1. Energy Balancing Credit Proposals Transmission Work Stream 7th October 2010 Loraine O'Shaughnessy

2. Background  Following failure of Lehman’s and unprecedented economic factors in financial markets EBCC carried out review of the UNC section X and the Energy Balancing Credit Rules.  One of several modification requirements that were identified:  Implemented :  0234 - To Correct Drafting Inconsistencies between Sections X and V of the UNC in Respect of User Default and Termination  0235 - Recovery of Debt and Smearing of Revenues via Energy Balancing Neutrality  In progress:  0233V - Changes to Outstanding Energy Balancing Indebtedness Calculation: working with EBCC to develop alternative proposal  0315 - To Enhance Section X of the UNC Transportation Principal Document to improve the Energy Balancing Further Security Process : Panel recommendation 21 st Oct

3. Proposal  The aim of this proposal is to recover costs associated with the procurement of Credit Rating Analytic Services  Extend the provisions under F 4.5.3  Recover costs of approx £40,000

4. Drivers  Following failure of Lehman’s and the unprecedented financial climate change. In an attempt to reduce the communities risk xoserve introduced daily processes to monitor all financial institutions underwriting Energy Balancing exposures.  Since Sept 2008 over 60% of financial institutions providing Security in respect of Energy Balancing exposures have been down graded.

5. Benefits  Streamlines the risk management process  Improved accuracy and response times to changes in Company ratings  Reduced man hours carrying out activities introduced following Lehman’s failure and change in the economic climate

6. Next Steps  Issue proposal to be discussed at the October UNCC meeting with a view to go to consultation