1. Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. Operational Co-ordination Workshop 18 th March 2015

2. Agenda 2 SessionTimings Welcome and Introductions9.30 DECC Policy Update9.40 Operational Plan10.10 Break10.45 IS Update11.15 Agreement Management11.30 Round Table Surgery Discussions11.50 Close12.45

3. Welcome  Safety  Introductions  Implementation Coordination to Operational Coordination  Questions  Round Tables 3

4. Capacity Market Policy update Mark Hayward Security of Electricity Supply, DECC

5. Changes for 2015 T-4 auction Consultation on changes to Capacity Market regulations and rules ran from 12 Feb – 5 March. Government response published 16 March.Government response Electricity Capacity Regulations Electricity Capacity (Amendment) (No.2) Regulations 2015 laid in Parliament 16 MarchElectricity Capacity (Amendment) (No.2) Regulations 2015 –Ensure grants for feasibility studies or R&D in relation to CCS will not preclude CMUs from participation in the auction. –Extending deadline for positing credit cover from five to fifteen days. 5

6. Changes for 2015 T-4 auction Capacity Market Rules DECC will make following amendments to CM Rules: Introduce requirement to demonstrate eligibility for refurbishing status during pre-qualification; Changes to enable participation of aggregated generation CMUs under 50MW; other technical amendments which seek to clarify the policy intent. Consultation response also updated on: the appropriateness of the current tools for ensuring delivery; definition of new build 6

7. 2015 Capacity Mechanism Operational Plan 7 Chris Woodall

8. Changes from 2014  From “Implementation” to “Operational”  Regulations & Rules due to be finalised and published 4 weeks before the Prequalification window opens  Prequalification window open for 4 weeks (so Rules are available 8 weeks before application “deadline”)  T-4 and DSR Transitional Auctions (TA)  Processes run in parallel through Prequalification and up to the completion of Tier 2 Appeals (DSR can pre-qualify for both auctions)  The DSR TA process is then halted until the after the final T-4 auction results are published (DSR cannot obtain Capacity Agreements in both auctions)  DSR which is successful in the T-4, but which also pre-qualified for the DSR TA, will be removed from the DSR TA process  Credit Cover timescales  Maximum of 15 days (was 5) from Pre-Qual Results day to providing Credit Cover to the ESC (dependent of Regulation amendment coming into force)  Deadline of 32 days for posting, verification & notifying the Delivery Body still applies 8

9. Regulations, Rules and Reports T-4 ref TA ref DeliverableScope Date requirement from CM Rules/Regs T-4 Auction DSR Transitional Auction DependenciesOwner 1 Amended Electricity Capacity Regulations & DECC CM Rule changes in force Amended CM Regulations changes (Interconnectors, metering, settlement) and DECC CM Rules changes to come into force March 2015 March 2015 DECC 2 Ofgem CM Rule change consultation opens Consultation opens April 2015 DECC CM rule changes in force Ofgem 3 SoS provides Data and assumptions to the Delivery Body The SoS provides final data and assumptions to the Delivery Body to enable preparation of the Electricity Capacity Report (ECR) No later than the 22 nd April Friday 17 th April 2015 n/aDECC 4 Ofgem CM Rule change consultation closes Consultation closes May 2015 DECC CM rule changes in force Ofgem 5 Submit Electricity Capacity Report to SoS Submit report to SoS including a recommendation on the target volume to procure. Before the 1 st June Friday 29 th May 2015 n/a Input assumptions from DECC. NG 6 SoS publishes determination on auctions being held The SoS determines whether a T-4 auction and DSR TA are to be held. By the 15 th June Friday 12 th June 2015 Electricity Capacity Report DECC 7 Ofgem publish final revised CM Rules Following consultation, Ofgem publish final updated version of CM Rules. June 2015 Ofgem Consultation process Ofgem

10. Guidelines and Pre-Qual preparation 10 T-4 ref TA ref DeliverableScope Date requirement from CM Rules/Regs T-4 Auction DSR Transitional Auction DependenciesOwner 7 Ofgem publish final revised CM Rules Following consultation, Ofgem publish final updated version of CM Rules. June 2015 Ofgem Consultation process Ofgem 8 Provide Auction Parameters to NG Provide updated demand curve & target volume based on NG ECR. Also provide Net CONE, Auction Price Cap, Min/Max capacity to procure, Price Duration curves & Price decrement schedule. As soon as practical after 15 th June Wednesday 24 th June 2015 Electricity Capacity Report DECC 9 SoS publishes Auction Parameters SoS publishes the final auction parameters Friday 26th June 2015 DECC 10 Publish "Formal" Auction Guidelines NG publish final guidelines to reflect auction parameters in SoS publication Prior to the opening of the pre-qual window Tuesday 30th June 2015 SoS Parameters NG 11 Further amendments to Electricity Capacity Regs come into force Provisional date that amendments to Regulations relating to double subsidy and period for posting credit cover should come into force by July 2015 Parliamentar y progress DECC 12 Pre-qualification window opens IT systems "active" and applicants submit formal registration and data submission T – 20 weeks Monday 20th July 2015 NG/ Apps

11. Pre-qualification & NG Appeals 11 T-4 ref TA ref DeliverableScope Date requirement from CM Rules/Regs T-4 Auction DSR Transitional Auction DependenciesOwner 12 Pre-qualification window opens IT systems "active" and applicants submit formal registration and data submission T – 20 weeks Monday 20th July 2015 NG/ App 13 Pre-qualification window closes Last date for applications to be submitted T – 16 weeks Friday 14th August 2015 Window open for 4 weeks NG/ App 14 Pre-qualification Results Day Inform applicants of the outcome of assessment and update the Capacity Market Register Provide SoS with aggregate de-rating capacity for each category of applicant (except Interconnectors) & any recommendation for adjusting the demand curve (from plant opting out & still operational). Send copies of completed applicant metering assessments to ESC. T – 10 weeks - PQ Friday 25th September 2015 NG 15 Start of NG Appeal submission window Opening date for applicants to raise an appeal with National Grid against the pre-qualification outcome Friday 25th September 2015 App 16 NG Appeal window closed Closing date for applicants to raise an appeal with National Grid against the pre-qualification outcome Friday 2nd October 2015 App

12. Appeals & Credit Cover 12 T-4 ref TA ref DeliverableScope Date requirement from CM Rules/Regs T-4 Auction DSR Transitional Auction DependenciesOwner 16 NG Appeal window closed Closing date for applicants to raise an appeal with NG against the pre-qualification outcome Friday 2nd October 2015 App 17 Provide updated Auction parameters to NG Provide update on target volume / demand curve to reflect plant opting out but remaining operational. PQ + 5 working days Friday 2nd October 2015 NG update to SoS on pre- qualification impacts DECC 18 NG Appeal assessment complete & appellants notified Applicant notified of appeal outcome. Capacity register updated. Notify SoS of appeals outcome. Friday 9th October 2015 Any/All NG appeals assessed NG 19 Start of Tier 2 Appeal submission window Opening date for applicants to raise an appeal with Ofgem against the pre-qualification outcome Friday 9th October 2015 App 20 Latest possible date for applicants to provide Credit Cover to the ESC New build participants and DSR providers must provide Credit Cover PQ + 15 working days (dependent on amendment to regs coming into force) Friday 16th October 2015 Pre- qualification results day App 21 Tier 2 Appeal window closed Closing date for applicants to raise an appeal with Ofgem against the pre-qual outcome Friday 16th October 2015 App

13. Appeals & Credit Cover (2) 13 T-4 ref TA ref DeliverableScope Date requirement from CM Rules/Regs T-4 Auction DSR Transitional Auction DependenciesOwner 21 Tier 2 Appeal window closed Closing date for applicants to raise an appeal with Ofgem against the pre-qualification outcome Friday 16th October 2015 App 22 Publish Updated Auction Guidelines Notification of updated Auction Parameters (as a result of opt outs) T – 7 weeks Monday 19th October 2015 DECC update to NG on parameters NG 23 Final Credit Cover verification Latest date for ESC to provide a Credit Cover approval notice if the applicant used the full 15 days to provide Credit Cover. PQ + 30 working days Friday 6 th November 2015 Credit Cover provided ESC 24 Latest possible date for applicants to provide Credit Cover approval notice to the Delivery Body Latest date for the applicant to provide the Delivery Body with a copy of the Credit Cover approval notice. PQ + 32 working days Tuesday 10 th November 2015 App 28A Tier 2 Appeal process target completion date Following completion of Tier 2 appeal, applicant & NG informed of outcome. Friday 20th November 2015 For DSR TA, this is the point where the process halts until after the T-4 auction results are published Ofgem

14. Guidelines & Confirmations 14 T-4 ref TA ref DeliverableScope Date requirement from CM Rules/Regs T-4 Auction DSR Transitional Auction DependenciesOwner 28A Tier 2 Appeal process target completion date Following completion of Tier 2 appeal, applicant & NG informed of outcome. Friday 20th November 2015 For DSR TA, this is where the process halts. Ofgem 25B Provide Final Auction parameters to NG Provide final updates to Auction Parameters. Tuesday 17th November 2015 Monday 4 th January 2016 For DSR TA, this is where the process re-starts after the T-4 results are published. DECC 26C Publish "Final" Auction Guidelines & Bidder details Publish final guidelines inc. any update to Auction Parameters & details of Auction Monitor. Notify applicants of pre-qualification status following completion of Credit Cover process. T – 3 weeks - PQ + 37 working days Tuesday 17th November 2015 Tuesday 5 th January 2016 Final T-4 auction parameters Credit Cover verification NG 27D Auction Status confirmation window open Start date for Applicants to submit confirmations (Existing – Price Maker/Taker; DSR – Size & In/Out; New/Refurb – In/Out & length) Tuesday 17 th November 2015 Tuesday 5 th January 2016 App 29E Closing date for Auction Status confirmations Last date for applicants to submit confirmations T – 10 working days Tuesday 24 th November 2015 Tuesday 12 th January 2016 IT SystemsApp

15. Auction & Results 15 T-4 ref TA ref DeliverableScope Date requirement from CM Rules/Regs T-4 Auction DSR Transitional Auction DependenciesOwner 29 E Closing date for Auction Status confirmations Last date for applicants to submit confirmations T – 10 working days Tuesday 24 th November 2015 Tuesday 12 th January 2016 App 30 F Run Mock Auction Run Mock Auction with all applicants Wed 25th Nov 2015 Wed 13 th Jan 2016 NG 31 G NG provides results of Auction Status confirmations to SoS NG to collate Auction status confirmations and provide results to SoS T – 8 working days Thursday 26 th November 2015 Thursday 14 th January 2016 NG 32 H Auction Go/No Go decision DECC/NG agree Go/No Go Monday 7 th December 2015 Monday 25 th January 2016 Auction Status Confirmations Delivery Body readiness DECC/ NG 33 I Start AuctionStart the first round T Tuesday 8th December 2015 Tuesday 26 th January 2016 Go/No Go decision NG 34 J Complete AuctionAuction closes C Friday 11th December 2015 Friday 29 th January 2016 Based on a 4 days auction NG 35K Notification of provisional Auction results Notify bidders whether they’ve been provisionally awarded a Capacity Agreement Notify DECC and Ofgem of the provisional results C + 24 hours Friday 11th December 2015 Friday 29 th January 2016 Auction completing NG

16. Results & Agreements 16 T-4 ref TA ref DeliverableScope Date requirement from CM Rules/Regs T-4 Auction DSR Transitional Auction DependenciesOwner 35 K Notification of provisional Auction results Notify bidders whether they’ve been provisionally awarded a Capacity Agreement Notify DECC and Ofgem of the provisional results C + 24 hours Friday 11th December 2015 Friday 29 th January 2016 Auction completing NG 36 L Auction monitor sends report to DECC Auction Monitor prepares report on Auction process and submits to SoS C + 2 working days Tuesday 15th December 2015 Tuesday 2 nd February 2016 Auction completing Auction Monitor 37 M Auction Results Day Publish results of the auction to Bidders, the Auction Monitor & other administrative parties C + 8 working days Wednesday 23 rd December 2015 Wednesday 10 th February 2016 Auction completing No counter instruction from SoS. NG 38 N Issue Capacity Agreements Issue agreements to successful bidders C + 20 working days No later than Friday 22nd January 2016 No later than Friday 26 th February 2016 Auction Results Day NG

17. 17 Questions ?

18. IT Systems Update 18 James Greenhalgh

19. CM Admin system - Plan on a Page

20. Proof of Concepts  O/C Event 15 th April  Portal Demonstration  O/C Event 19 th May 2015  Company Registration  User Management  Prequalification  Proof of Concept Format  Proof of concepts will not be system demonstrations, they will be PowerPoint screen shots  A walkthrough for an approximation of what the system will look like and how the process will flow 20

21. 21 Questions ?

22. Agreement Management 22 James Greenhalgh

23. How will the DB deal with processes going forwards…recap 23 We will facilitate the development of processes with all parties and feed back to you progress at future events. We will provide help and support at future stakeholder events through surgeries and material presented. Guidance documentation will be made available to everyone on our portal website. We’re always happy to help – we can be contacted through email (EMR@nationalgrid.com) or by Telephone 01926 655300.EMR@nationalgrid.com

24. Agreement Management – DSR Tests 24 Ben Smith

25. DSR Test – Post Prequalification 25  Chapter 13 of the Capacity Market Rules Sets out the process for obtaining a DSR Test, specifically post Prequalification: 13.2.6(b), 13.2.7. 13.2.8 and 13.2.9 (b).  A number of pre-conditions that need to be met before we can schedule a live DSR test. These are:  Metering Assessment has been completed  If a Metering Test is required as a consequence of the assessment then this has been successfully completed with a Metering Test Certificate issued  That the metering configuration being used is an approved metering configuration as confirmed by the Settlement Body  That the metering data is able to be conveyed to the Settlement Body in accordance with Rule 14.5  When the above are satisfied a DSR Test will be scheduled. The results of which will be sent to the Settlement Body by the Capacity Provider and then onto the Delivery Body for assessment and to issue a Test Certificate.

26. DSR Test – Post Prequalification 26

27. 27 Questions ?

28. Agreement Management – Transfer of Obligations 28 Robyn Jenkins

29. Transfers  There are two types of transfers covered in this session  Short Term Transfers – Secondary Trading  Permanent/Long Term Transfers: including  Sales of assets  Change of ownership  Change of Despatch Control  Change in location of a CMU is not covered, there is a great deal of complexity around this.  We think it may be a transfer of Obligation but if you are in a situation where you need to change location please contact us to discuss. 29

30. 30 Transfer of Capacity Obligations  A Capacity Provider may transfer a Capacity Agreement by… 1)Transferring all or part of its obligation to an Acceptable Transferee – Secondary Trading. This can only take place after the T-1 Auction 2)Transferring all Capacity Agreements relating to a CMU outright to a person acquiring such units or a person that is the Despatch Controller (Legal Owner Only) 3)Transferring all Capacity Agreements relating to a CMU outright to a person that is the Legal Owner (Despatch Controller Only)

31. Transfer of Capacity Obligations  Process to be “switched on” in 2017 – can only take place for a Delivery Year after the T-1 Auction.  Individual transfer may not relate to more than 1 Delivery Year.  Acceptable Transferees  A Prequalified CMU that does not have a Capacity Agreement for that Delivery Year  A Prequalified Prospective CMU that has achieved the Substantial Completion Milestone prior to the Delivery Year in which its Obligation commences.  An Eligible Secondary Trading Entrant 31 1)Transferring all or part of its obligation to an Acceptable Transferee – Secondary Trading.

32. 32 Transfer of Capacity Obligations  Generating CMU only  Capacity Provider must be the Legal Owner of each Generating Unit Comprised in such CMU  Must be transferring all Capacity Agreements relating to that CMU outright  Can transfer to  New Legal Owner  Despatch Controller  May be the same Entity as the Capacity Provider Transferring the Obligation 2)Transferring all Capacity Agreements relating to a CMU outright to a person acquiring such units or a person that is the Despatch Controller (Legal Owner Only)

33. 33 Transfer of Capacity Obligations  Generating CMU only  Capacity Provider must be the Despatch Controller of each Generating Unit Comprised in such CMU  Must be transferring all Capacity Agreements relating to that CMU outright  Can transfer to  Legal Owner  May be the same Entity as the Capacity Provider Transferring the Obligation 3)Transferring all Capacity Agreements relating to a CMU outright to a person that is the Legal Owner (Despatch Controller Only)

34. Transfer of Capacity Obligations  Transfers under option 1 will be available after the T-1 Auction  For Transfers covered under options 2 and 3 the person wishing to become an Acceptable Transferee must  Provide a Prequalification Certificate  Provide the information and make the statement described in Rules 3.4.1, 3.4.2, 3.4.6 and 3.4.9  3.4.1 – General Details about the Applicant  3.4.2 – Legal Status  3.4.6 – Declaration of Solvency  3.4.9 – Conduct  Not be a Capacity Provider for a Defaulting CMU in that Delivery Year.  Confirm it will comply with any requirement to provide or maintain Applicant Credit Cover  On receipt that person will receive written confirmation from the Delivery Body that they are an Acceptable Transferee. 34

35. Examples 35 I am the Legal Owner but would like the despatch controller for all of my Generating Units to hold the Capacity Obligation. You may transfer the obligation to the Despatch Controller, providing all units within the CMU(s) are under the same Despatch Control. My Generating CMU is made up of 4 individual units, I wish to sell 1 unit to a third party. Can that unit be removed from my CMU? No – a Generating Unit comprised in a CMU can only be sold together with all other units in such CMU. I am the Despatch Controller for a CMU and before the Delivery Year I will cease to be the Despatch Controller – do I transfer to the new Despatch Controller. Only the Legal Owner can transfer a Capacity Obligation to a Despatch Controller, you must transfer the Obligation and CMU to the Legal Owner, it will then be their responsibility to appoints new legal owner. The capacity provider is the legal owner but is a subsidiary company and due to a reshuffle will not exist in the future. Can I change the legal owner? You need to transfer the Obligation to the new legal owner, that could be a parent company or a different subsidiary company.

36. 36 Questions ?

37. 37  DECC Stakeholder Bulletins  contact Harry Bannisterharry.bannister@decc.gsi.gov.ukharry.bannister@decc.gsi.gov.uk  National Grid  Portalhttps://emrdeliverybody.comhttps://emrdeliverybody.com  Mail listemr@nationalgrid.comemr@nationalgrid.com  Helpline01926 655300  Date of Next Event – 15 April 2015 at the Charing Cross Hotel Information

38. 38 Questions ?

39. Round Table Surgeries 39