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Discretionary Release of Non Obligated NTS System Entry Capacity

Discretionary Release of Non Obligated NTS System Entry Capacity. Transmission Workstream 1st May 2008. Background. Concept of releasing strips of non obligated NTS entry capacity first raised November 2007.

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Discretionary Release of Non Obligated NTS System Entry Capacity

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  1. Discretionary Release of Non Obligated NTS System Entry Capacity Transmission Workstream 1st May 2008

  2. Background • Concept of releasing strips of non obligated NTS entry capacity first raised November 2007. • Discussions with the industry reached consensus to postpone until such time as could be considered in more depth or Industry wished to revisit. • In response to subsequent industry requests National Grid NTS brought 3 options forward to April Transmission workstream: • Option A – Ad-hoc release of non obligated capacity • Option B – As ‘A’ but with associated buy-back • Option C – Scheduled release of non obligated + buy back 2

  3. Background 2 • National Grid NTS committed to bring forward a draft enabling modification based on Option A as: • we have seen a clear demand for the product • ability to potentially implement ahead of this winter • and we believe that due to a number of new investments it may be possible to release additional non-obligated capacity this year 3

  4. Proposal – Discretionary Release of Non obligated capacity • National Grid NTS to bring forward an enabling mod that will allow the release of Non Obligated capacity, via an ad hoc auction release, outside of the existing Quarterly & Daily auctions • Less complex UNC modification that will give National Grid NTS greater flexibility in responding to market requirements i.e. can cater for both option A and option B. • Auction rules to be published as part of a set of Terms and Conditions during the invitation process, to be accepted by Users prior to bidding for capacity • Quantity made available to be based on a risk assessment • Potentially minimal system intervention required (expected to be held off-line, but systematised where possible) • Will be taken into account in the calculation of Trade & Transfer exchange rates (once the capacity has been sold it becomes Obligated Firm capacity) • Price paid for the capacity to be equal to or greater than the corresponding MSEC Reserve Price – otherwise there may be significant charging implications. 4

  5. General Issues • There are a number of issues that National Grid NTS will need to consider: • Can this be implemented prior to Winter 08/09 • Interaction with Trade & Transfer i.e. if National Grid NTS was to offer non obligated capacity with an associated buy-back • How would ad-hoc processes be initiated • Impact upon the secondary market • Ensuring that the process is non discriminatory 5

  6. Advantages • Will maximise the amount of capacity released to the market • Will increase National Grid NTS’ ability to respond to customer requests, where there is an appropriate risk/reward balance. • Will allow for greater product differentiation i.e. will facilitate both Option A and Option B • Should be limited system issues (will still require xoserve assessment) • There will be minimal ongoing overheads • There is the potential for additional revenue to be passed to Shippers 6

  7. Proposed UNC mod timeline 7

  8. Way Forward • National Grid NTS to raise a draft enabling modification for consideration at the May Panel 8

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