Assignment of NTS Entry Capacity

Transmission Workstream 06 November 2008

2

Assignment is…………….

The Transfer of Financial Liability in addition to the

Capacity Entitlement

3

Background

Historically NTS entry Capacity has been viewed as “one” product that is tradable.

Recently we have seen a marked interest in the introduction of an assignment process for NTS Entry Capacity:

Via Customer Account Management

Via Review Group 221 (Review of Entry Capacity & the appropriate Allocation of Risk)

Proposed introduction of assignment of NTS Exit Capacity as part of the proposed Reform of the NTS Exit Capacity arrangements has lent some impetus to these requests.

4

Background - Proposed rules for Assignment of NTS Exit CapacityUser facility to assign all of its NTS Exit (Flat) Capacity obtained via long/medium term releases at an Exit Point to another User at the same Exit point from a specified day

Assigning user must notify & the assignee user must confirm Identities

Exit Point

Assignment date

Assignment will result in: Assigning Users Exit capacity holdings at the exit point will be

reduced to zero & the User will no longer be liable for capacity charges for the assigned quantity from the assignment date

Assignee Users exit capacity holdings will be increased accordingly and the User will become liable for capacity charges from the assignment date

5

First Steps…

National Grid NTS wishes to establish:

the level of industry interest

whether assignment should be Full, Partial or Both

whether a Modification or Review Group Proposal should be brought forward & if so by National Grid NTS or the Industry

whether such a change will fall under the “User Pays” process

National Grid NTS to Initiate discussions with xoserve through the

ROM (Rough Order of Magnitude) process to establish the complexity of

the concept

6

Issues

Differences to NTS Exit Capacity: Majority of ASEPs are multi party Entry Capacity is sold via multiple mechanisms QSEC/AMSEC/RMTTSEC/DRSEC

with overlapping capacity periods Multiple Bids consisting of varying prices i.e. each Entry Capacity sub

transaction period can have a number of prices associated to it.

Complex change potentially impacting on a number of areas: Invoicing - Entry Capacity Invoice driven by specific Bid Information i.e. quantity

& price associated to a specific Bid ID & Method of Sale Trading – would need to link traded capacity to specific Bid IDs (currently based

on entitlements) Transfer and Trade (Surrender) Credit Partial Assignment – would need to identify which ‘bits of capacity’ were to be

assigned & price impact on Assignee

Implementation Date / System Requirements Unlikely to be able to complete any required system changes prior to 2010 at the

earliest Limited scope to offer a manual solution Impact of / relationship with NTS Exit Reform

7

Next Steps…