ScottishPower, Energy Retail Gas Long Term Vacant (LTV) Proposal February 2010 Karen Kennedy ScottishPower

ScottishPower, Energy Retail 2 Background There are approximately 700k homes unoccupied, 300k vacant for more than 6 months in England alone Gas Shippers are unable to effectively reduce their settlement and transportation cost exposure to these sites –An AQ for a site can only be amended through obtaining meter readings –A Shipper cannot gain access to the site to obtain meter readings –The Shipper has no redress to change the AQ of the site to reduce costs In the electricity market this problem has been addressed through BSC MOD196

ScottishPower, Energy Retail 3 Gas context There are 700k properties in England alone that are estimated to be vacant, 300k for more than 6 months. In Scotland a recent study found 4% of homes unoccupied At present the Shipper will make continuing attempts to gain access to the property to get readings and make various contact attempts – knowing the site is vacant Although this proposal seeks to reduce Shipper exposure to unwarranted costs, it is a clear solution to a commercial/cost allocation problem This proposal will allow for more accurate allocation of costs through RbD

ScottishPower, Energy Retail 4 Proposal for gas PRINCIPLE: Allows Shipper to classify a site as Long Term Vacant (LTV) and asks Xoserve to set the Annual Quantity (AQ) to one for settlement TO QUALIFY: The Shipper must have received two RVV02 flows with validation code E126 (“vacant premises”) and these must be more than three calendar months, but less than seven months, apart EXCLUSIONS: The site should not be classed as LTV if: –any other validation code is received between “vacant premises” notices –the Shipper receives any other valid flows containing register reading data –there is any indication of consumption at the site

ScottishPower, Energy Retail 5 Safeguards Xoserve would monitor the use of the LTV process and report Shipper usage through the Billing Operations Forum. It is proposed that the draft MOD would be sent for development and the Development Group would consider incentives and appropriate monitoring to ensure that there is no abuse of the AQ process. In addition the Group would consider how the process would work in practice It should be considered that there is an auditable process in the electricity market and that this might be used as a corresponding safeguard that the Supplier is acting in good faith Any LTV MOD proposed ScottishPower would be for the SSP/LSP market only