1. DNPC03 Report LDZ System Charges Capacity/Commodity Split and Interruptible Discounts

2. Questions for Consultation
1. Should the Charging Methodology be changed from 50/50 capacity/commodity split to 95/5
2. Should interruptible supply points pay 47.37% of the increased capacity charges
3. Should the change be made with effect from 1 April 2008 or 1 October 2008

3. 1. Main Points Raised Not enough information provided
Treatment of overhead costs
Would encourage introduction of Standing Charges
Runs counter to energy efficiency incentives
AQ Review process may need revised
Retro-fit modelling

4. 2. Main Points Raised Discriminatory effects SOQ data
Is the 47.37% cost reflective

5. 2. Main Points Raised Derivation of the 47.37% Existing Regime
Capacity
Commodity
Total
Firm 50
100
Interruptible
New Regime 95 5 45

6. 3. Main Points Raised
Align implementation date with end of the transitional arrangements, October 2011
Impact of October 2008 implementation on price changes

7. Impact of Oct 2008 implementation on price changes
Formula Year 2008/09
Charges based on 50/50
Charges based on 95/5
Apr-Sept
Oct-Mar
Total
F’cast Collected
98.9
123.1
222
109
113
F’cast Allowed
201
Percent Reduction
17.0%
Charges based on 95/5 implemented October 2008
211.9
9.6%
The percent reductions have been amended since the meeting on Monday 17/09. The slide used at the meeting calculated the percent reductions based on the full year’s revenue. In fact assuming the price change would be made on 1 October it is more representative to base the percent reduction on the October to March revenue. The revised percent changes are therefore shown above.
The basic point remains unchanged. Implementing the change to 95:5 on 1 October 2008 should reduce the size of the percent reduction in the level of the charges that would otherwise be needed at that date.

8. Final Proposals
The Charging Methodology should be changed so that capacity element the LDZ system charges is set to recover 95% of the revenue from the LDZ system charges and the commodity element set to recover 5%.
Interruptible supply points should pay 47.37% of the increased LDZ capacity charge
The change should be made with effect from 1 October 2008

9. Impact Analysis BS SOQs West Midlands Load Factor Original Change
SOQ Adj Change
Domestic
0-73.2
33.5%
-0.4%
-0.2%
Firm
73.2 – 146.5
29.9%
4.6%
4.9%
146.5 – 293.1
5.1%
5.4%
293.1 – 439.6
28.4%
7.3%
7.6%
439.6 – 586.0
28.9%
6.7%
7.0%
586.0 – 732.0
29.6%
5.9%
6.2%
30.3%
4.1%
4.4%
34.9%
-0.6%
-0.3%
35.7%
-0.9%
-0.7%
32.0%
4.2%
4.5%
48.0%
-11.3%
-11.0%
42.9%
-5.8%
-5.6%
54.3%
-14.5%
-14.3%
89.2%
-31.8%
-31.6%
Interruptible
27.7%
45.8%
29.4%
-13.1%
26.0%
39.2%
39.6%
0.5%
48.8%
54.4%
-15.0%
-21.8%
45.6%
64.5%
-7.7%
-30.2%
42.1%
42.4%
1.6%
1.7%

10. Impact Analysis BS SOQs North West Load Factor Revised Load Factors
Original Change
SOQ Adj Change
Domestic
0-73.2
37.2
-0,5
0.2
Firm
73.2 – 146.5
33.5
4.7
5.6
146.5 – 293.1
33.4
5.3
6.2
293.1 – 439.6
34.7
4.0
4.9
439.6 – 586.0
34.9
3.8
4.6
586.0 – 732.0
35.4
3.3
4.3
34.6
3.2
4.2
39.1
-1.1
-0.1
40.6
-2.0
45.4
-6.0
-5.1
51.5
-10.4
-9.6
46.7
-5.0
-4.1
56.2
-11.9
-11.1
100.0
-32.9
-32.3
Interruptible
15.3
43.9
113.5
-6.1
29.5
39.3
31.3
46.8
60.0
-6.6
-25.1
37.9
61.9
12.4
-24.7
53.0
58.1
-12.2
-18.4

11. Impact Analysis BS SOQs London Load Factor Revised Load Factors
Original Change
SOQ Adj Change
Domestic
0-73.2
33.3
0.3
0.6
Firm
73.2 – 146.5
35.2
-0.1
0.2
146.5 – 293.1
35.1
0.0
0.4
293.1 – 439.6
33.6
1.8
2.1
439.6 – 586.0
34.3
1.0
1.4
586.0 – 732.0
1.3
36.0
-2.0
-1.7
39.1
-4.4
-4.1
39.9
-4.7
42.2
-6.6
-6.3
46.5
-9.6
-9.3
54.3
-14.8
-14.6
64.6
-20.8
-20.6
84.9
-29.7
-29.5
Interruptible
24.3
45.3
43.9
-12.0
27.6
46.3
33.7
-11.7
38.7
51.2
3.3
-17.4
23.4
33.2
59.0
20.8
49.4
53.3
-15.4

12. Impact Analysis BS SOQs East of England Load Factor
Revised Load Factors
Original Change
SOQ Adj Change
Domestic
0-73.2
36.0
0.0
0.3
Firm
73.2 – 146.5
32.3
5.3
5.7
146.5 – 293.1
32.1
6.1
6.6
293.1 – 439.6
33.4
4.7
5.2
439.6 – 586.0
33.8
4.3
4.8
586.0 – 732.0
34.6
3.4
3.8
34.7
2.3
2.8
39.1
-1.9
-1.4
40.3
-2.4
-2.0
40.9
-1.6
50.8
-10.4
-10.0
50.6
-9.4
-9.0
45.6
-3.6
-3.2
67.0
-17.9
-17.6
Interruptible
15.9
37.4
105.6
5.6
40.0
50.7
1.6
-16.4
41.1
52.2
0.9
-16.8
53.3
66.7
-16.3
-30.5
47.7
54.7
-4.5
-14.7

13. Impact Analysis BS SOQs Northern
Load Factor
Revised Load Factors
Original Change
SOQ Adj Change
Domestic
0-73.2
35.6
-0.8
-0.6
Firm
73.2 – 146.5
29.3
5.8
6.0
146.5 – 293.1
6.4
6.6
293.1 – 439.6
33.0
2.0
2.2
439.6 – 586.0
34.3
0.4
0.6
586.0 – 732.0
33.6
1.3
1.6
34.4
1.4
37.2
-0.5
-0.4
38.7
1.5
40.9
-2.2
-2.1
50.5
-8.2
-8.1
53.9
-8.6
-8.5
46.7
0.5
96.4
-19.4
-19.2
Interruptible
32.2
48.1
22.0
-7.9
37.6
53.7
11.4
-12.0
30.2
56.6
-10.1
62.3
59.3
17.7
20.1
62.9
48.7
11.0
18.3
The revised load factors for the and load bands have been corrected. They were 64.0% and 92.8% and should have been as shown above. The SOQ adjusted changes are unaffected.

14. Impact Analysis BS SOQs Wales and West Load Factor
Revised Load Factors
Original Change
SOQ Adj Change
Domestic
0-73.2
31.7
-0.1
0.0
Firm
73.2 – 146.5
29.0
-0.4
146.5 – 293.1
26.9
2.0
293.1 – 439.6
28.6
0.1
439.6 – 586.0
31.0
-2.9
586.0 – 732.0
29.6
-1.1
0.8
35.3
-2.7
33.5
0.2
41.2
-6.0
38.8
-1.2
51.0
-9.2
53.1
-7.5
55.7
-3.7
Interruptible
25.8
27.2
20.3
15.8
25.5
26.7
26.1
21.6
31.8
10.2
6.1
43.7
45.8
-7.1
-9.9
52.9
54.2
-4.6
-6.1

15. Impact Analysis BS SOQs Scotland Load Factor Revised Load Factors
Original Change
SOQ Adj Change
Domestic
0-73.2
38.13
0.8
3.0
Firm
73.2 – 146.5
37.70
2.4
146.5 – 293.1
293.1 – 439.6
39.84
-0.1
-0.2
439.6 – 586.0
40.65
-1.1
586.0 – 732.0
41.44
-2.0
-2.2
41.47
-1.5
-1.7
40.82
0.2
0.1
43.30
-2.1
47.75
-5.9
-5.8
50.51
-7.2
64.06
-17.2
-17.3
79.60
-24.8
-25.0
93.95
-30.9
Interruptible
0.00
24.2
55.38
6.9
-15.3
38.98
46.13
13.4
-3.6
38.84
58.1
10.1
-21.7
41.93
59.63
-30.8
-12.3

16. Impact Analysis BS SOQs Southern Load Factor Revised Load Factors
Original Change
SOQ Adj Change
Domestic
0-73.2
31.45
1.0
Firm
73.2 – 146.5
31.82
0.5
146.5 – 293.1
31.72
0.7
293.1 – 439.6
31.62
0.9
439.6 – 586.0
32.13
0.1
586.0 – 732.0
32.72
-0.7
33.35
-0.8
35.65
-2.0
-4.3
37.33
-4.7
-4.6
40.97
-9.2
42.02
-10.2
53.33
-29.1
47.84
-12.4
60.65
-18.5
Interruptible
23.58
38.56
59.7
34.0
29.96
53.35
30.1
-42.6
49.25
50.91
-16.2
-12.5
34.00
46.19
21.5
-10.6
68.15
73.94
-32.0
-23.9