1. France-UK-Ireland (FUI) Region 5th Stakeholder Group (SG) 26 th November 2007, London Interconnector Operator (ICO) Update Simon McVeigh (NGIL) Jean-Gabriel Valentin (RTE)

2. IFA Capacity Management System User Interface The new system is proposed to be the sole commercial interface for Users for all IFA activity, including: –Conducting auctions –Users’ Mid-Channel Nominations (MCNs) –All general communications (results, ICEs, specifications, curtailments, general queries/notices etc) IFA will require a single Mid-Channel Nomination –unlike current practice of nominating identical MCNs to both TSOs Access to be via web-based format (secure, reliable, and using ETSO ECAN protocols)

3. IFA Capacity Management System Next Steps Dec 07Tenders invited March 08Contract award *September 08Product testing *October 08Commercial operation *note – chosen Supplier capability will determine precise Go-Live date. In spring 08 a further User workshop will be held to update Users on business process and interface issues.

4. IFA Capacity Management System Project Timescales TaskDuration Prepare Supplier Pre-Qualification 1 week (25 - 29/6) Arrange Regulators/ICOs meeting to agree way forward (deferred) 4 weeks (2 – 31/7) Supplier Pre-Qualification3 weeks (31/7 – 21/8) Re-arrange Regulators/ICOs meeting. Agree ICO response. 3 Weeks (22/8 – 11/9) Regulators additional request for information and ‘go-ahead’. 4 Weeks (12/9 – 9/10) Prepare ITT & System Req’ments6-8 weeks (10/10 – ) Issue ITT- ITT Period5-6 weeks Assess Tenders and Approve6 weeks Contract Award- System Delivery21-29 weeks * Users’ systems/interface mods.21-29 weeks * Industry testing3-4 weeks Go-Live- Mar 08 25 Jun 07 Plan Commencement Oct 08 Plan Progress 9 Oct 07 Actual – Regulatory ‘Go’ 26 Nov 2 Jul 07 Plan Assumption – Regulatory ‘Go’ Dec 07 * Revised estimates based on Supplier Pre-Qual responses Plan Changes

5. Potential Harmonisation Aspects Losses Firmness Settlement Interconnector Transfer Limits (ITLs) Use of I/C Fee

6. Losses Potential Harmonisation Aspects NGIL Assets RTE Assets IFA Mid Channel Nomination (MCN) 2000 MW Capacity F2E & E2F 1.17% Loss French Market Firm Connection e.g. 2024 MW GB Market Firm Connection e.g. 1976 MW 4 x 500MW Circuits (Poles 1 – 4) Operated as 2 pairs of 1000MW (Bipoles 1 & 2)

7. Losses Relevant Issues GB Market ≠ French Market –GB: Market Participants responsible for losses –Fr: RTE pass through all losses (except IFA) to consumers Direct Current ≠ Alternating Current –AC: System line loss small in meshed network –DC: System conversion losses notable NGET (TSO) ≠ NGIL (ICO) –NGIL (Interconnector Licence) not permitted to trade energy; cannot mitigate or pass through energy exposure –NGET (Transmission Licence): to take on losses for another BSC party is not resolving an imbalance issue in GB Market; outside Licence

8. Losses Potential Options IFA Mid Channel Nomination (MCN) 2000 MW Capacity F2E & E2F IFA Nomination? F2E Only? Both directions? Capacity offered? IFA Nomination? E2F Only? Both directions? Capacity offered? 1.17% Loss NGIL Assets RTE Assets

9. Losses Potential Options GB Market ≠ French Market –Harmonise GB & French market arrangements? Direct Current ≠ Alternating Current –Appropriate to consider harmonisation of IFA with other French AC borders? NGET (TSO) ≠ NGIL (ICO) –Consider varying NGIL’s Interconnector Licence / NGET’s Transmission Licence? Users already factor losses into the value of IFA capacity –Purpose of harmonisation?

10. Losses Conclusion No change proposed to current losses arrangements on IFA

11. Firmness Potential Harmonisation Aspects IFA (Direct Current) ATC = NTC = Rating F2E = E2F Capacity No Security Standards No circuit redundancy Reconcile at 100% Force Majeure 100% Other French AC Borders ATC ≤ NTC < Rating F2x ≠ x2F Capacity Security Standards applied Full circuit redundancy Reconcile at 110% Force Majeure 0%

12. Current Compensation Practices ETSO Survey

13. Compensation Force Majeure ETSO Survey

14. Firmness Relevant Issues IFA Risk ≠ Risk on Other French AC Borders –No European Grid Code to cover DC IFA –UCTE Handbook covers Other French AC Borders –Appropriate to consider harmonisation in FUI region? NGET (TSO) ≠ NGIL (ICO) –Firm NGIL-NGET Connection to Firm GB Market –NGIL (Interconnector Licence) not permitted to trade energy; cannot mitigate or pass through energy exposure –NGET (Transmission Licence): to take on risk for another BSC party is not resolving an imbalance issue in GB Market; outside Licence

15. Firmness Options IFA Risk ≠ Risk on Other French AC Borders –Consider harmonisation across ETSO –Network Access & Congestion Management Task Force NGET (TSO) ≠ NGIL (ICO) –Consider varying NGIL’s Interconnector Licence / NGET’s Transmission Licence? Who is best placed to mitigate curtailment? –Curtailment is typically in increments of 500MW –Curtailment is proportioned across all User MCNs

16. NACM Task Force Firmness Sub-group to Task Force led by E.On Several interconnections to be studied –IFA, IFB, IFD, P-Cz, D-P, D-DW, B-NI, D-NI, D-CH Analyse curtailments for 2006 CY data –Classified as caused by: Internal AC Network Interconnector assets

17. Firmness Study on Interconnectors Draft Curtailment Data 2006 Annual Outages Short-Notice Planned Outages Unplanned Trips/ Reductions IFA Curtailment Commentary* * Discrete curtailment events shown (not duration) Switching transitions 500MW / 1000MW not listed individually AC Borders Asset related maintenance/faults have not curtailed cross-border capacity because of Security Standards (UCTE Handbook) therefore redundancy in interconnection capacity

18. Firmness Summary CM Guideline –Optimisation of firmness –Combination of Firm & Non-Firm capacity allowed Medium-Term Harmonisation Potential –ETSO NACM Task Force Short-Term Harmonisation Potential –Firm & Non-Firm capacity Include as option for settlement functionality in CMS specification Consult IFA Users on combination of Firm/Non-Firm capacity

19. Settlement & Invoicing Target Availability Monthly Products DirectionTarget Availability (%) Actual Availability (%) AprilE2F9594.5 F2E9595.0 MayE2F9598.6 F2E9598.5 JuneE2F9089.8 F2E9090.2 ProductDirectionTarget Availability (%) Actual Availability (%) Quarter 2 (Apr-Jun) E2F9394.0 F2E9394.6

20. Settlement & Invoicing Current & Proposed IFA Current Products invoiced individually, with different payment terms Products offered/invoiced at Target Availability, reconciled on last payment Considers Users’ cash flow against IFA service delivery Equivalent to 100% compensation IFA User Proposal Consolidated monthly invoices for all products, harmonised payment terms Products offered at 100% availability, reconciled monthly for outturn Considers Users’ cash flow against IFA service delivery Equivalent to 100% compensation

21. Intraday Transfer Limits (ITLs) Current & Proposed IFA Current ITLs set after D-1 nomination ITLs do not impact Users’ Interconnector Entitlement (ICE) at D-1 ITLs can restrict Users’ ability to re-nominate intraday if MCN < ICE IFA Proposal ITLs set after D-1 nomination, before Intraday allocation ITLs will not impact Users Interconnector Entitlement (ICE) at D-1 CM Guideline (applying UIoSI/ UIoLI) will ensure MCN = ICE Clarification underway regarding ITLs for intraday capacity

22. Use of Interconnector Fee SO-SO Trades NGET (TSO) ≠ NGIL (ICO) –NGIL cannot subsidise NGET, or vice versa –NGIL must levy a fee for ‘Use of Interconnector’ capability post gate closure Options for Fee basis –Market-based Associate with retro-direction D-1/intraday auction clearing price? Associate with arbitrage value? –Non-market-based Is there a market to participate in, post gate closure? Product (I/C capability) is variable by nature – how to value? No change proposed to current arrangements