main premises to the financial security rules used by the gas transmission operator gaz-system s.a....

MAIN PREMISES TO THE FINANCIAL SECURITY RULES

USED BY THE GAS TRANSMISSION OPERATOR GAZ-SYSTEM S.A.

IN TRANSMISSION CONTRACTS AND NETWORK CONNECTION AGREEMENTS

the system, that connects

Financial security


LEGAL GROUNDS

Art. 14 item 3 Regulation (EC) 715/2009

In the applicable cases, services connected with third party access can be performed provided that the network users submit appropriate guarantees concerning their financial credibility. Such guarantees cannot be considered as unjustified barriers hindering from entering the market and additionally are:

In the adopted model (operating since 2006) by TSO GAZ-SYSTEM S.A. the financial credibility evaluationof entities attempting to provide transmission services via the TSO and the provisions regulating the forms and amount of financial security have been ordered on the network code level – the Transmission Network Code (TNC), which, in compliance with the legislation and doctrine, serves as a contractual model in the meaning of Article 384 of the Civil Code and has been approved by the Energy Regulatory Office (ERO) pursuant to Art. 41 of Directive 2009/73/EC.

In July 2012, the President of the ERO referring to an alternative interpretation of Art. 41 Directive 2009/73/EC called the Company to

remove from the Transmission Network Code (TNC) provisions regulating the level and forms of financial security applied by TSO GAZ-SYSTEM S.A. in order to secure payments from transmission contracts and connection agreements.

As a result of the decision of the President of the ERO, provisions on financial security were transferred to the specimen transmission contract or connection agreements.

agreed based on the guidelines outlined in the specimen transmission contract

NON-DISCRIMINATORY PROPORTIONALTRANSPARENT

Equal rules for all system users

Security level set proportionally to the value of the service rendered


Connection Agreements

100% security when signing agreements

50% security when signing agreements80% security when signing

agreements

Selection of Forms of Security to Choose From

1

Bank Guarantee (bank with a rating category not lower than :Baa2 for Moody’s, BBB for Standard and Poors, BBB for Fitch)

2

Insurance Guarantee (insurance company with a rating category not lower than Baa2 for Moody’s, BBB for Standard and Poors, BBB for Fitch)

3 Cash Deposit held in the TSOs account

4 Blocked Cash Funds on Client Account

5

Alternative forms of security are acceptable by the TSO e.g. promissory note and declaration of voluntary submission to debt recovery pursuant to Art. 777 Code of Civil Procedure.

Contributions and payment schedules

11 instalment 10 % total estimated connection fee within 30 days from concluding connection agreement,

2

2 instalment 40% total estimated connection fee within 30 days from concluding contracts with the contractor of the connection construction and assembly works,

3

2 instalment corresponding to the difference between the connection fee set based on real and documented outlays incurred by the Transmission System Operator GAZ-SYSTEM S.A. for the performance of a connection, and the instalments already contributed earlier payable in the given term outlined on the VAT invoice issued after the final acceptance of the connection.

Instalment plan according to the agreed scheme

100% payments after service performance

20% payments after obtaining permission to perform investment

and 80% after completion of investment

Securing 3 instalment 50% of the estimated costs in a form accepted by the TSO e.g. promissory note and declaration of voluntary submission to debt recovery pursuant to Art. 777 Code of Civil Procedure


1

Bank Guarantee (with a rating category not lower than Baa2 for Moody’s,

BBB for Standard and Poors,

BBB for Fitch)

2

Insurance Guarantee (insurance company with a rating category not lower than Baa2 for Moody’s, BBB for Standard and Poors, BBB for Fitch)



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Client Options

or

4

System Users

Capacity Allocation (CA)

• Tariff fees, of which:

• constant and variable charge

• charge for exceeding capacity

• Fees and discounts for contractual congestion, i.e. quality of gas

Contracted Capacity Allocation (CCA)

Gas Market Entities - Fees

System Users Shipper


• Balancing charges

• Fees for contractual congestion (nomination inconsistent with performance)

Transmission Contracts


The rating required by the TSO not lower than:Baa2 for Moody’s,BBB for Standard and Poors,BBB for Fitch

NOYES

No additional security


1Bank Guarantee (bank with a rating category not lower than Baa2 for Moody’s, BBB for Standard and Poors, BBB for Fitch)

2Insurance Guarantee (insurance company with a rating category not lower than Baa2 for Moody’s, BBB for Standard and Poors, BBB for Fitch)

3 Parent Company guarantee with the above rating category



6

Alternative form of security acceptable by TSO e.g. promissory note and declaration of voluntary submission to debt recovery pursuant to Art. 777 Code of Civil Procedure.

Required security amount 2 months commitment resulting from Transmission Contract

For Clients that do not have a 4-year positive

cooperation history with GS

For Clients that have a positive 4-year cooperation history

with GS

Financial security on the Balancing Market


The rating required by the TSO not lower than:Baa2 for Moody’s,

BBB for Standard and Poors,BBB for Fitch

NOYES

No additional security


1

Bank Guarantee (bank with a rating category not lower than :Baa2 for Moody’s, BBB for Standard and Poors, BBB for Fitch)

2

Insurance Guarantee (insurance company with a rating category not lower than: Baa2 for Moody’s, BBB for Standard and Poors, BBB for Fitch)

3 Parent Company guarantee with the above rating category



6

Alternative forms of security are acceptable by the TSO e.g. promissory note and declaration of voluntary submission to debt recovery pursuant to Art. 777 Code of Civil Procedure.

Required security amount 20% of the gas value transmitted in a given gas month

For Clients that do not have a 4-year positive cooperation

history with GS

For Clients that have a positive 4-year cooperation history with

GS

Security on the Balancing Market cont.


on the capacity allocation application review stage (CA), based on the quantities of gaseous fuel declared in the application, delivered for transmission (including the gas quantities that the entity intends to trade on the Gas Exchange or within bilateral on the OTC market)

on the transmission contract performance stage, based on the average monthly quantitiesof transported gaseous fuel

The submitted Security is based on the arithmetic mean of the daily values of the Gas Reference Price (GRP), determined pursuant to the TNC for the month preceding the

month in which it was submitted.

Term of Validity of financial security should include the entire term for which the capacity was allocated for (CA)

In the case of long-term services performed for a term longer than on (1) year, the TSO admits the possibility of submitting financial security for a term not shorter than one gas year, subject to its renewal fourteen (14) working days prior to its date of expiry.

The entity should monitor the level of financial security that it submitted in the context of the planned volumes of transmitted gas.

If the amount of security established does not cover 20% of the average monthly value of the volume of transported gas, the Balancing Market Participant should supplement the security to an appropriate level. Otherwise it may be fined in the form of a 25% increase in value of the financial security.

During the performance of the contract, the TSO shall monitor the level of security in the context of transmissions performed by the Shipper. Should the security submitted by the Shipper prove to be inadequate, the TSO shall request it to be raised (within 2-3 days) otherwise the CA or the agreement may be terminated.

At present, the TSO GAZ-SYSTEM S.A. is preparing a detailed concept of solutions that will enable the monitoring of the level of securities and the imbalance position of the URB on an ongoing basis.

main premises to the financial security rules used by the gas transmission operator gaz-system s.a....

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