Flow Swap Scenarios – Agreed Logic August 23rd 2011

Background The Review Group 0316 report concluded that: “National Grid NTS raised Modification 0365 (National Grid NTS Initiated Flow Swaps) to clarify the UNC with respect to flow swaps. However, it was not clear that this modification is necessary and a set of scenarios was developed with a view to clarifying the application of the UNC under a range of circumstances involving flow swaps. These scenarios have not yet been agreed by the DNs and National Grid NTS. Once final, agreed, scenarios have been established, they will be published alongside this Report”

Background cntd The logic and scenarios referred to within the review group report have now been finalised and agreed between National Grid NTS and the DNs. Agreement has been reached by the review group that this logic is consistent with the UNC rules and as such will be utilised by National Grid NTS to calculate the NTS Exit (Flat) Overrun Quantity when a flow swap has occurred. UNC Modification 0365 – “National Grid NTS initiated flow swaps” has now been withdrawn as a result of this agreement. The logic, principles and scenarios agreed to are included within this slide pack and to be published alongside the 0316 Review Group Report for reference.

Key Drivers for Flow Swap Scenarios The key principles driving the logic for an NTS Exit (Flat) Overrun adjustment (via a NTS Exit (Flat) Capacity transfer(s)) as a result of a flow swap - The NTS Exit (Flat) Overrun quantity at the specific NTS/LDZ Offtakes will not increase as a result of any NTS (Exit) Flat Capacity Transfer between these specific NTS/LDZ Offtakes. The aggregate NTS (Exit) Flat Capacity position across these specific NTS/LDZ Offtakes remains unchanged. The NTS Exit (Flat) Capacity transfer quantity must be consistent with the agreed flow swap quantities for the specific NTS/LDZ Offtakes. The Capacity transfer quantity from the decreasing to the increasing NTS/LDZ offtake(s) will be the minimum of three values (kWh/day): Agreed Flow Swap Quantity The NTS Exit (Flat) Overrun Quantity at the increasing NTS/LDZ offtakes The NTS Exit (Flat) Capacity held at the decreasing NTS/LDZ offtake minus the actual quantity of gas offtaken by the DNO User at the decreasing NTS/LDZ Offtake for the relevant Gas Day (or zero, which ever is greater) These 3 values (A,B,C) are used as the headings to demonstrate the NTS Exit (Flat) Overrun adjustment in the scenarios that follow.

Flow Swap Scenario 1 The NTS Exit (Flat) Overrun adjustment (facilitated by a capacity transfer) at the increasing NTS/LDZ offtake will be the minimum of the 3 values in the table below Agreed Flow Swap Quantity The NTS Exit (Flat) Overrun Quantity at the increasing NTS/LDZ offtake The NTS Exit (Flat) Capacity held at the decreasing NTS/LDZ offtake minus the actual Quantity of gas offtaken by the DNO User at the decreasing NTS/LDZ Offtake for the relevant Gas Day (or zero, which ever is greater)

Flow Swap Scenario 2 – Overrun at decreasing offtake The NTS Exit (Flat) Overrun adjustment (facilitated by a capacity transfer) at the increasing NTS/LDZ Offtake will be the minimum of the 3 values in the table below No NTS Exit (Flat) Capacity transfer from the decreasing NTS/LDZ offtake as this would increase the Overrun quantity at the decreasing offtake

Flow Swap Scenario 3 The NTS Exit (Flat) Overrun adjustment (facilitated by a capacity transfer) at the increasing NTS/LDZ Offtake will be the minimum of the 3 values in the table below

Flow Swap Scenario 4 The NTS Exit (Flat) Overrun adjustment (facilitated by a capacity transfer) at the increasing NTS/LDZ Offtake will be the minimum of the 3 values in the table below

Flow Swap Scenario 5 The NTS Exit (Flat) Overrun adjustment (facilitated by a capacity transfer) at the increasing NTS/LDZ Offtake will be the minimum of the 3 values in the table below

Scenario 6 for multiple flow swaps Offtake y is involved in two separate flow swaps on the same gas day * No NTS Exit (Flat) Capacity transfer from the decreasing NTS/LDZ offtake for flow swap quantity 2 as this would increase the Overrun position at the decreasing Offtake. The NTS Exit (Flat) Overrun adjustment (facilitated by a capacity transfer) at the increasing NTS/LDZ Offtake will be the minimum of the 3 values in the table below The Overrun adjustment (Via a NTS Exit (Flat) Capacity Transfer) will be calculated in the order of time that each flow swap was agreed from the decreasing to the increasing NTS/LDZ offtake.

Scenario 7 - One to many Flow Swap What is a One to Many Flow Swap? For the purposes of this slide pack, a one to many flow swap is where a flow swap is agreed to resulting in flow swapped from a single decreasing offtake to multiple increase offtakes. What's different? Under certain circumstances the capacity transferred from the decreasing offtake may need to be apportioned across multiple increase offtakes. This scenario illustrates how the apportionment is carried out. Why? In the previous scenarios all flow swaps were on a one to one basis so there is no requirement to apportion the capacity transfer to multiple offtakes. How? Step 1 – determine at each increasing offtake the maximum adjustment required The min of flow swap quantity or overrun quantity at the individual offtakes (A) Step 2 – determine the max capacity transfer from the decreasing offtake which is the min of: the aggregated quantities for each increasing offtake from step 1 (B) or the spare capacity at the decreasing offtake (C) Step 3 If the quantity derived from step 2 is C then pro ration is required based on the value of A for each increasing offtake i.e. A/B * C for each increasing offtake If the quantity derived from step 2 is B then the capacity transferred to each increasing offtake is A

“One to many Flow” Swap Scenario – The table below summaries the steps and logic used when transferring spare NTS Exit (Flat) to calculate the Overrun adjustments at the increasing locations following a flow swap where the capacity needs to be apportioned across multiple locations.