1. Allocation of Unidentified Gas Statement 2013/14 6 th February 2012

2. Areas Covered Consumption Method Overview Comparison with RbD Method Scaling and Sample Size Permanent and Temporary UG Theft Analysis AQ Variation Outstanding Data This is not an in-depth explanation of everything in the AUGS

3. Consumption Analysis: Background Estimate of Unidentified Gas total Simple and intuitive concept Total UG = Gas into LDZ – Metered Gas Out Total UG = Aggregate LDZ Load – DM Load – Shrinkage – (Metered SSP + Metered LSP) Uses meter read data for both SSP and NDM LSP market sectors Calculated figure covers all sources of UG SSP-assigned LSP-assigned

4. Consumption Analysis: Comparison with RbD Method RbD Method estimates LSP-assigned UG only Relies on an assumption that SSP-assigned UG is small This is only true where LSP AQ bias is larger than SSP AQ bias This is no longer necessarily true

5. Consumption Analysis: Comparison with RbD Method RbD Method relies on long-term trends in data It requires RbD and AQ bias to be steady When this is not the case, accuracy will be further affected AQ bias chart on previous slide shows it is not the case

6. Consumption Analysis: Scaling and Sample Size Actual consumptions based on meter reads can be calculated for a certain proportion of the population This is the sample Meters can lie outside the sample for a number of reasons Consumption calculation failed (AQ check/negative consumption) Site has no/insufficient valid meter reads Site is in a CSEP Sample consumption must be accurately scaled to cover full population

7. Consumption Analysis: Scaling and Sample Size

8. Non-consuming sites outside the sample must be handled correctly AQ=1 sites and non-consuming sites are not necessarily the same thing Some sites with AQ=1 are consuming gas Some sites with AQ>1 are not consuming gas Sites in CSEPs are always outside the sample Scale up correctly to cover all cases

9. Consumption Analysis: Scaling and Sample Size

10. Scaling up procedure example EUC Sample Size Sample Metered Consumption (GWh)SD Failed Sites Sites in CSEPs Population Size Population Metered Consumption (GWh) 01B1,855,56930,016.90.009281,011132,7322,269,31236,709.8 02B16,4182,231.40.0574,31813820,8732,837.0 03B4,0081,795.00.118828314,8672,179.8 04B1,5411,837.20.384290941,9252,295.3 05B4191,414.00.9377865031,696.8 06B1381,213.82.2842341651,453.4 07B45937.94.286130581,211.2 08B11404.25.0036017648.8 09B160.60.00000160.6

11. Consumption Analysis: Scaling and Sample Size Effect of sample size on UG estimate

12. Permanent and Temporary UG The Consumption Method calculates total UG including both Permanent and Temporary Therefore Temporary UG has to be estimated and removed from the calculated total This has been done according to current UNC definitions Temporary UG can arise from all elements of UG depending on source Mods 410, 424, 425 and 429 have been proposed and may change this Mod 425 implemented as of 25 th January – will need to assess impact going forward

13. Theft The recommended approach is to move to the Throughput Method for estimating the split of theft between the SSP and LSP market sectors LSP (GWh)SSP (GWh)Total (GWh)% Split 20074.0116.8220.8319.2 20085.8421.5527.4021.3 20095.0517.2722.3222.6 20103.2412.5215.7620.6 2008-2010 21.5% Sector 2006 200720082009 2010 Final NDM LSP 135.1134.4134.5125.0124.1 SSP 348.7368.4379.4363.2376.2 Total 483.7502.9514.0488.2500.3 LSP % 27.9%26.7%26.2%25.6%24.8% 23.3% Consumption plus Theft Method LSP Percentage Throughput Method LSP Percentage (TWh)

14. Theft LSP throughput percentage trend Trend will be reviewed each year and the most appropriate extrapolation method applied

15. Theft Consumption plus Theft Method suffers from the following issues: The calculations are heavily dependent on the accuracy of the estimate and duration of theft. Use of AQs - particularly as we can only calculate metered consumption for 50% of the data set. Accuracy of the metered consumption calculation. Potential effect of customer changes on pre/post theft AQs. Site classification issues – e.g. Unregistered sites. An assumption that the market sector split of unknown theft is the same as that of detected theft. Throughput method preferred and therefore recommended for future use

16. AQ Variation This issue affects Unregistered sites Setting of a representative AQ is in three stages Requested AQ  Confirmed AQ  AQ Following AQ Review Requested AQ is contained in the Unregistered Sites report sent to the AUGE This undergoes no validation It regularly differs from the Confirmed AQ and can be several orders of magnitude out Confirmed AQ is still on average much higher than the first AQ set by the AQ review for the site Factors to convert between all stages to give the best possible final estimate of Unregistered UG

17. General Enhancements to UG Calculation Unregistered Sites: two-stage AQ adjustment process iGT CSEPs: sufficient snapshot data now exists to identify a trend rather than simply taking forward a fixed value LDZ offtake meter errors: these are applied to the UG estimate from the Consumption Method

18. Current UG Estimates from Consumption Method LDZ Total UG (GWh) Total UG as Percentage of NDM Allocations 200920102011200920102011 EA7991,5621472.01%3.80%0.43% EM9481,356-6861.89%2.63%-1.59% NE7531,293832.40%4.02%0.30% NO481802-621.82%3.00%-0.27% NT1701,046-1,0360.31%1.89%-2.24% NW9511,112-9521.58%1.84%-1.86% SC1,1931,515-2842.61%3.30%-0.71% SE-237990-1,058-0.46%1.85%-2.42% SO6149551811.73%2.65%0.61% SW510572-1091.76%1.96%-0.45% WM237802-3940.53%1.76%-1.04% WN192223-313.61%4.15%-0.69% WS658589-2013.60%3.26%-1.33% Total726712819-44011.48%2.56%-1.05%

19. Current UG Estimates from Consumption Method There is currently a step change in 2011 This is likely to be due to a lack of corrections in the LSP consumption dataset for this year There are significantly fewer corrections in the 2011 dataset at this stage due to the smaller time that has elapsed since it ended Updated 2011 figures will be calculated when datasets for next year’s calculations are received In the meantime, 2011 is excluded from the analysis

20. Outstanding Data Some data items are still required from Xoserve All were received for last year’s analysis but need to be updated Composition of known CSEPs Opening meter readings of Orphaned sites Connection details for Unregistered sites Gas Safety Visit data

21. Thank you for your attention