PRIMARY AND SECONDARY CAPACITY

To secure the finance to build the Interconnector the original customers agreed to book all the then available capacity in the new system and signed up as IUK Shippers for a 20-year term. They agreed to pay a capacity charge throughout that period which provided a set rate of return on the capital investment required to deliver the project. Similarly, the subsequent projects to enhance the capacity of the Interconnector system have been funded on the basis of a capacity tariff paid over the remainder of the 20-year term (to the year 2018) and which provide a set rate of return.

Capacity tariffs are paid monthly, whether or not gas is shipped, provided that the contracted capacity is made available for use (or is unavailable due to events such as planned maintenance).

PRIMARY CAPACITY

Primary Capacity is capacity acquired directly from IUK or which has subsequently been acquired from an IUK Shipper by assignment.

Primary Capacity rights can only be traded by assignment, a formal process which results in the transfer of capacity rights for the remainder of the contract term.

All rights to Primary Capacity in the Interconnector (in both the forward and reverse flow directions) have been sold by IUK.

Primary capacity availability

SECONDARY CAPACITY

It is possible to directly access capacity in the Interconnector without the formality of an assignment either by sub-letting or transferring capacity from an IUK Shipper. Capacity acquired in this way is referred to as “Secondary Capacity”.

A sub-let is effectively a way in which a non IUK Shipper may “hire” capacity from an IUK Shipper for a specified period of time. Whilst the sub-lessee will be able to manage its capacity rights by submitting information to and receiving information from IUK directly, there is no formal, contractual relationship between the sub-lessee and IUK. The original Shipper will retain all its obligations to Interconnector with respect to the sub-let capacity.

IUK Shippers may acquire capacity from another IUK Shipper for a specified period of time by means of a capacity transfer. The capacity transfer will be on whatever terms are negotiated between the IUK Shippers.

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