Wales & West Utilities Mod 0671 User Commitment 1st November 2018 Wales & West Utilities Mod 0671 User Commitment

Background The current process allows a User to request additional Firm Exit Capacity It also allows a User to reduce its Exit Capacity When an increase is request that would result in NTS having to release additional Incremental Obligated Exit Capacity then NTS can consider substitution (Exit Capacity Substitution and Revision Methodology Statement paragraph 32) Exit Capacity Substitution and Revision Methodology Statement will need amending post mod 0621 as paragraph 35 will need amending.

The problem There are two problems A User cannot suggest a flow exchange between two offtakes it has to request an increase and decrease separately, the process doesn’t really allow for Users who want to optimise for commercial or operational reasons. These may will be between two adjacent offtakes on the same leg of the NTS. User commitment remains at an offtake even if the capacity has moved to another offtake These mean that it is both risky and probably not commercially viable to try and move Firm Exit Capacity between offtakes The first problem could be solved by a new process The second problem could be solved by changes to the User Commitment regime for flow exchanges We are not proposing a fundamental review of User Commitment

New process The User would be able to propose a capacity exchange between two offtakes during July to September window NTS would analyze this to see if it was possible without additional NTS investment If so then any existing User Commitment would move with the capacity exchange

User commitment If Incremental Obligated Exit Capacity is provided then the User Commitment applies to the whole of the Firm Exit Capacity at that offtake. This can rapidly build up into a big User Commitment that means a User gets no benefit from offering Firm Exit Capacity reductions because they still have to pay the User Commitment. This potentially leads to inefficient hoarding of capacity meaning other Users cannot make use of it.

User commitment an example 2018 BASELINE: Application Year Offtake A B C D Total 2018 Required UC Capacity charged for Annual Y+1 18/19 10 40 Y+2 19/20 Y+3 20/21 Enduring Y+4 21/22 Y+5 22/23 Y+6 23/24 Y+7 24/25

User commitment an example 2019 REQUIREMENT TO MOVE FLOWS FROM B TO A from 2021 Application Year Offtake A B C D Total 2019 Required UC Capacity charged for Annual Y+1 19/20 10 40 Y+2 20/21 Y+3 21/22 11 9 Enduring Y+4 22/23 Y+5 23/24 Y+6 24/25 Y+7 25/26

User commitment an example 2020 and beyond REQUIREMENT TO MOVE FLOWS FROM A TO B and D from 2023, slight increase in C Application Year Offtake A B C D Total 2020 Required UC Capacity charged for Annual Y+1 20/21 10 40 Y+2 21/22 Y+3 22/23 11 9 10.1 40.1 Enduring Y+4 23/24 9.5 10.5 41.1 Y+5 24/25 Y+6 25/26 Y+7 26/27 2021 User Commitments exist at all offtakes and no benefit of releasing any capacity until 2026