Mod 0273: 1 st Development Group Workshop

1. Mod 0273: 1st Development Group Workshop 4th February 2010

2. NG NTS Initial Views (December 2009) • Are comparisons to the electricity model appropriate? • The 3 month Connection and Use of System Code (CUSC) Modification Application process employed in electricity does not include a feasibility study • Feasibility Study fees are not published in electricity • The gas process needs to be fully understood • In comparison to electricity, the number of new connections and Network Exit Agreement (NExA) changes are relatively few • Receiving a number of enquiries in a relatively short period can cause workload planning difficulties • The timescales in gas vary considerably depending on the complexity of the customer requirements/installation • Feasibility Studies are important as they are undertaken to meet legislative obligations

3. Electricity Connections / Modifications Connection & Use of System Code (CUSC) Process

4. Electricity New Connections & Modifications - CUSC Process • The CUSC process offers a 3 stage connection process; • Feasibility Study (If required) • Connection Offer and Acceptance • Physical Connection / Modification Formal application & Payment cleared Sanction Works Feasibility Study Connection Offer Acceptance (Optional) Clock Start Offer Made 3 Months 3 Months 6 Months+

5. Electricity New Connections & Modifications - CUSC Process (Cont.) – Feasibility Study • Typically undertaken to help determine the best location for a new connection (e.g. Power Station) • Rarely used (1-2 p.a.) as information quickly becomes out of date and timescales are longer than for formal application process • Unregulated service - all costs are recovered, no delivery SLA • National Grid Daily rates are published but costs of studies may also include contractor costs. The number of hours involved is also not known until the scope is agreed.

6. Electricity New Connections & Modifications - CUSC Process (Cont.) – Design Stage (1) • Formal 3 month process covering New Connections or Modifications to existing contracts • National Grid offers to hold one pre-application meeting • Associated documentation is extensive • ‘Clock starts’ only when all documentation is received/approved & funds have been paid • Modelling analysis work is predominantly conducted “in house” by 40+ engineers • NGET receive a considerable number of applications p.a. • New connections: 40% • Modifications: 60%

7. Electricity New Connections & Modifications - CUSC Process (Cont.) – Design Stage (2) • Fees (fixed & indicative) published for New Connections & Modifications – average £100k, capped at £400K • Offer includes commencement date (fixed) and list of works (can be amended at a later date) • Offer for new connections & modifications made within 3 months • NG can request an extension to the 3 month timescale but this is rarely used • Acceptance; • User has 3 months to accept and only minor changes to contract are allowed • Major changes = new application

8. Gas Connections / Modifications NTS Exit Points with Network Exit Arrangements (NExAs)

9. New Connections & NExA Modification Process (1) • Offering Customers a connection to the NTS or a modification to their existing NExA is a license obligation (LC4B) • New connection & modification processes are undertaken in line with the Statement & Methodology for Connection Charging. • Available via link:http://www.nationalgrid.com/NR/rdonlyres/07959E2F-621E-4E55-8051-F19514F23EC4/35303/SC4BApril2009v30.pdf • Statement also includes worked examples of connections with indicative costs: • Conceptual design study for new connection - approx. £30k to £50k • Feasibility study to assess impact of adding a new connection…- up to approx. £150k • Feasibility study for System Extension pipeline (Exit only) - approx. £100k to £400k, depending on pipeline length and route • Users/developers must commit to payment of the cost estimate prior to commencement of the study

10. New Connections & NExA Modification Process (2) • A 3 phase approach is also offered for new exit connections; • Customer Engagement & Feasibility Study (If required) • Design studies • Conceptual • Detailed • Siteworks • Indicative Conceptual design study timescales are provided (on the web) – 20-26 weeks but it is also explained that it “would be longer for complex projects” • Work is often staged to enable a customer to understand project feasibility, costs and timescales without committing to full costs at the outset Offer Made Siteworks Feasibility Study Conceptual Design Detailed Design Acceptance (Optional) 3-6 months 3 Months 6 months 6 months 6 - 24 Months

11. New Connections & NExA Modification Process (3) • Modifications include physically moving the exit connection and amending ramp rates/operating pressures • A Feasibility Study maybe required prior to conceptual design and/or construction • For Modifications the scope of a Feasibility Study is ‘flexible’ and tailored to suit the customers requirements but also varies depending on: • the complexity of the project • the size of the installation • Once scope is agreed, the timescales and costs of the (bespoke) Feasibility Study are agreed with the customer upfront (contract) • A Feasibility Study may include; • An Impact Analysis of onsite components & wider network issues • An evaluation of options and any additional analysis as specified / agreed with customer • Indicative timescales & costs for Design & Sitework phases • Further detail to follow

12. Why is it important we conduct analysis within a feasibility study? • Rapid load changes during start up and shutdown could affect the efficient and effective operation of the pipeline system • Trigger safety devices and cut off supply at the installation • Cause damage to National Grid equipment at installations such as pressure regulators, filters and orifice plate meters • Adversely affect other Users of the system (entry and exit points) in the vicinity • Legislation • Health and Safety at Work Act etc. 1974 • Pressure Systems Safety Regulations (PSSR) 2000 • Pipeline Safety Regulations (PSR) 1996 • Further detail to follow

13. Typical timescales and costs • Important to remember that there is no such thing as a ‘typical’ project! • Further detail and case studies to follow

14. What is involved in conducting a study? • Further detail to follow

15. Further detail • National Grid NTS propose that an Network Design expert should cover certain aspects of the process in detail at March session

16. Problems with current arrangements – NTS perspective • Timing • Indicative timescales are provided, however • Complexity of exit connections/modifications and associated differences in scope make it difficult to define exact timescales upfront • Costs • Indicative costs are provided, however again • Complexity of exit connections/modifications and associated differences in scope make it difficult to define exact costs upfront

17. Problems with current arrangements – NTS perspective • Communication • No visibility of upcoming work (types, number, nature and frequency) - receiving a number of enquiries in a relatively short period can cause workload planning difficulties • Process • Some enquiries are speculative in nature • Scope creep is sometimes a problem • Customers don’t always know what they want! • Customers often experience difficulties in providing the information requested, especially if it needs to be provided by their equipment suppliers • Difficulties in agreeing Contractual terms (between Customer and NG)