EU Workgroup – Mod 500 Action 703 – confirm current capacity surrender process

Rolling Monthly Surrender process criteriaRMTnTSEC SurrenderCompared to CAM- CMP Surrender Min surrender priceMin surrender price is part of bid submission No min surrender price submitted Max number of offers210 Entitlement checkYes Re-allocation priorityMin surrender price; Surrender before Unsold Surrender timestamp; Unsold before Surrender Credit received by UserPrice of the bid the surrender was used to allocate Clearing price of auction Unused surrender quantity Returned to User Auction(s)Rolling Monthly onlyAnnual, Quarterly & RM 2 Note: a minimum surrender re-allocation quantity is not specified under the existing Surrender process

CAM-CMP surrender offers  No min reallocation quantity for CAM surrender offers  Surrender offers must be offered unconditionally to shippers via PRISMA  Consistent approach with other TSOs  In line with precedent under TnT Surrenders  No min surrender price for CAM surrender offers  Main purpose of economically ordering Surrenders for re- allocation is now redundant (CMP mandates timestamp)  Shippers still guaranteed to get at least reserve price (over last 12 months no shipper has submitted a min surrender price above the reserve price of the auction) 3

EU Workgroup – mod 500 Units – kWh/h & kWh/d

5 kWh/day and kWh/hour - Proposal  NG currently sells all capacity in kWh/d  IUK & BBL sell capacity in kWh/h. Irish sell capacity in kWh/d.  How is a bundled product marketed?  kWh/h or kWh/d (CAM allows both)  A pragmatic option would be for NG/Adjacent TSO to offer capacity in kWh/h at the Bacton IPs.  Maintain kWh/d at Moffat.  NG would convert Available Capacity (and corresponding price) from kWh/d to kWh/h for marketing on PRISMA. PRISMA uses kWh/h.

Example conversions  NG Obligation  NG available capacity: 240 kWh/day  Conversion: 240 kWh/d 10 kWh/h  Marketed on PRISMA as 10 kWh/h/runtime  Shipper perspective  For all auctions, except within day, the daily right will be the capacity purchased (in kWh/h) x 24.  For within day auctions, the daily right will be the capacity purchased (in kWh/h) x remaining hrs in the day. 6

Implication - Reducing Within Day Obligation kWh/h kWh/d 10  10 kWh/h offered for a whole day equates to an offer of 240 kWh/d.  10 kWh/h offered for the remaining half of a day equates to an offer of 120 kWh/d.  This effectively means the capacity offered, as measured in kWh/d, reduces as the day progresses hrs

Alternative – Increasing kWh/h obligation  To have a flat within day obligation (as measured in kWh/d) NG would have to ramp up the amount offered in kWh/h e.g. for 240 kWh/d obligation:  For 24hrs remaining then 10 kWh/h offered  For 6hrs remaining then 40 kWh/h offered  For 1 hr remaining then 240 kWh/h offered  However other TSO operating in kWh/h do not do this.  So assuming a matching technical capacity of 240 kWh/d on either side of the IP.  For the last hour of the day - 10 kWh/h would be offered bundled; the remaining 230 kWh/h would be unbundled 8

NG view – Bacton IPs only  Proposal - the daily obligation is converted into an hourly obligation by dividing by 24. The hourly obligation remains constant throughout the within day auctions  From a technical view point, a reducing within day obligation makes sense as it matches the physical capability of the pipeline  It would be a consistent approach with adjacent TSOs operating in kWh/h & avoids large amounts of unbundled capacity being offered  PRISMA has a within day functionality that TSOs can use; this assumes a flat hourly offering of capacity.  Overruns continue to be measured at a daily granularity. NG still has the ability to release non-obligated capacity 9