1. Balancing Update Stakeholder Group Meeting - 4 November 2009

2. 2 Experiences of Interim CBB Arrangements  More discrete pricing (6 prices) has allowed more cost reflective pricing  Useful for offsetting longer runs on expensive GB BMUs particularly over demand peaks  Cannot readily use for GB energy balancing as not fully integrated into dispatch tools  Active constraints on GB system potentially exacerbated  Flexibility of product i.e. windows currently allow for longer duration product and also for product shaping  NGET and RTE can indicate requirements ahead of gate closure through Early Notification Process  Greater refinement could be delivered with more pricing periods e.g. across current periods often selling and buying in different hours within the window

3. 3 NGET and RTE Offer Prices £/MWhe

4. NGET and RTE Bid Prices £/MWhe

5. 5 NGET Offer Price and Synchronised GB Offer Price (GB gate closure)

6. 6 NGET Cross Border Balancing Prices vs. GB Wholesale (APX)

7. 7 RTE Cross Border Balancing Prices vs. France Wholesale (Powernext (EPEX))

8. 8 Accepted Offer Volumes by TSO by IFA Gate

9. 9 Accepted Bid Volumes by TSO by IFA Gate

10. 10 Overview of Development of Enduring Solution  Key concerns have been identified Ramp management – some manageable solutions identified Shaping flexibility – some manageable solutions identified  Potential problems relating to 1-hour product UK demand/energy position can vary considerably across periods Demand triggers frequently occur on the hour: TV Pick-Ups; demand tele- switching; price-sensitive demands; pumping deload etc Need to minimise concurrent generation deloads or IFA ramp deloads – frequency control considerations Longer duration products could help avoid high cost or inappropriate actions  IS issues The enduring solution have to be fully integrated to NGET BM Systems Twice yearly IS releases (Baselines)

11. 11 NGET Proposes a 2-Hour Product  In addition to 1-hour products  A 2-hour CBB product would mitigate many of the identified risks.  Overcomes the major risk of failing to secure a second hourly product on demand peaks  Reduces uncertainty associated with potential system events and secures additional time to put alternatives in place if required  Helps preserve critical STOR (short notice / short duration plant e.g. OCGTs  Can also be used to resolve ‘ramp management’ issues as part of an integral energy/system transaction

12. 12 Common NGET / RTE Working Programme  Revision of the target date for enduring solution to November 2010  NGET and RTE work together to analyse in depth the possibility to secure a 2-hour product Target : conclusion by February 2010 Whether a solution is found, costs and planning re-evaluation will allow to define a target date for implementation, as far as possible implemented simultaneously with go-live  Both Operators are today working towards the implementation of the enduring solution for UK-FR CBB solution Target Go live : achieving go-live in November 2010 On the basis of the one hour duration product and the already agreed adaptations, augmented with the result of the study when available