1. Baseline Re-consultation
17 August 2007

2. Recap of Ofgem’s modelling request
2008/9 Network
Central case forecast of 1 in 20 peak
Based on three TBE scenarios (Auctions +, Transit UK and Global LNG) using supply substitution
Using least favourable node as supply balance
Modelling work produced three sets of data on “baseflows” (which reflected the initial supply scenario)
Also produced “free increments” (reflecting network capability at individual nodes)

3. Results of modelling exercise

4. Network Analysis – Global LNG, Easington
Easington ASEP maximised (local storage reduced from starting point), balanced at Milford Haven

5. Network Analysis – Transit UK, St. Fergus
St. Fergus ASEP maximised (storage reduced from starting point), balanced at Milford Haven

6. Network Analysis – Auctions+, Teesside
Teesside ASEP maximised (Aldbrough reduced), balanced at Milford Haven

7. Ofgem’s Baseline Methodology (1)
Start with the ‘baseflow’ identified by network analysis under each supply scenario
Adjust upwards to account for capacity already sold (if that is above ‘baseflow’)
Then add on 100% of the proportion of the zonal ‘free-increment’, which is
calculated using the maximum ‘free-increment’ over all nodes in the relevant zone;
but apportioned based on 2005 TYS forecast flows for 2008/9

8. Ofgem’s Baseline Methodology (2)
Take the average of the resultant figures over the three supply scenarios
Some final adjustments made to figures
This results in baselines which add up in total (over all nodes) to 8814 GWh/d
This includes the incremental obligated entry capacity already signalled at Barton Stacey, Garton, MH and IoG, but not any incremental obligated signalled during Sept 2006 QSEC (approx 1300 GWh/d additional in total over formula period)

9. Ofgem’s Final Proposals
Final Proposals baselines commensurate with £18m buyback target

10. Split the unallocated entry capacity on:
Ofgem looked at three different methods for apportioning the unallocated entry capacity
Split the unallocated entry capacity on:
10YS forecast flows for 2008/9
‘Baseflow’ adjusted for any extra sold capacity
2002 – 2007 TPCR baseline figures
Aggregate figure largely unchanged if use other methods, but the split between the entry points is different
If use the three different approaches …

11. This leads to …

12. How do you allocate the 8814 GWh/d? (1)
Start with current level of capacity obligations (take maximum booked for April 2008 onwards from August 2007 report on website) (8210 GWh/d)
Take off the Incremental Obligated (IO) which has been sold in Sept 2006 QSEC auction (1310 GWh/d)
This leads to 6900 GWh/d having been allocated
If previously sold out at an ASEP, add back 20% previously reserved for S-T (based on old TPCR baseline)
This affects Cheshire, Easington, Hornsea and Isle of Grain (359 GWh/d)
This leads to 7259 GWh/d which would be allocated
… this then leaves 1554 GWh/d of entry capacity unallocated

13. How do you allocate the 1554 GWh/d
Believe need to take account of physical capability
New baselines should be constrained to not exceed previous obligations
Needs to be broadly commensurate with the buy-back target

14. Zonal Summary

15. Discussion How do you allocate the unallocated capacity?
General discussion today
Written responses by 31 August
Further discussion on 12 September

16. NTS Entry Zones