1. UNC Modification Proposal 0385 Inclusion of DNOs as Users in User Pays Arrangements
Phil Lucas
7 June 2011

2. User Pays Arrangements
GDPCR : advocated specific funding arrangements for certain Transporter Agency services
Targeting costs on those that utilise the service
Incorporated in SSC A15 of NTS/DN Licence
UNC Modification 0188 (implemented 9 April 2008) – inclusion of Agency Charging Statement into the UNC
UNC Modification 0213V (implemented 7 April 2009) – User Pays Governance Arrangements
No specific contemplation that a DNO would be a User of a User Pays Service

3. Issue
Subsequent industry developments have occurred whereby it may be appropriate to apportion User Pays costs to DNO Users
As a unique beneficiary, or
As part of a broader group of ‘Users’ (DNOs and Shippers)
Current UNC Modification Rules do not facilitate apportionment of costs to DNO Users
Development of NTS Exit Capacity arrangements / services may warrant specific allocation of costs as described above
For example UNC Modification Proposal 0381 ‘Removal of the NTS Exit (Flat) Capacity “deemed application” process’

4. UNC Modification Rules
Para 2 Interpretation, 2.1 Defined Terms
"User": for the purposes of these Rules, references to a User in the context of an Individual Network Code Modification Proposal includes a Relevant Shipper and in all contexts excludes a DNO User.
Para 6.2 Content of Modification Proposal
6.2.5 A User Pays Modification Proposal shall…
(c) where it proposes that Users pay a proportion of the Implementation Costs, contain:
(i) an apportionment of the Implementation Costs between Users and Transporters; and
(ii) an apportionment of the Implementation Costs between Users;

5. Example of Application
UNC Modification 0224 “Facilitating the use of AMR in the Daily Metered Elective Regime
6.2.5(c)(i) - 100% User (shipper), 0% Transporter
6.2.5(c)(ii) – User (shipper) eligible Meter Point market share for development costs. Per election for operational costs
UNC Modification Proposal 0248 “Meter Reading Replacement”
6.2.5(c)(i) - 75% User (shipper), 25% Transporter
6.2.5(c)(ii) – User (shipper) NDM capacity market share for development costs. Per reading replacement for operational costs

6. User Pays Guidance Document
Page 4 – “Background”
“…under limited circumstances, a Modification Proposal may be classified as a User Pays Modification Proposal with a 100% cost allocation to the Transporters. An example of when this may occur is when the Transporters are classified as a User within the relevant section of UNC.”
Page 5 – “Definitions”
User – [as per] UNC MR2.1

7. DNO as a User
Enduring NTS Exit Capacity Arrangements (Modification 0195AV)
TPD Section B – System Use and Capacity
TPD Section J - Exit Requirements
TPD Section K – Operating Margins
TPD Section S – Invoicing and Payment
TPD Section U – UK Link
Parts of TPD Section V – General
TPD Section Z – Storage (where DNO is a storage user)

8. Proposal
Expand current definition of “User” within UNC Modification Rules to include DNOs where a User Pays Modification proposes allocation of User Pays costs to a DNO User
Benefits:
enables a proposer of a User Pays Modification Proposal to ‘legitimately’ propose allocation of costs to a DNO User
facilitates transparent allocation of User Pays costs
aligns UNC Modification Rules to scenario envisaged within User Pays Guidance Document
No implementation costs

9. Consequences of Non-Implementation
UNC Modification Rules would not facilitate proposed allocation of User Pays costs to DNO Users
User Pays Costs not able to be transparently allocated
User Pays Guidance Document remains inconsistent with the UNC Modification Rules

10. Next Steps
Modification Panel on 19 May 2011 determined as Self Governance
Determination Date identified as 15 September 2011
Suggested legal text provided within Proposal
Development of Workgroup Report – to be issued to Modification Panel by 15 September 2011