Transmission Planning Code – Draft Document

1. Transmission Planning Code – Draft Document Transmission Planning Code Workshop 4 3rd July 2008

2. Introduction • National Grid Gas (NGG) has a new licence obligation to introduce a Transmission Planning Code by 1 October 2008 that will “cover all material technical aspects relating to the planning and development of the pipe-line system…which may have a material impact upon persons connected to or using (or intending to connect or to use) the pipe-line system” • Aim is to improve transparency of NTS planning process • NGG must comply with and maintain the code, reviewing it at least every two years • Review cycle will include consultation with interested parties

3. Transmission Planning Code – What is it? • Framework document relating to the planning and development of the NTS • Methodology to determine the physical capability of NTS considering • Entry and exit capacity release obligations • How much capacity can be transferred/traded between entry points • How incremental flows at entry and exit affect system capability • Statutory network security obligations • Detailed assumptions on • How supply and demand patterns will develop over time • How the system will be operated under different supply and demand scenarios

4. The story so far... • Open Letter on Draft Scope published 7 March 2008 • 4 non-confidential responses received from E.ON, Centrica Energy, RWE npower, Scotia Gas Networks • 3 workshops held between April and June • Topics covered include Supply and Demand Scenarios, Flow Margin, Entry and Exit Processes • Draft TPC document circulated for comment ahead of formal consultation • Discussions have confirmed the need for a high level framework document, in summary: • Commercially sensitive data will not be published • “Code of practice” for planning and developing the NTS • Stable framework to be established for investment decision-making • Duplication of other methodologies to be avoided • Link between TBE forecasts, entry/exit commercial processes and investment planning should be clear

5. Timeline (2008) Implementation Development 7 March Open letter inviting views on scope by 21 March 2008 April-July Industry discussions on draft document July Formal consultation (28 days) Aug/Sept Authority considers consultation report workshop 3 July Consultation planned from w/c 7 July 1 October 2008 target date for implementation

6. Content of TPC (1) “The transmission planning code shall cover all material technical aspects relating to the planning and development of the pipe-line system to which this licence relates, which may have a material impact upon persons connected to or using (or intending to connect to or use) the pipe-line system to which this licence relates,” Chapter 2: Legislative framework • Gas Act and Licence • Pipeline Safety Regulations • Pressure Systems Safety Regulations • Gas Safety (Management) Regulations • EIA Directive • Town and Country Planning Act • IPPC Directive • EU ETS Directive • Chapter 3: Policy and guidelines • Relevant IGEM guidelines • National Grid planning policy

7. “and shall include: (a) a methodology to determine the physical capability of the pipe-line system to which this licence relates ...” Chapters 5 and 6: Supply and Demand Physical capability is dependent on supply/demand assumptions used Chapter 4: Investment Planning Network capability analysis and investment planning analysis Chapter 9: Network Analysis Network analysis assumptions Content of TPC (2)

8. “... specifying in detail how the licensee is taking into account: (i) its entry capacity release obligations ... and its exit capacity release obligations ...; (ii) the amount of capacity that may technically be transferred or traded between NTS entry points; Chapter 7: Entry Capacity Influence of QSEC, IECR and capacity substitution on plan T&T undertaken in operational timescales IECR and Entry Capacity Substitution Methodologies contain detail Chapter 8: Exit Capacity Transitional period only Interaction of OCS and load enquiry data with plan ExCR contains detail Chapter 4: Investment Planning Physical model results compared against commercial obligations Content of TPC (3)

9. “ (iii) the impact of incremental gas flows upon the capability of the pipeline system to which this licence relates at each NTS entry point and NTS exit point; and (iv) statutory network security standards.” Chapter 4: Investment Planning Planning cycle, network capability and investment planning Chapter 9: Network Analysis Network analysis assumptions 1-in-20 peak as in S.Sp.C. A9 also GSMR requirement for adequate pressure for gas leaving the NTS Content of TPC (4)

10. “(b) the detailed assumptions that the licensee is using in respect of: (i) the likely developments in the patterns of the supply of gas and the demand for gas; (ii) the likely developments in the levels of the supply of gas and the demand for gas; and (iii) the likely operation of the pipe-line system to which this licence relates for any given pattern and/or level of supply of gas or demand for gas.” Chapters 5 and 6: Supply and Demand Scenario based approach TYS, Demand Forecasting Methodology contain details Chapter 9: Network Analysis Use of network analysis models for relevant gas year and supply/demand scenarios Network analysis assumptions Content of TPC (5)

11. Summary • Draft Transmission Planning Code has been developed through discussions with industry • Aim is to describe high level framework surrounding planning and development of the NTS • Balances requirements for transparency and data confidentiality • Periodic reviews will be undertaken to ensure the document is maintained in line with legislative, commercial and planning policy changes • 28-day formal consultation planned from w/c 7 July • Consultation report submitted to Ofgem late August • Authority decision on document during September • Implementation from 1 October 2008, subject to consultation responses and Authority approval