Development of Firm Monitor & GBA

1. Development of Firm Monitor & GBA Transmission Workgroup – 1 December 2011

2. Agenda • Firm Monitor • GBA

3. Development of Firm Monitor Transmission Workgroup – 1 December 2011

4. Firm Monitor • National Grid has an UNC obligation to: • Calculate and publish Preliminary Firm monitor info in May • Calculate and publish “Final” Firm monitor info by October • The Firm Monitor represents the level of storage required to support all “firm” demand in a severe (1 in 50) winter It is published for information only

5. Why Change? • Gas Year 2011/12: all DN connected load classified as Firm • Subsequent increase in the level of storage space to meet firm load • Increase in space requirement from 32% in 2010/11 to 94% in 2011/12 • Change discussed at the Gas Forum, DSWG, the Small Suppliers Forum, Transmission Workgroup and with specific Shippers

6. Options • Do nothing • Firm Monitor space requirement will rise above 100% sometime (2012/13?) • Will be breached each year • Change calculation methodology • What demand do we use? • Remove requirement • Not used by majority of industry • Storage information is published on the web

7. Proposed Option • Remove requirement to publish firm monitor (in UNC). • Requirement for safety monitor will remain Next Steps • Aim to have change in place for winter 2012/13 • Raise modification in January 2012

8. Development of GBA Transmission Workgroup – 1 December 2011

9. What Is a Gas Balancing Alert (GBA) National Grid have a UNC obligation (V 5.9) to alert system users to a EOD supply/demand imbalance via a Gas Balancing Alert (GBA) A GBA has two triggers, day ahead (no discretion) or within day (discretion) Or Expectation on the market to respond by increasing supply or initiating a demand side reduction.

10. D-1 and Within Day GBA specific issues within scope for review Issues to be addressed in respect of specific GBA type : • Day Ahead GBA; • rename to a day ahead notification; • aligning UNC with the calculation methodology undertaken by National Grid NTS during the GBA; • ability for National Grid NTS to recall a GBA notice. • Within Day GBA; • ability for NGG to signal a within day issue; • review trigger methodology; • ability for National Grid NTS to recall a GBA notice.

11. Ability to Signal Within Day Issue Transmission Workgroup - 1 December 2011

12. Within Day Issue Safety Limit ?

13. Within-Day Linepack Variance

14. Yearly Profile Comparison

15. Within Day Warning Conclusions • Increasing volatility in within day linepack variation • Market is not incentivised to manage within day issues • National Grid are best placed to manage within day issues • Could inform the industry that NGG will be taking action to resolve within day issue

16. GBA Trigger Methodology Transmission Workgroup - 1 December 2011

17. Day Ahead GBA Trigger Level The GBA trigger level is National Grids view of total system supply for the winter period Consists of NSS and Storage 1. Non Storage Supplies (NSS) A view of likely NSS supplies are produced by National Grid in advance of the winter period and are published externally in the Winter Outlook document. NSS supplies are assessed monthly throughout the winter period as actual supply data is recorded. Any significant deviations away from the prevailing NSS assumption can reduce or increase the NSS value, leading to changes in the GBA trigger level. 2.Storage Supplies Any storage facility with two or more days deliverability, at assumed maximum rates, will be included in the GBA day ahead trigger level. Storage sites without GBA qualifying deliverability will not be included in the GBA trigger level, and the trigger level will be reduced by the maximum deliverability for those sites. We believe this process is both Transparent & Predictable.

18. Within Day GBA Trigger Methodology - Options • Maintain current methodology • Initial trigger is an incident that will reduce supplies by 25mcm/d, leading to an EOD supply demand imbalance • Issuing of a GBA is at NGG discretion • Supply trigger only, no demand shock trigger • Does not take into consideration start of day position

19. Within Day GBA Revised Trigger Methodology – Options • Full NGG discretion • Pros • No restrictive trigger (25mcm loss of supply) • Additional information to the industry on ‘why’ • Cons • Methodology for determining a GBA is opaque

20. Within Day GBA Revised Trigger Methodology – Options • Extend day ahead methodology to within day • Pros • No restrictive trigger (25mcm loss of supply) • Provides a more real-time view of supply • Common methodology across timescales • Cons • Difficulty in determining the level of supply

21. Additional information provision Transmission Workgroup - 1 December 2011

22. Additional information provision • Publication of NSS breakdown with supporting notes when changed • Publication of projected EOD supply deficit • Additional information via ANS message

23. Next Steps Transmission Workgroup - 1 December 2011

24. Day ahead & Within Day GBA Proposed changes : • Day Ahead GBA; • rename to a notification; • aligning UNC with the calculation methodology undertaken by National Grid NTS during the GBA; • ability for National Grid NTS to recall a GBA notice; • Publication of additional information. • Within Day GBA; • propose new trigger methodology; • ability for National Grid NTS to recall a GBA notice; • no within day name change proposed. Any industry concerns?

25. Day ahead & Within Day GBA • Raise modification in January 2012 • Aim to implement any changes for winter 2012/13