Transfer & Trades Special Transmission Workstream

2 Process – Transfer Initiation 1: Mod implementation date [2] 2. Recipient ASEP selection process initiated Business days NGG provides Users with a list of sold out ASEPs “recipients” on a monthly basis, where there is head room above the existing obligated level First T&T auction will cover period Oct 2007 – March 2008 Total = [2] days

3 Process – Transfer Initiation 1: Mod implementation date [2] 3. Users register interest 2 Users register interest for specific sold out ASEPs in the Transfer and Trade Auction Total = [4] days Business days 2. Recipient ASEP selection process initiated

4 Process – Trade Initiation 1: Mod implementation date [2] 3. Users register interest 2 Total = [6] days Business days 2. Recipient ASEP selection process initiated 2 4: Trade initiation NGG invite Users to Trade sold capacity in the auction and NGG publish: Definitive list of recipient ASEPs Information on relevant zonal and nodal capabilities at each recipient ASEP For within zone, NGG will provide a merit order of preferred ASEPs Exchange rates between zones Available months

5 Process – Trade Registration 1: Mod implementation date [2] 3. Users register interest 2 Total = [8] days Business days 2. Recipient ASEP selection process initiated 2 4: Trade initiation 2 5: Trade registration Users register the maximum amount of capacity per ASEP that they want included in the auction process.

6 Process – Auction Invitation 1. Mod implementation date [2] 3. Users register interest 2 Total = [13] days Business days 2. Recipient ASEP selection process initiated 2 4: Trade initiation 6: Auction invitation 5 NGG invite Users to participate in the Trade and Transfer auction and NGG publish: Definitive list of recipient ASEPs List of non-recipients within zone List of non-recipients out of zone Exchange rates for within zone transfers Exchange rates for out of zone transfers [may be different rates for different amounts up to a zonal max] Available months Day of auction 2 5: Trade registration

7 Process – Trade and Transfer Auction 1: Mod implementation date [2] 3. Users register interest 2 Total = [15] days Business days 2. T&T Auction recipient ASEP selection process initiated 2 4: Trade initiation Auction held See next slide for auction details 2 6: Auction invitation 5: Trade registration

8 Auction details Users can place, amend and withdraw bids on the day of the auction from 08:00-17:00. Information required: Identity of user Recipient ASEP or non-recipient ASEP Available month Amount of entry capacity kWh/day Minimum amount of entry capacity kWh/day (must be more than minimum eligible amount) Bid price in p/kWh, which must not be less than reserve price at ASEP Maximum 3 bids per User at anyone time for each ASEP and available month

9 Process – Allocations 1: Mod implementation date 2 3. Users register interest 2 Total = [30] days Business days 2. Recipient ASEP selection process initiated 2 4: Trade initiation Auction held 2 6: Auction invitation 5: Trade registration 8. Allocations provided to users [15] NGG provide following information to Users that have been allocated capacity: Available month ASEP Capacity amount (kWh/day) Price paid (p/kWh NGG provide following information to Users that have had traded capacity allocated: Available month ASEP Reduced amount Average price paid at ASEP (p/kWh) See next slide for allocation process

10 Allocation Process – Within Zone 1.All bids are ranked in terms of price irrespective of ASEP. 2.Bid price is to 4 decimal places 3.Where there are equal priced bids the earliest submitted valid bid will be processed first 4.All uncommitted zonal capability is allocated in descending price order. 5.Limitations on satisfying a bid are: Insufficient zonal capability Nodal maximum at recipient reached Obligated level at non-recipient Less than user specified minimum amount available 6.Obligations at ASEPs reduced according to ASEP capacity transferred via a merit order

11 Allocation Process – Out of Zone 1.For each zone a bid stack is created. 2.All recipient bids are ranked in terms of price multiplied by exchange rate for each zone, this will be compared with bids directly at non-recipients within zone. 3.Bid price is to 4 decimal places 4.Where there are equal valued bids the earliest submitted valid bid will be processed first 5.All uncommitted zonal capability is allocated in descending value order, where more than one ASEP is in the same zone, the Obligations at each ASEP are reduced according to capacity transferred via a merit order 6.Limitations on satisfying a bid are: Insufficient zonal capability Nodal maximum at recipient reached Obligated level at non-recipient reached Less than user specified minimum amount available

12 Process – Publication of results 1: Mod implementation date [2] 3. Users register interest 2 Total = [32] days Business days 2. Recipient ASEP selection process initiated 2 4: Trade initiation Auction held 2 6: Auction invitation 5: Trade registration 8. Allocations provided to users [15] 9. Publication of results See next slide for publication details 2

13 Next Steps  Send to JO6/7  Ofgem grant urgency9/7  Issue consultation10/7  Closed for responses20/7  Final Mod report23/7  Mod Panel31/7  Ofgem decision6/8  Implementation7/8  Produce work plan to develop enduring solution

Proposed Interruptible Arrangements for this Winter

15 Introduction  National Grid NTS believes that as part of the current changes being proposed to the Entry Regime for this winter, we should also focus on providing additional flexibility in the Entry interruption arrangements.  We believe that this would support and protect long term User commitments whilst maximising what can be delivered for this winter.  Based on feedback received at the last Transmission Workstream we have limited our proposal to the existing Daily Interruption process.

16 Current Interruptible Capacity Product - (DISEC)  Daily Interruptible capacity is offered on the day before the gas day, the rationale being that it is a tool designed to overcome potential hoarding of Entry Capacity.  Quantity Fixed by Algorithm Use it or Lose it calculation  Made available via a Day ahead auction  Pay as Bid  Allocate highest bid first  Discounted Reserve Price (Zero)  National Grid NTS can scale back at No cost

17 Proposal  Will expand on the current DISEC process  National Grid NTS will mirror the current UNC terms for the discretionary release of non obligated capacity i.e. have the right to release any additional interruptible capacity (in addition to that released through UIOLI) that it may choose to make available for that day.  The additional Interruptible Capacity be released at those ASEPs that have Sold out or where insufficient capacity is available.  The existing UIOLI calculation will be retained as a minimum level of release.  The Reserve Price will be zero.  Will consider process for restoration of Capacity rights post interruption

18 Proposal  Currently the definition of ‘Available Interruptible Capacity’ at an ASEP in UNC B is: “an amount of NTS Entry Capacity equal to the daily average unutilised firm capacity” National Grid NTS proposes that this be amended to include: “& any additional interruptible NTS Entry Capacity that National Grid NTS may in its sole discretion choose to make available for the day (if any)”