DNPC06 LDZ ECN Charges- Consultation Report Denis Aitchison 26th April 2010

DNPC06 From 1 October 2012 the DNs will pay the NTS Exit Capacity charges to the NTS and recover the cost from shippers DNPC06 put forward for consultation several options to effect this recovery There were six responses to the consultation paper

Type of Charge Should LDZ Exit Capacity charges be based on a flat pence per peak day kWh rate as per current NTS Exit Capacity charges All respondents supported this proposal, citing various reasons for support:- -Simple -Cost Reflective -No good reason to change

Application of New Charge Should LDZ Exit Capacity Charges be applied by Offtake, by Exit Zone or by Network By Exit Zone Five of the six respondents supported this option on the basis that it was: - The most cost reflective -The most practical One respondent supported an Offtake or an Exit Zone basis

Dates for Changing Charges Should the misalignment of the NTS and DN dates for changing charges be addressed Four respondents opposed this proposal mainly on the basis that there was no evidence that the misalignment would be a material issue Two respondents supported an alignment, either April or October, but said that other DN charges should change at the same time

Separate “K” for LDZ ECN Charges Should a separate “K” be introduced for LDZ ECN charges All respondents supported this proposal on the basis that it would be more cost reflective and that the “K” would be shared across shippers in the same proportions in which it arose. The “K” would be carried forward to the next formula year. Would be shown in the Mod 186 Reports.

Final Proposals Charge will be a p/pkdaykwh/day charge applied to Supply Point SOQ The charges will be based on Exit Zones There will be a separate K ECN for the purposes of setting the levels of the charges The level of the LDZ ECN charge for each Exit Zone will be based on the forecast NTS Exit Capacity costs for the Offtakes within that Exit Zone, +/- any K ECN adjustment, multiplied by a common Network scaling factor

Setting the Charges The level of the LDZ ECN charge for each Exit Zone will be based on the forecast NTS Exit Capacity costs for the Offtakes within that Exit Zone, +/- any K ECN adjustment, multiplied by a common Network scaling factor so that the forecast revenue from the charges equates to the target revenue.

Next Steps Consultation Report to Ofgem Ofgem respond within 28 days (unless they opt to do RIA) Change Order being raised with xoserve Raise Mod(s) to make the necessary changes to UNC to introduce the new charge