1. PN UNC Workgroup (Settlement topic) Allocations Overview 4 th December 2012

2. 2 Background Allocation Scaling Adjustment discussed and principle agreed in Settlement BRD Reconciliation Scaling Adjustment agreed in Reconciliation BRD –Market Share changed from throughput to AQ in PN UNC During internal analysis questions have been raised with the new arrangements None of which are un resolvable but –clarification needed for legal text and –assurance that we all have the same understanding of the arrangements

3. 3 Allocation processes – Timelines GAS DAY = DD - 1D+1 to D+5 INPUTS OUTPUTS Daily Energy Allocations Total System Outputs Energy Balancing Indebtedness Total LDZ Energy, Actual DM Reads Daily Energy Nominations Informs gas purchasing Estimated LDZ Energy, DM Estimates (from Shippers) ALPs, DAFs, AQs final Gas NominationsGas Allocations Gas Nominations = Day Ahead Forecasting

4. 4 Future Allocation – Project Nexus Allocation as described in Settlement BRD Unidentified Gas shared at portfolio level in each LDZ Non-Daily Metered Daily Metered c 2. Shrinkage 3. Larger DM sector – Process 1 & 2 – Actual Measurements 4. Improved standalone estimation for NDM sector (Process 3 & 4) 5. Allocation Scaling Adjustment – remaining energy is smeared at LDZ portfolio level 1. Total Energy as measured into the LDZ

5. 5 Current Process Non-Daily Metered Daily Metered AUGE allocates unidentified gas from SSP market to LSP market & potentially DM’s % of unidentified is defined in advance based on historical information

6. 6 Allocation Scaling Adjustment Unidentified Gas shared at Shipper portfolio level in each LDZ Applied to all Products (daily metered and non daily metered) Reconciliation Scaling Adjustment adjusts the share following a reconciliation of a meter point Total Energy allocated within an LDZ Unidentified gas Non-Daily Metered Daily Metered

7. 7 Issues Should the share of unidentified gas be shared using the same data? –Allocation Scaling Adjustment share is based on consumption at GFD+5 –Reconciliation Scaling Adjustment share is based on AQ What is the future role of the AUGE in the new arrangements? –Possible Options? No AUGE AUGE reviews unidentified gas & makes recommendations for process change, no impact to sharing AUGE sets rules for share of both Allocation & Reconciliation Scaling Adjustment