Simon Trivella –5th May 2011 Transmission Workgroup - Elexon NTS Exit (Flat) Capacity Deemed Applications: Are they needed / appropriate? Simon Trivella –5th May 2011 Transmission Workgroup - Elexon

Deemed Applications - Background Relates to NTS Exit (Flat) Capacity Automatic application for Enduring Annual NTS Exit (Flat) Capacity Principle contained within UNC TPD B 3.2.25 Triggered by a User incurring a NTS Exit (Flat) Capacity Overrun Charge Applies to highest Chargeable NTS Exit (Flat) Overrun amount Applies to Y+4 User Commitment rules would apply as usual? Result of Modification Proposal 0195AV Business Rule or legal text?

ExCR (June 2011) – paragraph 70 “In accordance with the UNC (TPD Section B3.2), where a User incurs an NTS Exit (Flat) Capacity Overrun charge they will be deemed to be applying for an increase in Enduring Annual NTS Exit (Flat) Capacity equal to the highest overrun quantity (recorded between 1st April year Y-1 and 31st March year Y). As overruns, and hence deemed applications, cannot occur until October 2012, at the earliest, this Statement does not, in this version, address how deemed applications will be progressed. Any rules regarding deemed applications will be clarified prior to the commencement of the Enduring Exit Period.”

Deemed Applications – Mod 0351 Raised to deal with interpretation of UNC Prevent Users having “logged up” deemed applications Some views that the Proposal was not required Different Interpretation View that it will not be an issue NG NTS withdrew (no published reason)

NTS Exit (Flat) Overrun Charge Relates to NTS Exit (Flat) Capacity and daily offtake Covered in UNC TPD B 3.13 Charge based on overrun amount multiplied by the highest of: 8 times the Capacity bid price for the day or the Applicable Daily Rate for the year ; or 1.1 times the highest offer price, forward price, or option exercise price paid by NTS in respect of any ECMA on the day; or 8 times the highest reserve price under any invitation for the Day or Gas Year in which the day falls Capacity does not “Ratchet” Same overrun amount can occur on multiple days

Justification for ‘deemed applications’? Allocates Capacity to a User that may not be required…? A trigger for NG NTS to carry out unnecessary investment …? Sterilises capacity on the NTS…? Any others…?

Next Steps Determine whether there is a requirement for ‘deemed applications’? What, if any, are the impacts of removing the concept? Systems? Commercial arrangements?

Simon Trivella –5th May 2011 Transmission Workgroup - Elexon NTS Exit (Flat) Capacity Deemed Applications: Are they needed / appropriate? Simon Trivella –5th May 2011 Transmission Workgroup - Elexon