1. UNC modification proposal 0407 : Standardisation of notice periods for offtake rate changes for all National Grid NTS Exit Users Transmission Workstream : 5 January 2012

2. Why is there a need for change? Proposal seeks to facilitate standard treatment for all Users with regards to the treatment of notice periods for offtake rate changes (for all NTS Users) WWU currently in discussions with potential new connectee to its system, but required pass through OAD terms into any new NExA contract, would negatively impact operational requirements of new site Current rules require LDZ aggregate offtake level can only change by 5% every 2 hours Knock on effect.......GDN has to utilise its storage capability to accommodate customers rate of offtake change.....this rule NOT a requirements for Users directly linked to NTS

3. Background – Legacy Rule GDNS have embedded (legacy) very large daily metered sites (VLDMCs) which are not governed by this 2 hour 5% rule......however the very nature of some embedded VLDMCs operations, typically dictate they need to change their rate of offtake by more than 5% with less than 2 hours notice. –e.g. Any power station reacting to electricity demands/requirements may be unable to provide 2 hours notice when seeking to alter their rate of offtake. To comply with the rule, GDNs may be obliged to invest in storage requirements to comply with the OAD (UNECONOMIC)? Any ‘new/potential’ VLDMC may have better terms to connect to NTS than LDZ...but may not of course have that choice due to locality restraints etc.

4. Potential Impacts on Shippers A shipper with a ‘new’ embedded VLDMC in an LDZ may be obliged to operate to a more onerous set of rules than a shipper with a Direct Connect connected to the NTS. Could ultimately lead to a potential new site not connecting or seeking to connect to NTS (instead of LDZ)

5. Governance (industry & WWU) Discussions scheduled for Offtake workstream (18 Jan) with intention to report back to Transmission Workstream? Report due to UNC panel in June 2012. WWU discussions with new site/shipper will monitor progress closely to enable commercial discussions

6. Summary Proposal seeks to provide a level playing field for all connectees for offtake rate changes to the NTS or LDZ system Ensures GDNs can comply with OAD without restricting ‘new’ VLDMC’s, or investing in additional (unnecessary)storage This proposal does not seek to change other OAD rules which manage rate changes at individual offtakes.

7. UNC modification proposal 0407 : Standardisation of notice periods for offtake rate changes for all National Grid NTS Exit Users Transmission Workstream : 5 January 2012