1. Modification 500 slides for Workgroup
Malcolm Montgomery
Matthew Hatch

2. Session 1 – Primary Processes
Auction Overview
Process Overview
Joint Booking Platform
Available Firm Capacity
Ascending Clock Auctions
Uniform Price Auctions

3. Content – Further Sessions
Secondary Processes
Supporting Processes
CMP Surrender
CMP LT UIOLI
Transfers
Scale backs
Buy backs
Unbundling
Voluntary Bundling
Tariffs & Charging Methodology
Transitional Arrangements
Contingency
User PRISMA Registration
Credit / Invoice / Over-run / Neutrality / Termination / Voluntary Discontinuance
PRISMA

4. CAM/CMP high level auction overview
LT UIOLI, Oversubscription,
+Prices
TSO informed of bundled/unbundled split NG
Compile
auction data
Post auction
processing
NG &
Shipper
inventory
GEMINI
Surrender
cut-off
Calculate
bundle
Auction
Invite(s)
Run
Auctions
Publish
results
PRISMA
CAM calendar
Surrenders
On going
View
auction
Submit
bids
Receive
outcomes
View
info
Receive
invoices
SHIPPER
TSO informed of bundled/unbundled split
Other TSO
Compile
auction data
TO BE DEFINED BY OTHER TSO

5. Interconnector Capacity & Auctions
Annual Yearly Interconnector Capacity Auction
Annual Quarterly Interconnector Capacity Auction
Rolling Monthly Interconnector Capacity Auction
Rolling Day Ahead Interconnector Capacity Auction
Interruptible Rolling Day Ahead Interconnector Capacity Auction
Within Day Interconnector Capacity Auction
Annual NTS Interconnector Capacity
Quarterly NTS Interconnector Capacity
Monthly NTS Interconnector Capacity
Daily NTS Interconnector Capacity
Interruptible NTS Interconnector Capacity
Mod General
10) List of auctions and capacity

6. CAM Standard capacity products - auction calendar
Frequency
Product
Capacity Commencing
Start of the auction
Invitation publication
Allocation
Auction algorithm
Annual Yearly
annually
Firm Y1 to Y15 annual strips
1st October
1st Monday of March
1 month before auction starts
next business day
(after the closing bid window)
Ascending clock
Annual Quarterly
Firm Q1 to Q4
1st October 1st January 1st April 1st of July
1st Monday of June
2 weeks before auction starts
Rolling
Monthly
monthly
Firm monthly tranche
1st day of each month
3rd Monday of the month
1 week before auction starts
Day ahead
daily
Firm & Interruptible D+1
Start of the gas day
Firm 15:30*
Interrupt’ [16:30]
At the start of the auction
30 minutes after the bidding round closes
Uniform price
Within Day
hourly
Firm D
Hour bar +3.5 from end of bid window
D-1 [18:00]
After closure of the day ahead auction
* All times are GMT for winter and BST for summer

7. PRISMA
CAM Regulation requires that TSOs offer capacity via a joint web based booking platform.
NG launched open letter consultation on PRISMA.
NG is now signed up as a shareholder of PRISMA along with other TSOs in (NW) Europe.
Users will need to complete Registration on PRISMA before using PRISMA functionalities.
Relevant User data will be exchanged between NGG and PRISMA for the purposes of completing processes within modification 500.

8. NG / PRISMA Processes Overview
User Registration
Credit Limit
Grid Point Data Maintenance
Surrender Request
Secondary Transactions
Run Auction
User Registration
Credit Sanction
Add Location
Surrender Process
Set up Auction
Process Results
Transfers
NG Processes
Assignment
Scalebacks
Oversubscription
Tariffs
Recall
Buybacks
LT UIOLI
Invoicing

9. Available Firm Capacity
Unsold Technical
NG Available Capacity
Adjacent TSO
Available Capacity
Surrender
PRISMA
LT UIOLI
Over-subscription
Available Bundled
General
12)
NG Technical Capacity = Licence Baseline
Available Unbundled

10. Technical Capacity Set Aside for shorter term auctions
Relevant for Annual Yearly Interconnector Auctions only
Y+6 to Y+15
Y+1 to Y+5
- 20% of Technical Capacity
- 10% of Technical Capacity
In the event that technical capacity has sold out to more than 80/90% for a relevant gas year then all remaining unsold technical capacity will be set aside for shorter term auctions.
General
13)

11. Uneven sold profile over Year Y
Technical Capacity
(80/90% level)
Unsold
‘a’
Unsold ‘b’
Unsold ‘c’
Unsold ‘d’
Sold Q2
Sold Q3
Sold Q1
Sold Q4
General
14)
Technical Capacity made available for the year above in an Annual Yearly Auction = ‘b’

12. CAM Cross border bundling - unsold capacity
Bundled Capacity
Consists of corresponding entry and exit capacity on both sides of the IP
Cross border bundling of unsold capacity has to be given priority
Unbundled Capacity
Where more available firm capacity exists on one side of an IP, this can be offered as an unbundled product up to 1 year ahead except for matching up to the sold level NG
Available Capacity
Adjacent TSO(s)
Unbundled
Available Capacity
Available to ‘bundle’
Where more available firm capacity exists on UK side – NGG may offer excess as unbundled product

13. Restriction in sale of unbundled capacity (>Y+1)

14. Available Interruptible Capacity
In line with existing UNC provisions.
Entry Release (as per UNC Section B ):
Exit Release (as per UNC Section B 3.6.2):
Reverse Flow
An amount equal to the forward flow technical capacity.

15. Ascending Clock Auctions

16. Ascending Clock Auctions – overview
Allow Users to place volume bids for capacity in bidding rounds at pre-defined prices (starting with the reserve price)
The price increases in each round (by the Large Price Step) until the demand for capacity has reduced such that the bids can be allocated in full
But if a First Time Undersell happens (when aggregate demand is first less than the offered capacity)
a further bidding round will be undertaken with the price equal to the previous round’s price plus the Small Price Step
Users can submit more than 1 bid per round
Total volume of bids in any round from the same User must be less than or equal to the capacity offered in the auction
Bids can be modified or withdrawn up to the close of the relevant bid window
Once the bidding round closes, no changes can be made
Need to explain how the First Time Undersell works -

17. Auction Invitation

18. Ascending Clock Bid windows

19. Ascending Clock Auctions – Algorithm (1-to-1)
1st round of auction
Capacity offered at
Reserve price (P0)
Are aggregate bids <=
Offered capacity?
Auction Closes
Allocate in full at the Reserve price
YES NO
2nd and subsequent
rounds
Capacity offered at
Previous Round’s price +
Large Price Step
Are aggregate bids =
Offered capacity?
Auction Closes
Allocate in full at the Offered price
(Previous Round’s price + LPS)
YES NO
Need to explain how the First Time Undersell works -
Are aggregate bids <
Offered capacity?
First Time Undersell
YES NO

20. Ascending Clock Auctions – First Time Undersell (1-to-1)
(FTU)
Capacity offered at
Previous completed round
Price + Small Price Step
Are aggregate bids <=
Offered capacity?
Auction Closes
Allocate in full at the Offered price
(Previous completed round’s price +
SPS)
YES NO
2nd and subsequent
rounds
Capacity offered at
Previous FTU price +
Small Price Step
Are aggregate bids <=
Offered capacity?
Auction Closes
Allocate in full at the Offered price
(Previous FTU price + SPS)
YES NO
Need to explain how the First Time Undersell works -
Iterate round until Offered price is equal to price which led to FTU occurring - SPS
Auction will then close at this point, with capacity allocated at price which led to FTU occuring

21. Auction in Progress example screen - 1

22. Auction In Progress example screen - 2

23. Ascending Clock example (1)
The available quantity is 200.
Applicable Price for round 1 is equal to the reserve price
Shipper bids are as follows
The bid demanded in round 1 is 240
This is greater than the available, so the auction progresses to the next round and the price increments by 1 large price step.
Shipper
Qty A
100 B 90 C 50

24. Ascending Clock example (2)
Applicable Price for round 2 is equal to the reserve price + 1 Large Price Step.
Shipper bids are as follows.
Shipper
Rd 1
Rd 2 A
100 90 B 85 C 50 45
Note: Rd 2 quantities must be less than or equal to the Rd 1 quantity
The bid demanded in round 2 is 220
This is greater than the available, so the auction progresses to the next round and the price increments by 1 large price step.

25. Ascending Clock example (3)
Applicable Price for round 3 is equal to the reserve price + 2 Large Price Step.
Shipper bids are as follows
Shipper
Rd 1
Rd 2
Rd 3 A
100 90 80 B 85 75 C 50 45 35
Note: Rd 3 quantities must be less than or equal to the Rd 2 quantity
The bid demanded in round 3 is 190
This is less than the available for the first time
so the auction progresses to the next round and the price decrements by 1 large price step and increments by 1 small price step.

26. Ascending Clock example (4)
Applicable Price for round 4 is equal to the reserve price + 1 Large Price Step + 1 small price step.
Shipper bids are as follows
Shipper
Rd 1
Rd 2
Rd 3
Rd 4 A
100 90 80 86 B 85 75 81 C 50 45 35 41
Note: Rd 4 quantities must be between Rd 2 and Rd 3 quantities
The bid demanded in round 4 is 208
This is greater than the available so the auction progresses to the next round by 1 small price step.

27. Ascending Clock example (5)
Applicable Price for round 5 is equal to the reserve price + 1 Large Price Step + 2 small price steps.
Shipper bids are as follows
Shipper
Rd 1
Rd 2
Rd 3
Rd 4
Rd 5 A
100 90 80 86 83 B 85 75 81 77 C 50 45 35 41 36
Note: Rd 5 quantities must be between Rd 3 and Rd 4 quantities.
The bid demanded in round 5 is 196
This is less than the available, but not for the first time, so the bids for round 5 are allocated in full.
4 units of capacity remain unsold.

28. Ascending Clock Auctions – Prices paid
The User pays the cleared price for the capacity as determined through the auction algorithm
Set at the reserve price plus the relevant auction premium (multiples of the LPS and/or SPS as relevant)
If the auction is for unbundled capacity, National Grid NTS invoices the User for the cleared price obtained in the auction
If the auction is for bundled capacity, National Grid NTS invoices the User for its share of the cleared price obtained in the auction
[Determined by the reserve price plus the relevant multiples of the LPS/SPS]
Need to explain how the First Time Undersell works -

29. Uniform Price Auctions

30. Uniform Price Auctions – overview
There is a single bidding round in which Users bid a price as well as a quantity
Users can submit up to 10 bids
Multiple bids from the same User are treated independently
Total volume of bids from the same User must be less than or equal to the capacity offered in the auction
Bids can be modified or withdrawn up to the close of the relevant bid window
Once the bidding round closes, no changes can be made
Only Daily or Within-Daily Capacity is offered
Need to explain how the First Time Undersell works -

31. Daily Auction Bid Windows

32. Uniform Price Auction Invitation (unbundled)

33. Uniform Price Auction Invitation (bundled)

34. Uniform Price Auctions – Algorithm (1-to-1)
Capacity offered
Users bid quantity and price
Bids are ranked in price
order, highest first
Are aggregate bids <=
Offered capacity?
Auction Closes
Allocate in full
Users pay clearing price
YES
All users pay the clearing price, set as follows:
if demand is less than offered capacity, the clearing price is the reserve price or
if demand is above offered capacity, the clearing price is the price of the lowest successful bid NO
Allocate
capacity to
highest priced
bids first
up to
available capacity
Are all the bids allocated
in full?
Auction Closes
Allocate in full
Users pay clearing price
YES
Need to explain how the First Time Undersell works - NO
Allocate
remaining available
capacity
pro-rated to
remaining bids*
Auction Closes
Some users have been
allocated in full, some
pro-rated
Users pay clearing price
* Providing the pro-rated amount is above the Users’ minimum quantity submitted

35. Uniform Price Example (1)
Available quantity for auction is 400.
3 Shippers enter 6 bids.
At the end of the auction then all bids are sorted by price.
Bids at the same price create a bid price group
Shipper
Qty
Min Qty
Price A
100 4 B 50 20 70 1 3 C 80 5 2
150 10

36. Uniform Price example (2)
Shipper
Qty
Min Qty
Price
Provisional allocation
Remaining capacity
Group < supply? A
100 4 50
400  B 20 70 1 3
250 C 80 5 2
150
180 x 10
n/a
Pro-rate 3rd bid group to reduce bid group quantity (230) down to the remaining available capacity for that group (180)

37. Uniform Price example (3)
So after pro-ration the bid for 80 is reduced to 62.6 and the bid for 150 is reduced to 118.4
Shipper
Qty
Min Qty
Price
Provisional allocation
Min < pro-rated qty? A
100 4 50  B 20 70 1 3 C 80 5 2
62.6
118.4
150 10
n/a
If pro-rated bids > min requested quantity then allocation is complete.

38. Uniform Price example (4)
If pro-rated bids < min requested quantity then bid is ‘killed’.
Shipper
Qty
Min Qty
Price
Provisional allocation
Min < pro-rated qty? A
100 4 50  B 20 70 1 3 C 80 5 2
62.6
118.4 x
150
n/a

39. Uniform Price example (5)
Bid stack is re-evaluated with any ‘killed’ bid(s) reduced to zero.
Shipper
Qty
Min Qty
Price
Provisional allocation
Remaining capacity
Group < supply?
Min < pro-rated qty?
Final allocation A
100 4 50
400  B 20 70 1 3
250 C 80 5 2
180 x
150

40. Uniform Price Auctions – Prices paid
The User pays the cleared price for the capacity as determined through the auction algorithm
If the auction is for unbundled capacity, National Grid NTS invoices the User for the cleared price obtained in the auction
If the auction is for bundled capacity, National Grid NTS invoices the User for its share of the cleared price obtained in the auction
Determined from the National Grid NTS applicable reserve price plus a [50%] share of the auction premium
Need to explain how the First Time Undersell works -

41. Post Auction

42. Post Auction Reporting
Aggregate auction results will be published on the Joint Booking Platform.
Individual auction results will be sent directly from the Joint Booking Platform to Users.
In addition to this:
Auction information will be viewable on Gemini;
Net entitlements will be updated and viewable on Gemini.

43. View Aggregate Uniform Price Details - 1

44. View Aggregate Uniform Price Details - 2

45. Additional Info in case of competition - 1

46. Additional Info in case of competition - 2

47. View Aggregate Ascending Clock Details - 1

48. View Aggregate Ascending Clock Details - 2

49. Individual Auction Result Info from PRISMA
TSO
Auction ID
Deal ID
Product
Network Point Name
Network Point ID
Direction of gas flow
Market Area
Category (bundled/unbundled)
Quantity
Capacity Period
Type of gas
Regulated Tariff
Surcharge
Total (clearing) price
Split factor (uniform price)
User details (i.e. User who placed bid)

50. Post Auction processing by National Grid
Auction results come back from PRISMA.
- Bundled bid demand
- Unbundled bid demand
Allocate bundled results first:
Unsold > Surrenders > LT UIOLI > Oversubscription
Then allocate unbundled results:
Remaining unsold > remaining surrenders > remaining LT UIOLI > remaining oversubscription
This way all unsold must be used before re-allocating surrenders; all surrenders before LT UIOLI; and all LT UIOLI before non-ob.
unsold
Surrender
LT UIOLI
Non-Ob U S L O

51. Next Steps

52. Next steps Date for next Workgroup
Content for future Workgroup sessions
Feedback from this session
AOB

53. National Grid UNC Mod (CAM & CMP adaptations) Initial Estimated Timescales
Modification
raised at UNC
Panel
Finalise WG
Report and
UNC Panel
Vote on
Modification WG
submit to
development
Modification
Panel
FMR and WG
submission
Development
to Ofgem
Draft CAM Mod
shared with
EU WG
UNC Panel
to review
Modification
Modification
Modification
WG report WG WG WG
and issue to
Development
consultation
15 May
development
development
18 DEC
3 Jul
4 Sep
6 NOV EU
Workgroup
1 May
20 NOV
5 Jun
7 Aug
2 Oct
Consultation
May 14
Jun 14
Jul 14
Aug 14
Sep 14
Oct 14
Nov 14
Dec 14
Ofgem
Implementation
Decision
Date EU
Feb
1st Nov*
Workgroup
*W.E.F 1st November 2015
Jan 15
Feb 15
Nov 15