1. 12 November 20091 energynetworks.org 1 PRESENTED BY MO SUKUMARAN, ON BEHALF OF WSB Presentation from Workstream B Pricing Modelling (EDCM/CDCM) Common Methodology Group Work

2. 12 November 20092 Agenda Background Workstream B Terms of Reference Progress to date Next Steps energynetworks.org 2

3. 12 November 20093 Background (1) - EDCM Collective Licence Modification (CLM) on Common EHV Distribution Charging Methodology (EDCM) and Decision document on EHV charging and governance arrangements published on 31 July 2009 CLM allows for DNOs to choose: Long Run Incremental Cost (LRIC) methodology; or Forward Cost Pricing (FCP) methodology CLM requires DNOs’ to submit their EDCM proposals by 1 April 2010. Workstream B formed to deliver a EDCM charging model which produces EHV tariffs for both methodology and where possible ensuring commonality energynetworks.org 3

4. 12 November 20094 Background (2) – CDCM DNOs submitted their HV/LV Common Distribution Charging Methodology (CDCM) Proposal on 25 August 2009. Ofgem published a consultation paper on DNOs’ CDCM proposals on 28 September 2009. Ofgem ‘minded to’ approve CDCM subject to proposed conditions: Service models; Network unavailability rebate payments; and Generator charging in generation dominated areas. Workstream B formed to deliver change proposals to comply with CDCM conditional approval.

5. 12 November 20095 Workstream B Terms of Reference Membership All DNOs represented with optional representation from stakeholder groups and Ofgem Chair and Deputy Chair from DNOs Meeting Frequency Weekly meetings either face-to-face or via teleconference Scope Develop a charging model that takes outputs from network power flow modelling analysis and deliver EHV tariffs for both EHV charging methodologies based on Ofgem decision document. Develop proposals on conditional approvals as required by Ofgem in their CDCM decision document Deliverables Common EDCM charging model for each methodology and integrated within CDCM Model (to the extent practical). Common definition of EHV/HV boundary Common Methodology Statement, revised CDCM Statement and associated documents Submit to Ofgem formal EDCM methodology proposal and CDCM change methodology proposal by 1 September 2010 at the latest. Timetable Plan to complete EDCM deliverables by 30 April 2010 Plan to complete CDCM work on Service models, NURP by December 2009 and Generator charging by 30 April 2010 ToR available on ENA website at: http://2009.energynetworks.org/edcm/http://2009.energynetworks.org/edcm/ energynetworks.org 5

6. 12 November 20096 Progress to Date Workstream B has met three times Developed Project Plan Review of Ofgem July Decision Document and tasks to be undertaken Progressed work on CDCM service models and network unavailability rebate payments Issued Invitation to Tender for Pricing Modelling Support to assist with workstream deliverables energynetworks.org 6

7. 12 November 20097 Next steps Appoint Pricing Modelling support for WSB Agree workstream scope boundary with WSA Commence work on areas of the charging methodology which requires further development. A PRESENTATION BY THE REGULATION GROUP OF THE ENERGY NETWORK ASSOCIATION energynetworks.org 7