0291 – NTS Licence Special Condition 27 – Balancing Arrangements Transmission Workstream 6th May 2010

Contents Background Introduction to Review Group 0291 Next Steps

Background to Review Group 0291 History Development of a Linepack product has been muted previously as a means of valuing the flexibility within the pipeline Current SMP Buy & Sell fixed differentials originally implemented in 2001 as a ‘short term’ solution in lieu of an ‘enduring’ solution NTS Licence Standard Condition 27 Introduced during recent SO incentive consultation to direct National Grid to develop / update the above

Review Group 0291 National Grid does not know the answer to the Linepack & Cashout ‘challenge’ Review Group will provide a combined forum for the industry to; Develop possible solutions Analyse options, and Recommend approach in response to Licence

Next Steps Review Group to run May – September 2010 Cashout Linepack All industry parties encouraged to join (see upcoming JO invite ) Final Report to UNC Panel (Sept) Cashout Modification Proposals (Oct) Consultation (Nov) Panel Consideration (Dec) Ofgem Decision (Jan) Implementation – 1st April 2011 Linepack Develop potential product 1st April 2011 Implementation (if directed by Ofgem) 1st October 2011