ERSE

General presentation from ERSE about the current natural gas regulatory situation in

Portugal

2nd Regional Coordination Committee (RCC) Meetingof South Gas Regional Initiative (S-GRI)

18 May 2007

Entidade Reguladora dos Serviços Energéticos

ERSE

1. Natural Gas Sector Organisation and Legislation

2. Tariffs

3. Some Numbers

Presentation contents

ERSE

1. Natural Gas Sector Organisation

ERSE

1. Natural Gas Sector Organisation

Entities:

TSO Transmission System Operator REN Gasodutos

SO Underground Storage Operator REN Armazenagem, Transgás Armazenagem

TO LNG Terminal Operator REN Atlântico

DSO Distribution System Operator BeiragásDianagásDuriensegásLisboagásLusitaniagásMedigásPaxgásPortgásSetgásTagusgásDourogás

ERSE

Decree-Law no. 30/2006, February 15Decree-Law no. 140/2006, July 26

Transposition of Directive no. 2003/55/CE, June 26 General principles for the organization and functioning of the national natural

gas sector, the exercise of the activities of reception, storage, transmission, distribution and supply of natural gas and the organisation of natural gas market

Ownership unbundling of reception, storage and transmission activities Juridical separation of distribution activity, namely from last resort supplier

activity Third party regulated access to the reception, storage, transmission and

distribution infrastructures Logistic operator for switching supplier ERSE regulation of the activities of reception, storage, transmission,

distribution, last resort supply and switching operator

1. Natural Gas Sector Organisation

ERSEMarket opening

January 1st, 2007

Ordinary electricity producers

January 1st, 2008

Annual consumption >= 1000000m3 (n)

January 1st, 2009

Annual consumption >=

10000m3 (n)

January 1st, 2010

All consumers

1. Natural Gas Sector Organisation

ERSEEvolution towards market

Activities separation

PROVISION

LNG TERMINAL

STORAGE

TRANSMISSION

DISTRIBUTION

TRADING / SUPPLY

Vertical integrated monopoly

Separation of regulated activities

Market opening Competition/market

1. Natural Gas Sector Organisation

ERSE

• Competition

• Natural monopoly• Regulated• Open access

• Competition

• Free choice of supplier

INFRASTRUCTURES

PROVISION PROVISION

SUPPLIERLAST

RESOURCE SUPPLIER

. . .

. . .

CONSUMERS

ORGANISED MARKET

1. Natural Gas Sector OrganisationNew Model

ERSE

ACTIVITIES SEPARATION AND

REVENUES DEFENITION

APPLICATION OF THE TARIFFS

ADITIVITY PRINCIPLE

DEFENITION OF TARIFFS WHICH REFLECT COSTS

PRICES TRANSPARENCY

NO CROSS SUBSIDIES BETWEEN

ACTIVITIES AND CONSUMERS

ADEQUATE ECONOMICAL

SIGNALS

ECONOMIC EFFICIENCY PROMOTION

FAVORABLE CONDITIONS FOR

THE DEVELOPMENT

OF MARKET COMPETION

CONSUMERS CONFIDENCE

1. Natural Gas Sector OrganisationNew Model - Regulation

ERSE

Tariffs General Principles(D.L. 30/2006, February 15)

Equal treatment and opportunities

Tariffs uniformity across continental territory

Tariffs must be cost reflective

Transparency on tariffs establishment

No cross subsidies between activities and consumers trough matching tariffs and costs and additive tariffs principle

Adequate economic signals and efficient use of the infrastructures

Consumers protection from tariffs evolution, maintaining at the same time economic and financial equilibrium of regulated activities, considering efficient management

Establishment of incentives for the efficient performance of regulated activities of the companies

Contribution for the promotion of energy efficiency and environmental quality

2. Tariffs

ERSE

2007 - End-user regulated tariffs homologated by the Ministry of Economy and Innovation under companies proposal

1st July 2007 – establishment by ERSE of the access to the infrastructures tariffs (proposal under approval)

1st January 2008 – homologation by ERSE of the end-user regulated tariffs

1st July 2008 – establishment by ERSE of the end-user regulated tariffs

2. TariffsEstablishment – Timetable

ERSE

GNL Terminal

Costs

Storage Costs

Costs Transfer

Natural Gas Acquisition

Costs

Provision

Transmission Distribution

En

d-U

sers

Transmission Costs

Global System Management

Costs

Distribution Costs

Retail commercial

costs

Transmission Grid Use

Tariff

Distribution Grid Use

Tariff

Mar

ket

Su

pp

lier

Non Regulated Energy Costs

Regulated Activities

Global System

Use Tariff

Grids Access Tariff

Non Regulated Energy Prices

Non regulated supply prices

End-User Tariff (non regulated)

2. TariffsRevenues and tariffs

Market supplier

ERSE

Energy Tariff

Supply Tariff

Las

t R

eso

urc

e S

up

pli

er

End-User Tariff

Regulated Activities

Last resort supplier

Natural Gas Acquisition

Costs

Provision

GNL Terminal

Costs

Storage Costs

Transmission Distribution

Transmission Costs

Global System Management

Costs

Distribution Costs

Regulated Energy Costs

Retail commercial

costs

En

d-U

sers

Costs Transfer

Transmission Grid Use

Tariff

Global System

Use Tariff

Distribution Grid Use

Tariff

Grids Access Tariff

2. TariffsRevenues and tariffs

ERSE

Last Resource Suppliers (LRS)Liberalised market

Natural gas Supply Activity

Natural gas Buy and Sale Activity

Supply Tariffs

(> 2 million m3,> 10 000 m3,

<= 10 000 m3)

Energy Tariff

MP & LP LRS

Consumer

HP LRS Consumer

HP Market Consumer

MP and LP Market

Consumer

Natural Gas Distribution Activity

Natural Gas Transmission Activity

Global Technical System Management Activity

Distribution Grid Use Tariff (MP e LP)

Transmission Grid Use Tariff

Global System Use Tariff

Gri

ds

Acc

ess

Tar

iff

HP

,MP

,LP

Gri

ds

Acc

ess

Tar

iff

HP

,MP

,LP

Free energy and supply

prices

En

d-U

sers

Tar

iff

2. TariffsAdditive Tariffs

ERSE

Investments in the Portuguese Gas Sector

1993 a1997

1998 1999 2000 2001 2002 2003 2004 2005

TOTAL

Distribuição

Instalações de GNL

Armazenamento Subterrâneo

Transporte em território Português

0

100

200

300

400

500

600

700

80010

3 E

UR

ERSE

Supply, number of clients and gas sales

1997 1998 1999 2000 2001 2002 2003 2004 2005

Número de clientes 32 72 105 158 177 198 202 210 211

Vendas de gás (103 m3) 95 000 766 000 2 137 500 2 243 100 2 485 010 3 005 000 3 443 000 4 014 000 4 234 500

Vendas por cliente (103 m3/cliente) 2 969 10 639 20 357 14 197 14 040 15 177 17 045 19 114 20 069

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

1997 1998 1999 2000 2001 2002 2003 2004 2005

106

m3

Clientes directos Distribuidores Regionais Centros electroprodutores

ERSEAverage price (€/m3 (n))

12

5,8

135,

6

190,

3

177,

4

177,

7

176,

1

215,

2

109,

4

188,

7

219,

8

174,

0

168,

5

205,

0

233,

2

191,

3

180,

0

128,

2

164,

1182,

1

129,

7

103,

6

206,

4

171,

6

178,

6

135,

6

225,

3

135,

7

222,4

172,6

169,8171,4

202,8

187,3

111,5

128,3

0

50

100

150

200

250

1998 1999 2000 2001 2002 2003 2004 2005

€/10

3 m

3

Industriais Distribuidoras Centros electroprodutores Trading Conjunto das vendas

Evolution of Natural Gas Prices in Portugal

ERSE

Natural Gas Flows Previsions for 2007-2008Inflows - 57,5 TWh; Consumption – 51,8 TWh

Entradas no SNGN

Saídas do SNGN

Campo Maior55%

Terminal GNL44%

Consumo na RNTGN89%

Consumo nas UAGs<1%

Injecção no Armazenamento Subterrâneo2%

Saída em Valença do Minho8%

Camiões cisterna, GNL

<1%

Perdas e Autoconsumos<<1%

Saída camiões cisterna<<1%

ERSE

ERSE

ENTIDADE REGULADORA DOS SERVIÇOS ENERGÉTICOS

Edifício Restelo

Rua Dom Cristóvão da Gama, 1, 3º

1400-113 Lisboa

Portugal

Telef +(351) 21 303 32 00

Fax +(351) 21 303 32 01

e-mail: erse@erse.pt

url: http://www.erse.pt