ADD PRESENTATION TITLE HERE (GO TO: VIEW / MASTER / SLIDE MASTER TO AMEND) ADD PRESENTER’S NAME HERE / ADD DATE HERE © Copyright EDF Energy. All rights reserved. FUNDING ARRANGEMENTS Stefan Leedham 03 June 2009

ADD PRESENTATION TITLE HERE (GO TO: VIEW / MASTER / SLIDE MASTER TO AMEND) ADD PRESENTER’S NAME HERE / ADD DATE HERE © Copyright EDF Energy plc. All rights reserved. PAGE: 3 FUNDING ISSUES 1. It is not clear what the costs for a service will be upfront – so hard to identify incremental costs 2. Different views as to what is meant by Like for Like: Additional requirements funded through User Pays? Only services that meet clear criteria are User Pays? Broadly the same function but no system limitations? We’re actually building the bionic man! 3. Haven’t scoped services but need to agree funding arrangements 4. The price control does not dictate how much the GDNs have to spend

ADD PRESENTATION TITLE HERE (GO TO: VIEW / MASTER / SLIDE MASTER TO AMEND) ADD PRESENTER’S NAME HERE / ADD DATE HERE © Copyright EDF Energy plc. All rights reserved. PAGE: 4 POTENTIAL WAY FORWARD 1. Agree criteria for classification of services as Core or User Pays 2. Once scope of service is defined Users agree classification of service using agreed criteria. 3 potential outcomes Clearly User Pays Service – follow mod 213V rules for allocation Clearly core service Could be either – reach consensus in workgroup, seek Authority view 3. Once classification agreed – mod rules support both routes 4. Requirement to review arrangements/scope if synergy savings

ADD PRESENTATION TITLE HERE (GO TO: VIEW / MASTER / SLIDE MASTER TO AMEND) ADD PRESENTER’S NAME HERE / ADD DATE HERE © Copyright EDF Energy plc. All rights reserved. PAGE: 5 HIGHLEVEL CLASSIFICATION MATRIX 1. Can Shippers choose whether to take the service or not? 2. Are there clear commercial implications/advantage from taking the service which limits choice? 3. Can Shippers actively reduce their exposure to costs? 4. Is the service a voluntary or elective service? 5. Does charging for the service incentivise appropriate Shipper actions? 6. Are Shippers prepared to pay for the service as User Pays? 7. Is it clearly User Pays – i.e. a no brainer?

ADD PRESENTATION TITLE HERE (GO TO: VIEW / MASTER / SLIDE MASTER TO AMEND) ADD PRESENTER’S NAME HERE / ADD DATE HERE © Copyright EDF Energy plc. All rights reserved. PAGE: 6 POTENTIAL ISSUES Single Service Provision for iGTs Outside of scope of Project Nexus Workstream – currently Funding arrangements will need to be in scope of group looking at this PNAG have recognised that this is an issue that needs to be resolved Could be funded via a User Pays approach Smart Metering Currently being considered by DECC – not in workstream scope Potential to avoid costs depending on solution Need to define what model will be implemented first and then ensure Project Nexus is compatible. Potential to duplicate Wait and see?

ADD PRESENTATION TITLE HERE (GO TO: VIEW / MASTER / SLIDE MASTER TO AMEND) ADD PRESENTER’S NAME HERE / ADD DATE HERE © Copyright EDF Energy plc. All rights reserved. PAGE: 7 WAY FORWARD Agree key criteria of User Pays and Core services Shippers and Transporters and Ofgem to provide feedback to … Agree classification format – matrix, flow chart, another option? Shippers and Transporters and Ofgem to provide feedback Produce final classification and format for agreement at next Workstream Need for formal approval by worktsream?

ADD PRESENTATION TITLE HERE (GO TO: VIEW / MASTER / SLIDE MASTER TO AMEND) ADD PRESENTER’S NAME HERE / ADD DATE HERE © Copyright EDF Energy plc. All rights reserved. PAGE: 8 QUESTIONS?

ADD PRESENTATION TITLE HERE (GO TO: VIEW / MASTER / SLIDE MASTER TO AMEND) ADD PRESENTER’S NAME HERE / ADD DATE HERE © Copyright EDF Energy. All rights reserved. THANK YOU