Capacity trade and transfer mechanism and the next AMSEC

auction

Bob HullDirector, Transmission

9 May 2007

2

Introduction

• December 2006 -TPCR package accepted by NGG in principle

• February AMSEC auctions delayed to May

• NGG advise Ofgem on 4th May on concerns on introducing the capacity trade and transfer mechanisms

3

NGG concerns

• There has been insufficient time for all shippers to fully understand the new regime in advance of them participating in the AMSEC auction on 11 May

• NGG suggestion that new obligations to transfer and trade capacity would take effect from next year’s AMSEC auction

4

Ofgem response• Ofgem does not propose to relieve NGG from its capacity trade

and transfer obligations

• The capacity trade and transfer obligations form an integral part of the overall TPCR package which was in principle accepted by NGG in December 2006

• In our view it is very important that potential bidders in Friday’s auction have access to all relevant information

• We therefore encourage NGG to hold a meeting with shippers in order to brief shippers on this issue and to make shippers aware of NGG’s concerns before Friday’s AMSEC auctions

5

Both letters have been published

• And can be found on the Ofgem website

• In the ‘Networks’ section, under ‘Transmission’, under ‘Gas transmission policy’ and then scroll down to find the NGG letter which has Ofgem’s response attached

6