1. Agency Charging Statement Overview of Consultation 11 th February 2008

2. Refresher  The Gas Distribution PCR proposed a core services plus user pays approach to the funding of xoserve  GTs’ allowed revenues (and transportation charges) have been reduced to allow for revenue collected through user pays charges  User pays will be treated as excluded services  User pays services are of two types:  Code: Gas Transporter obligations contained in the UNC. Invoiced under the UNC in the name of the Transporters  Non Code: All other services. Invoiced under the Contract and Conditions for non-code services in the name of xoserve  Changes are required to Transporter Licence, UNC and SPAA  Implementation date is 1 st April 2008

3. What is the Agency Charging Statement?  It is a document required by GT licence to be prepared jointly by the Gas Transporters and published on the agency’s website  It is required to set out  Scope of user pays services  Listed in Appendix 1 of the draft Statement  The methodology for deriving charges for user pays services  Described in section 3 and Appendix 2 of the Statement  The charges associated with such services  Listed in Appendix 1 of the draft Statement  Scope of core services  Defined as Transporter Agency Activities that are not user pays services

4. Consultation on the New Statement  Transporters are required to  consult interested parties on the details of the statement  furnish Ofgem with a report setting out  Any representations made and  Any changes made in consequence of representations  The Gas Transporters will seek Ofgem’s approval for the Statement

5. Consultation Timetable  All documents were published on the 31/1/08 on the Joint Office website:  Consultation paper giving the background to the Agency Charging Statement and questions for consultation  Draft Agency Charging Statement  Contract, Conditions and Schedules for non code services  Responses to the consultation paper should be sent to enquiries@gasgovernance.com to arrive by close of play on 22 nd February 2008. enquiries@gasgovernance.com  Responses will be published unless you specifically ask them to remain confidential. All responses will be forwarded to Ofgem.  Report on consultation to Ofgem by 29 th February 2008.

6. Questions  Questions on the content of the Consultation Paper or Draft Agency Charging Statement can be directed to the Gas Transporters or xoserve (contact details in paper)  Questions on the content of the non-code services Contract, Conditions or Schedules should be directed to xoserve.userpays@xoserve.com

7. Agency Charging Statement Charging Methodology 11 th February 2008

8. Cost of Service Provision  GTs’ allowed revenues (and transportation charges) have been reduced by £3m (2005/06 prices)  Reduction is equivalent to £3.3m at (2008/09 prices)  The costs provided to Ofgem are based on 2006/07 actual costs, utilising the published activity cost basis methodology  The user pays regime has additional costs – operating and liabilities  However, cost reductions have been made since the original forecasts  Forecast revenue for user pays is £3.3m

9. Demand for Services  There is general recognition that demand will change from current levels  Demand forecasts have taken into account  Feedback from Shippers  Historical usage  Impact of different charging levels  Availability of alternative service providers  We have used mid-point estimates to derive charges

10. Future  GTs’ will have a licence condition for prices to reflect the costs in providing the service  GTs’ have committed to review prices within six months  GTs’ will be required to report on costs and revenues to Ofgem

11. user pays services implementation February 2008

12. User Pays Non-Code services commercial arrangements Conditions Service Schedules Contract Documents e.g. Service Request Form Agency Charging Statement User Pays Non-Code services contractual documents xoserve User Shipper Short Code (SSC) level Organisation level (many SSC) Contract for the provision of Non-Code User Pays services The contract has “no value”, it allows Non-Code User Pays services to be requested and provided.

13. User Pays Non-Code services commercial arrangements M Number DVD Telephone Service Email Reports Portfolio Reports AQ Enquiry Service Request Form Service Request Form Service Request Form Service Request Form (Email Request) IX file User IAD Service Request Form (IAD access)

14. User Pays Non Code Services contract signature arrangements  Discuss arrangements with all organisations – Feb  Present contracts to Users for signature – Feb  Receive signed contracts no later than14 th March  Maintain contracts thereafter

15. User Pays Non Code Services Service Request arrangements for 1 st April  Users to consider extent of services required  Service Request form available from 1 st March (clause to make it effective from 1 st April)  Service Request form submitted to xoserve no later than 14 th March for services required from 1 st April  New processes for management of IAD account creation and deletion implemented from 1 st March  For IAD Accounts, xoserve will issue file of “live” IAD accounts in early March (creations and deletions will be managed against this register)

16. xoserve contacts xoserve.userpays@xoserve.com User Pays User Group meetings: Tuesday 3 rd June Tuesday 23 rd September