1. Auctions recommendations GTE+ Capacity Product Coordination (CPC) Workshop on 26 November 2008 Matthew Hatch National Grid

2. Characteristics of Auctions Auctions held during fixed periods Obligated level (baseline) offered to market Incremental capacity can be signaled during Long Term Auction Multiple opportunities for Users to obtain capacity Different product durations offered to market Market values the capacity offered Provides fixed price and quantity assurance Discretionary (non obligated) capacity can be made available (above baseline) Auction results published

3. Booking process of Auctions

4. 1 - Quantity allocated in full, likely to be at reserve price. 2 - Quantity allocated in full up to baseline; release of capacity would be considered above the baseline. Price would usually be greater than the reserve price. Allocation process of Auctions 1

5. Allocation process of Auctions 2

6. Auction considerations Baseline obligations are set at each entry ASEP Auctions provide the market the opportunity to bid for obligated capacity over a number of auctions and durations Capacity can be obtained long term Provides TSO with incremental capacity signals Medium term capacity offered in the constrained period Daily capacity offered Day Ahead and Within Day Users bid a price that they value the capacity at Network Code (UNC) open to changes

7. Recommendations for Auctions RecommendationDaily servicesMonthly servicesYearly services Maximum lead timeDay ahead & within day 20 calendar days before transmission services for Rolling Monthly Auctions 2 years before transmission services for Long Term Auctions (Y+2 to Y+16) Or 30 calendar days+ for Annual Monthly Auctions (Y0 – Y+2) assuming a February auction for April start (can obtain a annual strip for Y0 to Y+2 - allocation after auction). Window widthD-7 (D-1) to 02:00 D< 20 calendar days Max 10 calendar days (60 days to allocate) Start dayN/A First day of the calendar month First day of the calendar month in which the Quarterly tranche commences