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Review Group 221: 23 January Analysis of the impacts of the proposal on Users

Review Group 221: 23 January Analysis of the impacts of the proposal on Users. Analysis of the impacts of the proposal on Users. New analysis tool Tool developed to analyse RG221 Proposals Utilises all Auction Bid Values – AMSEC & QSEC Data is provided by ASEP and User Apology

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Review Group 221: 23 January Analysis of the impacts of the proposal on Users

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  1. Review Group 221: 23 January Analysis of the impacts of the proposal on Users

  2. Analysis of the impacts of the proposal on Users • New analysis tool • Tool developed to analyse RG221 Proposals • Utilises all Auction Bid Values – AMSEC & QSEC • Data is provided by ASEP and User • Apology • Error (double counting) identified with previous Auction Bid Values presented at 10 December RG221 meeting • £1.9bn total QSEC auction bid value figure less at £1.3bn • Figures for other options have also been impacted (but to a lesser degree) • See graph for full details • Split by Baseline and Incremental capacity to be confirmed

  3. Analysis of the impacts of the proposal on Users

  4. Analysis of the impacts of the proposal on Users • Credit Rating - 50% to be applied to this risk element • Element X (25%) – applied to all Users • Element Y (25% * Credit rating risk (See table))

  5. Analysis of the impacts of the proposal on Users • Credit Rating - 50% to be applied to this risk element (25% minimum) • Observations • User Credit Rating (IGR) – not available in all cases • Parent Credit Rating is available (where a PCG is currently used as security) • Large number of Users where no credit rating is available/recorded (27 Users)

  6. Analysis of the impacts of the proposal on Users • Project risk - 25% to be applied to this risk element • Only 3 Users have an entry capacity holding and have projects that are currently under construction • 1 User has been allocated the full 25% • 1 User has been allocated 20% (feasibility study in place) • 1 User has been allocated 20% but the affect is reduced when aggregated to an all ASEPs level (has capacity at more than 1 ASEP) • All (49) Users are unaffected by this risk element

  7. Analysis of the impacts of the proposal on Users • Community Impact Risk - 25% to be applied to this risk element • The risk to the community can be measured by the proportion of the revised auction bid value against the existing User holding • Difficulties experienced on how to implement/test • Test assumption: last years auction data used to derive a revised auction bid value • Impact • Suggest percentage for this risk element (currently 25%) be reduced to 10% and all figures updated at next years auction

  8. Review Group 221: Assessment of Implementation Risks

  9. Assessment of implementation risks • Risk1: Users may decide not to provide the security required and project fails • 2 single ASEP Users • Barrow • Fleetwood • £190m combined Auction Bid Value • High risk but this risk exists today • No security currently required

  10. Assessment of implementation risks • Risk2: Users may decide not to provide the security required and repurchasing some of the cancelled capacity at a later date. • Risk could apply to 8 Users at St Fergus that have capacity holding at this entrypoint but have little holding at other terminals. • 2009 St Fergus auction price higher than historical prices

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