enduring nts offtake arrangements transmission workstream 5th september 2006

Enduring NTS Offtake Arrangements

Transmission Workstream

5th September 2006

Background

15 EOWG’s to discuss NTS Exit Reform

Objective today to walkthrough the details of National Grid NTS Business Rules

Opportunity to provide clarification Concerns / objections raised via Modification process

Modification to be raised and sent to Panel 21/9/2006

Request to proceed direct to consultation

Contents

Introduction High Level Definitions Part I: NTS Exit (Flat) Capacity Overview Part II: NTS Exit (Flexibility) Capacity Product Overview Part III: Initialisation of NTS Exit (Flat) Capacity Regime Section 1: Long Term NTS Exit (Flat) Capacity Sales Section 2: Medium Term NTS Exit (Flat) Capacity Sales Section 3: Daily Release Short Term (Firm) NTS Exit (Flat) Capacity Sales Section 4: Daily Ahead Interruptible NTS System Exit Capacity Sales Section 5: Transfers and Assignment of NTS Exit (Flat) Capacity Section 6: Long and medium term NTS Exit (Flexibility) Capacity Sales Section 7: Daily NTS Exit (Flexibility) Capacity Sales Section 8: Transfers and Assignment of NTS Exit (Flexibility) Capacity Section 9: NTS Exit Capacity Constraint Management Section 10: Exit Capacity Neutrality Arrangements Section 11: Charging Arrangements Section 12: Credit Checks & Termination Rules Section 13: Liability Arrangements and User Obligations Section 14: Further references in UNC affected by Exit Reform APPENDIX 1: NTS Exit Zones APPENDIX 2: Area and NTS Exit Zone Maximas

Introduction

High Level Definitions

2 Separate Products

Defines NTS Exit Points, Zones & Areas

Capacity Products

Offtake

Rate

Time 22:00 06:00

Average

Flow Rate

Actual

Flow Rate

Flexibility Utilisation

End of day quantity

NTS Exit (Flat) Capacity provides right to offtake daily quantity of gas with implied rights to flow at uniform rate at an NTS Exit Point

NTS Exit (Flex) Capacity provides right to flow at a non-even flow rate in an NTS Exit Zone

06:00

Products

Types of capacity

• NTS Exit (Flat) Capacity

• NTS Exit (Flex) Capacity

Bundles

Prevailing rights (3 years+)

Annual (1-3 years)

Daily (day ahead and on the day)

Daily Interruptible (day ahead)

Annual (1-5 years)

Daily (day ahead and on the day)

Part I: NTS Exit (Flat) Capacity Overview

“Ticket to Ride” principleEnd of Day Quantity

By NTS Exit PointVarious types of NTS Exit (Flat) Capacity

Prevailing NTS Exit (Flat) Capacity (Firm) Annual NTS Exit (Flat) Capacity (Firm) Daily NTS Exit (Flat) Capacity (Firm) Daily Interruptible NTS Exit (Flat) Capacity

National Grid NTS can acquire a Users rights if; User doesn’t maintain appropriate credit NTS SO utilises NTS Exit (Flat) Capacity

management tools Required to ensure safety of the system

Part I: NTS Exit (Flat) Capacity Overview – cont.

Users holding made up of quantities bought & sold both from National Grid NTS & Other Users

Release Mechanism Long Term release (Y4 onwards) Medium Term release (Y1 to Y3) Short Term release (D-1 & D) Interruptible Short Term (D-1)

Flat Capacity Overrun By Day Aggregate flows exceed aggregate holdings at NTS

Exit pointIncludes –ve overrun

Individual Users overrun applied

NTS Exit Capacity - Overrun charge

A User’s NTS Exit Capacity flat/flex overrun charge will be determined as the “User's NTS Exit (Flat/Flex) Capacity Overrun” amount multiplied by the highest of:

8 times the highest price paid by Users at the NTS Exit Point/ Zone for any class of firm NTS Exit (Flat/Flex) Capacity for that day

8 times the highest reserve price at the NTS Exit Point or zone for any capacity auctions (NB. This is to cover scenario where no capacity is booked at an NTS Exit Point/Zone, but Users still flows)

1.1 times the highest price paid by National Grid for NTS Exit (Flat/Flex) Capacity for any NTS Exit Point/Zone for that day for capacity buy back through any constraint management action

Part I: NTS Exit (Flat) Capacity Overview – cont. (OVERRUN EXAMPLE)

NTS Exit Point A 3 Users

NTS Exit Point UDQO Flat holdings User Individual Overrun User Overrun

User 1 0 0 0 0

User 2 0 0 0 0

User 3 0 0 0 0

Sum of Users 0 0 0 0

Aggregate 0 0 0


NTS Exit Point A Add in EOD Flows


User 1 12 0 0 0

User 2 11 0 0 0

User 3 26 0 0 0


Aggregate 49 0 0


NTS Exit Point A Add in Flat Holdings


User 1 12 10 0 0

User 2 11 15 0 0

User 3 26 18 0 0


Aggregate 49 43 6


NTS Exit Point A


User 1 12 10 2 0

User 2 11 15 0 0

User 3 26 18 8 0


Aggregate 49 43 6


NTS Exit Point A


User 1 12 10 2 1.2

User 2 11 15 0 0

User 3 26 18 8 4.8


Aggregate 49 43 6

Part I: NTS Exit (Flat) Capacity Overview – Reductions

Notice to reduce Prevailing NTS Exit (Flat) Capacity rights from 08.00 1st July to 17.00 31st July of Gas Year (YN)

The reduction cannot be earlier than the later of: Gas Year YN+2 (i.e. 15 month notice)

Gas Year YA+4 Gas Year YA is the Gas Year with effect from which the

User was most recently allocated Prevailing NTS Exit (Flat) Capacity (i.e. if requested and allocated additional prevailing need to be through 4 year commitment before the User can make any reductions).

“Prevailing Flat Capacity” - Reduction

Capacity

10

20

July 2008

Oct 2010

1.5 year reduction notice period

Baseline

30

If User wishes to reduce prevailing rights, must provide at least 1.5 years notice

Initial Prevailing Level

Investments: Unconstrained Period “Prevailing Flat Capacity” - Increase

Capacity

10

20

July 2007

Oct 2010

Baseline

30

In July 2007, Users will also be able to request additional prevailing rights for use from Oct 2010

Require commitment to pay 4 years charges, irrespective of baseline

Initial Prevailing Capacity

Additional Prevailing Capacity

Commit to pay [4] years of charges for 30 units

Revised

Prevailing

Level

Oct 2014

Investments: Unconstrained Period “Prevailing Flat Capacity” - Decrease

Capacity

10

20

Oct 2010

Baseline

30

After User has committed to an increase, only able to decrease from when commitment met

Prevailing Capacity

Oct 2014

July 2013

1.5 year

notice period

Part II – NTS Exit (Flexibility) Capacity Product Overview

A high level review of NTS Exit (Flexibility) Capacity

High Level Overview of ProposalNon-Peak Day Example (EOD < Capacity Holding)

22.0006.00

MDQ/24

Capacity booked

= 7200

= 300 per hour

End of Day

Measurement

= 2400100

110

300

80

Flex utilised = 160

High Level Overview of Non-Peak Day Example (EOD < Capacity Holding)

22.0006.00

MDQ/24

Capacity booked

= 7200

= 300 per hour

End of Day

Measurement

= 2400100

110

300

User wishes to flow at 110 for 12 hours and 90 for 12 hours

90

18.00

Flex Utilised = 80

High Level Overview of Peak Day Example (EOD = Capacity Holding)

22.0006.00

Wish to flow at 305 for 12 hours and then reduce flow to 295 for 12 hours.

300

305

1800

295

Flex Utilised = 40

Actual max EOD

Flow = 7200

Booking = 7320

(305 MHQ*24)

Part II: NTS Exit (Flexibility) CapacityProduct Overview

Entitles Users to offtake at a non-even rate NTS Exit Zone

2 types of NTS Exit (Flexibility) Capacity Annual Daily

No Interruptible NTS SO can acquire a Users rights as per NTS

Exit (Flat) Capacity rules Release mechanisms

Annual Auction (Y1 to Y5) Short Term (D-1 and D)

Part II: NTS Exit (Flexibility) CapacityProduct Overview – cont.

Flex Capacity Overrun By Day Aggregate Flex utilised exceeds Flex Holdings at an NTS

Exit Zone Flex utilised = 22:00 deemed flow – 22:00 measured flow

Deemed flow = EOD measured flow/(24x16)1.5% tolerance applied


Individual User overrun applied Utilises the same principles as above Agree 22:00 default rules with User or 22:00 value provided by

Agent If the sum of all of the Users individual NTS Exit (Flexibility)

Capacity Overruns is greater than the than Aggregate NTS Exit (Flexibility) Overrun then the Individual User’s Overrun is scaled in proportion to their percentage of the sum of all the Individual User Overruns.

In the event that a User has agreed to reduce its intended end of day flow or flexibility utilisation by acceptance of a constraint management action undertaken by National Grid NTS, the User will not incur any resulting increase in its overrun charge.


A User’s NTS Exit (Flexibility) Capacity overrun charge will be determined as the User's NTS Exit (Flexibility) Capacity Overrun amount multiplied by the highest of:

8 times the highest price paid by Users at the relevant NTS Exit Zone to National Grid NTS for any class of firm NTS Exit (Flexibility) Capacity for that day;

8 times the highest reserve price at the relevant NTS Exit Zone for any capacity auctions (NB. This is to cover scenario where no capacity is booked at an NTS Exit Zone, but Users still utilise system flexibility);

1.1 times the highest price paid by National Grid for NTS Exit (Flexibility) Capacity at the relevant NTS Exit Zone for that day for capacity buy back through any constraint management action.

Part II: NTS Exit (Flex) Capacity Product Overview – cont. (OVERRUN EXAMPLE) NTS Exit Point A

(UDQO – EOD Flows), (22:00 2/3) and (Flex Holding) figures for 3 Users inserted

Aggregate 16 11.7 0 0 0.6 0

User 1 10 7 0 0 0.2 0 0

User 2 3 2.5 0 0 0.2 0 0

User 3 3 2.2 0 0 0.2 0 0

Sum of Users 16 11.7 0 0.6 0 0

NTS Exit Point UDQO Q2200AVG

(Q2200) UDFU

Flex Holding

User Individual Overrun

User Overrun


Aggregate 22:00 figures calculated

Aggregate 16 11.7 10.67 0 0.6 0

User 1 10 7 6.67 0 0.2 0 0

User 2 3 2.5 2.00 0 0.2 0 0

User 3 3 2.2 2.00 0 0.2 0 0

Sum of Users 16 11.7 0 0.6 0 0


(Q2200) UDFU

Flex Holding


User Overrun

Part II: NTS Exit (Flex) Capacity Product Overview – cont. (OVERRUN EXAMPLE)

NTS Exit Point A User Daily Flexibility Utilisation figures calculated (includes adjustment for 1.5% tolerance)

Aggregate 16 11.7 10.67 0.86 0.6 0

User 1 10 7 6.67 0.23 0.2 0 0

User 2 3 2.5 2.00 0.46 0.2 0 0

User 3 3 2.2 2.00 0.17 0.2 0 0

Sum of Users 16 11.7 0.86 0.6 0 0


(Q2200) UDFU

Flex Holding


User Overrun


User Individual Overruns calculated

Aggregate 16 11.7 10.67 0.86 0.6 0.26

User 1 10 7 6.67 0.23 0.2 0.03 0

User 2 3 2.5 2.00 0.46 0.2 0.26 0

User 3 3 2.2 2.00 0.17 0.2 0.00 0

Sum of Users 16 11.7 0.86 0.6 0.29 0


(Q2200) UDFU

Flex Holding


User Overrun


User Overruns calculated from User Individual Overrun Aggregate

Aggregate 16 11.7 10.67 0.86 0.6 0.26

User 1 10 7 6.67 0.23 0.2 0.03 0.03

User 2 3 2.5 2.00 0.46 0.2 0.26 0.23

User 3 3 2.2 2.00 0.17 0.2 0.00 0.00

Sum of Users 16 11.7 0.86 0.6 0.29 0.26


(Q2200) UDFU

Flex Holding


User Overrun


Bi-Directional Site Current IUK certification rules removed Establish direction of flow to determine whether NTS

Exit (Flexibility) capacity required

Net Entry to NTS from 06.00 to 22.00

Net Entry to NTS by end of day Treatment

Y Y Entry Point i.e. no NTS Exit (Flexibility) Capacity deemed to

have been used Y N Entry Point i.e. no NTS Exit

(Flexibility) Capacity deemed to have been used

N Y Exit Point

N N Exit Point

Part III: Initialisation of NTS Exit (Flat) Capacity Regime

DC’s can book up to Maximum Exit Capacity Booking for Winter 2005/06

Interruptible

DN’s book up to OCS booking for 2009/10 (specified in 2006 statement)

Part III: Initialisation of NTS Exit (Flat) Capacity Regime – Transitional Timetable

Date Held Product (Flat/Flex) Auction/ Application

Annual / Long / Medium / Short Term

Period

July 2007 (Confirmations by 15th July 2007)

Flat Application Long Term (Increase and confirmation of Initial

Prevailing rights)

Oct-2010 Onwards

July 2007 Flexibility Auction Annual Oct-2010 to Sep-2012

July 2008 (reductions by 15th July 2008)

Flat Application Long Term (increase and reductions)

Oct-2011 Onwards


August 2008 Flat Auction Medium term Oct-2010 to Sep-2011



Oct-2012 Onwards

July 2009 Flexibility Auction Annual Oct-2010 to Sep-2014August 2009 Flat Auction Medium term Oct-2010 to Sep-2012

August 2009 Flat and Flexibility Trading and Transfers Oct-2010 onwards

October 2009 Flat and Flexibility Holdings considered in Security and Indebtedness Oct-2010



Oct-2013 Onwards


August 2010 Flat Auction Medium term Oct-2010 to Sep-2013

24th September 2010 Flat and Flexibility Bidding Short Term 01-Oct-2010

30th September 2010 Flat and Flexibility

(Firm and Flat Interruptible day ahead)

Auction Short Term 01-Oct-2010

01st October 2010 Flat and Flexibility (within day)

Auction Short Term 01-Oct-2010

Nov-2010 Flat and Flexibility Invoices Issued For Oct-2010

Section 1: Long Term NTS Exit (Flat) Capacity Sales

Application for Additional Prevailing NTS Exit (Flat) Capacity

Held once a year 1st July to 31st July Open between 08.00 to 17.00 every day Users can modify and withdraw throughout bid window Minimum Eligible Quantity 100,000 kWh Applications not accepted (also rejected at acceptance) if

Credit Sanction in place

Users will need to book a continuous [4] years of capacity to satisfy the requirements test


National Grid NTS will have up to 2 months after the last application window has closed, to complete the allocation process, including any credit checks

If the potential results identify that Prevailing NTS Exit (Flat) Capacity at an NTS Exit Point is greater than the Baseline Quantity for that NTS Exit Point, National Grid NTS will apply to the Authority and request release of additional incremental.

this may involve National Grid NTS requesting baseline reductions at other NTS Exit Points (to be detailed in IExCR)


Post Application Information Provision Not later than 24 hours after each User has been

notified of their allocation, National Grid NTS will publish the following information by NTS Exit Point by Gas Year:

Aggregate quantity of Prevailing NTS Exit (Flat) Capacity allocated

Aggregate quantity of reductions accepted and from when such reductions apply

(Revised) Baseline Quantity (i.e. including any reductions accepted by the Authority)

Incremental Quantity (where applicable) Number of Users applying for additional prevailing rights

Investments: Unconstrained Period “Prevailing Flat Capacity” - Increase

Capacity

10

20

July 2007

Oct 2010

Baseline

30

In July 2007, Users will also be able to request additional prevailing rights for use from Oct 2010

Require commitment to pay 4 years charges, irrespective of baseline

Initial Prevailing Capacity

Additional Prevailing Capacity

Commit to pay [4] years of charges for 30 units

Revised

Prevailing

Level

Oct 2014

Investment Process - Incremental “Prevailing Flat Capacity”

Users able to apply in July to signal additional “prevailing” requirements for 3 years ahead

Each User commits to pay for [4] years of charges, irrespective of baseline (but may only reduce thereafter subsequent to [1.5] years

notice period)

National Grid NTS considers whether transfer of unsold capacity from other nodes would avoid investment and request permanent baseline

reductions via application to release incremental capacity

If aggregate of user requirements at a node above baseline then National Grid NTS consider need for investment

Allocations and transfers published by October

ARCAs

Allows non-UNC parties to reserve Prevailing NTS Exit (Flat) Capacity

Counter party commits to pay [4] years of exit capacity charges on any amount of reserved capacity not booked by Users under UNC

National Grid NTS commitment to allow users to book reserved capacity

Section 2: Medium Term NTS Exit (Flat) Capacity Sales

Held once a year August for Y1, Y2 and Y3

Over 2 business days, 3 business days apart Open between 08.00 and 17.00 Bids can be modifies/withdrawn between these times Bids must be greater than or equal reserve price Bids must be greater than or equal to Minimum Eligible

Quantity 100,000kWh 10 bids per User, per NTS Exit Point, per round If Credit Sanction in place User will be unable to bid (bids

also rejected at Allocation)

Section 2: Medium Term NTS Exit (Flat) Capacity Sales

Unsold baseline made available

50% of quantity to be offered in each round 1 and 2 & the unsold quantity from the first round is made available in the second round

Bids will be ranked in order of price

National Grid will allocate within [48]hrs for round 1&2

Section 2: Medium Term NTS Exit (Flat) Capacity Sales – cont.

Standard pay-as-bid allocation rules

Not later than 24 hours after each User has been notified of their allocation in the final round National Grid NTS will publish the following information per NTS Exit Point per Year:

Weighted Average Price of all successful bids Aggregate Volume Allocated Any remaining unsold baseline NTS Exit (Flat) Capacity (including any

NTS Exit Capacity that the National Grid NTS is obligated to release). Number of Users who submitted bids Number of successful Users The highest price accepted The volume accepted associated to the highest price The lowest price accepted The volume accepted associated to the lowest price

Section 3: Daily Release Short Term (Firm) NTS Exit (Flat) Capacity Sales

Held D-1and D 15.00 D-1 With a minimum of 60 minutes notice, by National Grid

NTS, after the D-1 auction.

Bid window open D-7 06.00 – D0 00.00

Users can place evergreen or reducing bids Can modify/withdraw evergreen at any time unless in

period between gate closure and allocation. Reducing bids can be withdrawn subject to the above but

cannot be modified once reduced.


Bids must be greater than or equal to reserve price

10 bids per Exit Point, per User, per day (excludes withdrawn and allocated bids)

Bids must be greater than or equal the Minimum eligible quantity (100,000 kWh).

If a credit sanction is in place Users will be unable to place bids (would also be rejected at allocation)


Bids ranked in price order (Pay-as-bid)

NTS SO will allocate 1 hour after closure

Quantity made available on D-1, based on unsold baseline plus NTS SO discretion.

Quantity made available on D, based on National Grid NTS discretion and/or Unsold baseline (subject to National Grid NTS Licence conditions)


Not later than 1 hour after each User has been notified of their allocation the National Grid NTS will publish the following information per NTS Exit Point per day:

Weighted Average Price of all successful bids Aggregate Volume Allocated Number of Users who submitted bids Number of successful Users The highest price accepted The volume accepted associated to the highest price The lowest price accepted The volume accepted associated to the lowest price

Section 4: Day Ahead Interruptible NTS Exit Capacity Sales

No ‘Firm’ right to offtake gas

Auction held D-1 15:00

Bid window open D-7 06.00 – D-1 14.00 Must be greater than or equal to reserve price No more than 10 bids per NTS Exit Point, per User, per Day (not including

withdrawn bids) Quantity must be greater than Minimum Eligible amount 100,000 kWh Bids rejected if Credit Sanction in place at time of bid being placed or

allocation

Amount made available based on UIOLI principles plus discretionary release

UIOLI based on Firm holdings minus average quantity offtaken. Difference calculated for each day over 30 days, excluding last 7 days. Average difference gives UIOLI quantity

Section 4: Day Ahead Interruptible NTS Exit Capacity Sales

Bids ranked in price order (Pay-as-bid auction)

National Grid NTS will allocate 1 hour after closure

NTS SO ability to scale back if constraint

Not later than 1 hour after each User has been notified of their allocation the National Grid NTS will publish the following information per NTS Exit Point per day:


Section 5: Transfers and Assignment of NTS Exit (Flat) Capacity

A trade registration system to facilitate trading

Users can trade ahead of the day (unlimited days in advance) and within day (upto 04.00)

Trading may not take place between NTS Exit Points

National Grid NTS may reject a trade within 60 minutes of the trade being confirmed if it causes a negative holding.

Section 5: Transfers and Assignment of NTS Exit (Flat) Capacity

User unable to buy via trading if Credit Sanction in place

Holdings adjusted for trade buys and/or sells

Original holder of capacity remains liable for NTS Exit Capacity charges.

National Grid NTS will facilitate primary transfer (assignment) of a User’s total amount of capacity holding to another User at an NTS Exit Point with 5 days notice

User able to assign its total amount of capacity holdings at an NTS Exit Point to another User at the same NTS Exit Point, subject to credit checks, including the liability to pay for capacity charges

Section 6: Long and medium term NTS Exit (Flexibility) Capacity Sales

No incremental investment

Annual NTS Exit Flexibility Auction By NTS Exit Zone Y1 – Y5 (annual strips) Held over 2 business days with 3 business days in between

Open 08.00 to 17.00 on each day Release 50% in each round and unsold from 1 in round 2 10 bids per NTS Exit Zone, per User, per round Bids must be greater than or equal to reserve price Bids must be greater than Minimum Eligible Quantity (50,000 kWh) Pay-as-bid auction Information provided pre and post auction


National Grid NTS shall allocate within 48 hours of closure of the window.

Between each round. Not later than 48 hours following the closure of each auction round, the National Grid NTS will notify Users of the following information by NTS Exit Zone and Gas Year:

Aggregate Volume Requested Aggregate Volume Allocated Highest Price Bid Allocated Volume Allocated at highest price Lowest Price Bid Allocated Volume Allocated at lowest price Number of Users who placed bids Number of successful Users Maximum Available NTS Exit (Flexibility) Capacity for future

auctions.


After Final Allocation. Not later than 24 hours after each User is notified of their allocation, National Grid NTS will publish the following information by NTS Exit Zone and by Gas Year:

Aggregate Volume Requested Aggregate Volume Allocated Maximum Available NTS Exit (Flexibility) Capacity Highest Price Bid Allocated Volume Allocated at highest price Lowest Price Bid Allocated Volume Allocated at lowest price Number of Users who submitted bids Number of successful Users

Allocation Process is Key 22 MCM national release Subject to area & zonal maxima

Complexity in Allocation Process

Section 6: Long and Medium term NTS Exit (Flex) Capacity Sales – cont. (EXAMPLE)

National Release 22

Area X limit 13

Area Y limit 17

Zone A limit 10

Zone B limit 12

Zone C limit 14

Zone D limit 6


NTS Exit

PointQuantityPriceZone Allocate to?

National Allocation

Area X Allocation

Area Y Allocation

Zone A Allocation

Zone B Allocation

Zone C Allocation

Zone D Allocation

User 1 7 5.0 A

User 1 5 4.5 D

User 2 6 4.5 A

User 1 2 4.0 B

User 4 6 3.5 B

User 3 4 3.0 C

User 2 8 2.5 A

User 3 2 2.5 B

User 4 5 2.5 C

User 1 9 2.0 A

User 2 4 2.0 D

User 3 12 2.0 C


NTS Exit


National Allocation

Area X Allocation

Area Y Allocation

Zone A Allocation

Zone B Allocation

Zone C Allocation

Zone D Allocation

User 1 7 5.0 A Allocate in Full 7 7 0 7 0 0 0

User 1 5 4.5 D

User 2 6 4.5 A

User 1 2 4.0 B

User 4 6 3.5 B

User 3 4 3.0 C

User 2 8 2.5 A

User 3 2 2.5 B

User 4 5 2.5 C

User 1 9 2.0 A

User 2 4 2.0 D

User 3 12 2.0 C


NTS Exit


National Allocation

Area X Allocation

Area Y Allocation

Zone A Allocation

Zone B Allocation

Zone C Allocation

Zone D Allocation


User 1 5 4.5 D Allocate in Full 12 7 5 7 0 0 5

User 2 6 4.5 A

User 1 2 4.0 B

User 4 6 3.5 B

User 3 4 3.0 C

User 2 8 2.5 A

User 3 2 2.5 B

User 4 5 2.5 C

User 1 9 2.0 A

User 2 4 2.0 D

User 3 12 2.0 C

Section 6: Long and Medium term NTS Exit (Flex) Capacity Sales – cont. (EXAMPLE)NTS Exit


National Allocation

Area X Allocation

Area Y Allocation

Zone A Allocation

Zone B Allocation

Zone C Allocation

Zone D Allocation



User 2 6 4.5 AAllocate partially, 3, Zone A max hit

15 10 5 10 0 0 5

User 1 2 4.0 B

User 4 6 3.5 B

User 3 4 3.0 C

User 2 8 2.5 A

User 3 2 2.5 B

User 4 5 2.5 C

User 1 9 2.0 A

User 2 4 2.0 D

User 3 12 2.0 C



National Allocation

Area X Allocation

Area Y Allocation

Zone A Allocation

Zone B Allocation

Zone C Allocation

Zone D Allocation




15 10 5 10 0 0 5

User 1 2 4.0 B Allocate in Full 17 12 5 2 0 5

User 4 6 3.5 B

User 3 4 3.0 C

User 2 8 2.5 A

User 3 2 2.5 B

User 4 5 2.5 C

User 1 9 2.0 A

User 2 4 2.0 D

User 3 12 2.0 C



National Allocation

Area X Allocation

Area Y Allocation

Zone A Allocation

Zone B Allocation

Zone C Allocation

Zone D Allocation




15 10 5 10 0 0 5


User 4 6 3.5 BAllocate partially, 1, Area X max hit

18 13 5 3 0 5

User 3 4 3.0 C

User 2 8 2.5 A

User 3 2 2.5 B

User 4 5 2.5 C

User 1 9 2.0 A

User 2 4 2.0 D

User 3 12 2.0 C



National Allocation

Area X Allocation

Area Y Allocation

Zone A Allocation

Zone B Allocation

Zone C Allocation

Zone D Allocation




15 10 5 10 0 0 5



18 13 5 3 0 5

User 3 4 3.0 C Allocate in Full 22 9 3 4 5

User 2 8 2.5 A

User 3 2 2.5 B

User 4 5 2.5 C

User 1 9 2.0 A

User 2 4 2.0 D

User 3 12 2.0 C



National Allocation

Area X Allocation

Area Y Allocation

Zone A Allocation

Zone B Allocation

Zone C Allocation

Zone D Allocation

User 1 7 5.0 A Allocate in Full 7 7 0 7 0 0 0User 1 5 4.5 D Allocate in Full 12 7 5 7 0 0 5


15 10 5 10 0 0 5

User 1 2 4.0 B Allocate in Full 17 12 5 10 2 0 5


18 13 5 10 3 0 5

User 3 4 3.0 C Allocate in Full 22 13 9 10 3 4 5

User 2 8 2.5 AReject as National Allocation Max Sold

22 13 9 10 3 4 5

User 3 2 2.5 BReject as National Allocation Max Sold

22 13 9 10 3 4 5

User 4 5 2.5 CReject as National Allocation Max Sold

22 13 9 10 3 4 5

User 1 9 2.0 AReject as National Allocation Max Sold

22 13 9 10 3 4 5

User 2 4 2.0 DReject as National Allocation Max Sold

22 13 9 10 3 4 5

User 3 12 2.0 CReject as National Allocation Max Sold

22 13 9 10 3 4 5

Flex Capacity – Increase (annual)

Capacity

5

July 2007

Oct 2010

Zonal

Baseline

Users able to book annual rights subject to national, area and zonal limits through “pay-as-bid” auction 5 years ahead

Annual right

Oct 2011

Annual right

Oct 2012

Allocate subject to national, area and zonal maxima

Reserve Price ~0 p/kWh

Invitation issued 28 days in advance

Section 7: Daily NTS Exit (Flexibility) Capacity Sales

Daily NTS Exit Flexibility OPN Process

OPN submitted at an NTS Exit Point level Needs to be detailed at a User level either by

Providing a User OPN orA default methodology to derive a User OPN

National Grid NTS calculate an implied NTS Exit (Flexibility) Capacity Usage from the OPN

If National Grid NTS can accommodate the requested OPN then the User’s NTS Exit (Flexibility) Capacity holding is increased (if required) by the User’s implied NTS Exit (Flexibility) Capacity usage.


If National Grid NTS cannot accommodate the OPN then the OPN is rejected and User’s can re-submit

If the revised OPN still cannot be accommodated then an Auction is invoked (National Grid NTS may also have to invoke Constraint Management Tools)

Additional NTS Exit (Flexibility) Capacity allocated via OPN process is charged at the Daily NTS Exit (Flexibility) reserve price.


Auction Process

Minimum of [30] minutes notice given by National Grid NTS, detailing

NTS Exit Zone Reserve Price

Volume released at National Grid NTS discretion

Users can place bids from 08.00 D-7 to 21.00 DMust be greater than or equal to reserve price10 bids per NTS Exit Zone, per User, per day (excludes withdrawn and allocated bids)Must be greater than or equal to Minimum Eligible Quantity

(50,000 kWh)Evergreen or reducing


Pay as bid auction

Not later than 1 hour after each User has been notified of their allocation the National Grid NTS will publish the following information per NTS Exit Zone per day. Each one of the pieces of information detailed below will be provided:


Flex Capacity – Increase (daily)

Capacity

5

Oct 2010

Zonal

Baseline

Annual right

Oct 2011

Annual right

Oct 2012

Daily rightsubject to new zonal maxima based on our assessment

Assessment of daily capability and unutilised flex

Consider release of additional flex (in accordance with incentive/obligation)

Allocate through OPN acceptance, if can meet all requests

If can’t meet all requests, allocate through “pay-as-bid”auction

Day ahead and within day

Current Notice Periods and Ramp Rates apply

Reserve Price ~0 p/kWh

Section 8: Transfers and Assignment of NTS Exit (Flexibility) Capacity

A trade registration system to facilitate trading (provided in 2009)

2 “types” of NTS Exit (Flexibility) Capacity Trading

Annual Trading Opens after first Annual auction for a Year has been allocated. Annual Block ONLY Can be traded at and between Zones Cannot be traded during Annual Auction (i.e. from first bid date

to allocation completed) Cannot trade annually after last Annual Auction for that Gas

Year


Daily Trading Opens after last Annual auction for a Year has been allocated. Minimum for a day. Can be traded at and between Zones

Both Annual and Daily trading subject to Intra and Inter Zonal Rules:

Intra-Zonal Users can trade ahead of the day (subject to Annual and Daily

rules) and within day (upto 04.00) Facilitate trading between Users


Inter-Zonal Can trade in advance (subject to Annual and Daily rules). Trading window open up to 12.00 D-1 Trades subject to

Area maximaZonal MaximaNTS SO taking Constraint Management Actions within an

NTS Exit Zone Can trade between Users and a User can trade with itself.

Either “type” of trade and intra/inter zonal results in an adjustment to both the buying and selling User’s NTS Exit (Flexibility) holding at the relevant NTS Exit Zones.


National Grid NTS will facilitate primary transfer (assignment) of a User’s total amount of capacity holding to another User at an NTS Exit Zone with 5 days notice

User able to assign its total amount of capacity holdings at an NTS Exit Zone to another User at the same NTS Exit Zone, subject to credit checks, including the liability to pay for capacity charges

Section 9 : NTS Exit Capacity Constraint Management NTS Exit (Flat) Capacity Constraint Management

Scaleback Of Interruptible Options & Forwards contracts NTS Exit (Flat) Capacity Buy Backs

NTS Exit (Flexibility) Capacity Constraint Management

D-1 Buy Back of Primary Product Bi-Lateral Contracts

Flow Swaps Forwards & Options Turn Up

Section 9 : NTS Exit Capacity Constraint Management

Scaling Back of NTS Exit (Flat) Interruptible Interrupt anytime after 15.00 D-1 Minimum of current hour +1 notice Takes account of “deemed flow” National Grid NTS shall determine the proportion of

Interruptible required to be scaled off. Users pay for original Interruptible (pre-scale).


Buyback of NTS Exit (Flat and Flexibility)

Capacity Process same as daily release Pay as bid auction Limits to bids/offers (reserve price bids, minimum

eligible quantity and so on) Allocate lowest price first Potential for Flat buyback D-1 and D Potential for Flex buyback D-1 Information provided post auction


Within Day Flow Reductions NTS SO notify Users of quantity and period Users submit offers

QuantityPrice

Pay as bid auction Price feeds into NTS Exit (Flexibility) Capacity

Overrun Flow reduction reduces a Users NTS Exit (Flexibility)

Capacity holding by 1/3 of the quantity accepted.

Section 10: Exit Capacity Neutrality Arrangements

Cost and revenues smeared on NTS Exit (Flat) Capacity holdings over all NTS Exit Points

Revenues D-1 and D NTS Exit (Flat) Capacity Sales Non-obligated NTS Exit (Flat) Capacity Sales D-1 and D NTS Exit (Flexibility) Capacity Sales NTS Exit (Flat) Capacity Overrun Charges NTS Exit (Flexibility) Capacity Overrun Charges

Costs NTS Exit Capacity Constraint Management tools

Section 11: Charging Arrangements

Users pay National Grid NTS NTS Exit Capacity Charges (Flat and Flexibility) NTS Exit Commodity Charges NTS Exit Capacity Overrun Charges NTS Exit Capacity Neutrality Charges

National Grid NTS pay Users NTS Exit Capacity Surrender Charges NTS Exit Capacity Neutrality Revenues Non compliant gas and liabilities

Invoiced in accordance with UNC Section S

Section 12: NTS SO Credit Checks & Termination Rules

Credit (subject to Credit Modifications raised)

Extension to current credit rules Notify Users if exceed 70% of their credit limit Sanction placed if exceed 85% of User’s credit limit Assessment of outstanding invoices plus next 12 months entry

capacity charges.

Considers 12 months Flat & Flex in security & credit assessment

DNs will need appropriate security

Section 12: NTS SO Credit Checks & Termination Rules

Termination

DNO terminates, new DNO takes over

Non DNO User terminates NTS Exit (Flat and Flexibility) Capacity revert to NTS SO Except where the User has traded the product onto another User

Non terminated user has option to “buy” the traded quantity and #accept the liabilities

the User has bought the product from another UserProduct reverts to non-terminated User

Section 13: Liability Arrangements and User Obligations

Liabilities – Direct Connects Principle applies to both Flat and Flexibility Amount of gas not made available for Offtake by National Grid

NTS Based on holdings (C), flows (X) and nominations (Y)

Flat Liability use Flat holdings, end of day flows/nominationsFlex Liability use Flex holdings, 22.00 flows and flex nominations

Rate for Flat = Prevailing Exit Capacity Price (P) Rate for Flexibility = WAP for Annual Auction bids for that Gas

Year for that NTS Exit Zone (P).

C * (1-X/Y) * P * F

F = multiplier of 10

DN’s as now


National Grid NTS obligations to make gas available for offtake

National Grid NTS shall not be obliged to make gas available for Offtake where :

Quantity flowed exceeds the User’s NTS Exit (Flat) Capacity

Holding.At any time where flows exceed the maximum permitted

rateOn any day that there is Planned Maintenance

Maximum Permitted RateApplies between 06.00 and 22.00Flex holding + 16/24ths of end of day Flow


User obligations at NTS Exit Points User not entitled to flow at a rate that exceeds the Maximum Permitted Rate

Flat holding / 24 + Flex holding / 4

Where National Grid NTS believe that this rate is being exceeded – National Grid NTS can take any steps to secure the required reduction


Pressure Obligations at NTS/LDZ Offtakes Commitments for 2009/10 (set this summer) rolled over going forward. National Grid NTS and DNO’s can request a :

Permanent increase / decrease in April each year, detailing new Assured Offtake Pressure and start of Gas year applies

Finite increase / decrease at any time, detailing the new Assured Offtake Pressure and the period that the pressure shall apply.

The counter party must accept within 2 months for permanent or 10 days for temporary unless it would prejudice the safe and economic operation of their system.

Section 14: Further References in UNC

Section G Interruptible Firm Allowance SOQ Capacity Booking Interruptible Supply Points Partnering Supply Points

CSEP Ancillary Agreements remain but UNC takes precedent

Section I OAD Various Sections to be removed as superseded by these

Business Rules

enduring nts offtake arrangements transmission workstream 5th september 2006

Documents

nts exit points

nts exit zonesappendix

nts exit zone06

flat capacity firmdaily

exit reformappendix

flat capacity firmannual

nts exit point zone

nts exit reform objective