E.ON to Streamline Pipeline System

E.ON said Monday that it is continuing its competition initiative by means of major steps in the gas sector. E.ON Gastransport will combine three of its market areas in the gas pipeline system and thus simplify network access still further. Furthermore, the company will make additional pipeline capacities available for importing gas into Germany. E.ON Ruhrgas will promote spot trading further.

As from 1 October 2007, E.ON Gastransport will only have two market areas: one for high-calorific gas (H-gas) and one for low-calorific gas (L-gas). E.ON Gastransport operates the gas pipeline system of E.ON Ruhrgas, which has an overall length of more than 11,000 km and is by far the largest and most complex in Germany. By taking this step, E.ON Gastransport reportedly is improving its competitive position on the gas market. As a result, there will be a nation-wide market area uniting large quantities of gas from all of Germany's major international sources. It will be highly liquid and particularly attractive for shippers and gas traders.

E.ON Ruhrgas is currently conducting talks with energy exchanges with a view to supporting gas trading in this new market area. Since early October 2006, E.ON Ruhrgas has been operating its own Internet-based trading platform in the North and thus tangibly stimulated gas spot trading in Germany.

An important improvement for new market actors offering gas in Germany is the increase in pipeline capacities from the border to the virtual trading point. E.ON Ruhrgas will invest in pipeline construction at border-crossing points where spare pipeline capacity is persistently below 10 % and appropriate spare capacity is available on the other side of the border.

Dr. Burckhard Bergmann, member of the E.ON AG Board of Management, said: "We are determined to promote competition on the German gas market and are providing strong stimuli with these steps. The challenge consists in achieving this without impairing security of supply."

The decrease in the number of market areas and the implementation of the "two-contract model" demanded by the Federal Network Agency make high demands on the company. To ensure that network access continues to function smoothly, E.ON Gastransport will fundamentally transform its network calculation system. The determination and use of capacity have to be placed on a new footing. Free allocation of entry and exit capacities to individual entry and exit points throughout the market area leads to a considerable loss of capacity in the pipeline system. This has to be counteracted by suitable capacity-reinforcing measures, for instance load flow commitments of customers. The goal is, as before, to ensure large capacities and a high degree of freedom for shippers, while at the same time guaranteeing reliable gas supply.


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