1. Proposer: Hayley Burden Panel Date: 17th April 2014 0494: Mod Title: Imbalance Charge amendments required to align the UNC with the Network Code on Gas Balancing of Transmission Networks

2. Why change? EU Gas Balancing Code sets out, for the purpose of daily imbalance charge calculations, how the System Marginal Price for the buying and selling of gas shall be determined. There is a difference between the Balancing Code calculation and the calculation that is currently utilised in the GB regime In UNC, the System Marginal Buy Price (SMBP) and System Marginal Sell Price (SMSP), can be set by using any Market Balancing Action taken by National Grid NTS (e.g. SMBP can be set by a Market Balancing Buy or Sell Action, and SMSP can be set by a Market Balancing Buy or Sell Action). The Balancing Code states that, if the System Marginal Price is being set by a Market Balancing Action, a Market Balancing Buy Action can only set SMBP, and a Market Balancing Sell Action can only set SMSP. This obligation applies across the GB balancing regime.

3. Options GB is required to be compliant with the EU Gas Balancing Code, therefore changing the UNC facilitates legal compliance As a result, options are limited, however NG NTS is seeking an approach that requires minimum change to the GB industry

4. Solution Change the imbalance charge calculation in UNC (Section F 1.2 System Prices) to match the imbalance charge calculation detailed in the EU Balancing Code (Chapter V, Article 22 Applicable Price)

5. Recommended Steps The Proposer recommends that this modification should be:  Not subject to self-governance because the Proposer believes that as a consequence of implementation there is likely to be a material impact from the proposal on commercial activities connected with the shipping of gas conveyed through pipes  Workgroup assessment to develop the modification for 6 months but it is our expectation that this could be completed earlier