Manifest Errors for Entry Capacity Overruns Workgroup 364

1. Manifest Errorsfor Entry Capacity OverrunsWorkgroup 364 Transmission Workgroup 3rd March 2011

2. Background • GasTerra had an issue with significant (>£m) Entry overrun charges incurred during April, as a result of a ‘manifest error’ • Mod 341 to introduce Manifest Error Provisions into UNC • Mod 364 adds an appeal process • 364 will be withdrawn if 341 is rejected • Status / Timeframe • 341 is waiting for Ofgem Decision • Timeframe for Decision ? • Suggested Approach: If Ofgem directs implementation of 341 – then it can direct implementation date to coincide with a decision on the Appeal Mod 364

3. Topics for Discussion • Objective • Alternative Means to Achieve Objective? • Proposed Solution • Impacts, Implementation Costs etc • Legal Text • Next Steps

4. Objective ‘Add an Appeal Process to enable scrutiny and re-consideration of decisions on Manifest Error Claims, if required’ • Manifest Errors Process in 341 requires UNCC to consider Claim and determine • If it is a valid error • What adjustment should be made to overrun charges • 341 contains robust provisions to: • protect UNCC members from personal liability, and • require independent/impartial consideration of a Claim • Appeal process would provide: • Possibility of scrutiny of a UNCC decision • Thereby reducing the likelihood of the need to use it and • Mechanism to amend in the unlikely event of a biased or otherwise procedurally flawed decision

5. 2. Alternative Means to achieve Objective ? Alternatives for Appellate Body ? • Expert ? • Who ? – What expertise is necessary ? • Costs ? • Appointment process/timeframe ? • Industry Panel ? • Membership ? • Appointment Process/timeframe ? • Costs ? • Ofgem ? • ‘Up to speed’ already, shortest process lead time • Jurisdiction is appropriate in relation to UNC – Ofgem can raise SCR’s and decides on Mods • Consistent with Self-Governance approach (which includes Ofgem appeal role)

6. 3. Proposed Solution – Mod 364 Appeal to Authority permitted Within 5 days of determination of UNCC being notified to Users In writing, copied to UNCC Chair Who can Appeal? Users (whose invoices may be affected) Voting UNCC members (who may be aware of improper procedure) Claimant Grounds: That the decision of the UNCC was not made in accordance with section B, and that the failure to comply with section B had a material impact on the UNCC’s determination Possible Outcomes Uphold UNCC ruling Substitute its own ruling for that of UNCC Remit for re-consideration by UNCC

7. 4. Impacts (of Mod 364) • Impacts • Possible requirement for NG to re-present some information already prepared for UNCC determination • Ofgem would be required to consider the Appeal • No systems impacts • Costs • Minimal, though Ofgem is free to levy an administrative charge if it wishes • Benefits • Speedy, effective and simplest solution • Lowest cost approach Any comments/views – Please contact: sue@tpasolutions.co.uk (or: 07770 702966)

8. 5. Legal Text • Who can appeal? 2.17.9.1 Where the UNCC makes a determination in relation to a Claim raised pursuant to this paragraph [B 2.17], voting members of the UNCC, National Grid NTS or any User whose charges may be affected (each an ‘Appellant’) may refer such determination to the Authority, subject to the following provisions. For the avoidance of doubt, the User who raised the Manifest Error Claim may be an Appellant. ………………. • Grounds ? 2.17.9.3 The sole grounds for a reference are that the determination made by the UNCC was not made in accordance with the provisions of paragraph [B 2.17] and that the failure to comply with the provisions of paragraph [B 2.17] had a material impact on the UNCC’s determination.

9. 6. Next Steps • Workgroup Report ? • Return to Panel to decide whether to send for consultation ? Any comments/views – Please contact: sue@tpasolutions.co.uk (or: 07770 702966)