Customer Treatment in project Nexus Presentation on behalf of GDF Suez By Gareth Evans

Introduction  Discussion to date  Current Processes  Customer classification in settlement  Underlying Assumptions  Transition to universal reconciliation

Discussion to date  Should market differentiation for settlement and other processes be currently based on consumption thresholds?  Do the benefits of basing system process on customer flag outweigh the costs?  Will the use of consumption flags result in inequitable treatment for customer types?

Current processes -RbD

Current Processes - Line by line reconciliation

Customer classification in settlement  Debate over customer classification can be seen as two distinct issues: Benefits of increasing reliability of current flag (possibly by enhancing its importance in processes) for safety reasons, customer treatment, reporting. Use of customer flag (or other mechanism) to allow market segments to be treated consistently(Domestic or I&C using RbD and universal rec respectively)

Customer Classification (licence issues)  As was recognised in previous meeting, accurate D/I flag has significant benefits outside of Settlement.  Can be seen to be outside of Nexus development, for the purposes of Smart Metering and line by line reconciliation debate.

Use of Customer Flag for system delineation  Use of current flag, even with increased numbers of customer types (SME, Large Dom, etc) would mean all Shippers move to the new settlement regime at the same time.  Significant issues with this type of cutover Legacy issues (RbD runoff). Transitional regime development. All Shipper systems must be changed at same time for that customer type

Underlying Assumptions (Line by line rec)  Nexus Represents a possibility of a new world with new processes from point of implementation (i:e market redesign).  Any Market changes as a result of Nexus (such as Smart Metering) must be rolled out across industry sectors consistently and instantaneously (Big Bang)  RbD must be refreshed or removed. Are these assumptions valid?

Proposed Alternative - Tapered Regime (additional flag)  Shippers are given the OPTION of moving to line by line rec for their customers by using additional flag. Recognises that market has not changed since last review of RbD. Gives Shippers control of their transition to universal reconciliation. avoiding stranding of systems. RbD could act as legacy system, avoiding new development allows different treatment of customer types (small I&C, large Domestic)

Issues with tapered regime  Capacity for xoserve is likely to be a limiting factor. Variety of mechanism to handle this: One-way nomination Shipper limits (unfair?)  Handling of sites that leave RbD.

Contact Details  Happy to answer questions : Waters Wye Associates: Gareth Evans