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<p>Government's plans for the Capacity Market and interim arrangements being put in
place by National Grid ahead of this will offer an opportunity to extend the life
of existing capacity where it is economically efficient to do so. Subject to state
aid approval the first Capacity Market auction will take place in late 2014 for delivery
in winter 2018. This will ensure sufficient capacity into the coming decades by offering
regular payments to existing and new generation capacity that is successful at auction.</p><p>
</p><p>In advance of this National Grid has developed Supplemental Balancing Reserve,
a new balancing service through which it will be able to procure further capacity
should it be needed, including capacity that is or otherwise intends to mothball or
close. National Grid will only seek to competitively procure the amount of capacity
that its forecast determines necessary and expect to run an initial tender process
this spring for capacity for the winter of 2014/15 and 2015/16, with the possibility
of extending this period if necessary.</p><p> </p>
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