1. Review Group 0166
20/09/2007

2. What does Offtake Reform need to achieve?
User Commitment
Ability for Users (Shippers and DN’s) and developers to both signal and commit to their long term requirements.
Associated financial commitment underpins investments specific to a new/modified connection
Enables :
Economic and Efficient NTS investment, where appropriate signal received.
Fair and open system access
Ability for all Users to signal their requirements in a consistent manner.

3. Key Problems issues with User Commitment
Current
Individual ARCA arrangements
DN signals are not currently backed financially and can be changed closer to actual Gas Flow and could have originally generated NTS investment.
No direct mechanism for NTS shippers to signal their long term requirements
0116V
Met NTS User Commitment requirements.

4. What Does Offtake Reform need to achieve ?
Interruption
Universal Firm product supported by buyback mechanisms (i.e. Forwards and Options and prompt) i.e. interruption based on system requirements.
Some short-term interruptible should be made available
Compliance with EU Gas Regulations

5. Key Problems issues with Interruption
Current
Minimal Interruption over last 5 years
Recognise that interruption could provide constraint management benefit on days of system stress
Currently NTS believe that apart from SW quadrant all interruptible could be accommodated as firm.
Subject to supply assumptions
Sites have been “commercially-interrupting” based on gas price
0116V
Met Universal Firm requirement with the ability to buy back.

6. What does Offtake Reform need to achieve?
Flexibility
Design a product and mechanisms to accommodate within day flow rate variations and appropriate tools to manage such variations.
Enable NTS to plan the operation of the Network and for all parties to have certainty regarding their ability to utilise such variations.
Maintain a safe and efficient system
DN’s meet their Licence Obligations and 1:20 safety case
unfettered offtake flow rate variation would require a bigger system, and/or
alternative arrangements to limit offtake flow variations, or
certainty that offtake flow rate variations would not exceed capability

7. Key Problems issues with Flexibility
Current
Limited inherent Flexibility within the NTS
Different offtakes require different levels of flexibility
Offtake variations create variations in linepack levels in the locality
The system cannot currently satisfy all possible offtake flow rate variations without substantial (and potentially uneconomic) investment
NTS designed and built as a “bulk transmission” system and limited ability to absorb “within day” and “end of day” imbalances
Reflecting offshore design and requirements
Reflecting optimum usage of compression

8. Key Problems issues with Flexibility
0116V
Limited amount of Flex available – no ability for NTS to invest (simple vs complex)
Product definition based on a constant end of day flow rate and a assessment applying to all categories of User – is this the right approach ??
Analysis being undertaken by NTS. Present results in one of October Review Groups.