SSP – PROVISIONAL LSP – SSP AMENDMENT RULES Stefan Leedham 22nd October 2009

UNC REQUIREMENTS Section G: 1.6.4: (a) Following the notification of the Provisional Annual Quantity the Registered User may, subject to paragraph 1.6.4(c) and where the provisions of paragraph 1.6.4(b) apply: (i) in the case of a Smaller Supply Point where it considers that the Provisional Annual Quantity should be greater or lesser than the Provisional Annual Quantity notified by the Transporter by not less than 20%; or (ii) in respect of any Larger Supply Point not later than 13 August in the preceding Gas Year notify the Transporter that it considers that the Provisional Annual Quantity does not satisfy the requirement in paragraph 1.6.6 ("User Provisional Annual Quantity").

UNC REQUIREMENTS Section G: 1.6.6: The requirement referred to in paragraph 1.6.4 is that the Provisional Annual Quantity, User Provisional Annual Quantity or Annual Quantity of a Supply Meter Point should represent reasonable assumption(s) as to the quantity offtaken (or, in the case of a New Supply Meter Point or a Supply Meter Point notified to the Transporter under paragraph 1.6.13(a)(ii), which would have been offtaken) from the Total System in the period of 12 months by reference to which the Provisional Annual Quantity, User Provisional Annual Quantity and the Annual Quantity is determined. The variable that determines the End User Category of the Supply Point should reflect reasonable assumptions as to the quantity offtaken from the Total System during the period from 1 December to 31st March in the preceding Gas Year.

UNC REQUIREMENTS IN PLAIN ENGLISH After the registered Shipper has been notified of the Provisional Annual Quantity then if the registered Shipper believes that the Provisional Annual Quantity is incorrect, and it has applied a consistent methodology to calculate its proposed AQs then: For an SSP the proposed revision to the Provisional Annual Quantity has to be at least 20% For an LSP the proposed revision can be anything The Shipper has to inform the Transporter by 13 August 1.6.6: The AQ or Provisional AQ should represent a reasonable assumption as the ammount of gas that was, or would have been, offtaken in the previous 12 months. The EUC should reflect a reasonable assumption as to the amount of gas offtaken between 1 December and 31 March in the previous Gas Year. I.e. they should be accurate

THE ISSUE For an SSP site whose provisional AQ places it as a LSP site, then xoserves systems require any AQ amendment to be at least 20% For sites with less than a 20% amendment the Shipper proposed AQ is rejected The site remains as an LSP and mod 640 charges are invoiced Creates a cost to Shippers Creates tension with G1.6.6 requirements Shipper has to appeal or wait until next AQ amendment window

A SIMPLE EXAMPLE Current SSP AQ of 62,000 kWh per annum Transporter provisional AQ 74,000 kWh per annum Shipper proposed AQ 65,000 kWh per annum Shipper proposed AQ rejected – has to be less than 59,200 kWh Mod 640 charges invoiced Current LSP AQ of 73,500 kWh per annum Shipper proposed AQ accepted

A POTENTIAL SOLUTION UNC amended so that: Where the Provisional Annual Quantity is greater than 73,200 kWh per annum Then the SSP 20% rule should not be applied Facilitates compliance with UNC G 1.6.6 Avoids requirement for AQ appeal Ensures Mod 640 charges are correctly targeted at Shippers who are not managing their portfolio Consistent with Shipper License Conditions

OTHER POTENTIAL SOLUTIONS UNC amended so that: Where Mod 640 charges should be incurred and Shippers have attempted to amend the provisional AQ but have been unsuccessful due to 20% rule then Mod 640 charges should not be invoiced Does not facilitates compliance with UNC G 1.6.6 Requirement for an AQ appeal remains Ensures Mod 640 charges are correctly targeted at Shippers who are not managing their portfolio May not be consistent with Shipper License Conditions Potential to encourage gaming?

ISSUES Any other solutions? Is this a User Pays modification proposal? Could this be implemented in time for next AQ amendment window? Level of demand for this service? Questions?

THANK YOU