1. Potential Alternative Proposal – Interaction with Electricity Capacity Market
23 January 2018

2. Uniper’s Concerns
Under current Mod 0621 proposals, NGG plans to introduce full-capacity based charging by 2021
In the Electricity market, bidding in the T Auction will commence on 6 February
Capacity Market Delivery Year runs Oct – Sep (same as Gas Year)
As a result, parties are bidding in now, based on their best understanding of future gas (and electricity) charging arrangements – these are still far from clear!
If Shipper forecasts / estimates made now turn out to be incorrect, potential for significant exposures for transmission-connected gas-fired Generators
May lead to unexpected / unintended outcomes in the Capacity Market
Costs to consumers
Security of supply

3. Potential Solution
Delay the move to full-capacity based charging until 2022
Instead of current plan for 2021 implementation
Initial thought is apply to Entry & Exit, but open to idea of Exit only, given specific concerns
With a four year lead time, this will allow parties bidding now a greater degree of certainty over gas transportation costs that will be levied in 2021
Assumes FCC of 100% and capacity + commodity charging
By the time of the next Capacity Market T-4 Auction (Jan 2019?), it is anticipated that there will be more certainty over future arrangements
Charging review will be complete, likely to be an Ofgem decision
Will ensure parties bidding into the CM have more certainty over future arrangements, better able to forecast costs.
Our preference (to avoid further alternatives) is for NGG to amend its original proposal