Regulation) one of the purposes of the Agency for the Cooperation of. Agency) is to assist the regulatory authorities in exercising, at

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1 book entry and exit capacity independently, reby creating gas transport through zones instead of Agency for Cooperation of Energy Regulators No. Dear along contractual paths. As a successful result, NCC has recently legally implemented entry-exit reasons. (hereinafter to coordinate ir action. Under Article 4(b) of Regulation Agency may issue opinions and REQUEST FOR AN OPINION UNDER ARTICLE 7(4) OF REGULATION NO 713/2009 Verkiu str. 25C-1, LT Vilnius. Lithuania VALSTYBINE KAINV IR ENERGETIKOS KONTROLES KOMISIJA NATIONAL COMMISSION FOR ENERGY CONTROL AND PRICES of of April, 2014, transit should be treated equally as gas transportation from or Member As Agency already explained to NCC by letter No ACER-20 l4-dh-ms-239 as distribution stations or even to pipeline branches which are used only for domestic transmission third country to that third country through territory of Republic of Lithuania, i. e. from Russian Federation via Belarus to Kaliningrad region has no connection with costs related to gas affects cross-border issues. Accordingly, TSO raises question regarding allocation of above mentioned indirect costs and its allocation to all entry-exit points. According to TSO gas flow from to all entry and exit points on a pro-rata basis, refore amendments of Methodology directly revenues via entry and exit points. According to amended Methodology, costs which are not directly related to transportation path (costs related to gas distribution stations, gas compression stations and etc.) should be allocated transmission system operator (hereinafter AB Amber Grid regarding allocation of allowed No ). However, during this process NCC faced with some principal disagreements with model by amending Methodology for Determination of National Regulated Prices in Natural Gas Sector (hereinafter referred to in Article 35 of Directive 2009/72/EC and Article 39 of Directive 2009/73/EC. As basis of Recital 19 and Article 13 of Regulation 715/2009/EC in 2013 took a decision to develop entry-exit model for natural gas transmission system operator allowing network users to Agency is already informed by letter No. R as of 10 th of December, 2013, NCC on recommendations addressed to regulatory authorities whereas Article 7(4) states that Agency provides an opinion, based on matters of fact, at request of a regulatory authority on wher a decision taken by a regulatory authority complies with provisions of Directive 2009/73/EC, Regulation (EC) No 715/2009 and or provisions of Third Energy Package legislation. National Commission for Energy Control and Prices of Republic of Lithuania Energy Regulators (hereinafter European Union level, regulatory tasks performed in Member States and, where necessary, Agency) is to assist regulatory authorities in exercising, at p. 1 14) (hereinafter Methodology) TSO) (13 transmission price caps according to amended Methodology (30 th of October, 2014 decision th of October, 2014 decision No ) as well as setting NCC) under national legislation is appointed to be national regulatory authority as Regulation) one of purposes of Agency for Cooperation of of 13 July 2009 establishing an Agency for Cooperation of Energy Regulators (OJ L 211, 2009 According to Regulation (EC) No 713/2009 of European Par]iament and of Council

2 2 State, i.e. as a part of transmission activity. This principle has been implemented by provisions of newly modified Methodology meaning that legal regulation is set on non-discriminatory and fair rules for gas transportation (EU and non-eu based) in order all system users to be treated equally. Accordingly, NCC believes that indirect costs should be paid proportionally by all system users including party of third country and it should not be treated in different way which could mean discrimination of or users and breach of Article 13 of Regulation, in particular Article 13(1) of Regulation stating that tariffs for network users shall be non-discriminatory and set separately for every entry point into or exit point out of transmission system. It is important to emphasize that same principle is applied for all domestic consumers because entry-exit model cannot ensure fully cost-reflective tariffs. It should be noted that mentioned amendment of Methodology is a decision laying down final position of NCC and determining rules for allocating costs to entry and exit points. This decision directly affects interests of participants of gas market, refore is considered to he a subject for an Agency review as it is prescribed in Article 7(4) of Regulation. Therefore NCC pursuant to Article 7(4) of Regulation requests Agency to provide opinion on above mentioned issue wher ihe J ICC s view ümplemented via decsisions on amendment ofmethodology and adjustment ofab Amber Grid natural gas transmission price caps) towards allocation of indirect costs of transmission system, i.e. party from third country transporting gas to that third country through territory ofa Member State should cover part of indirect costs of transmission system as well as all domestic users although party do not use this system and accordingly NCC s decisiqj±jparticularlv Art of Methodolo on this cross-border issue is in compliance with Article 13 ofregulation 715/2009/EC. in order to have a comprehensive understanding on particularitics of legal background, NCC s decision on amendment of Methodology for Determination of National Regulated Prices in Natural Gas Sector and related documents are prescribed in annexes attached to this letter. If any furr clarification is needed we are ready to provide additional information and explanations, as well as if necessary to explain issue via teleconference or by or means. ATFACHED: 1. A copy of NCC s Resolution on amendment of Methodology for Determination of National Regulated Prices in Natural Gas Sector (an extract of decision on 13 th October, 2014, No ), ii pages. 2. A copy of NCC s Resolution on Adjustment of AB Amber Grid natural gas transmission price caps for 2015 (30 th of October, 2014, No ), 2 pages. 3. A copy of NCC Natural Gas and Electricity department s Natural Gas Division Certificate on adjustment of natural gas transmission price cap of AB Amber Grid for 2015 (29 th of October, 2014, No ), 12 pages. Yours sincelery, euras.lt

3 54.02 EUR!MWhlper day Iper year The internal exit point LTL/MWhiper day /per year or EURIMWh!per day /per year. 2. To stipulate that proportions of covering level of revenues from transmission operations, calculated in line with Entry Exit Pricing Model, can be adjusted subject to provisions of Network Code on Harmonized Transmission Tariff Structures for Gas adopted by European Commission, amendments of or legal acts or conclusion by competent institution of European Union. 3. To stipulate that price cap denominated in Litas shall become void from date of adopting Euro in Republic of Lithuania, and price cap denominated in Euros shall come into validity on day of adopting Euro in Republic of Lithuania. The Resolution can be brought in a court of law according to procedure and under conditions set forth in Law on Administrative Proceedings of Republic of Lithuania. 2

4 Exit NON-CONFifiENTIAL VERSION NATIONAL CONTROL COMMISSION FOR PRICES AND ENERGY GAS AND ELECTRICITY DEPARTAMENT GAS DIVISION To submit at Commission s meeting Commission 29/10/2014 CERTIFICATE ON THE ADJUSTMENT OF THE NATURAL GAS TRANSMISSION PRICE CAP OF AB AMBER GRID FOR October 2014 No Vilnius Background Taking into consideration that Item 19 of Preamble and Paragraph I of Article 13 of Regulation EC) No 715/2009 of European Parliament and of Council of 13 July 2009 on conditions for access to natural gas transmission networks and repealing Regulation (Ec,.) No 1775/2005 provides that in setting tariffs (prices) to users of transmission system, principle of Entry Exit Pricing Model has to be applied, and in line with Methodological Guidelines on Enty Pricing Model in Natural Gas Transmission System (hereinafter Guidelines) approved by Resolution No of 7 August 2014 of National Control Commission for Prices and Energy (hereinafter Commission), Commission by Resolution No of 13 October 2014 amended Methodology jbr Setting State-Regulated Prices in Natural Gas Sector, which had been approved by Commission s Resolution No of 13 September 2013 (hereinafter Methodology). Pursuant to amended Methodology, from 2015 price cap of transmission operations shall be set and adjusted per one unit of capacity and application of Entry Exit Pricing Model shall he started, which provides that Commission shall set price caps and adjust m in entry and exit points of transmission system to be established at: 1. The entry points of natural gas transmission system of Lithuania: 1. The interconnection point between Lithuanian transmission system and link of liquefied natural gas terminal in Klaipêda (hereinafter LNGT Entry Point); 1.2. The interconnection point between Lithuanian transmission system and Latvian natural gas transmission system, where natural gas, which is transmitted through this point to Lithuanian natural gas transmission system, is accounted in Kiemênai gas metering station (hereinafter Kiemênai Entry Point); 1.3. The interconnection point between Lithuanian transmission system and Belarus natural gas transmission system, where natural gas, which is transmitted through this point to Lithuanian natural gas transmission system, is accounted in Kotlovka gas metering station (hereinafter Kotlovka Entry Point). 2. The exit points of natural gas transmission system of Lithuania: 2.1. The external exit points: The interconnection point between Lithuanian transmission system and Latvian natural gas transmission system, where natural gas, which through this point is

5 The internal exit point LTL/MWh!per day /per year or EURJMWh/per day /per year. ENCLOSURES. Resolution Re: Adjustment ofab Amber Grid Natural Gas Transmission Price caps for 2015, 2 pages. Gas Division Invited attendees: 1. Ministry of Energy of Republic of Lithuania 2. State Consumer Rights Protection Authority 3. Lithuanian Gas Association 4. Lithuanian District Heating Association 5. Confederation of Lithuanian Industrialists 6. AB Amber Grid 7. AB Aeherna

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