0350 – Combining the NTS entry capacity and exit capacity credit checks Chris Shanley

Background (1) Modification Proposal 0246/0246A/0246B ‘quarterly NTS Entry Capacity User commitment’ – raised May 2009 & rejected 3rd June 2010. Modification Proposal 0261 ‘Annual NTS Exit (Flat) Capacity Credit Arrangements’ - raised July 2009 & implemented 1 January 2010. Removed a User’s ability to allow their Annual NTS Exit (Flat) Capacity to lapse. Consent to Modify C037 was subsequently raised to clarify aspects of 0261 legal text, however Panel recommended that it would be better addressed by a Mod proposal.

Background (2) Modification Proposal 0332 ‘Removal of a Users’ ability to allow Quarterly NTS Entry Capacity to lapse’ - raised 8 September 2010, discussed and developed at Transmission Workstream. Analysis requested on the option of combining the entry and exit capacity checks - highlighted that four shippers would be required to provide an extra £14.75m credit/security. Consensus that there is merit in combining the two credit calculations in to one process as it would reduce the risk from a User default and simplify the admin arrangements. 0332 withdrawn and 0350 raised - 24th November 2010

0350: Combining the NTS entry capacity and exit capacity credit checks Combine the NTS entry and exit capacity credit checks Amend V3.3.4 to include next 12 months of NTS entry capacity as well as exit capacity Remove B2.2.15 & B2.2.16 as the purpose of these sections is replaced by the above change Removal of these sections means that an entry User will no longer be able to defer their registered quarterly NTS entry capacity Add further clarity to the legal text implemented by 0261 by considering the text changes included in Consent to Modify C037.

Benefits of proposal Advantages Disadvantages May discourage speculative auction bidding, thus reducing the risk of inefficient system investment Will reduce the risk of increased Entry Capacity Commodity charges to the shipper community from: A User signalling and being allocated capacity that is subsequently allowed to lapse. A User providing insufficient credit to cover their total Entry and Exit Capacity commitment. Reduces UNC Parties’ administrative burden of monitoring two separate credit arrangements. Disadvantages Single ASEP user would not have the option of allowing Quarterly NTS Entry Capacity to lapse

Implementation It is proposed that 0350 is implemented on 1st of the month following the Authority’s decision to allow for any necessary changes to the administration processes. i.e. If direction received 15th January, 1 calendar month after is 15th February, and the 1st of the month after that is 1st March, therefore implementation in this example would be 1st March