum elaborated by Spanish and Portuguese TSOs, in coordination with NRAs, was submitted to Public Consultation. • ERSE will approve the document and will be published by the end of this week • “Coordinated implementation of the Network Code on Capacity Allocation Mechanisms. Information Memorandum. January 2014”

7. II. Capacity Allocation Mechanisms • II.3. Arrangement for the first auction (for information by TSOs) • II.3.1 Using PRISMA: training session, shipper’s registration. • II.3.2 Auction details for yearly products: capacity offered, bidding rounds, price steps, contracts, etc. (for information by TSOs)

8. III. Congestion Management Procedures • III.1. Supervision of CMP implementation in the SGRI

9. III. Congestion Management Procedures III.1. Supervision of CMP implementation in the SGRI (for information by Regulators)

10. III. Congestion Management Procedures • The ACER Monitoring Report on CMP implementation is in process, according to CE Decision of 24 August 2012 : • To check the legal implementation of CMPs (implementation deadline was 1 Oct 2013) • To receive TSO data on contractual congestions and occurrences for each applied CMP, that resulted in an offer of capacity, in order to elaborated the ACER Congestion Report – the publication is expected by the end of February. • For those objectives, an online survey was launched by ACER/TF CAM: • TSOs answer the questions by mid February. • NRAs will review the answers and complete their part by the end of February. • The responses will be analysed and evaluated. • The Report on CMP implementation will be finished by May/June.

11. IV. Developing hub-to-hub trading in the South region IV.1. Iberian Gas Hub: update on the study on models for integration of the Spanish and Portuguese gas markets (for information by Regulators)

12. IV.1. Iberian Gas Hub: update on the study on models for integration of the Spanish and Portuguese gas markets 0. GENERAL OBJECTIVE • In order to assess the feasibility for the development of a gas hub, the study analyzes different aspects of the current gas market situation in Spain and Portugal, including prices in the gas market, as the most important factors. • The study covers three different models for Iberian gas market integration, comparing the advantages and disadvantages for each model. • Market Area Model. • Trading Region Model. • Market with Implicit Capacity Allocation.

13. VP VP IV.1. Iberian Gas Hub: update on the study on models for integration of the Spanish and Portuguese gas markets 1. The Market Area Model (full integration) Features • The adjacent transmission and distribution networks situated in the same geographical area (and well interconnected) are forged into a single entry/exit system. • The market area includes all gas transmission and distribution systems of participating countries (one single market area). • The market area enables a single wholesale market with a single virtual point. • The market region has a single balancing system (with a single balancing entity and balancing rules). Country A Market Area A National market area Final customers (A) Country A Country B Market Area AB Cross-border market area Final customers (A) Final customers (B)

14. VP IV.1. Iberian Gas Hub: update on the study on models for integration of the Spanish and Portuguese gas markets 2. The Trading Region Model (full integration, except balancing) Features: • The adjacent transmission and distribution networks that are situated in the same geographical area and that are well interconnected are forged into a single entry/exit system with a single virtual point. • The Trading Region has two end-user balancing zones. The balancing in each end-user zone is performed according to the respective national rules (imbalances are managed by the national balancing entities). Country A Country B Trading Region AB End userzone A End userzone B Final customers (A) Final customers (B)

15. IV.1. Iberian Gas Hub: update on the study on models for integration of the Spanish and Portuguese gas markets 3. Common Wholesale market with implicit allocation of capacity Interconnection capacity is being reserved for implicit allocation Features: • A certain amount of the interconnection capacity is reserved for implicit allocation. • In this model, gas trade and allocation capacity are assigned simultaneously via a gas exchange (or a gas trading platform). • The implicit allocation mechanism will allocate cross-border capacity on the basis of the bids and offers to buy and sell gas on a functioning gas exchange on either side of the border. Thus, capacity allocation (and gas flow) will follow the market signals. Market participants make “bids” and “offers” for buying or selling of gas The implicit mechanism matches those bids and offer with the highest price differences Capacity is automatically assigned once a trade is made until cross-border capacity is sold out or prices have converged

16. IV.1. Iberian Gas Hub: update on the study on models for integration of the Spanish and Portuguese gas markets 4. Preliminary evaluation of the models

17. V. Next NC implementation • V.1. Balancing and Interoperability: implementation priorities (for information by TSOs) (for discussion)

18. VI. Infrastructures • VI.1 2013 South Gas Regional Investment Plan (GRIP) • VI.2 Regulators’ opinion on 2013 GRIP

19. VI. Infrastructures V.1. 2013 South Gas Regional Investment Plan (GRIP) (for information by TSOs)

20. VI. Infrastructures VI.2. Regulators’ opinion on 2013 GRIP (for information by Regulators)

21. VI. Infrastructures • VI.2. Regulators’ opinion on 2013 GRIP • The Draft 2013 South GRIP was submitted to Public Consultation until 20 Jan 2014. • The Regulators in the Region adopted their Opinion on 30 Jan: • General comments • Data on demand and regional supplies are referred to 2011 (updated with 2012 is recommended). • Some wording clarifications and sources references in figures/tables. • Consistency in the scenarios considered: further description. • Demand forecast • Welcome the revision of the demand forecast taking into account the current economic situation in the Region. • It would be useful to have a clear picture on the overall demand trends. • Comments on: Supply, Infrastructure, Capacity Subscription (data revision is advisable) and Economic aspects (more data on cost of the foreseen projects)

22. VII. AOB and next meetings - 2014 • Nextmeetings: • 27th IG meeting: 28 March - telco • 28th IG meeting: 30 April - telco • 22nd SG meeting: 21 May