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. Assured Offtake Pressures OAD Workgroup 25 th September 2012

2. 2 Network Flexibility  Term that National Grid NTS has used in RIIO to identify the additional operational capability required for the NTS to accommodate the changing flow patterns and changing behaviours / requirements of NTS Users  NTS have proposed that this can be achieved through  Rules, Tools or Assets  Optimum solution likely being a combination of all three  Assured Offtake Pressures (AOPs) and associated pressure agreements are some of the existing Rules and Tools that are currently used to manage the NTS/LDZ interface  Optimisation of NTS/DN system investment

3. 3 Assured Offtake Pressures (AOPs)  AOPs provide DNOs with sufficiently high system input pressures under which to plan, develop and operate their LDZs economically and efficiently  Each Exit Point’s AOPs are applicable for each Day within in a Gas Year and are not linked to demand  The agreed/significant pressures process can be used to agree lower/higher 06:00 operational pressures if required  This process is used on the majority of days

4. 4 Why Propose Changes to AOPs  NTS investment / capability analysis assumes that AOPs are met at all demand levels  No equivalent of the Agreed Pressures Process for planning purposes  Majority of investment planning analysis for new supplies / storage sites is undertaken at medium to low demand levels

5. 5 Why do analysis at lower demand levels?  Supply flows, mainly at importation facilities, do not show a correlation with national demand levels Source: National Grid NTS’ RIIO-T1 submission

6. 6 Entry Capability at lower demand levels  As demand reduces, entry capability of the NTS also reduces as gas needs to be transported further into the system  This results in larger pressure drops making it more difficult to meet AOPs whilst accommodating the level of supply at the terminal.  National Grid NTS may be proposing to invest to meet AOPs that are not required at a particular demand level, leading to potentially inefficient investment

7. 7 AOPs  It is often difficult for National Grid NTS to agree to DNO requests to increase existing AOPs as they are currently equally applicable to summer and winter demand conditions  If AOPs were linked to demand then  National Grid NTS could be more confident of efficient investment at off-peak demand levels  National Grid NTS and DNOs may be able to agree increases to AOPs at higher demand levels, as these would not apply for the entire gas year  We would not be required to agree appropriate pressures with each DNO, each Day via the Agreed Pressure Process  Would allow GNCC to make more efficient decisions when balancing the network and planning for system access

8. 8 Understanding AOPs  NTS want to understand each DNOs requirement for high input pressures to their LDZs so that we can consider potential changes to way AOPs are treated. Source: NTS Demand Side Modelling - Design of Distribution Systems (GL Noble Denton) 65% of Peak

9. 9 Historical (aggregated) LDZ Demand 10% 65% of Peak Forecast 50% of Peak Forecast 15%

10. 10 Proposal  Proposal to introduce “Bands” of demand  Based on percentage of Peak LDZ demand forecast  For each demand band, DNOs and National Grid NTS would agree:  06:00 (SOD) Assured Offtake Pressure (by exit point)  22:00 (EOD) Assured Offtake Pressure (by exit point)  NTS Exit (Flexibility) Capacity (by exit point) given the associated AOPs

11. 11 Bands of Demand 0%100%50%25%75% Current AOP at a DNO Exit Point Actual DNO Pressure Requirement? Demand Bands Stepped AOPs in line with DNO Requirement Input Pressure at Exit Point Percentage of Forecast Peak Demand Assumed that a minimum level is required below a certain demand threshold

12. 12 Next Steps?  National Grid NTS has discussed this potential proposal with some DNOs during its annual network planning meetings  Not all DNOs took up National Grid NTS’ offer of a meeting this year  National Grid NTS is currently investigating the code, systems and process implications  Operational timescales  Agreed 06:00 Pressure process  Low Demand Days  Will provide further updates at future OAD Workgroups  Draft Modification to be available for industry discussion in October / November