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                          Current Arrangements
                     Addressing TR’s Five Questions
                         Implications of TA Vision
                 Consideration of European Developments
                             Other Comments
         What Interconnectors would want from any Access Regime

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                    Current Arrangements
         – Not without issue, but in general

   • Treated as a generator and demand and charged the same as
     any other connectee
   • Capacity rights are for max capability and for duration of project
   • Rights are contracted through CUSC and bilaterals between
     Interconnector Owner and NGC and are considered firm
   • Connection and TNUoS charges made to IOs and recharged to
     Interconnector Users
   • BSUoS charges made to IUs directly
   • Have also been reasonably and successfully adapted under
     different contract structures since 1990

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               Addressing TR’s 5 Questions
               under Current Arrangements
   • Rights are allocated to IO once security established, firm for
     duration of project although no absolute surety of price
   • IOs could trade those rights in theory and can contract on
   • Breaching contract terms could ultimately require disconnection
     and termination charges as appropriate
   • Initially the IO is the contracted party with NGC and has the
     prime contractual responsibility
   • NGC’s transmission investment driven by needs of the customer
     building the interconnection and the need to meet the planning
     standards. No different from other users and prospective users.
   • Sufficient information currently available - CUSC processes
     Charge out rules, transparent tendering, 7yr Statement

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       Implications/Questions of TA Vision
   •   Access rights will only be allocated for several years. Then? Auctions?
   •   IOs obtain access rights? One-way or two-way rights?
   •   IUs contract/auction for I/C and Trans. Capacity? Are they separable?
   •   Who and how do you invest in new interconnections?
   •   Possible incorporation of Interconnection assets into Transmission?
       Inter-system trades done at mid-point?
   •   Existing contracts for use of the Interconnections? Some have 2 yrs to
       run, some have 30yrs. Explicit duration and rights. Compensation?
   •   Should there be different rules for interconnections from rest of system
       or between existing and future ones?
   •   Is the SO always going to be wanting to buy back the rights in the
       direction most likely to aggravate a transmission constraint? Or, will it
       always wait until short term when trades have been agreed? Will this
       be in the energy market or the access market?

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               Consideration of European
   • Interconnections allow Cross Border trading, but are regarded
     as psuedo-generators at the border
   • CBT debate likely to lead to fixed or zero charge for use of
     transmission for cross border trades, therefore
   • Replacing Connection and TNUoS and/or any TA regime?
   • System to System trading? When? Who? Rights to use?
   • Use of interconnectors in Europe considered firm except when
     potential loss of demand results.
   • Increasing interest in ICRP model in Europe
   • Is Interconnection ownership an issue? Conflicts of interest?

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                      Other Comments
    • Any present or future interconnection transfer could flow
      disadvantageously wrt the Transmission System.
    • Interconnection transfers can reverse and if seen to be a long
      term possibility then the system could be reinforced accordingly.
      The judgement will be one of constraints costs versus
      investment costs.
    • Hence it is important to consider this at the investment planning
      stage; this will impact on system reinforcement requirements or
      in level of charges.
    • Ability should be retained to allow transfers to be curtailed to
      prevent (or in the event of) demand disconnection.

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     What Interconnectors Want From Any
                Access Regime
   • Entry and Exit Access rights to each system agreed to IO for the
     life of the Interconnection, min 25yrs and possibly 40yrs.
   • Proper recognition of Two-Way flow and Superposition.
   • Ability to act as a Trading Unit and a party acting as aggregator.
   • Equitable treatment of Interconnectors within the overall
     charging regime, reflective of their impact on the system.
   • Trading opportunities for IUs in all timescales are maximised,
     not frustrated, especially if charges are the same as other users.
   • Interconnection investment opportunities can be realised.
   • The ability and option to have firm and non-firm access rights.
   • The auctioning of Interconnection Capability automatically gives
     rights of access to the Transmission System.
   • Only pass-thru costs are BSUoS and CBT. Other costs are IO’s.
   • Equitable treatment with rest of Europe.

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