Netherlands Authority for Consumers and

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Netherlands Authority for Consumers and Gasunie Transport Services B.V.

Markets (ACM) _{PO Box 181}

f.a.o. Mr J. de Maa _{9700 AD Groningen}

PO Box 16326 _{Concourslaan 17}

2500 BH The Hague _{T (050) 521 22 50}

E info@gastransport.nl

Groningen Register of Commerce (KvK) 02084889

www.gasunietransportservices.com

Date Direct line

March 1, 2018 +31 50 521 2250

Our reference Your reference

LCR 18.069

Subject

Tariff proposal 2019 Dear Mr De Maa,

Hereby, we are sending you the tariff proposal for the year 2019 (hereinafter: tariff proposal) of Gasunie Transport Services B.V. (hereinafter referred to as: GTS) for the statutory tasks of transport, balancing, quality conversion, existing connections (BAT) and connection points (AT). The tariff proposal consists of this letter, three Excel files, a number of appendices with further explanation of these files and an audit certificate.

This letter successively deals with the following matters:

1. Consequences of the changes in the timing of the tariff proposal; 2. Calculation of the tariffs in the tariff proposal;

3. Tariff development; 4. Confidentiality.

1. Consequences of the changes in the timing of the tariff proposal

Pursuant to Article 82, Paragraph 3 of the Dutch Gas Act, GTS is required to submit its tariff proposal before September 1 each year. However, the new European network code tariff structures (NC-TAR1_{) requires that the annual tariffs must be disclosed at least one month}

before the annual auction. From now on, GTS will therefore submit its tariff proposals at the beginning of each year, so that the ACM has the opportunity to make a decision on the 2019 tariff in good time. This change in timing has a number of consequences for the tariff proposal, which are discussed in more detail below.

One of the consequences is that some data may not yet be available at the time the tariff decision is taken. These concern the rate of inflation and the fiscal interest rate (in Dutch belastingrente). The tariff proposal makes use of an August-August inflation rate. Because the inflation rate for the period of August 2017 to August 2018 will only be determined by the Dutch Central Bureau of Statistics (CBS) in September 2018, an estimated rate of 1.2% is used in the tariff proposal, as well as in the tariff decision. The fiscal interest rate for 2019 is also not yet known when the tariff decision is taken, therefore, an estimated rate of 4% is used. If it becomes evident that the realizations of the inflation rate and the fiscal interest rate deviate from the estimated rates, the difference is expected to be corrected in the 2020 or 2021 tariffs.

In addition, the earlier submission of the tariff proposal means that the revenue and settlement data for 2017 are not yet definitive. The final figures can only be included in the tariff decision. The changes are expected to be minimal.

1_{Commission Regulation (EU) 2017/460 of 16 March 2017 establishing a network code on harmonised}

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Gasunie Transport Services B.V.

Date: March 1, 2018 Our reference: LCR 18.069 Subject: Tariff proposal 2019

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Finally, the earlier submission of the tariff proposal increases the possibility of network point changes on the network point list of the tariff year 2019. The network point list may change as a result of, among other things, new connection points, network points becoming inactive, changes in network areas or changes in the market segment of a network point. For any new network points, an interim tariff will be determined in accordance with previous years, on the basis of the tariffs set out in the tariff decision.

2. Calculation of the tariffs in the tariff proposal From method decision and x-factor decision to tariff proposal

The method decision lays down the rules with regard to GTS’s revenue model, including how GTS is compensated for its costs. The x-factor decision defines the x-factors for the various statutory tasks. With this percentage, the allowed revenues are adjusted annually. The rules from the method decision, x-factors and allowed revenues from the x-factor decision are input for the tariff proposal. The calculation module that GTS received from the ACM on January 16, 2018, was used to draw up the tariff proposal. The tariffs are calculated in the calculation module (see Annex 1). This calculation module also includes all the data needed to calculate the tariffs2_.

Calculation of tariffs

The tariff proposal consists of tariffs for entry, exit, connection, wheeling, diversion, transfer of transport capacity or right of use, balancing, quality conversion, BAT and AT.

The entry and exit tariffs are different for each network point. The starting point for these tariffs is the 2018 tariff without tariff corrections and gas storage discount. The sum product of these tariffs with the expected volumes of 2019 is then adjusted to the level of the total allowed revenues for 2019 before corrections. Corrections shall be made to these adjusted tariffs to compensate for the costs of non-regular expansion investments, the settlement of realizations in 2017 for revenues, oversubscription and buy back, energy purchase costs, auction fees and administrative imbalances, and for incidental corrections. Finally, a 25% discount on entry and exit tariffs is applied to the network points that have the market segment ‘Storage’. Within a system of revenue-cap regulation, this means that the non-storage network points are slightly increased.

The connection tariffs apply to LDC exits. The annual amount per network point, on the basis of which connection tariffs are determined, depends on the number of gas receiving stations per network point. The annual amount for 2019 is determined by multiplying the annual amount for 2018 excluding tariff corrections by 1 + CPI - x-factor. This annual amount is then adjusted by the tariff adjustments described above under entry and exit tariffs. The annual amount per network point is converted into a capacity tariff per network point using the volumes per network point.

Like the entry and exit tariffs, the tariffs for the services wheeling, diversion and transfer of capacity rights or usage rights are determined by adjusting the 2018 tariff without tariff corrections to the total revenues for 2019 before corrections and applying the corrections mentioned above. The storage discount does not apply here.

2_{The tabs 'TAR_TAB 15_Toelichting' and' TAR_Tab 16_Wijzigingen NWPs' have been added by GTS. All}

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Balancing, quality conversion and existing connections (BAT) are subject to a uniform tariff. The tariff for balancing and quality conversion is charged on all network points; the tariff for BAT is charged only on the network points subject to BAT. The tariffs are determined by dividing the allowed revenues after corrections for the task in question by the corresponding volumes.

The connection point tariffs (AT tariffs) are determined in accordance with the methodology described in Paragraph 3.3.7 of the Gas Tariff Code. These tariffs are set for each network point individually. The level of the operational and capital costs of the individual connection point in relation to all connection points determines which part of the allowed revenues this individual connection point must pay. The part of the allowed revenues that the connection point has to pay is converted into a capacity tariff by dividing it by the expected volumes for this connection point.

All capacity tariffs are rounded off to three decimal places. Other provisions

According to NC-CAM3_{, virtual interconnection points (VIPs) should be introduced from October}

1, 2018. However, as a result of regulatory uncertainty regarding the obligations arising from NC CAM, GTS is forced to postpone the establishment of VIPs4_{. The tariffs for VIPs are therefore}

not included in the tariff proposal.

In accordance with marginal 309 of the method decision 2017-2021, the ACM will test the energy purchase costs for the quality conversion task for necessity. The difference between the estimated and realized necessary costs will be taken into account in the tariff decision. This necessity test will take place in the period between the submission of the tariff proposal by GTS and the adoption of the tariff decision by the ACM.

The proposed 2019 tariffs for each network point and service are included in Annex 2, ‘Overzicht voorgestelde tarieven 2019’. In addition, GTS has also drawn up an Excel file which compares the proposed 2019 tariffs per network point and service with the 2018 tariffs. This annex is intended to give more insight into individual tariff changes. The overview is included in Annex 3, ‘Overzicht tariefontwikkeling’.

3. Tariff development

In the tariff proposal, the tariffs rise by 2% on average compared to the tariffs for 2018. This increase is the result of a number of different effects. The application of the x-factor has a downward effect on tariffs. On the other hand, the expected fall in sales in 2019 (see Annex 4) leads to an upward effect5_{because of the revenue-cap regulatory system. Furthermore, the}

annual tariff corrections in 2019 have a smaller downward effect on tariffs than the annual tariff corrections in 2018.

The tariff changes vary according to the statutory task, and consequently the tariff changes for each individual entry point and exit point will also vary. For example, the transport tariffs will rise (+4%), while the tariffs for existing connections (-12%), quality conversion (-8%) and connection points (-17%) will fall. The tariff for balancing remains unchanged.

A more detailed explanation of these effects will be given on the GTS website.

3_{Commission Regulation (EU) 2017/459 of 16 March 2017 establishing a network code for capacity}

allocation mechanisms in gas transmission systems and repealing Regulation (EU) No 984/2013.

4_{See our communication to our customers on the GTS website.}

5_{The expected decrease in sales included in the tariff proposal does not take into account current}

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4. Confidentiality

You have indicated that you wish to publish the tariff proposal 2019 submitted by us on your website in full, with the exception of data that must be exempted from disclosure on the grounds of confidentiality, as referred to in Article 10 of the Dutch Government Information (Public Access) Act (hereinafter referred to as the Wob)6_{. In the light of the Wob, we are of}

the opinion that the following data should be treated as confidential:

▪ The revenue and calculated volume per network point is company confidential and customer information;

▪ Details as well as the explanatory notes relating to expansion investments, connection points and incidental items are confidential insofar as they can be traced back to one party and insofar as customer information is concerned;

▪ Network point-specific information in the explanatory notes on network areas is confidential;

▪ Personal details of the contact persons are confidential;

▪ The audit certificate has been drawn up for the ACM and is exclusively for the ACM, and can therefore not be used for any other purpose.

In addition to a confidential version, we will also send you a public version of the tariff proposal 2019 (including annexes) for confidentiality reasons.

For the sake of completeness, we note that this letter and its annexes have been sent by cryptshare. If you have any questions about this tariff proposal, please contact

.

Sincerely,

GASUNIE TRANSPORT SERVICES B.V.

Manager Regulation Annexes

1. Excel file Rekenmodule7

2. Excel file Overzicht voorgestelde tarieven 20198

3. Excel file Overzicht tariefontwikkeling9

4. Explanatory note: Estimation of volumes 201910

5. Explanatory note: Estimation of non-tariff regulated revenues11

6. Explanatory note: Expansion investments12

7. Explanatory note: Incidental corrections13

8. Explanatory note and calculation of network areas14

9. Audit certificate15

6_{Article 10 Paragraph 1 under c ‘as far as business and manufacturing data are concerned’ and Article 10}

Paragraph 2 under g ‘for data, the disclosure of which would cause a disproportionate disadvantage’.

7_{The Annex contains confidential data; the file is available in a confidential and public version.}

8_{The Annex does not contain confidential data.}

12_{The Annex contains confidential data; the file is available in a confidential and public version.}

14_{This Annex contains two documents: an explanation and a calculation. The explanation does not contain}

any confidential data. The Annex with calculations contains confidential data; the file is available in a confidential and public version.