1. Linepack ‘Park and Loan’ Quantity - Influencing Factors Review Group 291 – July 2010

2. Summary  Pre-assessment of available quantity for park and loan is complex.  Competing needs for flexibility and contingency impact on the operating range of linepack.  This motivates discretionary release, with appropriate incentive.

3. Operational Range of Linepack Flexibility Maximum operating pressures Contractually agreed pressures Linepack Flexibility day Demand / supply pattern Flexibility + contingency NTS set-up

4. System Flexibility  NTS has historically been built to transport gas efficiently, based on flat supply and demand, within a range of operating pressures.  System flexibility is inherently a “by-product” of operating the NTS within a range of pressure limits.  Current “limits” of flexibility entirely dependent on the daily NTS setup and the supply/demand pattern and therefore quite complex to define and model outer-boundary and maxima of available flexibility.  National Grid is incentivised to minimise day-on-day linepack changes but has no incentive on within-day linepack ‘release’ or ‘use’

5. Flow Pattern Volatility – “Time of flight” The ability to profile energy within day across a number of entry/exit points whilst maintaining an energy balance in aggregate across the day.  Supply patterns responding to demand and market changes.  Plant issues and Portfolio balancing.  Price-responsive supplies and demands. Supply A Offtake Supply B 200km 50km Flows from Supply A switch to Supply B. Linepack levels at Offtake will drop due to the inherent lag of flow from Supply B taking time to reach the Offtake

6. Single Entry/Exit Point Flexibility The ability to profile an entry or exit flow above and below a flat rate.  DN offtake profiles.  Power station changes driven by electricity market interaction.  Storage and interconnector within-day switching.  Within-day entry flow fluctuations driven by demand changes and nomination changes. Flow Time Removing Linepack from NTS Replenishing Linepack to NTS Average flow (1/24th rate) Example: DN Offtake Flows vary within day due to domestic demand

7. (2) NTS Flow, Pressure & Flexibility Time Flow Average flow (1/24 th rate) Pressure Time Max Daily Pressure Min Daily Pressure 22:00 06:00 Start of Day 06:00 Minimum pressure at point where depletion of linepack ceases Flow profile varying about the 1/24 th rate Finite limit of flexibility linked to compression/ flow rates required to return to start of day pressure Increases the severity of NTS pressure drop Increasing Linepack Usage Replenishing Linepack to NTS Removing Linepack from NTS DN Offtake

8. Example Day – 9 th January (Actual Data)

9. Operational Range of Linepack Flexibility Maximum operating pressures Contractually agreed pressures Linepack Flexibility  Compressor trip risk day

10. Operational Range of Linepack Flexibility Maximum operating pressures Contractually agreed pressures Linepack Flexibility  Within-day exit flexibility  Compressor trip risk day

11. Operational Range of Linepack Flexibility Maximum operating pressures Contractually agreed pressures Linepack Flexibility  Within-day exit flexibility  Compressor trip risk  Within day entry flexibility day

12. Within-day Linepack Utilisation Within-day Max-Min Range of NTS Linepack 30 day rolling average

13. Operational Range of Linepack Flexibility Maximum operating pressures Contractually agreed pressures Linepack Flexibility  Within-day exit flexibility  Compressor trip risk  Within day entry flexibility day  Information uncertainty, EOD imbalance

14. Day-to-day linepack change

15. Within-day PCLP swings PCLP = Opening linepack + System Inputs (Daily Flow Nominations and Storage Flow Nominations) – System Demand (Offtake Profile Notifications) This graph shows ranges of hourly PCLP values during the gas day.

16. Operational Range of Linepack Flexibility Maximum operating pressures Contractually agreed pressures Linepack Flexibility  Within-day exit flexibility  Compressor trip risk  Within day entry flexibility day  Information uncertainty, EOD imbalance  Supply loss risk

17. Example Day – 4 th January (Supply Loss)

18. 4 th January - Continued

19.  Within-day entry flexibility Operational Range of Linepack Flexibility Maximum operating pressures Contractually agreed pressures Linepack Flexibility  Within-day exit flexibility  Compressor trip risk  Inter-Day Linepack ‘park and loan’ day  Information uncertainty, EOD imbalance  Supply loss risk

20. Release volume  Competing requirements for flexibility and contingency, and varying conditions day to day, determines the release will be discretionary if the quantity is to be maximised.  The risks and rewards inherent in linepack release leads to an incentivised regime.