Agency Charging Statement Overview of Consultation 11 th February 2008

Refresher  The Gas Distribution PCR proposed a core services plus user pays approach to the funding of xoserve  GTs’ allowed revenues (and transportation charges) have been reduced to allow for revenue collected through user pays charges  User pays will be treated as excluded services  User pays services are of two types:  Code: Gas Transporter obligations contained in the UNC. Invoiced under the UNC in the name of the Transporters  Non Code: All other services. Invoiced under the Contract and Conditions for non-code services in the name of xoserve  Changes are required to Transporter Licence, UNC and SPAA  Implementation date is 1 st April 2008

What is the Agency Charging Statement?  It is a document required by GT licence to be prepared jointly by the Gas Transporters and published on the agency’s website  It is required to set out  Scope of user pays services  Listed in Appendix 1 of the draft Statement  The methodology for deriving charges for user pays services  Described in section 3 and Appendix 2 of the Statement  The charges associated with such services  Listed in Appendix 1 of the draft Statement  Scope of core services  Defined as Transporter Agency Activities that are not user pays services

Consultation on the New Statement  Transporters are required to  consult interested parties on the details of the statement  furnish Ofgem with a report setting out  Any representations made and  Any changes made in consequence of representations  The Gas Transporters will seek Ofgem’s approval for the Statement

Consultation Timetable  All documents were published on the 31/1/08 on the Joint Office website:  Consultation paper giving the background to the Agency Charging Statement and questions for consultation  Draft Agency Charging Statement  Contract, Conditions and Schedules for non code services  Responses to the consultation paper should be sent to to arrive by close of play on 22 nd February  Responses will be published unless you specifically ask them to remain confidential. All responses will be forwarded to Ofgem.  Report on consultation to Ofgem by 29 th February 2008.

Questions  Questions on the content of the Consultation Paper or Draft Agency Charging Statement can be directed to the Gas Transporters or xoserve (contact details in paper)  Questions on the content of the non-code services Contract, Conditions or Schedules should be directed to

Agency Charging Statement Charging Methodology 11 th February 2008

Cost of Service Provision  GTs’ allowed revenues (and transportation charges) have been reduced by £3m (2005/06 prices)  Reduction is equivalent to £3.3m at (2008/09 prices)  The costs provided to Ofgem are based on 2006/07 actual costs, utilising the published activity cost basis methodology  The user pays regime has additional costs – operating and liabilities  However, cost reductions have been made since the original forecasts  Forecast revenue for user pays is £3.3m

Demand for Services  There is general recognition that demand will change from current levels  Demand forecasts have taken into account  Feedback from Shippers  Historical usage  Impact of different charging levels  Availability of alternative service providers  We have used mid-point estimates to derive charges

Future  GTs’ will have a licence condition for prices to reflect the costs in providing the service  GTs’ have committed to review prices within six months  GTs’ will be required to report on costs and revenues to Ofgem

user pays services implementation February 2008

User Pays Non-Code services commercial arrangements Conditions Service Schedules Contract Documents e.g. Service Request Form Agency Charging Statement User Pays Non-Code services contractual documents xoserve User Shipper Short Code (SSC) level Organisation level (many SSC) Contract for the provision of Non-Code User Pays services The contract has “no value”, it allows Non-Code User Pays services to be requested and provided.

User Pays Non-Code services commercial arrangements M Number DVD Telephone Service Reports Portfolio Reports AQ Enquiry Service Request Form Service Request Form Service Request Form Service Request Form ( Request) IX file User IAD Service Request Form (IAD access)

User Pays Non Code Services contract signature arrangements  Discuss arrangements with all organisations – Feb  Present contracts to Users for signature – Feb  Receive signed contracts no later than14 th March  Maintain contracts thereafter

User Pays Non Code Services Service Request arrangements for 1 st April  Users to consider extent of services required  Service Request form available from 1 st March (clause to make it effective from 1 st April)  Service Request form submitted to xoserve no later than 14 th March for services required from 1 st April  New processes for management of IAD account creation and deletion implemented from 1 st March  For IAD Accounts, xoserve will issue file of “live” IAD accounts in early March (creations and deletions will be managed against this register)

xoserve contacts User Pays User Group meetings: Tuesday 3 rd June Tuesday 23 rd September