Exercise Opus Findings Gas Customer Forum 10 th March 2008

Exercise Opus  NEC emergency exercise completed by the DNs in late September / early October 2007  Opus tested firm load shedding within the DNs and isolation capability only  DNs physically visited a proportion of sites to simulate load shedding and isolation  DNs were asked to define Special Status Sites (sites who can be load shed quickly) and report on load shedding performance for these sites  HSE will be publishing the Opus report shortly

Firm load shedding > 25,000 tpa sites  There was an increase in sites who could turn off gas (43% - 47%) compared to the previous year  More than a third of sites cannot be contacted due to incorrect contact information  19% of site could be contacted but were unable to turn off their gas  The quality of contact information varied considerably by shipper

Cannot Contact Site

Sites Contacted and Can Turn Off

Cannot Contact Site

Sites Contacted and Can Turn Off

Special Status Sites  DNs demonstrated that they were able to load shed 80% of the load consumed by special status sites within four hours.  DNs are to review how they defined Special Status Sites in light of the Opus results.

Isolation  DNs were able to demonstrate that they could deliver timely isolation  Site visits highlighted practical constraints at some sites (valves in busy roads etc). DNs will review isolation plans to ensure locations are suitable.

Conclusion ♦ There has been a small improvement in >25,000tpa sites which can be successfully shed ♦ A third of sites still cannot be contacted due to incorrect contact information ♦ Contact information varied considerably by shipper and improvements are still needed in this area. ♦ As expected Special Status Sites could be reliably contacted and load shed ♦ Isolation plans were shown to be effective

TBE Process Timeline Gas Customer Forum 10 th March 2008

TBE Process Dec: Publish Ten Year Statement Feb/Mar: Consultation Apr/May/Jun Demand & Supply Forecasts Outline investment proposals July 10th: Industry seminar September?: Long Term Auctions Oct/Nov: Review Investment Plan

TBE 2008 Update  Meetings with most industry players completed  Good dialogue, open discussions  Broad range of views expressed  Shipper’s open session completed 6 th March 2008  To date a limited number of industry questionnaires have been returned  Collective UKCS data again to be provided through Oil & Gas UK  TBE Summer Event 2008 is again at One Great George Street, Westminster on 10 th July 2008  Contact – Peter Parsons -

OM Consultation Gas Customer Forum 10 th March 2008

Operating Margins (OM) Consultation  National Grid Gas is consulting on future competitive OM provision  Special Licence Condition C25 requires us to ‘...promote competition in the provision of OM services to the licensee by 1 April 2009.’  What does the consultation feature?  Background on current OM arrangements  Discussion regarding existing and potential new providers of OM (both supply and demand side)  Discussion regarding possible procurement mechanisms

Consultation Details  Timescales:  Consultation issued: w/c 10 th March 2008  Workshop planned for late April to discuss issues  Consultation ends: 2 nd May 2008  The consultation documentation can be found at: We value responses from all areas of the industry to assist us in the development of a robust enduring OM regime. Questions? Contact

Gas Operations Winter Reporting Monthly Web Update - February

Monthly Web Update  hlyupdates/ hlyupdates/  The following charts are available online:  Gas Supply Build Up  Gas Demands (breakdown)  UKCS Monitor  Import Assessment  Gas Price vs Interconnector & Storage Activity  Current supply assumptions table

Gas Supply Build Up  Recent Supply Characteristics:  February weather has seen “mild” periods interspersed by “warm” periods, hence the clear peaks and troughs.  Norwegian flows high with an average of 79mcm/d and a peak of 99mcm/d, the highest this winter.  BBL continuing to flow steadily at around 36mcm/d.  IUK imports have been intermittent, with some periods seeing flows ~20mcm and other periods seeing no import.  There has been virtually no LNG import flows during February.  Some Short Range Storage (LNG Storage) has flowed particularly during the high demands mid month.

Gas Demands  February demand has been mainly above seasonal normal.  The most notable trend is average Daily Metered demand (large industrial & power) which has increased again to a 139mcm/d average from a 127mcm/d average in January.  Storage injection has been very low, with an average of 1.2mcm/d.

UKCS Supply Monitor  Recent drop in UKCS supply due to loss of Bacton Shell due to a fire.  Proven UKCS supply now 251mcm/d.  Actual UKCS supply outturn has been good, with flows broadly in line with pre winter forecasts.

Gas Prices

Gas Price vs IUK & Storage Activity  The UK gas price (SAP) has averaged 51p during February, well above this time last year. A price spike up to 57p was witnessed around 28 Feb which coincided with the Bacton Shell supply loss.  The period saw net storage withdrawal into the NTS (+ve green bars).  There was little IUK activity, although the mainly small flows were more import than export.  Peak net IUK imports were 1 st Feb at 22mcm/d, which is close to this winter’s maximum of 23mcm/d.

Supply Assumptions Update

Transmission Planning Code Transmission Workstream 6th March 2008

Introduction  National Grid Gas (NGG) has a new licence obligation to introduce a Transmission Planning Code by 1 October 2008 that will “cover all material technical aspects relating to the planning and development of the pipe-line system…which may have a material impact upon persons connected to or using (or intending to connect or to use) the pipe-line system”  Aim is to improve transparency of NTS planning process  NGG will publish open letter on 7 March 2008 inviting views on the scope of Transmission Planning Code document

Transmission Planning Code – What is it?  Framework document relating to the planning and development of the NTS  Methodology to determine the physical capability of NTS considering  Entry and exit capacity release obligations  How much capacity can be transferred/traded between entry points  How incremental flows at entry and exit affect system capability  Statutory network security obligations  Detailed assumptions on  How supply and demand patterns will develop over time  How the system will be operated under different supply and demand scenarios

Transmission Planning Code – Governance  Transmission Planning Code must be in force by 1 October 2008 after consultation with interested parties and approval by the Authority  NGG must comply with and maintain the code  Review and consultation process undertaken by NGG at least every 2 years  Modifications must be approved by the Authority

Timeline (2008) Implementation 7 March Open letter inviting views on scope by 21 March 2008 MarchAprilMayJuneJulyAugSeptOctNov... 1 October 2008 target date for implementation April/May Industry discussions on draft document June/July Formal consultation (28 days) Aug/Sept Authority considers consultation report Development

Draft Scope  Legislative guidance documents  e.g. IGE recommended practice documents  Planning legislation and consents process  e.g. Implications for investment lead times  National Grid policies relevant to planning and development of NTS  e.g. assessment of new loads, design of NTS pipelines and installations  Network Analysis techniques  e.g. considerations for investment planning, how physical capability is determined  Supply and Demand Outlook  e.g. how TBE forecasts are used in investment planning

Next Steps  NGG publish open letter 7 March 2008 inviting views on draft scope  Responses requested by 21 March 2008  NGG to develop draft Transmission Planning Code document for discussion  Consideration given to licence requirements and industry views on scope  Industry workshops to discuss draft document during April and May – suggested dates are:  3 April 2008 and 1 May 2008 (after Transmission Workstream)  Further workshops June and July to support consultation if required