UNC Modification Proposal 0116Reform of the NTS Offtake Arrangements

Transmission Workstream

5th October 2006

Bi-Directional Sites – Current arrangements

End of day exit Daily Quantities (DQ) and User allocations (UDQOs) provided to National Grid NTS e.g.

Exit DQ = 10, UDQO User A = 2, UDQO User B= 8

Same process undertaken for end of day entry quantities

End of Day Net Physical measurement provided

National Grid NTS check difference between Exit and Entry measurements equals end of day net physical measurement

Bi-Directional Sites – Proposed Enduring Arrangements

Existing end of day processes continues for entry and exit

Step 1. Flex Overruns only calculated if cumulative net exit physical flow over first 16 hours

Step 2. Cumulate flow over 06:00 to 22:00 Exit Daily Quantity (DQ22:00) and User allocations (UDDQ22:00) provided to National Grid NTS e.g.

Exit DQ22:00 = 6, UDDQ22:00 User A = 1, UDDQ22:00 User B = 5 DQ22:00 must be no less than the cumulative net exit physical flow at 22:00

Step 3. User exit allocations (UDQO and UDDQ22:00) utilised in Flex Overrun calculation

Negative Flex Flow Example 1

22.0006.00

End of Day

Measurement

= 7200

300

User has 0 Flexibility holding and -160

Flexibility Utilisation.

Overrun = -160 – 0 = -160 = NO Flexibility

Overrun

User has 0 Flex Holding, if they wish to

Flow an “anti-diurnal” profile no

Requirement to purchase Flexibility

290

Negative Flex Flow Example 1

22.0006.00

End of Day

Measurement

= 7200

300

User must flow less than or equal to 4640

at 22.00 to ensure that no Flexibility

Overrun is incurred

Users Flexibility Holding = -160

Users Flex utilised = 4640 – 4800 = -160

-160—160 = 0 NO Flexibility Overrun

User Trades or sells back to NTS 160 units

290

Pressure Commitments – Transitional Arrangements (Mod 046)

Assured Offtake Pressures rolled over from interim to transitional regime

based on 2005 Offtake Capacity Statement remain at this level until Sept 2010 unless amended as a result of a

request

DNOs able to request pressure increase by end of July in conjunction with their capacity requests

National Grid NTS accept/reject pressures and capacity requests by end of September as part of Offtake Capacity Statement

Pressure Commitments - Proposed Enduring Arrangements (Mod 0116)

Assured Offtake Pressures rolled over from transitional to enduring regime

based on Sept 2006 Offtake Capacity Statement remain at this level unless amended as a result of a request

DNOs able to request (permanent) pressure increase by end of July in conjunction with their capacity requests, but capacity requests via annual flex auctions

National Grid NTS accept/reject pressure increase by end of September as part of Offtake Pressure Statement

Pressure Commitments - Proposed Enduring Arrangements (Mod 0116)

National Grid NTS ability to request (permanent) pressure decreases

requests by end of April DNO accept/reject by end of July

Ability for National Grid NTS and DNOs to request temporary decreases for a day or days

Accept/reject within 10 days

Common test for acceptance/rejection of any pressure request, based on current arrangements

Safe and efficient operation of Transporter’s network Obligation to co-operate

New Connections – Current Arrangements Developer discusses with National Grid NTS its connection

requirements through “connection process”

States anticipated capacity requirements National Grid NTS considers whether requires investment If so, may seek to agree terms of ARCA and delivery date ARCA required to be agreed to allow sufficient investment lead rime

Where ARCA agreed, Shippers able to book prevailing rights from relevant month consistent with delivery date through SPA process

Shippers not able to request additional capacity beyond 6 months under UNC via SPA process, irrelevant of whether triggers investment

New Connections – Proposed Enduring Arrangements Developer discusses with National Grid NTS its connection requirements

through “connection process” Obtain relevant NTS Exit Zone and NTS Exit Area (as defined in ExCR Methodology

Statement)

States anticipated capacity requirements National Grid NTS considers whether requires investment If so, may seek to agree terms of ARCA and delivery date ARCA required to be agreed to allow sufficient investment lead rime Investment lead times will be consistent with obligations agreed as part of the TPCR

Where ARCA agreed, Shippers able to book for agreed non-Gas Year start dates, daily rights through daily auctions prevailing annual rights from relevant Gas Year – nominated Shippers deemed to

have booked capacity under UNC at relevant Application Window

Also, any User able to request additional flat capacity at Annual Application Window for unconstrained period for use from start of a Gas Year

New Connections – Proposed Enduring Arrangements

Initialisation rules rollover capacity bookings from Transitional to Enduring Arrangements

DNOs based on Sept 2006 Offtake Capacity Statement Shippers based on Gas Year 2005/06 bookings

Require to clarify in rules that same will apply to any agreed Reserved Capacity through ARCAs

only those under current negotiation and where agreed by implementation of the proposal

NTS/LDZ Operational Flows – Proposed Enduring Arrangements

Reciprocal arrangements provided to DNOs for flow swapping i.e.

DNO’s able to request flow swaps from National Grid NTS in accordance with same rules as under UNC OAD I2.4 for National Grid NTS to request flow swaps from DNOs

Exit Capacity Release Methodology Statement – User Commitment

User Commitment

Option 1. Commitment Based on Prevailing Prices

National Grid will accept User applications, subject to

appropriate credit checks, made at Annual Application Window in Gas Year Y to increase Prevailing NTS Exit (Flat) Capacity to amount “Q” on basis that

User will pay relevant NTS Exit Capacity charges for amount Q for each Gas Day over the period Gas Year Y+4 to Y+7 (inclusive)

NTS Exit Capacity charges as published in Transportation

Statement for relevant Gas Days

User Commitment

Option 2. Commitment Based on Prices at time of application

National Grid will accept User applications, subject to appropriate credit checks, made at Annual Application Window in Gas Year Y to increase its Prevailing NTS Exit (Flat) Capacity to an amount “Q” on the basis that the User will:

pay to National Grid at least the User Commitment Amount; and/or hold the amount Q for each Gas Day over the period Gas Year Y+4 to Y+7

(inclusive)

User Commitment Amount will be determined as follows:

User Commitment = P x Q x F x 365, where

P = relevant prevailing NTS Exit Capacity charge at the time of application (p/kWh) Q = total amount of Prevailing NTS Exit (Flat) Capacity held by the User (kWh) F = factor of 4