Simon Trivella – 22nd May 2008 Distribution Workstream UNC Modification 0215 - Enduring Arrangements for Supply Point Capacity decrease at an Interruptible Supply Point Simon Trivella – 22nd May 2008 Distribution Workstream

Background UNC Modification Proposal 0090 (1st April 2008) Revised DN Interruption Arrangements Transitional Period 1 April 2008 to 30 September 2011 1st Annual Auction to take place in June 2008 Gas Years 2011/12 to 2015/16

Current Arrangements (Mod 0090) Any increase or decrease in Supply Point Capacity is covered by UNC TPD Section G 6.1.6 Any increased Capacity is deemed to be Firm Capacity (F) Proposal 0215 does not seek to change this More Complex arrangements for any decrease in Capacity Proposal 0215 seeks to make these arrangements more flexible for all parties involved

Current Arrangements (Mod 0090) Overall Interruption Price (OIP) The total amount payable by the DNO based on a fully exercised annual contract (Option & Exercise Price) in p/kWh/Day Interruptible Tranche (Tn) A portion of Supply Point Capacity (in kWh/Day) (up to 100%) designated as Interruptible Maximum number of Tranches per Supply Point in any Interruptible Period (Gas Year) is 9 (T1, T2 , …. , T9)

Capacity Reductions (Mod 0090) Ranking The Interruptible Tranches at a Supply Point are ranked in order of OIP, highest first Example 4 Interruptible Tranches (T1, T2, T3 & T4) All equal to 20% of SP SOQ Firm Capacity (F) equal to 20% 20% : 80% split of Firm and Interruptible Capacity

Capacity Reductions T4 T3 T2 T1 F Ranking T1 OIP = 0.05 p/kWh/Day Firm has OIP = 0.0 p/kWh/Day (SP SOQ) T4 T3 T2 T1 F

Capacity Reductions T1 T2 T3 T4 F 40% SOQ Reduction Tranches T1 & T2 extinguished T3 & T4 both equal 33.3% Firm Capacity equal 33.3% Moved from 20:80 to 33:67 Consistent with site capabilities? (SP SOQ) T1 T2 T3 T4 F

Capacity Reductions T1 T2 T3 T4 F 50% SOQ Reduction Tranches T1 & T2 extinguished If remainder of T3 is < MIA T3 becomes Firm Capacity (60%) If remainder of T3 is > MIA T3 remains at reduced level Firm Capacity equals 40% Significant impact on F:I split (SP SOQ) T1 T2 T3 T4 F

Reduction of inflated SOQ SOQ is 2 times actual 50% SOQ Reduction Tranche extinguished Site becomes 100% Firm (SP SOQ) T1 F

Mod 0215 Proposal Current Arrangements remain as default Ability for reduced Capacity to be taken from: Interruptible Tranche(s) (Tn) Firm Capacity Both Only on Agreement from User and DNO, else default applies

Advantages Greater flexibility for all Parties End Consumer / User Ability to retain Firm : Interruptible split that reflects actual capabilities Distribution Network Operator Ability to retain Interruptible Capacity in a Interruption Zone Future constraints / demand Satisfy overall Interruption Zone requirements

Disadvantages None

Simon Trivella – 22nd May 2008 Distribution Workstream UNC Modification 0215 - Enduring Arrangements for Supply Point Capacity decrease at an Interruptible Supply Point Simon Trivella – 22nd May 2008 Distribution Workstream