IECR Incremental Step Size Transmission Workstream, 5th November 2009

Background The Incremental Entry Capacity Release Methodology Statement: provides the rules by which National Grid will consider the release of incremental entry capacity. defines incremental step sizes which are offered at the QSEC auction. provides a methodology to determine the number of incremental steps and the step size. For a new ASEP the minimum step size is 15 GWh When the IECR was first drafted this value was considered sufficiently small for any anticipated new and increased supplies.

Potential Developments New ASEPs have been identified that may bid in the QSEC auction in March 2010. will have a low peak gas input (<15 GWh). hence may have to bid for significantly more capacity than they need. table below shows extent of potential over-bidding required. Maximum capacity required by operator Incremental capacity bid level needed under current IECR Level of excess capacity bought 5 GWh/day 15 GWh/day 200% 7.5 GWh/day 100% 20 GWh/day 30 GWh/day 50% 286 GWh/day 300 GWh/day 5%

National Grid is proposing to revise the IECR: Proposal National Grid is proposing to revise the IECR: such that the minimum incremental step size for new ASEPs is no lower than 5GWh (currently 15GWh) (paragraph 82). smaller increments are allowed for existing ASEPs. to improve the drafting of paragraph 82. does not change the meaning (except as above). to remove the references to P0 prices being set to zero (paragraph 84 and footnote). following implementation of GCM17.

Consultation Action Date Consultation started 13th October 2009 Consultation closes 10th November 2009 Replies to be sent to: box.capacityandcharging@uk.ngrid.com and cc to: andrew.fox@uk.ngrid.com IECR proposals submitted to Authority for approval 17th November 2009 Latest date for Ofgem decision 13th January 2010 (earlier if QSEC held at start of month) Notification of charges for QSEC auction (including step prices) 1st / 15th January 2010 (to be confirmed)