Paris, November 20, 2006 – The French energy regulation commission (CRE) has submitted a proposal to the State on the rates to be applied for access to natural gas transmission networks.

Provided that they are validated by the State, these rates will apply for a two-year period as of January 1, 2007.

This pricing proposal follows on from those concerning the rates for access to natural gas distribution networks and the use of LNG terminals. Hence, the principles that have been, for close to four years now, drawn up by the CRE concerning gas infrastructure access rates, will continue to apply.

Gaz de France is pleased with the steady rate rules and increased visibility on investment strategy.

To draw up these rates, the CRE has applied the following principles:

• The rates cover operating expenses and capital costs, in line with the cost plus method.
• Operating expenses have been determined based on the accounts and forecasts submitted by GRTgaz.
• The same methods will continue to be used for calculating capital costs. More specifically, the regulated asset base rises between two regulation periods in line with the level of investment and inflation, and decreases in line with depreciation and declassification.
• The payment rate for the regulated asset base is estimated on the basis of the financial asset valuation model.
•  In addition, an adjustment account will make it possible to offset certain unforeseen variations in income and expenses (energy purchase costs, excess penalties notably). 

In more detail, the CRE's proposals are as follows:

• The regulated asset base retained is 5,426 million euros as of January 1, 2007. In light of the inflation, investments, depreciation and declassification seen since the previous rate, this represents an increase of 11 million euros in relation to that retained in 2005. The inclusion of investments in the regulated asset base is factored in as on January 1 each year.
• Fixed assets (370 million euros on average in 2007-2008) are now compensated;
• Investment forecasts for 2007-2008 amount to 705 million euros.
• The real basic rate of compensation before tax is 7.25%, vs 7.75% until now. This rate is identical to the level retained at the end of 2005 for distribution network and LNG terminal rates. The principles retained at that time have been confirmed, with the assumptions remaining unchanged;
• The increases in compensation rates are maintained:
  - 1.25% for new investments,
  - 4.25% for new investments helping reduce congestion on the grids;
• The annual amount of expenses to be covered averages out at 1,236 million euros for 2007 and 2008;
• Between 2007 and 2008, revenues will change in line with subscribed capacity levels, with growth estimated at 2%. 

If this proposal is approved by the State, it will make it possible to have a stable regulatory framework, consolidating the outlook for the transmission business over the medium term.

For reference, distribution network and LNG terminal access rates will be maintained at least through to the end of 2007.

Press contact
Pénélope Linage - Tel: +33 1 47 54 30 17
Email: penelope.linage@gazdefrance.com      

Investor contact
Brigitte Roeser Herlin – Tel: +33 1 47 54 77 25
Email: GDF-IR-TEAM@gazdefrance.com

Company profile
Gaz de France is a major player in Europe's energy. Ranked first in the distribution of natural gas in Europe, Gaz de France employs more than 53,000 people and realised, in 2005, sales of 22.4 billion euros and a Group net income of 1.7 billion euros. The group boasts a portfolio of 13.8 million customers, 11.1 million of which in France. Listed on the Paris Bourse as of July 2005, Gaz de France entered the CAC 40 and the Dow Jones Stoxx 600 indexes as of September 2005. 

Forward-Looking statements

The objectives summarised above are based on data, assumptions and estimates, which Gaz de France considers reasonable. These data, assumptions and estimations may change due to some uncertainty relating, notably, to the economic, financial, competition, regulatory and climatic situations. Furthermore, the materialisation of certain risks described in chapter 4 of the reference document filed with the French Financial Market Authorities (Autorités des Marchés Financiers) under the n° R.06-050 on 5th May 2006 (hereinafter, referred to as the “Reference Document”) may have an impact on the Group's business and its ability to achieve its objectives. Besides, achieving its objectives implies the success of the sales strategy described in paragraph 6.1.2 of the Reference Document. Gaz de France, therefore, disclaims any undertaking and gives no representation as to the fact that it will achieve its objectives and disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this communication.

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