Workgroup meeting October 2014 Reform of gas allocations regime at Interconnection Points UNC Modification 0510 Workgroup meeting October 2014

Introduction The Modification Solution covers 3 areas: Allocation of gas by NG NTS to IP Users equal to their confirmed nominations NG NTS and the adjacent Transporter to allocate the difference between metered quantities and net aggregate confirmed nominations to an Operational Balancing Account (OBA) Provision for NG NTS to allocate Users in proportion to measured quantities in some circumstances: Breach of OBA Steering Tolerance Exceptional Event Where NG would otherwise take system management actions 2

Recent operational history at IPs In the last three years at IPs: No NTS Entry or Exit Constraints have occurred requiring firm capacity buy backs System management tools used at IPs 9 times (scaleback of interruptible capacity, locational trades, restricting system exit flexibility) Supply losses have occurred 5 times (all ending prior to 14:00)

Illustration of proposed arrangements (1) NG monitors gas flow vs flow profile (DFNs and OPNs) through Gas Days Allocate as nominate Agreed steering tolerance 1 2 3 4 DFN/OPN Flow profile Gas Days 4 Actual Gas flow

Proposed arrangements if the Steering Tolerance is breached (2) NG monitors gas flow vs flow profile (DFNs and OPNs) through Gas Days NG and adj TSO agree to extend the cumulative steering difference beyond tolerance for limited period to enable allocate as nominate on Day 3 Allocate as nominate Conversation with adjacent TSO Agreed steering tolerance 1 2 3 4 DFN/OPN Flow profile Gas Days 5 Actual Gas flow

Proposed arrangements if the Steering Tolerance is breached (3) NG monitors gas flow vs flow profile (DFNs and OPNs) through Gas Days Conversation with adjacent TSO Possible Proportional Allocation1 Gas Day 4 Agreed steering tolerance NG and adj TSO agree to extend the cumulative steering difference beyond tolerance for limited period-allocate as nominate Day 3 Measured flow and OBA balance (confirmed on Gas Day 5) show unexpected breach in steering tolerance 1 2 3 4 DFN/OPN Flow profile Gas Days 1Only if the TSOs cannot agree a further temporary extension of the steering tolerance 6 Actual Gas flow

Proportional allocation (net) forward flow should be 90 units entry based on noms Say measured flow = 80 units, then virtual reverse flow allocations remain whole and forward flow allocations are proportionate to the forward flow Confirmed Quantities: IP NG NTS network Adjacent TSO network Physical flow direction NTS entry Confirmed Quantities NTS Exit Confirmed Quantities A 20 units B 30 units C 10 units D 40 units 100 total E 2 units F 3 units G 4 units H 1 unit -10 total A 18 units B 27 units C 9 units D 36 units 90 total E 2 units F 3 units G 4 units H 1 unit -10 total 7