1. Entry Capacity Transfers - Constrained Period
Transmission Workstream, 7 Dec 06

2. Update UNC Modification Proposals 0118 and 0118a withdrawn
0118 did not allow transfers between zones
0118a sought to allow transfers between zones, but required further development
The following outlines a potential process by which inter-zonal transfers could be facilitated……

3. Revised Transfers Process
Step 1. Trigger for facilitating transfers
After AMSEC, ASEPs classified for each month in following Capacity Year as one of following:
Recipient Nodes (ReN)= Sold out ASEP*
Donor Nodes (DoN) = Unsold out ASEP*
If one or more ReN for any month, hold AMTSEC auction
Process based on where there is a need for additional capacity, with AMSEC process used as last opportunity for shippers to obtain baseline
*We could include a tolerance on definition of sold out/unsold out – but propose zero to simplify exchange rate determination process.

4. Revised Transfers Process
Step 2. Pre-registration information
User must register to participate in AMTSEC auction
Pay application fee to cover costs
State minimum and maximum amount of capacity desire at Recipient Node for relevant month
Exchange rates only provided to Users who have pre-registered for a Recipient Node
Differs from Ofgem proposal in that User does not need to indicate the donor node
Application applies to participate in any AMTSEC auction round

5. Revised Transfers Process
Step 3. Determine Exchange Rates, nodal maxima and release amount for auction round
To minimise risk of increased buy back costs and set a single exchange rate for each Recipient:Donor Node combination, National Grid NTS will determine
nodal maxima for each recipient node
amount of unsold capacity from each donor node to be made available in each auction round
Exchange rates valid if all unsold amounts released in that round allocated (within a tolerance)
Principles to be contained within Capacity Transfers Methodology Statement

6. Revised Transfers Process
Step 3 cnt. Determine Exchange Rates, nodal maxima and release amount for auction round.
x:1 – means x units at DoN equivalent to 1 unit at a ReN
Total Unsold
Unsold in Tranche
ReN1
ReN2
DoN1 20 10
1:1
DoN2 16 8
3:1
2:1
DoN3 30 15
0:1 ;
DoN20 40
Maxima (GWh)

7. Revised Transfers Process
Step 4. Publish AMTSEC Invitation – round 1
Only Users that have pre-registered their interest will receive the following information (& only for those Recipient Nodes for which they have registered an additional Capacity requirement)
For each ReN for each month, National Grid NTS will publish:
Single exchange rate for each DoN
Reserve Prices (set at the same level as ReN AMSEC level)
Nodal Maxima (to be updated after each auction round)
For each DoN for each month, publish both:
Total amount of unsold capacity
Amount of unsold capacity available within that auction round
Confirm Gas Day on which first auction round will be undertaken

8. Revised Transfers Process
Step 5. AMTSEC auction
Shippers able to place bids (volume, price) at ReNs for relevant months
Bids are binding

9. Revised Transfers Process
Step 6. Allocation Mechanism
Translate all bids
For each bid and each ReN:DoN combination, determine the price per Exchange Rate value (“Unit Price”)
Rank all bids based on Unit Price to form one bid stack
Allocate each bid in turn subject to
Transferred capacity within tolerance [10%] of amount available at Donor Node in that round
Amount allocated at Recipient Node does not exceed the Nodal Maxima at that node in that round
Where two potential donor nodes to satisfy bid at recipient node can be satisfied by two or more donor nodes (i.e they have the same unit price), capacity will be transferred from the donor node with lowest Reserve Price first

10. Example – AMTSEC AUCTION
Exchanges Rates
Round 1
Total Unsold
Unsold available in Round 1
ReN1 (B)
ReN2 (C)
DoN1 (A)
200 50
2:1
3:1
Nodal Maxima (GWh) for round 1
Allocation Process
Bids
Translated to A
Capacity Transferred from Donor Node
Capacity Allocation at Recipient Node
V (units)
P (p/unit)
£Rev B
100 50
200 25 C
150 60 90
450 20
Volume must not be greater than a shipper has pre-registered
Bids translated back to recipient node – allocated if total does not exceed ReN maxima
Bids translated to each Donor Node based on exchange rate
Ranked based on Unit Price
Translated bids to be capped at maximum amount made available at Donor Node in round 1

11. Revised Transfers Process
Step 7. Publish results
Publish results of each AMTSEC auction round within [2] Gas Days
Any transfers deemed to have met obligation to release at Donor Nodes
Step 8. Further auction rounds
If unsold capacity remains, capacity is still required at recipient ASEPs & the nodal maxima have not been reached, steps 3 to 7 are repeated
Next auction round held [2 weeks] after closure of previous auction round to allow calculation of new exchange rates