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. Mod 0333 – Update to default System Marginal Buy Price and System Marginal Sell System Transmission Workgroup – 6 th January 2010

2. 2 Funding Background  In summary, work to implement Mod 0333 will include the following xoserve changes;  Creation of data table within Gemini to hold annual default SMP updates  Creation of new screen within Gemini to allow default SMPs to be updated on a regular basis  Updated ROM suggests one-off costs likely to be £205k - £227k  No ongoing costs  Original versions of mod assumed costs could be logged up as per Licence Condition C8G  Discussions with Ofgem indicated this route did not apply for this proposal

3. 3 Proposed User Pays funding split  Mod 0333 is a User Pays mod as the proposed changes will require additional work for xoserve  User Pays Guidelines suggests Mods seeking to better facilitate Relevant Objectives (c) & (d) be funded 50:50, Transporters:Shippers  National Grid proposes a different split of 100% shipper User Pays  Cost levied to individual shippers on day of implementation based upon a shippers % split of previous 365 gross imbalance energy

4. 4 User Pays Funding Split Rationale  National Grid considers that ‘users & beneficiaries’ of an update to the default SMPs will be Shippers  Shipper benefits are as follows;  Improved cost reflectivity of default SMPs  Associated reduction in imbalance charges to Shippers (~£1.2M p.a.)  Reduction in total Balancing Neutrality cash flows  There is no Gas Transporter benefit;  Update of default SMPs is not expected to alter shipper balancing behaviour as proposed change to current default SMPs is minimal  As a result, Residual Balancing activities are not expected to change and NTS will be neutral to proposed changes