1. Capacity Methodology Statements
Transmission Workstream
7th June 2007

2. 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)

3. Methodology Statement – Timetable
Consultation start
Consultation end
Comment
Capacity Transfer and Trade
2nd May
30th May
Incremental Entry Capacity Release
16th May
5th June
Entry Capacity Substitution
18th May
15th June
See later slides
Exit Capacity Release
(Interim)
13th June
(Enduring)
TBC
Linked to implementation of mod 116A
Exit Capacity Baseline
Revision
Applies to Enduring Exit regime

4. Entry Capacity Substitution
Transmission Workstream
7th June 2007

5. Proposed new licence condition
Background
Proposed new licence condition
Aims to minimise investment needed to satisfy incremental demand for NTS Entry Capacity
Process initiated by User capacity requests in the QSEC auction.

6. Users bid in QSEC auctions
Process
Users bid in QSEC auctions
NG assesses bids in accordance with IECR methodology.
Bids pass economic test
Incremental capacity released (subject to lead time)
Network Analysis of incremental capacity identifies system unable to satisfy requests without reinforcement. Opportunities for capacity substitution investigated.
Consider within zone substitutions first
Consider recipient ASEP with lowest Revenue Driver first
Consider nearest (by pipeline length) donor ASEP first

7. Conditions for Substitutions
Satisfactory User commitment through QSEC auctions
No incremental change in buy back risk.
No compromise of existing commitments (e.g. offtake pressures).
Where, after exhausting all substitutions, a residual requirement for reinforcement remains and this reinforcement is uneconomic due to economies of size, then some substitutions may be rejected.
An upper limit on the exchange rate may apply (subject to consultation) to avoid excessive loss of capacity at donor ASEPs.

8. Key Issues
Users have no involvement in the process after submitting QSEC auction bids.
Substitutions have no impact on NG’s obligation to make capacity available to the User.
Unsold baseline capacity (in the QSEC auction) at any ASEP may be substituted to another ASEP and will not be available in subsequent auctions.
Capacity NOT available in the QSEC auction will NOT be substituted to another ASEP.

9. Theoretical Example – St. Fergus

10. Theoretical Example: Effects of Entry Capacity Substitution

11. Interim Exit Capacity Release
Transmission Workstream
7th June 2007

12. Previous version updated, no major changes.
Background
Previous version updated, no major changes.
Duration extended for delay to implementation of Enduring Exit regime.
Initial Volume Allocations (NTS/LDZ offtakes) updated based on latest OCS.
Flex capacity values removed because incremental (flex) capacity is not released.
Exit Baseline Revision (to account for effects of substitution) does not apply to interim / transitional period.