Moving the QSEC and AMSEC Auctions

National Grid NTS, Transmission Workstream

2

Background

Last Year National Grid NTS raised Modification Proposal 0189,

proposing that the QSEC auction be moved from September to April

Proposal itself received broad support but some concerns

expressed, particularly around uncertainty surrounding baseline

reconsultation and substitution

Proposal was rejected but Ofgem indicated that they would support

a March auction

National Grid NTS now intends to bring forward another

Modification Proposal to change the timing of QSEC and also AMSEC

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Proposal

UNC currently requires that National Grid NTS releases quarterly capacity in September for Y+2 to Y+16 and monthly capacity in February for Y+1 and Y+2

Discharged through the QSEC and AMSEC auctions respectively

National Grid NTS proposes changing this so that quarterly capacity is released in March for Y+2 to Y+16 and monthly capacity is released in August for Y+1 and Y+2

Also propose that definition of ‘Y’ (Capacity Year) be changed from 1 April – 31 March to 1 October – 30 September

Change would be effective from 1 April 2009

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Reasoning

Align the release of long term NTS Entry Capacity with the start of the Gas Year i.e. the

start of the winter period, when flows increase

To enable full use of the final summer build period prior to incremental capacity delivery

for construction activities

Timely delivery of capacity reduces risk of gas being stranded offshore and investment-related buybacks

To allow signals received through the QSEC auction to feed into the Transporting

Britain’s Energy (TBE) consultation, which would enhance that process

To allow signals received through the QSEC auction to feed into the enduring exit

reform auction / application processes which would improve network analysis / planning

Allow timely transition to the new regime and for issues currently being debated by

industry (e.g. Review Group 221) to be resolved prior to the next QSEC auction

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Timeline

Proposal to be raised at October Mod Panel and progress through normal

governance procedures

Would be implemented from 1 April 2009

In practice this would mean that AMSEC would be held in February 2009 as normal

then the change would take effect so another AMSEC would be held in August 2009

and QSEC would take place in March 2010

Consequently there would be no QSEC auction in 2009, which may be seen as a

disadvantage, although the six months’ worth of capacity that would have been

available in a September 2009 QSEC (if there were no change) that would not be

offered in a March 2010 QSEC would be made available in the August 2009 AMSEC

This is demonstrated on the next slide (September 2009 QSEC capacity release

timings included for information only)

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Capacity Release Timeline

Feb

2009

AMSEC

Aug

2009

AMSEC

Sept 2009

QSEC (if

no change)

Sept 2009

QSEC

Incremental

(if no change)

Mar

2010

QSEC

Mar 2010

QSEC

Incremental

Apr-Sep 2009

Oct-Mar 2009/10

Apr-Sept 2010

Oct-Mar 2010/11

Apr-Sept 2011

Oct-Mar 2011/12

Apr-Sept 2012

Oct-Mar 2012/13

Apr-Sept 2013

Oct-Mar 2013/14

Apr-Sept 2014

Oct-Mar 2014/15

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Proposed Next Steps

Proposal discussed at Mod Panel 16 October

Issued for consultation 17 October

Close out for representations 7 November

Mod Panel Vote 20 November

Submission to Ofgem 21 November

Questions?