1. Proposer: Matthew Hatch Panel Date: 15 th May 0501: Treatment of Existing Entry Capacity Rights at the Bacton ASEP to comply with EU Capacity Regulations Guidance: These slides are meant to provide a brief overview for the UNC Panel, to introduce what is trying to be achieved, to help them understand and decide the best process to be followed for new modifications. Please aim to be as brief as possible and not justify nor make the case for the Modification. Notes are provided in italics and if this template is being used should be removed. The Joint Office is available to help and support the drafting of any modifications, including guidance on completion of the Modification template and the wider modification process. Contact: enquiries@gasgovernance.co.uk or 0121 288 2107. enquiries@gasgovernance.co.uk

2. Why change? New rules for selling capacity come into force under the EU Network Code on Capacity Allocation Mechanisms from 1 st Nov 2015. The current Bacton ASEP needs to be split into 2 new ASEPs: Bacton IP & Bacton UKCS CAM rules will apply at IPs from 1 st Nov 2015 but prevailing UNC rules will continue to apply for non-IPs from this date. Current Bacton ASEP will no longer exist from 1 st Nov 2015. Existing holdings from 1 st Nov 2015 onwards need to be moved between the 2 new points.

3. Options Ofgem will modify National Grid’s Transmission Licence to split the current Obligated level at the existing Bacton ASEP between the two new ASEPs. However a UNC modification is needed to move the existing capacity holdings that Users already have at the current Bacton ASEP for periods from 1 st Nov 2015.

4. Solution Registered capacity at the existing Bacton ASEP will be moved (by a reallocation process) to either Bacton IP or Bacton UKCS. Users will choose which of the 2 new ASEPs they will move their capacity to for each relevant period, and the quantity to be moved to each ASEP. Future capacity holdings at the 2 new ASEPs must equal, in aggregate, the capacity held at the existing Bacton ASEP. The total reallocation quantity for all Users must be within the new Obligated levels for each ASEP.

5. Recommended Steps The Proposer recommends that this modification should be:  Workgroup assessment to develop the modification for 6 months.  Not subject to self-governance because this modification is likely to have a material impact on the commercial operation of the pipeline system.