1. CDCM Annual Review Workshop Mo Sukumaran SSEPD (on behalf of DNOs) 17 May 2011 12 May 2011 1 | Energy Networks Association - CMG

2. Workshop agenda 12 May 2011 2 | Energy Networks Association – CMG Introductions and safety brief - 10:00 am Purpose of the workshop and agenda- 10:05 am CDCM Annual Review – Process and objectives - 10:10 am CDCM Model Overview - 10:30 am Improvements to CDCM- 11:30 am Generation Charging – GDA- 12.15 pm Lunch- 12:30 pm Stakeholder Feedback- 13:15 pm Next steps and Deliverables- 14:15 pm Any other business- 14:30 pm Close- 14:45 pm

3. The purpose of today Our objective is to review the CDCM methodology. We are not looking to work up solutions today but rather to identify issues. We have asked Reckon consultants to present and challenge areas of the CDCM Should promote debate and discuss issues After lunch we will look to group like issues

4. CDCM Annual Review Process & Objectives Harvey Jones CE Electric (on behalf of DNOs) 12 May 2011 4 | Energy Networks Association - CMG

5. Our Licence obligations 13.1 The licensee must at all times have in force: (a) a Use of System Charging Methodology which the Authority has approved on the basis that it achieves the Relevant Objectives; and (b) a Connection Charging Methodology which the Authority has approved on the basis that it achieves the Relevant Objectives (each, separately, “the Charging Methodology”), and, except with the consent of the Authority, must comply with the Charging Methodology as modified from time to time in accordance with this condition. 13.2 The licensee must, for the purpose of ensuring that the Charging Methodology continues to achieve the Relevant Objectives: (a) review the methodology at least once every year; and (b) subject to paragraph 13.4, make such modifications (if any) of the methodology as are necessary for the purpose of better achieving the Relevant Objectives.

6. The relevant objectives The Relevant Objectives in relation to the Charging Methodology are: (a) that compliance with the methodology facilitates the discharge by the licensee of the obligations imposed on it under the Act and by this licence; - we need to meet our licence and electricity act obligations (b) that compliance with the methodology facilitates competition in the generation and supply of electricity, and does not restrict, distort, or prevent competition in the transmission or distribution of electricity; Does not get in the way of market competition (c) that compliance with the methodology results in charges which reflect, as far as is reasonably practicable (taking account of implementation costs), the costs incurred by the licensee in its Distribution Business; reflects cost incurred by our business and (d) that, so far as is consistent with sub-paragraphs (a), (b), and (c), the methodology, as far as is reasonably practicable, properly takes account of developments in the licensee’s Distribution Business. Takes account of structural changes in our businesses

7. The change process 29 April 2010 7 | Energy Networks Association Licence condition 50.28 sets out that DNOs must make arrangements to provide for the review and future modification (where appropriate) of the modification arrangements. Forum for establishing issues with charging methodologies Communicating and debating solutions DCMF Methodology issues Group Prioritisation of issues Manage issue proposals to DCMF Assist end-users in forming change proposals Issue 1 Issue 2 COG Charging group DNO resource management Scenario modelling Model development DCUSA Change proposal 1 Change Proposal 2 Output from annual review

8. CDCM Annual Review Improvements Planned Simon Yeo WPD (on behalf of DNOs) 12 May 2011 8 | Energy Networks Association - CMG

9. CDCM Annual Review Improvements Planned ‘Methodologies Issues Group’ (MIG) Purpose: Forum for users and stakeholders to discuss methodology issues before formal Change Proposals are raised. Scope of group: Defining issues submitted Gathering information relative to the issue Identifying possible solutions 12 May 2011 9 | Energy Networks Association - CMG

10. CDCM Annual Review Improvements Planned MIG Issues Log 15* Issues on MIG log – each assigned: leader, urgency / complexity rating, target start date, target submission date and target implementation date. MIG Meetings MIG meets on a monthly basis Open forum meeting Papers published *some contain multiple similar issues grouped together 12 May 2011 10 | Energy Networks Association - CMG

11. CDCM Annual Review Improvements Planned 12 May 2011 11 | Energy Networks Association - CMG Issue NoTitleTarget Implementation 1Commonality of the network (500MW) modelApril 2013 2Standing charge factorsApril 2013 3Reactive proxy dataApril 2014 4Justification of non-scaling Generator scalingApril 2013 7 & 17Excess capacity management & de-energised site chargesApril 2013 10 & 13Generation in demand rich areasApril 2012 11 & 21UMS TariffsApril 2012 12 & 22Use of HH and NHH forecast data for costingApril 2013 13HH generation intermittent/non intermittent tariffsApril 2012 14UMSO administration chargesApril 2013 15Time of day bands to seasonal time of day time bandsApril 2014 16DelinkingApril 2014 18HV sub & LV sub additional IDNO connection pointsApril 2012 19Charging of reactive energy where there is no reactive dataApril 2014 26CDCM default tariff applicationTBC

12. CDCM Annual Review Improvements Planned Contact dcmf@electralink.co.uk:dcmf@electralink.co.uk –To raise an Issue (standard template) –To be added to the MIG distribution list –For advice on application of change process 12 May 2011 12 | Energy Networks Association - CMG