1. user pays presentation 6th November 1 user pays services November 2007

2. 2 user pays presentation 6th November Background  Part of the latest Gas Distribution Price Control Review to;  Focus on how xoserve should be funded, and  Drive efficient use of xoserve services  Incentivise xoserve and GTs to develop innovative solutions for customers  Consultation recommended that xoserve be funded using;  majority covered by transportation charges provided free at point of delivery, and  part ‘user pays’ services  In their updated GDPCR proposals Ofgem has proposed that £2.83m be excluded from the Transporters allowed revenue.  Ofgem convened workgroups identified a number of current xoserve (ASA) services that will form the user pays services  The industry is to implement arrangements for provision of user pays services  Ofgem view this as the proof of concept of user pays that could inform how the principle could be extended in future.

3. 3 user pays presentation 6th November user pays  An industry group has been established to deal with implementation matters  See the Joint Office website for all documentation etc  http://www.gasgovernance.com/industryinfo/xoserveGroup http://www.gasgovernance.com/industryinfo/xoserveGroup  Three meetings held, further meeting scheduled for:  December 10th

4. 4 user pays presentation 6th November Current service provision model Ofgem TransportersShippers xoserve Formula revenue Transportation Charges Agency Services Agreement services

5. 5 user pays presentation 6th November user pays service provision model Ofgem TransportersShippers xoserve Formula revenue - £2.83m* Transportation Charges - £2.83m* Agency Services Agreement services Shippers / users user pays services payment *subject to GDPCR outcome

6. 6 user pays presentation 6th November Principles  user pays services will be implemented with the following principles;  As-Is deliverables  Mostly existing service standards  Existing delivery frequencies  Existing business rules  user pays services that were previously free at the point of delivery will now be provided on a directly chargeable basis

7. 7 user pays presentation 6th November PROVISION OF INFORMATION (type 2) D8TA CENTRE SERVICES SERVICEPERFORMANCE STANDARDS CHARGING BASIS BUSINESS RULES PRICE IADAs per current arrangementsPer IAD account As per UNC, GT Licence etc D8TA CENTRE TELEPHONE ENQUIRY LINE Arrangements under review (currently 3 MPRNs per call 5 data items per MPRN) Chargeable phone line DVDOn a quarterly basisPer DVD EMAIL SERVICE Based upon number of MPRNs and requests Per request

8. 8 user pays presentation 6th November PROVISION OF INFORMATION (type 2) D8TA CENTRE SERVICES AVAILABLE EMAIL REPORTSBusiness Rules PRICE 1Incoming Shipper Report As per UNC, GT Licence etc 2Previous Shipper/Supplier 3Current Shipper & MSN 4AQ/SOQ/EUC/Exit Zone/Postcode 5Meter Removal Date Report 6Meter Details Report 7Address Details Report 8Confirmation Effective Date Report 9Last Meter Read and Date 10Domestic Third Party AQ Report

9. 9 user pays presentation 6th November REPORTING (type 2) REPORT TITLETRIGGERFREQUENCYCHARGING BASIS PRICE Query Management - Standards of Service report Auto by dateMonthlyBy report Invoice Queries - queried and withheld amounts End user requestAd hocBy report Invoice Queries - awaiting adjustment End user requestMonthlyBy report Invoice Queries - pending adjustment End user requestMonthlyBy report Portfolio StatementAuto by dateMonthlyBy report User PortfolioEnd user requestAd hoc (no more frequent than monthly) By report

10. 10 user pays presentation 6th November …REPORTING (type 2) REPORT TITLETRIGGERFREQUENCYCHARGING BASIS PRICE CSEPS portfolio statementReceipt of user request Ad hocBy report Unique Sites - portfolio statement Receipt of user request Ad hocBy report Annual Asset PortfolioAuto by dateAnnuallyBy report Transco Asset PortfolioAuto by dateMonthlyBy report [“DEad” portfolioAuto by dateMonthlyBy report]* * to be confirmed

11. 11 user pays presentation 6th November AQ Enquiries (type 2) SERVICEPERFORMANCE STANDARDS CHARGING BASISBUSINESS RULESPRICE AQ enquiry2 business daysPer MPRN enquiryAs now

12. 12 user pays presentation 6th November MUST READS (type 1) SERVICEPERFORMANCE STANDARDS CHARGING BASIS BUSINESS RULES PRICE Must Read provision As now. Trigger, as now. Per valid read obtained As now

13. 13 user pays presentation 6th November Shipper Agreed Reads (type 1) SERVICEPERFORMANCE STANDARDS CHARGING BASIS BUSINESS RULESPRICE UO1 FILES2 daysPer MPRNAs now EMAILTo be notifiedPer MPRNAs now FAXTo be notifiedPer MPRNAs now

14. 14 user pays presentation 6th November User Admission (type 1) SERVICEPERFORMANCE STANDARDS CHARGING BASISBUSINESS RULES PRICE User Admission NonePer user applicantAs now

15. 15 user pays presentation 6th November Draft High Level Timeline SEPOCTNOVDECJAN 08 FEBMARAPR User Pays Implementation Discussions MAY 01/04/08 – Start of Formula Year 24/09/07 – Ofgem – Updated Proposals Published Joint Agency Charging Statement Publication 12/07 – Ofgem – Final Proposals Published 21/02/08 – Panel - Issue Recommendation 20/12/07 – Panel Issue for Consultation Agency Framework Agreement Draft +28 days UNC mod

16. 16 user pays presentation 6th November user engagement  Next steps:  Contact all users to:  Explain user pays  Assess likely take-up of services  Establish user pays contacts  Early next year  Provide contracts for user pays services  Confirm service delivery arrangements  Note: xoserve are still able to offer commercial services to Shippers and other organisations

17. 17 user pays presentation 6th November User Pays Commercial arrangements  Type 1 services invoicing  Type 2 services commercial arrangements

18. 18 user pays presentation 6th November User Pays Invoicing Type 1  User Pays Invoicing Type 1  Delivery method of invoices and supporting information  Potential Charge Types

19. 19 user pays presentation 6th November User Pays Invoicing - Type 1  Invoices will be sent using existing ad-hoc processes  An existing invoice type will be used (ADN)  New charge types will be added to the invoice for each type 1 service  Notification of these charge types will follow the Operational Rules Governing The Supply of Invoice Charges Via the Ad- Hoc Process (1 month notice)  It is anticipated that there will be one Type 1 invoice per user per month including charges for any/all service lines procured  Supporting information will be delivered via e-mail where required  Payment terms will be in line with Section S of UNC

20. 20 user pays presentation 6th November User Pays Invoicing – Type 1 Potential Charge Types Invoice TypeCharge TypeDescription ADNN28Shipper Agreed Reads Credit ADNN29Shipper Agreed Reads Debit ADNN30User Admission Charges Credit ADNN31User Admission Charges Debit ADNN32Must Reads Credit ADNN33Must Reads Debit

21. 21 user pays presentation 6th November User Pays commercial arrangements – type 2 services Four contractual documents published in the public domain: - Terms and Conditions - Service Schedules - Contractual documentation e.g. Service Orders - Agency Charging Statement

22. 22 user pays presentation 6th November User Pays Type 2 commercial model User Pays Framework Contract – T&Cs User Pays Framework Contract – Schedules: POI – IAD POI – RFI POI – DVD POI – Email rpts Reporting AQ Enquiries Agency Charging Statement (prices) User Pays Contract docs: Service order etc User Pays customer xoserve Order (under T&CS) Service and Invoice (under T&Cs and KPIs where applicable)

23. 23 user pays presentation 6th November User Pays type 2 arrangements Users will order services (using the Service Order document) under the published terms and conditions. The Service Order will be part of the contract. Service Orders will be subject to standard confidentiality provisions. xoserve can implement control measures with users e.g. only accepting orders from authorised persons within user organisations

24. 24 user pays presentation 6th November User Pays type 2 Service Order e.g. user xoserve Submit Service Order for 12 portfolio reports Validate Service Order and acknowledge Receive acknowledgement Deliver service, confirm delivery Confirmation of delivery Raise invoice (and supporting information) Receive invoice and pay Receive payment

25. 25 user pays presentation 6th November TermComments Contract structurePublic documents, Service Order forms part of contract Credit / security arrangementsMay be required, dependent on contract size and company credit rating Intellectual Property Rights (IPR)General principle that xoserve retains IPR in service delivery mechanisms and reports produced. IPR in the data generally envisaged to be unchanged by the provision of the services Data ProtectionRecognition and explanation of xoserve’s role ConfidentialityConfidentiality provisions to be two was as appropriate. LiabilitiesPerformance standards to be detailed in Service Schedules, as appropriate. Liabilities position under review InvoicingIn GB pounds. Monthly in arrears. Possible rule regarding value and age of debt to minimise number of lower value invoices User Pays Type 2 contract T&Cs….

26. 26 user pays presentation 6th November …User Pays Type 2 contract T&Cs TermComments PriceAs per published Agency Charging Statement Payment terms28 calendar days Invoice challengesBona fide disputes to be notified within set period of invoice issue Late paymentAnticipated to be in accordance with Late Payment of Commercial Debts (Interest) Act 1998. Limitations on service provisionWhere appropriate, permissions to request / release data must be in place. Customer obligationsCustomer to request services using the Service Order form. Where required to provide data (email reports). Warrant that they are entitled to receive the service.

27. 27 user pays presentation 6th November User Pays type 2 Service Order  The Service Order is used to order type 2 services from xoserve  The Service Order will require key customer information e.g. invoicing contact details etc  xoserve will validate the Service Order for completeness, and can, if required, validate against certain user criteria e.g. authorised submitter  xoserve will acknowledge the Service Order and provide service delivery information  The Service Order must contain a signature, anticipated fax or paper submission will be required

28. 28 user pays presentation 6th November User Pays Agency Charging Statement SERVICECHARGING BASISType IADPer IAD account2 D8TA CENTRE TELEPHONE ENQUIRY LINE Chargeable phone line2 DVDPer DVD2 EMAIL SERVICEPer MPRN / request2 ReportsBy report2 AQ EnquiryPer MPRN enquiry2 Must ReadsPer valid read obtained1 Shipper Agreed ReadsPer Read1 User AdmissionPer admission application1

29. 29 user pays presentation 6th November User Pays Agency Charging Statement Pricing methodology: Principle of reflective cost recovery charges against forecast demand Reflective cost recovery charges to include: - Operational costs - System operations costs Forecast demand: - Assessment of take-up of services

30. 30 user pays presentation 6th November User Pays Agency Charging Statement (as per current licence proposals) Contents: Introduction and background Scope of user pays and core services Charging basis Charging methodology Service charges Invoice supporting information Frequency of review Reference to user pays terms and conditions and service schedules

31. 31 user pays presentation 6th November Summary  user pays will be effective from 1 st April 2008  xoserve project team initiated to implement  Industry engagement has commenced  Services themselves unchanged  Changes to GT licences have been proposed by Ofgem. A UNC modification has been proposed  xoserve contact points  for Shipper user pays operational matters; Andy Miller, Helen Field and Emma Lyndon  for all other matters Andy Miller