Capacity Methodology Statements

Transmission Workstream

5th July 2007

Capacity Methodology Statements

Constrained Period Unconstrained

EntryEntry Capacity Transfer and Trade Methodology

Statement

Entry Capacity Substitution Methodology Statement

Incremental Entry Capacity Release Methodology

Statement

Exit

Exit Capacity Baseline

Revision Methodology Statement

Exit Capacity Release Methodology Statement

(Interim & Enduring)

Methodology Statement – Timetable

StatementConsultation

startConsultation

endComment

Capacity Transfer and Trade 2nd May 30th May Under review

Incremental Entry Capacity Release 16th May 5th June With Ofgem

Entry Capacity Substitution 18th May 15th June See later slides

Exit Capacity Release

(Interim)16th May 13th June With Ofgem

Exit Capacity Release

(Enduring)TBC

Linked to implementation of mod 116A

Exit Capacity Baseline

RevisionTBC

Applies to Enduring Exit regime

Consultation on the proposed Entry Capacity Substitution Methodology Statement

Key concerns expressed: Loss of capacity at the donor ASEP

Makes new projects expecting to use “spare” capacity less viable. Impact on Security of Supply.

Storage contracts are generally of short duration. User unable to signal long term requirements to prevent capacity being substituted away.

May lead to inefficient investment decision as Users bid to protect capacity normally obtained short-term.

Loss of Total Capacity Generally a limit on exchange rates preferred.

Most respondent unable to specify a precise rate, but 1:1 and 1.5:1 suggested.

Consultation on the proposed Entry Capacity Substitution Methodology Statement

Key concerns expressed: Scope of Substitutions.

Capacity substitutions limited to within zone to reserve capacity for within zone transfers and trades.

Substitutions should be applied to incremental requests irrespective of whether the NPV test is passed.

Adverse impact on short-term markets. Concern that proposals may have an adverse

impact of availability of NTS exit capacity, particularly flexibility capacity.

Consultation on the proposed Entry Capacity Substitution Methodology Statement

Key concerns expressed: Comments on Detail of Proposed Process

Use of lowest revenue driver to identify recipient ASEP Should the process aim to avoid “material” or

“incremental” risk? Exchanges should be assessed against “peak” flow

analysis. Definition of zones – storage ASEPs should be separate

from non-storage.