1 Modification 0152V Implementation Matters 25 October 2007

2 Business Rules  The following slides were used during Review Group 126 discussions to illustrate the “5-year model” and now represent the business rules for approved Modification 0152V.

3 Approved model - 5 years (4 yrs to 4 yrs 364 days) 1 st Feb R R R R4 RIP1 RIP2 RIP3  First implementation in April 2008  With effect from all charges raised from this date and up to 31st March 2009 are restricted to an earliest start date of 1st April 2004  In April 2009, the restricted invoicing period (RIP) will roll-forward one year. With effect from , all charges raised from this date and up to 31st March 2010 will be restricted to an earliest start date of 1st April 2005.

4 Impact of moving the earliest start date forward Charge duration With effect from 1 st April 2008, charges (where required) will be calculated back to 1 st April Period now closed Out – not reconciled or adjusted Charge duration Up to 31 st March 2008, charges (where required) will calculate back to 1 st Feb 1998

5 Impact of moving the earliest start date forward - reconciliations Reconciliation charge duration With effect from 1 st April, charges will be calculated back to 1 st April 2004 (where required) Period now closed out – not reconciled Reconciliation charge duration Up to 31 st March 2008, charges will calculate back to 1 st Feb 1998 (where required) R1 R2 The period pre is unreconciled on current business rules

6 Illustration of reconciliation Estimated consumption Actual consumption Meter reading period R1 R2 DIFFERENCE D1D2D3D4 Dn The reconciliation charges are calculated on a daily basis. To implement the rule in slides 8 and 9 xoserve systems will truncate the reconciliation at Reconciliation volumes for D1, D2 and D3 will not be invoiced and will remain unreconciled

7 Business Rule – applying the effective date  The implementation date for each period will be known in advance i.e. 1 st April each year  The new restricted invoicing period will roll forward on 1st April each year, and applies to charges to be calculated from 1st April each year  Relevant invoice charges e.g. reconciliation charges, will be calculated to 31 st March, and processed on an invoice issued in April  On 1st April the end date rolls-forward (to 1st April 2004 on 1 st April 2008)  The business rule must allow these charges relating to March, but calculated in April, to be valid under the restricted invoice period regime  Specifically for the month immediately prior to the RIP roll-forward, charges (where required) will be calculated back to the current earliest start date (before the roll-forward) and up to the end date  These charges will appear on the Reconciliation invoice to be issued in the first month after the roll-forward  The following slide illustrates this exception

Reconciliation invoice issued 24 th April A MPRN reconciliation charge Applying the effective date – Reconciliation Invoice R1R2  In April only, each year, the March Reconciliation invoice will include items which have technically timed out, to reflect the timing of the Reconciliation Invoice (one month in arrears) 24 th April Period now closed out – not reconciled or adjusted A MPRN reconciliation charge Reconciliation invoice issued 28 th May  Reconciliations processed on the April 2008 invoice issued in May will end date at

9 Treatment of Operational Query Adjustments  Modification reports includes the principle of a hard cutover, the maximum adjustment period for operational query adjustments will be set as the earliest start date which applies when they are invoiced  Operational queries are generally raised when the issue surfaces and therefore not all adjustments go back to the relevant earliest start date Query submitted Maximum adjustment period Financial adjustment invoiced Period now closed out – not adjusted

10 Operational Query Adjustment examples continued Query submitted Maximum adjustment period Query submitted Maximum adjustment period RIP – RIP – Financial adjustment invoiced Financial adjustment invoiced Period now closed out – not adjusted Period now closed out – not adjusted

11 Business Rule RbD treatment  Reconciliations and adjustments are processed as a “primary” activity.  Each reconciliation and adjustment will generate a “secondary” activity - an equal and opposite energy adjustment to the smaller supply point market through the Reconciliation by Difference (RbD) process.  Not all RbD processes are completed at the same time as the “primary” activity. Some reconciliations and adjustments are processed a month later in RbD than the “primary” reconciliation or adjustment

12 Business Rule RbD treatment continued RIP1 RIP2 Adjustment charge period Adjustment invoice issued Period now closed out – not reconciled or adjusted  The RbD charges associated with the adjustment processed in March 2009 are processed on the reconciliation invoice issued in April  The business rules described in the Modification Report allow the RbD charges to flow in full, including those relating to the period 1st April 2004 to 1st April 2005, which is now “closed-out”. RbD charges processed

13 Treatment of USRVs  Reconciliation charges that exceed certain tolerances are suppressed and submitted to shippers for resolution (USRVs)  A reconciliation charge can extend back to the earliest start date  A reconciliation may remain suppressed across a roll-forward date, so that part of the reconciliation is now timed out  The business rules include the re-calculation of USRVs (and any SRVs) which span the new earliest start date, so that only the part within the new RIP can be invoiced

14 Treatment of USRVs – examples In April 2009, part of the reconciliation charge is now “timed out”. The new shorter reconciliation will be subject to the suppression tolerances, and may pass or fail Reconciliation charge period (USRV) In February 2008, a reconciliation charge is calculated which results in a USRV Reconciliation charge period (USRV) Period now closed out – not reconciled Period now closed out – not reconciled R1 R2

15 Modification 0152V – Further Information  Information Sources  Review Group 126 materials and report  Modification 0152V Final Report  Practicalities of implementation  Presentations scheduled for future Billing Operations Forum (next meeting Tuesday December 4 th )  General enquiries to Billing teams –