Richard Fairholme E.ON UK Draft Modification Proposal: Entry Capacity Transfers to Sold Out ASEPs Richard Fairholme E.ON UK

Overview Based on Modification Proposal 0133 – includes NG’s model for unsold Entry Capacity transfers. Resolves the outstanding Licence obligation to facilitate sold capacity transfers in 2007. Only for transfers to sold out ASEPs (i.e. to solve a problem). Transfers only with a defined window of once [or twice] yearly (to minimise the administrative burden). Transfers within one User account only (to minimise the implications for Gemini). A straightforward, transparent solution – can be implemented ahead of next Winter.

Sold Capacity Transfer Process (“SCTP”) User A: ASEP 1 (Donor) User A: ASEP 2 (Recipient) Existing Process Gemini Full Transfer Mechanism User B: ASEP 1 (Donor) User B: ASEP 2 (Recipient) NG NTS NEW Process

Timeline AMSEC Auction Sold Capacity Transfer Process (“SCTP”) AMTSEC Auction (“Unsold” Capacity) Additional August SCTP (Pre-Winter)?

Why Sold Capacity before Unsold Capacity? Allows Users to optimise their own portfolio before entering the market for unsold capacity. Will allow the transfer of capacity from any other ASEP, not just those that have unsold baseline, and thus the AMTSEC, if initiated before the Sold Capacity Transfer Process, may miss the most efficient ASEP (i.e. with highest Transfer Rate). Avoids reducing the available unsold capacity at the Donor ASEPs available for purchase in the within-year auctions – the AMTSEC will likely just result in further ASEPs becoming sold out. More efficient allocation of capacity by allowing greater scope for market participants to determine at which ASEPs they most want to hold capacity.

Timeline - SCTP AMSEC Auction Ends (January) [2 days] NG issues invite to participate in SCTP Users commits to pay fixed application fee User states desired Recipient ASEPs and desired (“Available”) Months [7-14 days] NG NTS publishes transfer date, transfer rates for each Available Recipient and Donor ASEP, and max. monthly Capacity that can be accommodated at Recipient ASEP During application window, Users submit applications (8am – 5pm) NG allocates Capacity in accordance with allocation rules (Draft Mod para. 15) NG notifies Users of Allocations – End of SCTP AMTSEC (“Unsold”) process begins - Recipient and Donor ASEPs published by NG