Entry Capacity transfers in the constrained period Transmission Workstream 5 th October 2006

Entry Capacity transfers in the constrained period  Based on allowing transfer of capacity between interacting ASEPs  Transfers take place within zones on a 1:1 basis  Capacity transfer allows ASEP capability to transfer  Monthly Capacity made available through a new auction  AMTSEC  Subject to a Nodal maxima  Industry concerns  Doesn’t go far enough  Sterilisation of Entry Capacity  Agreed to further explore the possibility of transfers across zones

Transfers between zones  How can this be achieved  Earlier workstream presentations suggested this could be done through;  Commercial exchange rates  Buyer covers the incremental cost of transferring capacity  Physical exchange rates  Exchange rate factors in likelihood of constraints  Is it possible to allow transfers between Zones that are adjacent and have ‘some’ physical interaction  ASEPs with no physical interaction  ASEPs with limited/variable physical interaction  ASEPs with a strong physical interaction

Physical exchange rates  Transfers between ASEPs with no physical interaction  Does not allow transfer of physical capability  Any transfer would be using existing headroom (if any) near recipient ASEP or creates incremental risk at recipient ASEP.  Therefore no exchange rate available

Physical exchange rates  Transfers between ASEPs with limited/varying physical interaction  Physical interaction only comes into play when capacity transfer reduces flows at the Donor ASEP  Physical interaction limited by configuration of Network  Multi junction  Compressors  Therefore possible for ASEPs in close proximity to have no / minimal transfer of capability as a result of a request to transfer capacity.

Capacity Exchange rate

Physical exchange rates  Certain ASEPs have a 1:1 exchange rate  Share common areas of pipeline and/or junctions  Highly interactive  If 1 unit of flow decreases at one ASEP then 1 unit of additional flow would be allowed at interacting ASEP  Basis of grouping ASEPs into zones

Zonal definition  Zonal Definition  ASEPS placed within the same zone if;  Share common areas of pipeline and multi junctions  Highly interactive  If 1 unit of flow decreases at one ASEP then 1 unit of additional flow would be allowed at interacting ASEP

Teesside Hatton Barrow Theddlethorpe Easington Carnforth Bishop Auckland Bacton Burton Point Alrewas Asselby Wisbech Peterborough Warrington Garton NTS Schematic – Easington Area Scunthorpe Hornsea

Multiple Transfer requests  Provision of certainty to Users of applicable exchange rates  Prior to participation in an auction to enable transfer of unsold capacity;  Uncertainty around demand for capacity in forthcoming auction  Uncertainty around whether Users would secure the capacity to enable the transfer to take place.  Exchange rate may change after the auction.

Multiple requests Baseline Capability Transfer request 10 Units Capacity Exchange rate 2:1

Multiple requests Baseline Capability Transfer request 10 Units Capacity Exchange rate 4:1

Multiple requests Baseline Capability Transfer request 10 Units Capacity Exchange rate 0

Alternative proposals  Unsold Capacity  Provide wide range of exchange rates  ‘Lock in’ Users to transfer request  Sold Capacity  First come first served

Way forward  Modification Proposal to go to October Mod Panel?  Does Proposal meet the relevant objectives?  Is the Proposal sufficiently developed?  Is it worthwhile proceeding with Proposal?