Capacity Methodology Statements Transmission Workstream 5 th July 2007

Capacity Methodology Statements Constrained Period Unconstrained Entry Entry Capacity Transfer and Trade Methodology Statement Entry Capacity Substitution Methodology Statement Incremental Entry Capacity Release Methodology Statement Exit Exit Capacity Baseline Revision Methodology Statement Exit Capacity Release Methodology Statement (Interim & Enduring)

Methodology Statement – Timetable Statement Consultation start Consultation end Comment Capacity Transfer and Trade 2 nd May30 th May Under review Incremental Entry Capacity Release 16 th May5 th June With Ofgem Entry Capacity Substitution 18 th May15 th June See later slides Exit Capacity Release (Interim) 16 th May13 th June With Ofgem Exit Capacity Release (Enduring) TBC Linked to implementation of mod 116A Exit Capacity Baseline Revision TBC Applies to Enduring Exit regime

Consultation on the proposed Entry Capacity Substitution Methodology Statement Key concerns expressed:  Loss of capacity at the donor ASEP  Makes new projects expecting to use “spare” capacity less viable. Impact on Security of Supply.  Storage contracts are generally of short duration. User unable to signal long term requirements to prevent capacity being substituted away.  May lead to inefficient investment decision as Users bid to protect capacity normally obtained short-term.  Loss of Total Capacity  Generally a limit on exchange rates preferred.  Most respondent unable to specify a precise rate, but 1:1 and 1.5:1 suggested.

Consultation on the proposed Entry Capacity Substitution Methodology Statement Key concerns expressed:  Scope of Substitutions.  Capacity substitutions limited to within zone to reserve capacity for within zone transfers and trades.  Substitutions should be applied to incremental requests irrespective of whether the NPV test is passed.  Adverse impact on short-term markets.  Concern that proposals may have an adverse impact of availability of NTS exit capacity, particularly flexibility capacity.

Consultation on the proposed Entry Capacity Substitution Methodology Statement Key concerns expressed:  Comments on Detail of Proposed Process  Use of lowest revenue driver to identify recipient ASEP  Should the process aim to avoid “material” or “incremental” risk?  Exchanges should be assessed against “peak” flow analysis.  Definition of zones – storage ASEPs should be separate from non-storage.