Capacity trade and transfer mechanism and the next AMSEC auction Bob Hull Director, Transmission 9 May 2007

2 Introduction December TPCR package accepted by NGG in principle February AMSEC auctions delayed to May NGG advise Ofgem on 4 th May on concerns on introducing the capacity trade and transfer mechanisms

3 NGG concerns There has been insufficient time for all shippers to fully understand the new regime in advance of them participating in the AMSEC auction on 11 May NGG suggestion that new obligations to transfer and trade capacity would take effect from next year’s AMSEC auction

4 Ofgem response Ofgem does not propose to relieve NGG from its capacity trade and transfer obligations The capacity trade and transfer obligations form an integral part of the overall TPCR package which was in principle accepted by NGG in December 2006 In our view it is very important that potential bidders in Friday’s auction have access to all relevant information We therefore encourage NGG to hold a meeting with shippers in order to brief shippers on this issue and to make shippers aware of NGG’s concerns before Friday’s AMSEC auctions

5 Both letters have been published And can be found on the Ofgem website In the ‘Networks’ section, under ‘Transmission’, under ‘Gas transmission policy’ and then scroll down to find the NGG letter which has Ofgem’s response attached

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