Mod 116B

1
Mod 116B

• Steve Rose - on behalf of RWE Trading

2
Background

• Mod 116 B was raised after discussion with a
  number of shippers about aspects Mod 116 which
  were unduly complex and which increased shipper
  risk.
• If Ofgem decide Mod 116 does better facilitate
  the achievement of the relevant objectives they
  can then consider if Mod 116B does so more
  strongly.
• If Ofgem decided that Mod 116 does not better
  facilitate the achievement of the relevant
  objectives then neither should Mod 116B.
• Support or qualified support of Mod 116B does not
  stop Users from supporting Mods 116 and/or Mod
  116C.

3
Section 1

• A User may not offtake gas at a rate of offtake
  which exceeds or is less than the OPN Prevailing
  Offtake Rate by more than the relevant tolerance
  specified in Network Exit Provisions
• NExA tolerance 3. DN tolerance 10 at an
  individual offtake and 3 at all offtakes in an
  LDZ
• 1.5 overall tolerance not sufficient to take
  account of a Users NExA flow entitlement and
  Users could incur an overrun by complying with
  their NExA as shown in this example.

4
Section 2

• New Firm Supply Points commissioned prior to the
  Enduring Arrangements to have an Initial
  Prevailing NTS Exit (Flat) Capacity holding based
  on their first registered capacity.
• Calrification on latest date for reducing Initial
  Prevailing NTS Exit (Flat) Capacity .
• Distinction made between release/reduction of
  Prevailing NTS Exit (Flat) Capacity at new and
  existing exit points.
• Developers (Users and non UNC parties) shall use
  reasonable endeavours to make a user commitment
  in the July window.
• NG shall use reasonable endeavours to make new
  capacity available within the desired timescales
  if user commitment given outside July window.
• NG shall use reasonable endeavours to make new
  capacity available from a date other than the
  start of the Gas Year provided user commitment is
  given.

5
Section 3 - 6

• If a User does not rely on the annual auctions to
  secure NTS Exit (Flexibility) Capacity and
  re-submission of its OPN reduces the amount of
  capacity required (based on its original OPN) the
  allocated capacity should be reduced accordingly.
• Latest time for NTS Exit (Flexibility) Capacity
  between Exit Zones to be aligned with initial OPN
  submission time.
• Transfer and assignment of NTS Exit Capacity
  (Flat and Flex) to be a matched process prior to
  acceptance to avoid erros being automatically
  accepted (as per Entry and NBP).
• No changes to sections 5 6

6
Section 7

• Reference to NTS Exit (Flexibility) Commodity
  Charge deleted
• 1.5 tolerance increased to 3 in overrun
  calculation
• NTS Exit (Flexibility) Overruns only to be
  incurred if there is an aggregate overrun and the
  day has been declared a flexible constraint day
• Relief from overrun charges arising from
  intertrips or forced outages in the same way as
  for NTS Exit Capacity constraints management
  actions taken by NG.
• NTS Exit Capacity neutrality arrangements to be
  split into separate pots for flat and flex
  costs/revenues. Flat neutrality to be smeared
  based on proportion of national flat capacity.
  Flex neutrality to be smeared based on proportion
  of area flex capacity.

7
Sections 8 - 10

• No changes to Section 8
• NG to be required to publish the following
  information once the enduring arrangements take
  effect
• Actual utilisation of NTS Exit (Flexibility)
  Capacity in each zone for each gas day (by 1100
  hrs D1)
• NTS Exit (Flexibility) Overrun quantity and
  charges for each gas day in e NTS Exit Zone
• NG to be required to publish the following
  information w.e.f. 1/7/07
• The sum of the NTS Exit (Flexibility) Capacity
  expected to be utilised in each zone based on the
  initial OPN submissions D-1 and subsequently fore
  each hour within the gas day

8
Advantages

• Potential to lessen the extent of User system
  build by lessening Users exposure to overrun
  charges and flex commodity charges.
• Avoids the rigidity of developers having to
  signal new capacity requirements within an annual
  July window and for an October start.
• Soft landing approach to such fundamental reform
• Avoids overrun exposure caused by
  intertrips/forced outages
• Targets flex neutrality cost/revenue only to
  Users who utilise flex (as opposed to flat
  capacity) and only at zones where they offtake
  gas.
• Provides information on flex utilisation in
  advance of the first opportunity Users have to
  acquire it to better inform their bidding
  strategy.