GB Queue The GB Queue – Problems and possible solutions Mark Copley

GB Queue Purpose  To provide background to the GB Queue  To discuss the reasons for the queue  To assess the undesirable incentives that may exist  To question whether proposals on the table will address any of these incentives  To prompt discussion on what else needs to be done

GB Queue The Queue  NGET issued 13.2GW of offers  To over 165 projects  A series of sequential reinforcements are needed  Connection is not possible in some locations until 2016 and beyond

GB Queue The problem – At a high level  Unprecedented demand for network capacity in areas of the system with relatively little transmission.  Need for significant system upgrades before this generation can connect  Upgrades take time to receive planning consents and be completed  Offers were made on a first come first served basis which doesn’t reflect the viability of projects  Significant risk that efficient projects cannot connect  Risk that transmission licensees invest inefficiently.

GB Queue The causes – In more detail  Poor information for transmission licensees –No information from existing parties –A place in the queue is frequently a costless option  Inability for the most viable projects to identify themselves –Either by trading with existing parties, –Buying a less firm/ restricted right style access product, –Advancing their connection date if capacity becomes available

GB Queue The causes (2)  Inflexible market rules –Arrangements do not promote flexibility. Incentive not to reveal information as it’ll lead to a new offer with a post 2016 connection date.  An overly lenient approach to managing contracts? –Should NGET take a more hands-on role in managing contracts?  Increasing volumes of distributed generation? –Is there a discrepancy in treatment?

GB Queue Progress to date Potential ProblemPossible SolutionComments Poor information on which to invest CAP131 – Generic user commitment 6 years commitment from new connectees, 2 years from existing A place in the queue is a costless option CAP131 – A non-refundable holding fee Limited trading opportunitiesNGET developing proposalsSee Adam’s presentation Limited range of access products CAP143 – ITECIs there scope for others to be developed No opportunity to advance dates if capacity becomes free NGET consulting on optimisation shortly How do we ensure full industry involvement? Inflexible market rulesTO BE DEVELOPED?Work ongoing Contract managementNGET to take a more hands-on approach? Is this what users want? Probably a compliment to flexibility.

GB Queue Questions for discussion  Have we correctly characterised the problems?  Are any recent developments likely to address them?  Are there any other issues to address?  What role should Ofgem/ transmission licensees/ industry play in this process?

GB Queue Promoting choice and value for all gas and electricity customers