1. Mod 0273: 3 rd Development Group Workshop 4 th March 2010

2. Contents 1.Answers to 1 st Workshop Questions  Number of large Projects  Capacity Application/Connection Timeline 2.Overview of Shipper and GT issues identified at 1 st Workshop 3.Possible solutions to issues identified 4.Appendix A – Issues Summary

3. Answers to 1 st Workshop Questions

4. More information on CUSC process  Number of large projects  3/4 power stations in Gas  Similar number of power stations in Electricity  20~ other large electricity projects (tbc)

5. How does gas connection process fit in with associated capacity request? Conc. DesignDetailed Design Gas Year +1 Gas Year +2Gas Year +3Gas Year +4 Annual Window (July) For a new Exit Connection, Shippers / Developers should approach National Grid’s Customer Services Team as early as possible to discuss the capacity & connection process Initial Discussion NTS License Amendment NTS Re-enforcement (if necessary) Siteworks Feasibility Study Agree & Sign NExA Capacity New Connection NExA NTS Exit (Flat) Capacity Request (For Capacity from Gas Year +4)

6. Shipper and GT issues identified at 1 st Workshop See appendix A for full details

7. Summary of Key Issues Identified  Lack of process transparency  Unknown timescales & costs at outset  Difficulties in understanding requirements /agreeing study scope  Elongated contractual negotiation  Poor communication  Difficulties in providing information  No set timescales

8. Process – Possible Solutions Potential SolutionAdvantagesDisadvantages  Develop template to ensure all required info is provided up front  Able to implement relatively quickly  Will reduce admin timescales & enable projects to be agreed & start ASAP  May reduce flexibility of transporters to begin project with minimal data and build up info as project progresses  Customers may need time to populate, especially if info is required from elsewhere or it may be seen as bureaucratic if unnecessary info is requested  Standard contractual terms  Able to implement relatively quickly  Will reduce admin timescales & enable projects to start ASAP/once scope of study is agreed  Does not provide contractual flexibility  Delays may still occur in signing contract and have a knock on effect to study start times  Customer Enquiry Form  A Standard Form has now been developed for new connections (see form)  A Form for Modification requests is under development  Standard Contractual Terms  NG already have standard T&Cs but a review is underway to assess whether they are fit for purpose/could be enhanced (Design & Build Agreement first, then Feasibility Agreement)  Would an industry consultation be advantageous?

9. Communication – Possible Solutions Potential SolutionAdvantagesDisadvantages  Create standard project communications documents  Formalised Comms. Process will report regular progress, next steps & risks / issues (on monthly basis)  Could be applicable to all ongoing projects irrelevant of size  Additional admin work for both parties  Does not capture (future) work not yet progressed/discussed  Increased Cost  Increased red tape  Potential delays to study process  Develop & agree a high-level project plan to highlight key milestones  Visibility of important milestones  Manages customer expectations & allows customer to plan activities accordingly  Planned timescales may be subject to change  Provision of key contact information  Will enable right people to talk to each other direct and reduce hand time taken to obtain information, etc.  Include key Engineer & Commercial contacts within new modification enquiry form (see previous slide)  A high-level project plan template is under development

10. Timing – Possible Solutions (1) Potential SolutionAdvantagesDisadvantages  Review NTS website to ensure new connection & modification processes timescales are transparent and meet customer requirements  Able to implement relatively quickly  Low cost  Aid visibility of end-to-end process (inc feasibility)  Manage customer expectations of overall process duration  Unlikely to directly ‘speed up’ process  Case studies may not cover every scenario  Improve case studies both on-line and within Charging Methodology Statement  Review of connection information on National Grid website  Website Improvements are due to be implemented this summer  Review of Gas Connection Charging & Methodology Statement  See further examples – Do they aid understanding of timescales / likely costs?  Development of Feasibility Study Cost / Timescale Matrix  Combined with the above example, does this provide enough indicative information?

11. Timing – Possible Solutions (2) Potential SolutionAdvantagesDisadvantages  Introduce ‘no longer than’ timescale for all feasibility studies  Provides users with confidence in timescales  Allows ‘worst case’ date to be utilised in user planning process  Longer term solution – how would it be introduced (licence change)?  Blanket ‘worst case’ date may not be suitable for all types of study  Does not focus on root cause of issue (time spent to agree scope/costs, etc.)  May increase cost of survey if required timescales are shorter than current times  Defining appropriate fixed timescales up front may be difficult given complexity of requests  Introduce ‘fixed’ timescales for feasibility studies  Fixed timescales?  When would clock start??

12. Costs – Possible Solutions Potential SolutionAdvantagesDisadvantages  Develop on-line ‘decision tree’ & develop time/cost matrix to support  Able to implement in medium term  Medium cost  Will provide a more accurate indication of cost & timescale to users  May prove difficult to capture all eventualities / variety of projects  If not robust may cause customer challenges  Develop fixed prices  Published fixed prices will manage customer expectations/reduce challenges (take it or leave it?)  May prove difficult to price up all possible projects  Current process requires obtaining price from external contractors  May frequently change due to market prices  Some Customers may still want indicative prices (possible refund) and any effort spent in developing fixed prices will have been wasted  See timing solution slide 1 (improved indicative price information/examples)  Fixed Prices?  Very rarely chosen in Electricity!

13. Summary of Possible Solutions  Enhance process information to provide greater clarity / transparency  Streamline process - templates  Provide enhanced indicative timescales & costs  Revised terms and conditions  Set timescales ? – costs and benefits

14. Appendix A – Issues Summary

15. Process - Issues UserTransporters  No standardisation across Transporters.  No standard documentation / T&Cs / applic. process.  Number and nature of studies required unknown until well into the process and can change as project develops within Transporter.  Lack of process transparency.  No guarantee of non-discrimination in treatment by Transporter – e.g. how can we be certain that Transporter not prioritising all the “easier” requests?  Unclear definitions of types of study – e.g. what is the difference between “feasibility study” and “pre-feasibility study”?  Transporters not always clear what info they want from Shippers and is what they ask for always relevant / necessary?  Number of gas enquiries is small compared to electricity  Some enquiries are speculative in nature  Scope creep is sometimes a problem  Customers don’t always know what they want!  Customers often experience difficulties in providing the information requested, especially if it needs to be provided by their equipment suppliers  Difficulties in agreeing Contractual terms (between Customer and NG)  By offering flexibility and offering new products (e.g. pre-feasibility) definitions have been diluted

16. Communication - Issues UserTransporters  Relies on individuals within Transporter to progress request, rather than established process.  May require Shippers to do lots of chasing to obtain updates on progress.  No visibility of upcoming work (types, number, nature and frequency) - receiving a number of enquiries in a relatively short period can cause workload planning difficulties

17. Costs - Issues UserTransporters  Unknown at outset.  True costs often not known until well into the application process and can differ substantially from initial estimate (where provided)  No idea whether costs are currently “cost- reflective” and Shippers in a poor position to challenge them  Breakdown of costs – not always clear what we are actually paying  Rough costs are provided upon initial application  Refined costs are provided upon agreement of scope  Complexity of exit connections/modifications and associated differences in scope make it difficult to define exact costs upfront  License states that Transporters can charge users in respect of the cost incurred

18. Timing - Issues UserTransporters  Open-ended process – no established time limits.  Unable to initially gauge how long Transporter will take to deal with request(s).  No obligation on Transporter to respond by any set date(s).  Indicative timescales are provided and contracts include end dates for scheduled completion of works  Complexity of exit connections/ modifications and associated differences in scope make it difficult to define exact timescales upfront