1. September 2008 QSEC auction - Allocations Transmission Workstream 04.12.08

2. 2 Introduction  Following November workstream, some Shippers expressed an interest in the 2008 QSEC allocation results  Aggregate results were published 14 November on Gemini, National Grid website and via Joint Office  Now taking the opportunity to run through these results and answer any questions you may have

3. 3 Quick reminder - QSEC bidding  Demand driven price  Auction can close early if stability groups remain unchanged between interim bid windows – difficult to predict when this will happen  This year’s auction closed after interim bid window 2  Price Step (P0) = 90% baseline – minus anything sold in previous auctions + any unsold incremental  Price Steps P1 to P20 = Incremental Capacity offered (Available NTS Entry Capacity)  Incremental prices are based on the long run incremental cost of providing additional capacity above the obligated level

4. 4 Allocations Overview ASEP Total Allocated (kWh) Revenue (£) Cleared Price Step Clearing Price Lowest Price Highest Price Avonmouth219,803,25020,031P00.0001 Bacton5,218,997,44139,666,749P00.0084 Barrow2,179,490,00013,779,413P00.007 Burton Point 100,743,3229,198P00.0001 Cheshire6,524,648,800595,821P00.0001 Dynevor264,524,55024,109P00.0001 Hatfield Moor Stor. 259,200,000655,273P00.0028

5. 5 Allocations Overview (cont…) ASEP Total Allocated (kWh) Revenue (£) Cleared Price Step Clearing Price Lowest Price Highest Price Hole House6,399,923,044584,415P00.0001 Hornsea19,620,000159,805P00.009 Grain1,291,200,000706,444P00.0006 Partington219,803,25020,031P00.001 St Fergus1,691,670,28658,409,444P00.0378 Teesside1,991,246,19115,090,587P00.0083 Theddlethorpe359,579,0602,692,577P00.0082

6. 6 Incremental Capacity Release - Caythorpe  Incremental signal received for 90 GWh  Obligated incremental until Dec 2015  Obligated Incremental allocated at price step P6 = 0.0094 p/kwh  After 5 years Obligated Incremental then becomes baseline  April 2020 to December 2024 allocated at P0 (along with some individual quarters earlier on in the transaction period)  Total revenue received = £19,305,720

7. 7 Non Obligated Incremental Capacity Release - Easington  Allocations made of both Baseline and non obligated capacity  Aggregate Volume of Capacity sold 1,284,329,102 kWh  Total Revenue received - £11,297,469  Baseline Capacity Sold  1,060,599,012 kWh  Revenue - £8,984,488  Incremental signal received for some quarters :  Where NPV test not passed, National Grid can choose to release non obligated incremental inline with UNC section B2.6 (a) (iii)  National Grid released non-obligated incremental capacity at Easington in Q1 2011, Q1 2012, Q1 2013, Q1 2014 and Q1 2015  Total sold - 223,730,079 kWh  Revenue - £2,312,981

8. 8 Conclusion  Currently the next QSEC auction should be held, in accordance with Code, in September 2009  2 UNC modification have been raised on Auction timing:  Modification Proposal 0230 is seeking to change this so that the next QSEC auction would be held in March 2010  Modification Proposal 230A seeks to maintain existing September QSEC Auction in September 2009 prior to transition to a March 2010 Auction  Full guide to the QSEC auction is available on National Grid’s website with contact details for the Capacity Auctions team and also for independent consultants, should you wish to obtain advice on bidding strategies  All of the information in today’s presentation is taken from the aggregate QSEC results published on National Grid’s website http://www.nationalgrid.com/uk/Gas/Data/CA/reports/Long+Term+System+Entry+Capacity+%28LTSEC%29.htm ANY QUESTIONS?