1. NTS Entry Charging Review Update
UNC Transmission Workstream 7th January 2010

2. Introduction
In August 2009, National Grid launched a review of entry charging principles through the formation of the Entry Charging Review Group (ECRG).
This was in response to growing concern about the increasing rate of the TO entry commodity charge.
TO Entry Commodity Charges have increased, year-on-year, due to the increasing revenue under-recovery from NTS Entry Capacity Revenue.
The ECRG have identified the following as the key contributing factors to the high level of the TO Entry Commodity Charge
the quantities of firm and interruptible capacity made available at zero reserve price,
the quantities of entry capacity procured ahead of the gas day and
the ability of shippers to profile their capacity procurement.
The review group has suggested a phased approach may be of benefit.
The first phase to involve
the removal of entry capacity reserve price discounts and
a UNC Modification Proposal to reduce the quantities of daily interruptible entry capacity (DISEC) released
Further phases to be developed through the ECRG.
Anticipated to include the re-introduction of daily and monthly capacity reserve price multipliers within the Charging Methodology.

3. Discussion Paper
ECRG agreed that an initial discussion paper be raised (Jan 2010), before a proposal is raised to remove entry capacity discounts, to seek views on;
Principles/objectives of the review
Discarded options
Entry-Exit split & Commodity changes
A Phased Approach
Phase 1: Remove discounts* and reduce interruptible quantity released for 1st Oct ‘10
Phase 2: Price Multipliers – October 2011 Earliest
UNC Changes
References to zero reserve prices*
Interruptible quantity** & release
Neutrality changes** (within day obligated capacity revenue could be removed)
Licence Changes
Removal of clearing obligation
Revenue mapping (within day obligated capacity revenue is SO but could be TO)
Auction Timings & Frequency
*Initial National Grid NTS view no Systems Impact identified
** Initial National Grid NTS view Potential Systems Impact

4. Potential UNC Changes UNC Changes Auction Timings & Frequency
References to zero reserve prices
TPD Section B (f) (ii)
Interruptible release / Quantity
TPD Section B
Neutrality changes (within day obligated capacity revenue could be removed)
TPD Section B (a) (i) (1)
Auction Timings & Frequency

5. Potential UNC Changes – Initial thoughts
References to zero reserve prices
Remove UNC references to zero reserve prices
Interruptible release – potential options:
Only release when all firm sold out
Only release when [90%] of firm sold out
Release UIOLI when quantity greater than unsold firm
Interruptible quantity (where applicable) – potential options:
Only release the difference between the UIOLI and the unsold firm
Release the UIOLI quantity

6. Potential UNC Changes – Initial thoughts
Neutrality changes (within day obligated capacity revenue could be removed)
Obligated capacity could be removed from capacity neutrality smear
Auction Timings & Frequency
Likely to depend upon other changes?
Timing of DISEC auction in relation to Day Ahead firm release?
Within Day hourly assessment of firm release will continue

7. Potential Charging Timelines
Process
Phase I
Phase II (Earliest)
Review Meetings from
9 September 2009
Discussion Paper
January 2010
Summer 2010 and/or Spring/summer 2011
Charging Proposal Consultation
26 February 2010
May 2011
Consultation ends
Prepare Final Proposals
26 March 2010
June 2011
Submit Final proposals
30 April 2010
July 2011
RIA ends
30 July 2010
Assume no RIA
Decision/ Notice of Charges
30 July 2011
Implementation
01 October 2010
01 October 2011

8. Potential UNC Timeline
There is an expectation that any UNC changes would be progressed on a similar timeline to the Charging Methodology changes such that they could be considered by Ofgem as part of a single Regulatory Impact Assessment (RIA)
Process
Key Dates
UNC Workstream: Initiate discussions
07 January 2010
UNC Workstream: Draft UNC Proposal
04 February 2010
UNC Workstream: UNC Proposal
04 March 2010
UNC Panel: Start Consultation
18 March 2010
Consultation close-out
12 April 2010
UNC Panel recommendation
15 April / 20 May 2010
RIA ends – Decision/ Notice of Charges
30 July 2010
Implementation
01 October 2010
Easter causes issues with the timeline. May need to request short notice inclusion (for recommendation) at April Mod Panel.