1. LDZ Shrinkage Forum Jonathan Dennett Elexon 22 nd June 2006

2. Our Proposals Gas YearShrinkage Factor 2005/060.62% 2006/07 0.621%

3. Agenda 1.LDZ Shrinkage Overview – National Grid 2.Initial LDZ Shrinkage Factor Proposals 2006/07

4. 1. LDZ Shrinkage Overview

5. 1.1Structure for the discussion of Initial Proposals for LDZ Shrinkage  LDZ Shrinkage Obligations  What the Shrinkage Factors are and how they are used  The Shrinkage components

6. 1.2 LDZ Shrinkage Obligations  To replace the gas that is used or lost by the Distribution Networks

7. 1.3What the Shrinkage Factors are and how they are used (Part 1)  The Gas Transporter buys its Shrinkage Gas by LDZ, as this enables local Shrinkage performance to be taken into account  The Gas Transporter buys Shrinkage Gas each day to replace the gas that is lost or used on that day  To enable this to occur, the Gas Transporter buys a proportion of throughput in each LDZ each day  Each LDZ has a ‘Shrinkage Factor’ that is a factor of consumption, which the Gas Transporter is then obliged to buy each day for the particular LDZ (the next slide refers)

8. 1.3What the Shrinkage Factors are and how they are used (Part 2)  Calculating a Shrinkage Factor  Each LDZ has its own Shrinkage Energy, Consumption Energy and therefore Shrinkage Factor

9. 1.4LDZ Shrinkage components  There are three components to LDZ Shrinkage; they are:  Leakage  Own Use Gas  Theft of Gas  The amount of energy in respect of each of these components is calculated in a different way

10. 2.National Grid’s 2006/07 Gas Year Initial LDZ Shrinkage Factor Proposals

11. 2. Index of national Grid’s LDZ Shrinkage Slides  Leakage  Low Pressure  Medium Pressure  AGI  Identified Events  Own Use Gas  Theft of Gas  Shrinkage energy summary  Annual Consumption  Proposed Shrinkage Factors

12. 2.1Calculation of Leakage Methodology  In every case, we have applied the same methodology as last year  We have used revised data in the calculations

13. 2.1.1 LP Leakage

14. 2.1.1 LP Leakage (Mains Length 2006 Proposal) LDZ Length of Main (km) PECIDISTTotal EA9,2425,1021,27832615,948 EM13,3737,5851,48344122,882 NL10,2428,0381,81152220,613 NW16,60010,4991,6321,15729,887 WM9,4928,1931,18097819,842 Total58,94839,4177,3833,424109,173

15. 2.1.1 LP Leakage (Mains Length 2005 Proposal) LDZ Length of Main (km) PECIDISTTotal EA8,8755,4361,28533115,927 EM12,2968,4441,49543622,670 NL9,6808,6971,82749320,697 NW15,58611,3131,6331,14729,679 WM8,7208,9031,18496319,769 Total55,15642,7927,4243,370108,742

16. 2.1.1 LP Leakage (Mains Length Differences) LDZ Length of Main (km) PECIDISTTotal EA367-334-7-620 EM1,078-859-126212 NL562-659-1629-84 NW1,014-81410209 WM772-710-41573 Total3,793-3,375-4154431

17. 2.1.1 LP Leakage (Average System Pressure) LDZ Average System Pressure (mbarg) Average System Pressure (mbarg) All-PE Networks Excluded 2006 Proposal 2005 ProposalDifference 2006 Proposal 2005 ProposalDifference EA35.6335.99- 0.3633.9435.48- 1.54 EM35.2734.20+ 1.0833.1934.36- 1.16 NT26.3426.84- 0.5026.3426.84- 0.50 NW29.8128.30+ 1.5129.1828.13+ 1.05 WM29.7630.02- 0.2628.1028.97- 0.87 Total31.1430.69+ 0.4529.9330.36- 0.43

18. 2.1.1 LP Leakage (Leakage Factors) Material Leakage Rate (scm/km/annum @ 30mbarg) PE63.5 Steel >=4"3854.3 Steel <=3"3416.3 Ductile <=5"719.2 Ductile >=6"576.4 Spun Cast1075.7 Pit Cast <=3"2407.2 Pit Cast 4"-5"1639.8 Pit Cast 6"-7"2525.5 Pit Cast >=12"7463.4

19. 2.1.1 LP Leakage (MEG) LDZ MEG Saturation 2006 Proposal 2005 ProposalDifference EA0.00% EM28.21%29.97%-1.76% NL16.64%10.45%6.19% NW8.67%10.72%-2.04% WM19.56%20.96%-1.40% Total19.43%19.79%-0.36%

20. 2.1.1 LP Leakage (Energy Comparison) LDZ LP Leakage (GWh) 2006 Proposal 2005 ProposalDifference EA218225- 7 EM293307- 15 NT313339- 26 NW446442+4 WM330355- 25 Total16001668- 69

21. 2.1.2 MP Leakage

22. 2.1.2 MP Leakage (Mains Length 2006 Proposal) LDZ Length of Main (km) MetallicPlasticTotal EA5461,6272,173 EM1,4992,5254,024 NT1,0417451,786 NW1,0162,2173,233 WM1,0272,0463,074 Total5,1309,16014,290

23. 2.1.2 MP Leakage (Mains Length 2005 Proposal) LDZ Length of Main (km) MetallicPlasticTotal EA5511,6292,180 EM1,5352,4784,013 NT1,0427411,783 NW1,0352,1913,226 WM1,0402,0123,052 Total5,2039,05214,255

24. 2.1.2 MP Leakage (Mains Length Differences) LDZ Length of Main (km) MetallicPlasticTotal EA-5-2-7 EM-364610 NT44 NW-19267 WM-123422 Total-7310936

25. 2.1.2 MP Leakage (Energy Comparison) LDZ MP Leakage (GWh) 20052004Difference EA20.320.4-0.1 EM44.745.2-0.5 NT30.430.5-0.1 NW25.1 -0.1 WM28.928.80.0 Total149.3150.0-0.7

26. 2.1.3 AGI Leakage

27. 2.1.3 AGI Leakage (Population) LDZ District GovernorHolders Service Governor LTS Offtake NTS Offtake EA1,510455,02314612 EM2,2011613,07012911 NL9716413,8591275 NW2,644763,53514610 WM1,93277,91217312 Total9,25820843,40072150

28. 2.1.3 AGI Leakage (Leakage Factors) Leakage Rate (scm/annum/site) District GovernorHolders Service Governor LTS Offtakes NTS Offtakes 406.976927.64648531075

29. 2.1.3 AGI Leakage Total AGI Leakage (GWh) LDZ2006 Proposal EA42.8 EM38.4 NL38.4 NW52.3 WM42.7 Total214.6

30. 2.1.4 Identified Gas Release Events

31. 2.1.4 Identified Gas Release Events (UKD Occurrences) No. of Occurrences ServicesMains>500kgTotal 11,0331,5534412,630

32. 2.1.4 Identified Gas Release Events (Energy Assessment) LDZ Gas Release Events scmGWh EA84,7140.92 EM170,8681.87 NL91,7091.00 NW188,1392.06 WM107,5481.18 Total642,9797.03

33. 2.1.5 Own Use Gas

34.  National Grid proposes to use accurate values for Own Use Gas in the 2006 proposal

35. 2.1.5 Own Use Gas (Energy Assessment) LDZ Own Use Gas % ConsumptionEnergy (GWh) EA0.012%6.0 EM0.012%9.3 NL0.012%7.8 NW0.012%10.1 WM0.012%6.9 Total0.012%40.2

36. 2.1.6 Theft of Gas

37.  National Grid is not proposing any change to Theft of Gas at this time

38. 2.1.6 Theft of Gas (Energy Assessment) LDZ Theft of Gas % ConsumptionEnergy (GWh) EA0.02%10.1 EM0.02%15.5 NL0.02%13.0 NW0.02%16.8 WM0.02%11.6 Total0.02%66.9

39. 2.1.7 Overall Shrinkage Energy

40. LDZLeakage (GWh)OUG (GWh)ToG (GWh)Total (GWh) EA282.16.010.1298.2 EM377.99.315.5402.7 NT382.87.813.0403.5 NW524.910.116.8551.8 WM403.16.911.6421.7 Total1970.840.266.92077.9

41. 2.2 Annual Consumption

42. 2.2.1 Annual Consumption (Comparison) LDZ LDZ Consumption (TWh) 2006/072005/06Difference EA50.2953.48-3.20-5.98% EM77.5581.92-4.37-5.34% NT64.9172.61-7.70-10.60% NW84.1490.77-6.63-7.30% WM57.8563.98-6.13-9.58% Total334.74362.77-28.03-7.73%

43. 2.3 Shrinkage Factors

44. 2.3.1 Shrinkage Factors LDZLeakage Own Use Gas Theft of Gas Shrinkage Factor 2006/072005/06 EA0.561%0.012%0.020%0.593%0.60% EM0.487%0.012%0.020%0.519%0.54% NT0.590%0.012%0.020%0.622%0.62% NW0.624%0.012%0.020%0.656%0.62% WM0.697%0.012%0.020%0.729%0.76% UKD0.589%0.012%0.020%0.621%0.62%