Provision of third party access to licence exempt electricity and gas networks Andy Pace

1. 4 October 2012 Provision of third party access to licence exempt electricity and gas networks Andy Pace 1 | Energy Networks Association - DCMF

2. Background 4 October 2012 2 | Energy Networks Association – DCMF The Electricity and Gas (Internal Markets) Regulations 2011 introduce new obligations on licence exempt distribution and supply undertakings, including a duty to facilitate third party access to their electricity and gas networks. Relevant DECC documents • DECC Draft Guidance: Provision of third party access to licence exempt electricity and gas networks, 14 October 2011. • DECC Revised Guidance: Provision of third party access to licence exempt electricity and gas networks, February 2012. Relevant Ofgem documents: • Guidance on third party access charges for licence exempt gas and electricity distribution networks 151/11 dated 10 November

3. Proposed Solutions 4 October 2012 3 | Energy Networks Association – DCMF Full Settlement Metering Approach All premises within the unlicensed network have meters. All premises are charged DUoS as normal No DUoS charged at boundary meter No settlement issues Difference Metering Approach Some premises on unlicensed network elect to move supplier These premises will be required to have half hourly metering Meter readings of these premises will go through normal settlement process. Boundary meter reading of the unlicensed network will be reduced by the units of the premises who have elected to move supplier. Implications on how DUoS derived

4. Difference Metering Approach 4 October 2012 4 | Energy Networks Association – DCMF

5. TPA Working Group 4 October 2012 5 | Energy Networks Association – DCMF • TPA working group has met twice and includes customer representatives • No issues with DUoS billing for full settlement metering approach • Consultation completed on 2 options for apply DUoS under the difference metering approach: • OPTION 1: Apply DUoS at boundary • DUoS charged at boundary as normal on raw meter data (not adjusted for difference metering) • Supplier of premises within unlicensed network not charged DUoS for site • Unlicensed network provider charges premises using their approved methodology for use of system charges (via supplier) • Requires raw data and difference data to be available for the boundary meter. • Implications on settlement process

6. TPA Working Group 4 October 2012 6 | Energy Networks Association – DCMF • OPTION 2: Apply DUoS at boundary and individual premises • DUoS charged to premises on unlicensed network who have elected to move suppler as follows: • Same unit rates as applied at boundary meter • Zero capacity charges (unlicensed network operator will charge this element) • Zero reactive charges (unlicensed network operator will charge this element) • Possibly an element of the fixed charge • DUoS charged at the boundary meter as follows (on adjusted meter readings): • Capacity charge (based on MIC) • Reactive charges • Unit rates • Fixed charge (possibly reduced) • Gross flow required to determine excess capacity • Gross flow required to determine full reactive charge

7. 4 October 2012 7 | Energy Networks Association – DCMF

8. 4 October 2012 8 | Energy Networks Association – DCMF

9. Analysis of TPA Charging Methods 4 October 2012 9 | Energy Networks Association – DCMF

10. Next Steps 4 October 2012 10 | Energy Networks Association – DCMF • Draft document circulated to working group • Agreed document will be sent to Ofgem with 2 key questions: • Confirm the legality/appropriateness of the customer charging option • Request clear guidance on Ofgem’s preference on charging