1. Initial view on changes to Codes OTEG, 3 rd July 2006

2. Agenda  Assumptions  SO – TO Code  Grid Code  Connection and Use of System Code  Process/timescales for change  Only an initial view at this stage  GB SQSS debate heavily influences changes required  Are current arrangements appropriate offshore?

3. Assumptions  ‘Offshore Users’ have equitable treatment as ‘Onshore Users’  Each offshore network has single point of connection to onshore network  Offshore TOs may be nested  Offshore networks may connect to onshore transmission or DNOs  Offshore transmission will only be AC  Must accommodate one or many new TOs  Transitional arrangements may be required prior to enduring regime being implemented  Any regime developed must be adaptable for the future

4. SO-TO Code (1)  Section B - Governance  Practicalities of extending beyond 3 TOs  Section C - Transmission Services  Switching Arrangements - TO acts under instruction from GBSO  DNO interaction e.g. outage co-ordination  Interaction between offshore TOs  Section D - Planning Co-ordination  Is onshore model applicable offshore?

5. SO-TO Code (2)  Section E – Charging  Charging Statement for each TO  Section F – Communications and Data  Are confidentiality provisions in STC suitable?  STC Procedures  Full review of existing STCPs required  Requirement for new ‘Offshore STCPs?’

6. Grid Code  May require further, additional, regional differences  Planning processes  Dealing with potential DNO interfaces  Connection Conditions  Driven by GB SQSS debate  Review connection conditions for offshore  Operating Codes  Safety rules differ for different TO areas  General Conditions  Constitution of Grid Code Review Panel

7. Connection and Use of System Code  Access  Allocation of access  Compensation for loss of access  Exporting GSPs  Current issue could be exacerbated via DNO connection  Transmission Charging  CUSC/Charging statements work hand in hand  Same as GB regime?  Bilateral Agreements  Are existing onshore pro-formas appropriate?

8. Process for change - options  Use normal governance arrangements for codes – Authority decision  Ofgem/DTI consult – changes designated by Secretary of State  Issues to consider:  Timescales  Complexity and scope of change  Interactions between codes (cross-governance)  Flexibility  Ensuring all interested parties are included  Utilisation of existing industry expertise  Co-ordination with ongoing GB Code change processes  OTEG liaison with industry panels

9. Timescales  June 06Initial view on code changes  Sept 06Follow on from GBSQSS group  Scope required changes further  Q1 07Specific identification of required changes  Q2 07Industry consultation  Q2/3 07Refinement of changes  Finalise details of legal drafting  Q3/4 07Final consultation  Mid 08Go-Live for offshore regime