1. Proposed Transitional Gas Exit Arrangements
Presentation to Transmission Workstream
01 September 2005

2. Contents Impact of Delay to Enduring Arrangements
Proposed Transitory Arrangements
Impacted areas
Consultation timetable

3. Update on Authority Decisions
Authority decision on Network Sales concluded that NTS Exit arrangements required reform to be introduced in two phases:
“Interim” Arrangements established new commercial framework recognising the new NTS/DN interface
“Enduring” Arrangements (by September 2005) to introduce more market based arrangements effective from gas year 2008/09
On 24 June, Authority announced delay to implementation of Enduring Arrangements until September 2007 for release of capacity rights from gas year 2010/11

4. Implications of delay
Regime requires to be extended to cover gas years 2008/09 and 2009/10
Regime requires to address within and beyond typical 3 year investment lead time
Concept of “Transitional Arrangements”

5. Transitory Arrangements - Proposed Principles
Capacity products and contracting/invoicing parties unchanged
Capacity requests/allocations extended to 30 Sept 2010
Shippers – continuation of current rules
DNOs – extend to one further year ahead
Incremental investments to be backed by firm financial commitment
Additional information from DCs and DNs to support 5 year NTS development plan
Seek to implement Oct 05

6. Impacted Areas UNC – Capacity registration and information exchange
IExCR – Incremental Exit Capacity Release Methodology Statement
SC4B – Standard Condition 4B (Connection charging methodology)
ARCA – Advanced Reservation of Capacity Agreement requires for DNs

7. Proposed UNC Modifications
Two UNC Modifications have been raised:
1) 0038: Re-introduce formal planning information from DNs (“PS3”)
2) 0046: Extend sunset clauses to allow DNs to request and NTS to confirm capacity beyond September 2008
Considered required to help demonstrate that Transco NTS and DNs are meeting Safety Case requirements in the absence of any other enduring mechanism
formalise mechanism by which Transco NTS and DNs agree capacity entitlements 3 years ahead
ensure sufficient lead time for required investments

8. Modification 0046 - Interim Arrangements
Shipper Users able to request increases in Firm Capacity or redesignation of Interruptible Supply Points as Firm until 30 Sept 2008
Offtake Capacity Statement for each DNO sets out for each of its NTS/LDZ offtakes for each Gas Year until 30 Sept 2008:
NTS Offtake (Flat and Flexibility) Capacity
Assured Offtake Pressures
DNOs can request increase or decrease to these amounts during June-July each year (“the Application Window”)
Transco NTS responds by 30 Sept each year with updated Offtake Capacity Statements
Incremental capacity requests assessed in accordance with Incremental Exit Capacity Release Methodology Statement (IExCR)

9. Modification 0046 - Transitional Arrangements
Delay to implementation of enduring offtake arrangements requires development of transitional arrangements
Gas Years 2008/09 and 2009/10
Modification 0046 proposes to extend sunset clauses in UNC to Sept 2010 such that
Shipper Users able to register increases in Firm Capacity or redesignation of Interruptible Supply Points as Firm up to Sept 2010
DNO Users able to register capacity for 2008/09 as soon as possible and 2009/10 next June/July

10. Modification 0046 - Proposed Timetable
Application Window
Requests for Amended Cap.
– Relevant Gas Years
Requests for Initial Capacity
– Relevant Gas Year
Transco NTS Response to Capacity Request
Two weeks after implementation of Proposal
2008/09
Six weeks after implementation of Proposal
June/July 2006
2006/07
2007/08
2009/10
30 September 2006
June/July 2007
30 September 2007
June/July 2008
30 September 2008
June/July 2009
30 September 2009

11. Modification 0046 - Transco NTS assessment
NTS Offtake Capacity requests
Incremental capacity requests assessed in accordance with revised IExCR Methodology Statement
Require consideration as to when appropriate for Transco NTS to invest in NTS
Transco NTS to consult on revised IExCR over period of consultation on Mod 0046
Assured Offtake Pressure requests
Transco NTS will accept requests up to previous Gas Year value
Higher pressure requests assessed in accordance with current criteria in UNC ie. whether Transco NTS would be able to make gas available for offtake in all feasible conditions

12. Transitional IExCR Incremental Capacity requests
Requests in excess of following values deemed to be requests for “incremental capacity”
NTS Exit Capacity
prevailing registered quantities held by Shippers at NTS Exit Points
NTS Offtake (Flat/Flex) Capacity
as stated in the prevailing Offtake Capacity Statement for previous Gas Year I.e request for 2008/09 based on 2007/08 allocation

13. Transitional IExCR Allocation of incremental capacity requests
* In accordance with SC4B 'Transco
NTS Statement of principles and methods
to be used to determine charges for National
Transmission System Connection Services'

14. DN ARCA - Principles
Extension of principles applied to NTS direct connects
DN ARCA required in accordance with proposed conditions in SC4B ie. where require Specific Reinforcement for
incremental NTS Offtake (Flat) Capacity > 20 mtpa; and/or
any incremental NTS Offtake (Flexibility) Capacity
Will state level of financial commitment from DN and amount of “reserved” capacity
Each specific agreement based on a generic form of agreement - based on Langage ARCA
Transco NTS and DNO to agree delivery date for reserved capacity, but delivery date can be delayed due to specific events beyond Transco NTS control eg. granting of relevant provisions
Disputes referred to Ofgem

15. DN ARCA - Liabilities
DNO User required to book stated levels of capacity or pay Transco NTS the “Outstanding Amount”:
ARCA Commitment – Booked Incremental NTS Offtake (Flat/Flex) Capacity x prevailing NTS Exit Capacity Charge over first 2 years of capacity availability
where “ARCA commitment” is 1 years NTS Exit Capacity Charge for incremental NTS Offtake (Flat/Flex) Capacity
Transco NTS liabilities covered by existing UNC failure to make available for offtake payments

16. Timetable Mod 0046 Consultation 19 Aug – 9 Sept
FMR to be submitted to Ofgem for decision [23 Sept]
Supporting documents
Consultation [25 Aug – 22 Sept]
Submit to Ofgem for decision [28 Sept]