An alternative approach….. We could widen the ‘ARCA’ (advanced reservation of capacity) principles currently applicable to non-UNC parties in exit The high level principle would be that capacity is reserved following the signature of a bi-lateral contract whilst planning activities are undertaken The ‘demonstration date’ concept would be retained, whereby the contract can be terminated and the capacity no longer reserved if the project does not progress Formal user commitment would be made at a defined point following receipt of a Development Consent Order 1

Planning and Advanced Reservation of Capacity Agreement (PARCA) Our alternative approach utilises a bi-lateral contract which incorporates the principles of the existing PCA and ARCA contracts Signature of the contract would not be mandatory to signal incremental capacity – but provides certainty of overall timeline for both parties and is likely to lead to a more efficient timeline overall because of this Planning and Advanced Reservation of Capacity Agreement Pre-Capacity Agreement 1a – need case and technical options 1b – strategic options 2 – Preferred route corridor 3 – Environmental Impact Assessment Advanced Reservation of Capacity Agreement Capacity reserved from signature Demonstration dates and information Termination where project doesn’t progress 2

How it could work Part 1a of the PCA works takes around 6 months to complete and identifies whether there is existing capability in the system and therefore whether the rest of the PCA activities (1b to 3) are required If there is no existing capability in the system then a PARCA contract could be used to: Underpin the work needed to investigate build and non build options to provide that capacity Reserve capacity whilst these activities are undertaken Provide ‘drop out’ points which allows the customer to terminate and capacity to be returned to market if they decide not to progress their project Could be utilised in conjunction with (or used to facilitate) ‘stop-gap’ long term non-firm product 3

Kick off PARCA anytime here Interaction with Mod 373 The initial part 1a work could be carried out in parallel or sequentially with the Mod 373 timeline It would be the customer’s choice of when to start the 1a phase, but we believe there is an ‘optimal’ point This optimal point ensures that the customer receives a connection offer and need case/technical options report to consider together Day 0 3 months 9 months 12 months 15 months Connection Application Simple Provide Offer Accept Kick off PARCA anytime here Mod 373 Connex Process Optimal PARCA signature date 6 months Conceptual Design Study Feasibility Study Conceptual Design Study Complex Connection 4

Further development required… We have been looking at this option as a result of the feedback that the ‘split auction’ approach is potentially too complex Our thinking is therefore not as far developed as the split auction option There are a number of questions to be discussed for example: Should this allow reservation of unsold only (where no incremental required)? Is an ‘open season’ approach required to let market know when a PARCA is about to be signed? Interaction with Europe? But in general, we believe this option has merit 5

Way forward Monthly workgroup as part of Transmission workgroup propose to begin on 5th of July – initially cover outstanding actions Is monthly sufficient? A lot of material to cover so which areas to focus on first?