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Operating Margins – Request for Proposals

Transmission Workstream

6th April 2006

Dave Smith, National Grid NTS

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Operating Margins (“OM”) – Request for Proposals (RFP) Background

Existing providers Supply side – Storage & Importation 2006/7 booking – 1648 GWh volume & 1265 GWh/d delivery Low historical average use Payments – Capability and utilisation fees

Establish contestability in the provision of OM Assumes removal of prices caps for National Grid LNG Storage

Potential providers include Demand side - Firm load, DN Offtakes Supply side - Storage, Beach flex, Importation

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Key Requirements

Dedicated fast response (max 2 hours) A physical flow change (additional supply or demand

turndown) When may OM be needed

Immediate period following operational stresses as a result of, for example; a failure offshore and/or; unanticipated demand changes and/or; unexpected pipeline/plant unavailability

To manage the orderly rundown of the system following declaration of a Gas Supply Emergency

How long may OM be needed Typically OM will be used to maintain NTS pressures in the period before

other balancing measures become effective

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Operating Margins – Request for Proposals (RFP) Provisional Timetable

Purpose of RFP Understand who potential providers are

Understand how potential providers will deliver service and therefore ensure the tender specification matches users requirements

We are looking for proposals from all providers (including existing providers)

Invitation published 28 February 2006

Deadline for receipt of proposals 10 May 2006

Issue of Invitation to tender 8 September 2006

Deadline for receipt of tender submissions 15 December 2006

Award of contract Q3/Q4 2007

Service commencement 1st May 2008

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Operating Margins – Request for Proposals (RFP)

For further information contact:

David SmithSenior Account Manager, Network OperationsTel: 01926 655534dave.m.smith@uk.ngrid.com

or

Nicholas GardnerSenior Account Manager, Network OperationsTel: 01926 653450nicholas.gardner@uk.ngrid.com