Structure of Charges: Update and next steps DCMF 10 September 2008

2 Structure of charges project MarchOfgem decision to split the project between delivery at HV/LV and EHV level 8 MayStat con on CLM proposal for HV/LV charging 1 JulyCLM obligating DNOs to submit a CDCM for HV/LV charging by 1 September 09 takes effect 31 JulyOfgem decision and stat con on CLM proposal for EHV charging and governance 25 AugustDNOs submit CDCM for approval by the Authority 1 OctoberCLM obligating DNOs to submit an EDCM for EHV charging by 1 September ‘10,and incorporate methodologies within DCUSA takes effect

3 CDCM - HV/LV charging 25 AugustDNOs submit CDCM for approval by the Authority SeptemberPublication of Ofgem CDCM consultation OctoberOfgem CDCM consultation closes NovemberPublication of Ofgem decision on CDCM DecemberDNOs publish indicative charges for 1 April April 2010Implementation of CDCM and incorporation of the CDCM within DCUSA

4 EDCM - EHV charging 1 OctoberCLM obligating DNOs to develop and submit the EDCM to the Authority by 1 September 2010 comes into effect 2009/2010DNOs in conjunction with other associated licensees to develop an EDCM that conforms either to the description of the LRIC methodology or to the FCP methodology as published by the Authority on 31 July Sept 2010DNOs to submit EDCM for approval by the Authority Nov 2010Publication of Ofgem decision on EDCM Dec 2010DNOs publish indicative charges for 1 April April 2011Implementation of EDCM and incorporation of EDCM within DCUSA

5 EDCM - EHV charging Associated licensees are those DNOs who have chosen to develop the same EHV charging methodology i.e. either LRIC or FCP During winter 2009 and 2010 we anticipate that the DNOs will organise working groups to develop the EDCM building on the model used for the development of the CDCM by the Common Methodology Group We are committed to continuing Ofgem involvement in the CMG and intend to respond to EDCM issues where appropriate. EHV charging boundary – it is appropriate that a common EHV boundary should be determined in advance of September We consider that the DNOs should develop and consult on a common approach and submit proposals to the Authority in 2010

6 CDCM and EDCM governance 31 July 09 - Ofgem decision that it would be appropriate for the governance structure of the common methodologies to be provided for by incorporation within DCUSA Legal obligation on DNOs contained in SLC22A – incorporation of CDCM by 1 April 2010, incorporation of EDCM by 1 April Arrangements for handling modification proposals must also comply with requirements of SLC50 and SLC50A, Part F 22 August 09 - DCUSA proposal 046 raised in order to bring the governance of the CDCM within the agreement Proposal 046 deals with the procedure for handling formal modification propoals following incorporation. The role of the DCMF in interacting with the DCUSA process remains to be considered.

7 DCUSA proposal 046 and DCMF Proposal 046 considered by DCUSA panel on 28 Aug. Panel agreed proposal should be a PT 1 matter and subject to the definition procedure Invitation to attend 1 st Working Group meeting distributed on 1 September to DCUSA parties and DCMF members 1 st working group meeting held on 7 September – limited representation among DNOs and suppliers. The DCUSA panel intends to issue a 3 week consultation on proposal 046 in Sept with a 2 nd working group meeting scheduled for w/c 12 th Oct. Important issues are being raised in the working group - it is essential that interested parties engage to ensure their views are considered in the development of this proposal