FUI Priorities 2010 - 2012

1. FUI Priorities 2010 - 2012 9th FUI Stakeholder Group Meeting Dublin, 16 June 2010

2. FUI Priorities 2010 - 2012 • Coordination of Long Term Auctions • Market Coupling • Addressing barriers to efficient flows • New Interconnector Investment • Balancing • (Intra Day)

3. Coordination of Long Term Auctions • Regional coordination of long term explicit auctions is a key component of the CMGs. • Main options identified in the paper are: • Full harmonisation: single set of rules leading to single auction system for FUI for all borders in the region, operated by a central body • Moderate harmonisation: matching of timeframes for auction of capacity, types of products and implementation of fully compatible systems • Gradual approach • CWE - common auction platform with capacity on interconnectors is offered separately. • TSOs proposals on coordination of long term auctions – 9th SG Meeting: • Products • Nominations • Other aspects

4. Market Coupling • Target Model - Single Price Coupling across Europe PCG, AHAG and Framework Guidelines • Implications of and development in for the FUI region • Scenario A: IFA and Britned couple GB to CWE • Scenario B: Britned interim solution for 2011, then full IFA FUI – CWE Coupling • Consideration to be given to GB/CWE - SEM coupling following this • Prerequisites to Market Coupling and other issues: • Price References • Physical Firmness • Triad Charges and other identified barriers to efficient flows

5. Addressing Barriers to efficient Flows • Key barriers identified are: • SEM design issues (gate closure, requirement to bid ½ hourly prices in SEM etc) • GB charges and Interconnector Losses, Firmness on IFA • SEM RAs to update FUI on barriers • NG will review charges and consult on possible changes in summer 2010 • Ofgem consultation and conclusions considering firmness issue • Bundled products

6. New Interconnector Investment • Ofgem consultation on interconnector policy - seeks views on the appropriate framework for regulated investment. • CRE consultation on new IC investment -merchant interconnectors and how to deal with exemptions • Potential work areas for FUI include: • develop a regional model on regulated interconnector investment, • improve cross border investment climate by enhancing communication and cooperation between IC owners, potential investors and regulators • and/or develop a coordinated regulatory approach on how to deal with exemptions

7. Balancing • FUI Workstream to look at potential mechanisms for increased provision of cross border balancing services. • Work stream considering how increased competition in the provision of balancing services can be facilitated by balancing options from cross border reserve providers. • GB – France (IFA) focus to date • Model for balancing exchanges at the interconnection between France and England, known as the BALIT (BALancing Inter TSO) project – enduring solution November 2010 • Compromise solution on 2hr Cross Border Balancing (CBB) product on IFA – Presentation by NG/RTE • Regulators will approve the new fee methodology • Coordination of balancing on other ICs – extension to Moyle and East West? • Links with Intra Day timeframe

8. Intra Day • FUI priority paper following target model development at EU level • Intra Day Implementation Group • Target Model – implicit continuous allocation inter regional with flexibility allowed within regions • Market based mechanism and auctions • Intermittency in FUI region and Intra Day • Intra day – balancing link

9. Conclusions Priorities 2010 -2012 Long Term Coordination Market Coupling Intra Day Balancing Address Barriers to trade Interconnector Investment