1. Proposer: Matthew Hatch Panel Date: 15 th May 2014 0500: EU Capacity Regulations – Capacity Allocation Mechanisms with Congestion Management Procedures Guidance: These slides are meant to provide a brief overview for the UNC Panel, to introduce what is trying to be achieved, to help them understand and decide the best process to be followed for new modifications. Please aim to be as brief as possible and not justify nor make the case for the Modification. Notes are provided in italics and if this template is being used should be removed. The Joint Office is available to help and support the drafting of any modifications, including guidance on completion of the Modification template and the wider modification process. Contact: enquiries@gasgovernance.co.uk or 0121 288 2107. enquiries@gasgovernance.co.uk

2. Why change? New rules for selling capacity come into force under the EU Capacity Allocation Mechanisms Network Code from 1 st Nov 2015. The prevailing UNC rules for interconnection points need to be modified to comply with EU Regulation 715/2009 & the associated rules for CAM. These rules primarily (but not exclusively) relate to the auctioning of entry and exit capacity at interconnection points (Bacton IUK, Bacton BBL, Moffat). The prevailing rules for the EU Congestion Management Procedures Network Code (introduced by mods 449 and 485*) will also need to be modified. * Subject to approval

3. Why change (cont)? The relevant objective under Standard Special Condition A11 of National Grid’s gas Transportation Licence is met. That is 1g) compliance with the Regulation and any relevant legally binding decisions of the European Commission and/or the Agency for the Co-operation of Energy Regulators

4. Options UNC modification is the only identified route. Without introducing change via the UNC, NGG would not be in compliance with the EU Regulation and relevant NGG Licence Condition (Standard Special Condition A11).

5. Solution Amended processes for Interconnection Points are proposed, including, but not limited to:  Auctions - including products offered, calendar & auction algorithms  Use of a common booking platform for auctions  CMP processes i.e. Surrender & LT UIOLI  Trading  Interruptible Capacity  Charging  Transitional Arrangements incl. end-dating Enduring Exit Capacity Rules for these new processes will be written into UNC. Existing rules for interconnection points will be modified or switched off as necessary.

6. Recommended Steps The Proposer recommends that this modification should be:  Not subject to self-governance because this modification is likely to have a material impact on the commercial operation of the pipeline system.  Workgroup assessment to develop the modification for 6 months