Following the implementation of the Transmission Price Control Review (TPCR) project, National Grid Gas (NGG) had three new licence conditions requiring it to facilitate the trade, transfer and substitution of National Transmission System (NTS) entry capacity.
Transfer is the temporary relocation of unsold baseline NTS entry capacity from one entry point to meet demands for NTS capacity at another entry point. Trade refers to the temporary relocation of sold NTS entry capacity from one entry point to meet demands at another entry point.
Interim transfer and trade arrangements were implemented for winter 2007/08. Ofgem directed NGG to review the methodology underpinning transfer and trade in the interim period and use reasonable endeavours to have approved methodologies in place by 2 June 2008 for the enduring regimes.
On 22 April 2008 Ofgem approved NGG’s enduring transfer and trade methodology, along with UNC187A on 23 April 2008, which allowed for the transfer and trade process to be incorporated into the Rolling Monthly System Entry Capacity (RMSEC) auctions.
Substitution is the process by which unsold NTS baseline entry capacity is moved from one or more entry points to meet demand for incremental obligated NTS entry capacity at another entry point. In its Direction of 3 March 2008 the Authority placed an obligation on NGG to have an approved substitution process in place by 6 April 2009.