Entry Capacity transfers in the constrained period

1. Entry Capacity transfers in the constrained period Transmission Workstream 5th October 2006

2. Entry Capacity transfers in the constrained period • Based on allowing transfer of capacity between interacting ASEPs • Transfers take place within zones on a 1:1 basis • Capacity transfer allows ASEP capability to transfer • Monthly Capacity made available through a new auction • AMTSEC • Subject to a Nodal maxima • Industry concerns • Doesn’t go far enough • Sterilisation of Entry Capacity • Agreed to further explore the possibility of transfers across zones

3. Transfers between zones • How can this be achieved • Earlier workstream presentations suggested this could be done through; • Commercial exchange rates • Buyer covers the incremental cost of transferring capacity • Physical exchange rates • Exchange rate factors in likelihood of constraints • Is it possible to allow transfers between Zones that are adjacent and have ‘some’ physical interaction • ASEPs with no physical interaction • ASEPs with limited/variable physical interaction • ASEPs with a strong physical interaction

4. Physical exchange rates • Transfers between ASEPs with no physical interaction • Does not allow transfer of physical capability • Any transfer would be using existing headroom (if any) near recipient ASEP or creates incremental risk at recipient ASEP. • Therefore no exchange rate available

5. Physical exchange rates • Transfers between ASEPs with limited/varying physical interaction • Physical interaction only comes into play when capacity transfer reduces flows at the Donor ASEP • Physical interaction limited by configuration of Network • Multi junction • Compressors • Therefore possible for ASEPs in close proximity to have no / minimal transfer of capability as a result of a request to transfer capacity.

6. Capacity Exchange rate

7. Physical exchange rates • Certain ASEPs have a 1:1 exchange rate • Share common areas of pipeline and/or junctions • Highly interactive • If 1 unit of flow decreases at one ASEP then 1 unit of additional flow would be allowed at interacting ASEP • Basis of grouping ASEPs into zones

8. Zonal definition • Zonal Definition • ASEPS placed within the same zone if; • Share common areas of pipeline and multi junctions • Highly interactive • If 1 unit of flow decreases at one ASEP then 1 unit of additional flow would be allowed at interacting ASEP

9. NTS Schematic – Easington Area Teesside Bishop Auckland Barrow Hornsea Garton Carnforth Asselby Easington Scunthorpe Warrington Theddlethorpe Hatton Bacton Alrewas Burton Point Wisbech Peterborough

10. Multiple Transfer requests • Provision of certainty to Users of applicable exchange rates • Prior to participation in an auction to enable transfer of unsold capacity; • Uncertainty around demand for capacity in forthcoming auction • Uncertainty around whether Users would secure the capacity to enable the transfer to take place. • Exchange rate may change after the auction.

11. Multiple requests Baseline Transfer request 10 Units Transfer request 10 Units Capability Transfer request 10 Units Capacity Exchange rate 2:1

12. Multiple requests Baseline Transfer request 10 Units Transfer request 10 Units Capability Capacity Exchange rate 4:1

13. Multiple requests Baseline Transfer request 10 Units Capability Capacity Exchange rate 0

14. Alternative proposals • Unsold Capacity • Provide wide range of exchange rates • ‘Lock in’ Users to transfer request • Sold Capacity • First come first served

15. Way forward • Modification Proposal to go to October Mod Panel? • Does Proposal meet the relevant objectives? • Is the Proposal sufficiently developed? • Is it worthwhile proceeding with Proposal?