1. Transmission Workstream 2nd December 2010
Manifest Errors for Entry Capacity Overruns Mod 341 and Guidance Document
Transmission Workstream
2nd December 2010

2. Background
GasTerra had an issue with significant (>£m) Entry overrun charges incurred during April, as a result of a ‘manifest error’
Discussed at each Workstream since July
Mod 341 to introduce Manifest Error Provisions into UNC
Raised in October
Workstream Discussion & Development
Version 2 published
Guidance Document (v3) also published
UNCC discussion ( ) to consider the role
Completion of Workstream Report ?

3. Contents Timescales Process Steps - Confirmation of Details
Adjustments
Possible Appeals Mod
Relevant Objectives
Impacts
Next Steps

4. 1. Process Timescales D0 D+3 D+10 D+55 D+58 D+60 M M+1 max 1
All process steps should be undertaken by all parties ‘as soon as reasonably practicable’
If possible, all reasonable efforts should be made to consider the claim before the invoice due date
Timescales shown are proposed as outside limits:-
Transporter
Acknowledges
Claim and
Notifies
Users
(incl UNCC)
Claimant
Raises Claim to
Transporter
UNCC
Must
conclude
Decision
notified
to all
Outcome
implemented
Invoice
Issue
Date
Report
Published
Error Occurred M
M+1
Due
Date D0
D+3
D+10
D+55
D+58
D+60
max 1
calendar month
to raise
claim
Typically
week after
M+1 end
(overruns charged at M+1)
Implement outcome
in next Capacity
Invoice after decision
provided 10 days
notice is available,
otherwise
subsequent invoice
UNCC to meet within 10 days
55 days to
conclude
3 days to
notify
5 days to
publish
report
3 days
to notify
all users
NB Min 5 days
notice of meeting

5. 2. Confirmation of Details
Threshold = £50,000 per claim
£5000 fee for making each claim
Claim within 1 month of Invoice Issue
For errors prior to implementation but since April 1st 2010, within 1 month of implementation date
UNCC considers Claims
Claimant must provide evidence, NG to provide information/verification
UNCC decide a) if valid, and if so b) what adjustment should be made
55 days to decide
Time extensions can be mutually agreed
UNCC can make reasonable requests for more information with 5 days notice
Default Position if fail to decide in time (= midpoint between Ref Cost 1 and Ref Cost 2)
No personal liability
Required to act independently and reasonably
Decisions by majority vote
For Valid Claim: UNCC to be reasonably convinced both the following criteria are met:-
That it was a genuine, unintended error
That the User was not seeking unfair commercial advantage

6. 3. Adjustments Reference Costs Factors
Decision between Reference Costs to avoid predictable outcome
Ref Cost 1 = alternative cost of capacity (including T&T) +5%
Ref Cost 2 = 20% of Overrun Charges
Ref Cost 3 = Costs incurred as a result of the overrun (i.e. buybacks)
Further Reference Costs at UNCC discretion
Objectively justified
Factors
Acted promptly and took steps to avoid repetition
Prudence of Claimant
Proportionality of Charges
Extent to which attributable to Gemini
Extent to which attributable to error in published information
Adjusted Charges should strike a reasonable balance between
a) the need to maintain incentives to book capacity in advance,
b) the particular circumstances and nature of the Manifest Error, and
c) the reasonableness of charges which should be paid as a result of a Manifest Error.

7. 3a. Reference Costs and Factors - Operation
For a Valid Error
Reference Costs will give max and min possible figures for adjusted charges (and possibly intermediate figures)
Factors guide UNCC as to where to settle
100%
100%
Reference Cost 2 = 20%
Reference Cost 1
Reference Cost 3
Factors
Factors
Reference Cost 2 = 20%
Reference Cost 1

8. 4. Possible Appeals Mod
Complementary, but separate proposal being developed
Appeal the UNCC decision to the Authority
Grounds: If decision is not in accordance with section B (includes requirement for impartiality etc)
Possible further fee (£5000?)
Ofgem could:
Uphold UNCC ruling
Substitute its own ruling for that of UNCC
Remit for re-consideration by UNCC

9. 5. Relevant Objectives (d) Effective competition between suppliers:-
Providing comfort to Users, especially new entrants and/or smaller participants that genuine errors are capable of reasonable treatment
(f) Efficiency in the implementation and administration of the UNC
Providing an appropriate mechanism for the consideration and resolution of possible manifest error circumstances in relation to entry capacity overruns
Reducing the risk of contractual disputes arising from unreasonable and unintended consequences of existing arrangements
(a) Efficient and economic operation of the system
to the extent that greater comfort for participants increases the likelihood of their more active participation in secondary trading - may lead to more efficient use of the system

10. 6. Impacts No capital or development costs Not User Pays Users
UNCC required to hear claims
Users may be required to pay back capacity neutrality amounts
Reduction in contractual risk
Transporter
Has to implement any amendments to neutrality required
Benefits
Introduce clear and defined process for dealing with manifest errors
Provides for reasonable treatment (which is appropriate because otherwise the 8x multiplier can act as an unfair penalty)
Approach proposed allows for adjustment of charges (not removal of charges) whilst maintaining the ‘ticket to ride’ principle

11. 7. Next Steps Workstream Report ?
Aiming for December Panel to submit Mod for Consultation
January Panel Decision
Ofgem - February
Appeals Mod (being developed)
and Gemini Changes Mod (to follow, if necessary)
Any comments/views –
Please contact: (or: )