G

U

Operational implementation of balafrom the 1rst of july 200

and evolutions on the 1rst of sept DEFINITIONS / CONTRACTUAL POINTS ......................................

� Daily imbalance tolerance and mid-range cumulative im� Effective temperature ......................................................� Cumulative imbalance account : EBC...............................� Nomination on EBC account : CE point ...........................� Allocation difference account : CEA ................................� Nomination on CEA account : CA point ..........................� New contractual points ....................................................

TRANSPORTATION REQUESTS ....................................................� Transportation requests on new contractual points......� New contractual controls .................................................

� Publication of information about the optional level o� Control of nominations on CE point ............................� Control of nomination of the CA (allocation differenback to zero the level of CEA ..............................................� Balance of transportation requests .............................

CONFIRMATION...........................................................................� Matching notice ............................................................� Confirmation notice......................................................� Confirmation statement ...............................................

ALLOCATION................................................................................� New allocation rules.........................................................� Allocation available on ECT website ...............................

� Maximal imbalance account statement (bordereau d� Monitoring of the Allocation difference account (Suid’allocation)..........................................................................� Allocation notice ...........................................................� Allocation statement ....................................................

APPENDIX 1 : THE ALLOCATION DIFFERENCE ACCOUNT ..........APPENDIX 2 : EXAMPLE OF IMBALANCES CALCULATION AFTE

RTgaz – CAMG

pdated the 28th of august 2007

ncing system 7 ember 2007

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..............................................7 f tolerance ..........................7 ..............................................8 ce Account point) to bring ..............................................9 ..............................................9 ............................................10 ............................................10 ............................................10 ............................................10 ............................................11 ............................................11 ............................................11 ’écart de bilan maximaux) 11 vi du compte d’écart ............................................13 ............................................13 ............................................13 ............................................15 R 01/09/07.........................19

GRTgaz – CAMG

INTRODUCTION After a public consultation process of several months, GRTgaz daily balancing system is evolving towards a system founded on “market rules”. This new balancing system consists of two main topics :

- the purchasing / selling of GRTgaz daily physical balancing need, - the application of new balancing rules for shippers on GRTgaz network.

These new rules are implemented from the 1rst of july 2007. This document describes the operational implementation and impact for the application of new balancing rules for shippers on GRTgaz network, applied at the beginning of july 2007, and of the evolutions on the 1rst of september 2007. It is intended for operational shippers department, and points out for them how a shipper should manage his contract within these new rules :

- how these new rules will be implemented contractually, - how a shipper should do their daily transportation requests on the new points, - how a shipper should access to their confirmation and allocation.

This document does not describe the balancing rules, neither the reasons of implementation of these rules, nor the contract and convention eventually signed by the shipper. These information are available in the following documents :

- Balancing system for GRTgaz transport network validated by the CRE (available on GRTgaz public website www.grtgaz.com)

- Framework concerning purchase and sale of natural gas (also available on www.grtgaz.com) - Trading agreement signed with Powernext SA (supplied by Powernext).

The Appendix 1 General Terms and Conditions of the Natural gas transmission contract is also updated to take in account . Main impact on operational part of these new rules :

What does not change Main changes from 1rst of july 2007

Balancing system on daily basis, and on each balancing zone, for each quality of gas.

SEJ service disappears as the same time as the new balancing rule is implemented

The shipper must be balanced on each balancing zone, and for each quality of gas.

The daily tolerance is calculated by the sum of standard daily tolerance and optional daily tolerance.

The nominations have to be balanced. Overruns of cumulative imbalances tolerance (EBC) are penalized but no more cashed out.

Overruns of daily imbalance tolerance (EBJ) are penalized and cashed out.

Possibility to nominate to monitor the level of the EBC

At the end of the month, the EBC account is no more cashed out.

Creation of an allocation difference account (CEA) and nominations to manage the level of the CEA

Main changes from 1rst of september 2007

From the 1rst of september 2007, introduction of the mid-range cumulative imbalances

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GRTgaz – CAMG

DEFINITIONS / CONTRACTUAL POINTS

• Daily imbalance tolerance and mid-range cumulative imbalances

On each balancing zone, where he has subscribed to delivery capacities, the shipper has a daily imbalance tolerance (EBJ). From the 1rst of july 2007, this daily imbalance tolerance is the sum of :

- the standard tolerance provided in a standard way (same calculation as the current tolerance), - the optional tolerance :

o that might be subscribed by the shipper, o limited by 3% of his delivery capacities, o in case of extreme cold, this tolerance depends on effective temperature.

From the 1rst of september 2007, for each balancing zone, is introduced the mid-range cumulative imbalances, expressed as a percentage of the daily tolerance. On the 1rst of september 2007, this mid-range is initialized at the value of 70%. The implementation of the mid-range modifies imbalances process calculation.

• Effective temperature

The calculation of effective temperature is made each day D-1 for the gas day D, for each balancing zone, and for each shipper’s contract. For each gas day D, the following data are available on ECT website before 01:00 pm D-1 for each balancing zone :

- Forecast of effective temperature («Teff ») - Limit temperature («Tlimite ») - Threshold temperature («Tseuil »).

Maximum daily tolerance

T eff

Minimum daily tolerance

Level of Teff Maximal optional tolerance Minimal optional tolerance

If Teff > Tseuil Optional tolerance subscribed

If Tlimite < Teff < Tseuil Linear evolution of the optional tolerance calculated on the basis of the Teff

If Teff < Tlimite 2 x Optional tolerance subscribed Optional tolerance = 0

In case of low-temperatures conditions, the size of mid-range is modified as below :

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GRTgaz – CAMG

-10%

-5%

0%

5%

10%

15%

Tlimit e Tseuil

Talon

Tolérance tot ale

• Cumulative imbalance account : EBC

On each balancing zone, where he has subscribed to delivery capacities, the shipper has a cumulative imbalance account (EBC). From the 1rst of july, the maximum and minimum EBC are respectively fixed to 5 x positive daily imbalance tolerance and 5 x negative daily imbalance tolerance. From the 1rst of september 2007 : the maximum and minimum EBC are respectively fixed to 5 x positive daily tolerance x mid-rang cumulative imbalances and at 5 x negative daily imbalances x mid-range cumulative imbalances. At the end of the month M, the cumulative imbalance account is not cashed out : the value published for the EBC of the 1rst day of the month M+1 is the value of the EBC at the end of the last day of the month M.

• Nomination on EBC account : CE point

To monitor the level of his EBC and to manage the balancing of his contract, the shipper shall nominate on his EBC account: these nominations will be made on « CE point ». The quantity nominated corresponds to the quantity the shipper wants to off-take (REC) or to deliver (DEL) on his EBC account.

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GRTgaz – CAMG

• Allocation difference account : CEA

A shipper who has an EBC account (i.e. delivery capacities) for one zone has an allocation difference account (CEA) on this zone. The allocation difference account (CEA) takes in account differences between the provisional allocations and the definitive allocations. For each balancing zone, at the latest the 19th of the month M+1, the allocation difference account (CEA) is calculated for the month M within the following rules. The difference between :

- the value of the Cumulative Imbalance Account (EBC) in the allocation notice for the last gas day of month M - and the value of the Cumulative Imbalance Account (EBC), calculated, for the same last day, with the definitive

allocations of the month M, is credited or debited on the 20th of the month M+1 in the CEA. For more information, please consult the appendix 1.

• Nomination on CEA account : CA point

A shipper who has an allocation difference account shall nominate on the allocation difference account (CEA). These nominations will be made on a « CA point ». The quantity nominated corresponds to the quantity the shipper wants to off-take (REC) or to deliver (DEL) on his CEA account.

! Only the shippers who have delivery capacities (capacities to deliver gas to industrial customer or to the distribution grid operator) shall nominate on CE and on CA points.

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GRTgaz – CAMG

• New contractual points

The following new contractual points will be settled for the shippers :

Contractual Point Designation

CE0001 Cumulative imbalance account point for North B zone

CE0004 Cumulative imbalance account point for South zone

CE0005 Cumulative imbalance account point for East zone

CE0006 Cumulative imbalance account point for North H zone

CE0007 Cumulative imbalance account point for West zone

Contractual Point Designation

CA0001 Allocation difference account point for North B zone

CA0004 Allocation difference account point for South zone

CA0005 Allocation difference account point for East zone

CA0006 Allocation difference account point for North H zone

CA0007 Allocation difference account point for West zone

! Difference between CE/EBC and CA/CEA

LEVEL NOMINATION

EBC : represents the level of the cumulative imbalance account (EBC)

On the CE point. The shippers nominates on the variation of the EBC account

CEA : represents the level of the difference allocation account (CEA)

On the CA point. The shippers nominates on the variation of the CEA account

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GRTgaz – CAMG

TRANSPORTATION REQUESTS

• Transportation requests on new contractual points

Transportation requests on the new contractual points shall be done following these rules : - on contractual points CE000X :

Category point = Monthly imbalance account (*) Counterpart = NONE Flow direction = Off-Take or Delivery

- on contractual points CA000X : Category point = Monthly Allocation difference account (*) Counterpart = NONE Flow direction = Off-Take or Delivery (*) : necessary for ECT website only In case the EBC or CEA account is positive (i.e. the shipper is on excess vis-à-vis GRTgaz), to reduce the imbalance, the shipper has to nominate on Off-take (REC). In case the EBC or CEA account is negative (i.e. the shipper is on deficit vis-à-vis GRTgaz), to reduce the imbalance, the shipper has to nominate on Delivery (DEL). These transportation requests might be done just like the transportation requests for the other contractual points : by ECT website (by importing a flat file in ECT, or by keyboarding directly on ECT), or by Edigas. It is also possible to make weekly and monthly forecasts, and nomination on D+1, D+2, and D+3 like the transportation requests for other contractual points.

• New contractual controls

• Publication of information about the optional level of tolerance

GRTgaz publishes the optional level of tolerance for day D before 01:00 pm the day D-1 on the “Today’s information” page.

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GRTgaz – CAMG

In addition, GRTgaz publishes for each shipper his optional level of tolerance, and his mid-range cumulative imbalances level in the Maximal imbalance account statement.

• Control of nominations on CE point

Transportation requests on CE points are taken in account to check the balancing of nomination. Transportation requests on CE points for the gas day J :

- might be eventually above the daily imbalance tolerance for the nominations sent before the day J-1 at 03:00 am,

- from 9 :00 am on the gas day J, transportation requests must be lower than the daily imbalance tolerance. In case Teff < Tseuil (effective temperature is below threshold temperature) GRTgaz should inform the shippers that his nominations rights are reduced by publication of the effective temperature on ECT website. In case Teff < Tseuil (effective temperature is below threshold temperature), nominations on CE points are accepted in line with the following rules :

- the nominations leading to an increase in the excess of a Cumulative Imbalance Account which is already in excess are accepted, within the limits of the daily imbalance tolerance ;

- the nominations leading to an increase in the deficit of a Cumulative imbalance account which is already in deficit are curtailed ;

- the nominations leading to bring the balance of an Cumulative imbalance account excess or deficit account closer to zero are accepted, within the limits of the daily imbalance tolerance.

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GRTgaz – CAMG

-40

-20

0

20

40

60

80

100

120

Day 1 Day 2 Day 3 Day 4

Nomination EBC level

Nomination accepted

Daily imbalance tolerance =30

Example with a positive

Nomination accepted Nomination cut

• Control of nomination of the CA (allocation difference Account point) to bring back to zero the level of CEA

Bring back of the CEA to zero : The 19th of M+1, the CEA of the month M is calculated. Between the 20th of the month M+1 and the 19th of the month M+2, the shipper shall nominate to bring back his allocation difference account (CEA) to zero. The daily nominations must conform with the profile defined by GRTgaz below :

- between the 20th of M+1 and the end of month M+1 : the balance of the CEA can remain constant - during the course of the first 19 days of M+2, the level of the CEA is gradually brought back to zero at the rate

of a minimal daily nomination corresponding to 1/19th of the balance of the CEA at the last day or the month M+1.

The shipper has the possibility of nominating a profile to returning to zero faster. Nominations which do not correspond to the profile defined above are subject to the physical control before being accepted by GRTgaz. The shipper is informed of the quantity confirmed by the Confirmation Notice. For more information, please consult the appendix of this document.

• Balance of transportation requests

Transportation requests on CE and CA points are taken in account to balance the nominations of the contract. The information about the balance of nomination is available in the Confirmation Notice.

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GRTgaz – CAMG

CONFIRMATION

For each cycle, like the transportation requests for the other points, information about the transportation requests and the confirmation on CE and CA points are available on ECT website. These notices and statement are also available on CSV format to be exported. These notices and statement may be sent by Edigas.

• Matching notice

Quantities nominated and accepted for the points CE000X (the cumulative imbalance account points) and CA000X (the Allocation difference account points) are available on the matching notice, each day J-1 before 3:00 pm, for the quantities concerning the gas day J.

• Confirmation notice

Quantities nominated and confirmed for the points CE000X (the cumulative imbalance account points) and CA000X (the Allocation difference account points) are available in the confirmation notice for each day.

• Confirmation statement

Quantities nominated and confirmed for the points CE000X (the cumulative imbalance account points) and CA000X (the Allocation difference account points) are available in the confirmation notice for each day of the current month.

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GRTgaz – CAMG

ALLOCATION

• New allocation rules

Allocation rules

Point Description Allocation rule

CA000Y Imbalance difference account point Allocation = confirmation

PS000Y Storage interconnection point Allocation = confirmation

CE000Y Cumulative imbalance account point Allocation = result of calculation of optimisation balancing algorithm

GRTgaz website http://www.grtgaz.com will propose an on-line tool to test the new balancing system and a description of the optimisation balancing algorithm.

Treatment of daily imbalances

From the 1rst of july 07, for each day and each balancing zone : - the daily imbalance lower or equal, in absolute value, to the maximum / minimum daily tolerance are

aggregated in the cumulative imbalanced account (EBC). - the part of daily imbalance respectively below / under the maximum / minimum daily tolerance is purchased /

sold by GRTgaz to the shipper at a penalized price. (These purchasing / saling are based on definitive allocation of the month M, calculated after the 15th of the month M+1).

From the 1rst of september 07, for each day and each balancing zone :

- The proportion of the daily total imbalance which is less than or equal to the mid-range of cumulative imbalances is aggregated in the EBC account.

- The proportion of the daily imbalance beyond the mid-range of cumulative imbalances is covered by a purchase/sale between GRTgaz and the shipper, under the following rules:

• the amounts between the mid-range of cumulative imbalances and the daily tolerance (standard + optional) are covered by a purchase or sale transaction at the P1 price (using the same P1 price for purchase and sale), P1 as defined in the transmission contract,

• the quantities outside the daily tolerance are covered by a purchase or sale transaction at price P2. P2 as defined in the transmission contract.

The daily total imbalance values used for billing purchases and sales of gas at price P1 and P2 are the definitive values, calculated and published during month M+1. The appendix 2 proposes an example of imbalances calculation.

Treatment of cumulative imbalances

For each day and each balancing zone, if the cumulative daily imbalances is respectively beyond the maximum limit / under the minimum limit of the EBC for the zone, the quantity on excess / deficit is subject to a penalty as defined in the transmission contract. This quantity is no more purchased / sold by GRTgaz to the shipper.

• Allocation available on ECT website

The level of the cumulative imbalance account (EBC) is available on the Allocation notice & statement. The level of allocation difference account (CEA) is available on the monitoring of allocation difference account.

• Maximal imbalance account statement (bordereau d’écart de bilan maximaux)

For a month, this statement displays for each day and for each balancing zone : - Effective temperature (Teff)

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GRTgaz – CAMG

- Standard daily tolerances - Optional daily tolerances subscribed - Total daily tolerances - Optional tolerances applied - Total tolerances applied - Mid-range cumulative tolerances (Band within which imbalances are cumulated).

The provisional maximal imbalance account statement for month M gives provisional tolerances calculated between the 1st day of the month and the 4th working day of the month M+1. The definitive maximal imbalance account statement gives definitive tolerances values the 5th working day of the month M+1. This statement is also available on CSV format to be exported.

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GRTgaz – CAMG

• Monitoring of the Allocation difference account (Suivi du compte d’écart d’allocation)

For each month, the Monitoring of Allocation difference account displays theoretical profil defined by GRTgaz, and the real level of CEA.

This statement is also available on CSV format to be exported.

• Allocation notice

Each day D+1 before 12:30, the allocation notice is available on ECT website, including the allocation on the contractual points CA000X, CE000X. In this allocation notice, GRTgaz publishes the level of the cumulative imbalance account (EBC). This allocation notice is also available on a csv format to be exported.

• Allocation statement

For a month, the allocation statement displays for each day and for each balancing zone : - the allocation on each contractual points, - the allocation on the allocation difference account points (CA000X) - the level of cumulative imbalance account (EBC) by balancing zones, including the cash-out and the sum of

penalties. Between D+1 and the end of the month, the values are updated if necessary, and the level of EBC re-computed.

NB : The allocation on CA point is the allocation for the nomination on the CA point, it is not the level cumulative of the allocation difference account (CEA).

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GRTgaz – CAMG

The provisional allocation statement is available for month M between the 2nd day of the month M and at the latest the 19th of month M+1. At the latest the 19th of M+1, the definitive allocation statement is available. This statement is also available on CSV format to be exported.

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GRTgaz – CAMG

APPENDIX 1 : THE ALLOCATION DIFFERENCE ACCOUNT

This appendix gives some explanations about how to bring back the CEA account to zero. At the latest, the 19th of M+1, the CEA of the month M is calculated. Between the 20th of the month M+1 and the 19th of the month M+2, the shipper shall nominate to bring back his allocation difference account (CEA) to zero. The daily nominations must conform with the following constraints:

- between the 20th of M+1 and the end of month M+1 : the balance of the CEA can remain constant - during the course of the first 19 days of M+2, the level of the CEA is gradually brought back to zero at the rate

of a minimal daily nomination corresponding to 1/19th of the balance of the initial CEA value for month M. The shipper can nominate a profile to bringing back to zero faster. Nominations which do not correspond to the profile defined above are subject to the physical control before being accepted by GRTgaz. The shipper is informed of the quantity confirmed by the Confirmation Notice. The shipper shall nominate to bring back the CEA closer to zero ; by no means, the shipper will be authorized to nominate a value on the CA points that leads the CEA higher. Two examples and a global schedule are presented to illustrate the management of CEA account.

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GRTgaz – CAMG

1rst example : The shipper does not nominate on the CA point. In this case, the quantity confirmed is calculated on the basis of the profile defined by GRTgaz.

Nominations / Confirmations on CA points

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ntity

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h)

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The shipper nominates 0. GRTgaz confirmed quantities following the profile defined.

Bring back of the CEA to zero

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ntity

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Bring back profile CEA_nom CEA_prog

For example : The 5th of july, the level of the CEA is 147 MWh. The 6th of july, a nomination of 0 on the CE point leads to a CEA_nom at 147 MWh. The shipper is confirmed on the CE point at 10,5 MWh. The level of the CEA_prog = 147 - 10,5 = 136,5 MWh

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GRTgaz – CAMG

2nd example :

Nominations / Confirmations on CA points

-35000

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1500015

/616

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ntity

(kW

h)

Q_nominated Q_confirmed Gradient

The shipper nominates under the profile: GRTgaz accepts the nomination. Q confirmed = Q nom

This nomination leads the CEA higher : nomination refused bay GRTgaz. Q confirmed = 0.

The leveal of the CEA = 0 The shipper nominates on CA point : nomination refused. Qconfirmed = 0

Bring back of the CEA to zero

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APPENDIX 2 : EXAMPLE OF IMBALANCES CALCULATION AFTER 01/09/07 The graph below shows a shipper which, on a given balancing zone, has:

- a daily tolerance of +/-10 - the mid-range is 70%. Its cumulative mid-range is therefore 0.7 x 10 = +/- 7 - its cumulative tolerance is consecuently: 5*7 = +/-35. -

1 2 3 4 5 6 7

10

35

7

49

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P1 P2 P3

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ly t

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ance

Cum

ulat

ive

imba

lanc

e

11

4

6

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0

7

33

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33

The daily trend in imbalances can be interpreted as follows:

- the proportion of daily imbalances in the zone situated above the mid-range limit is cumulated in the imbalance account (EBC): blue zones

- The proportion situated between the mid-range limit and the daily tolerance is settled at price P1: yellow zones - The proportion outside the daily tolerance is settled at price P2: orange zones - The red broken line represents the level of the maximal cumulative imbalances (maximum of EBC) - Quantities that exceed cumulative tolerances are subject to penalties at price P3: red zones