Credit Arrangements – Independent Assessments Joanna Ferguson

Current Arrangements Current arrangements for utilising Independent Assessment as a means of obtaining unsecured credit contained in UNC Section V3.1.7 Transporter will specify a panel of 3 independent credit rating agencies User may select from the panel User allocated an Independent Assessment Score (1-10) used to allocate up to a maximum of 20% of Transporters Maximum Unsecured Credit Limit

Current Arrangements (cont.) The table contained in UNC shows only limited information Table provides no guidance on how the 1-10 scoring is mapped to the independent rating agencies scoring mechanism Independent Assessment Score % Transporters Maximum Unsecured Credit Limit

DCUSA Example February 2009 Ofgem directed DCP034 into DCUSA Introduction of Independent Assessment arrangements DCP034 included a table similar to that in UNC and also a further table to enable mapping of the Credit Assessment Factor to the scoring mechanisms of 5 independent rating agencies

RG252 Discussion Need to ensure that DNs take a consistent approach Agreed that it is not necessary for UNC to be an exact duplicate of DCUSA Further consideration required to establish if there are better options available in creating clarity in UNC Final choice needs to be reasonable and justifiable

Options for Discussion Copy DCUSA table into UNC, retaining the ability of DNs to select a panel of three (including an agency not included in the table) and allowing the user to choose per the current text Limit the table to 3 agencies which are agreed by all DNs. Lowest rating used to assess unsecured credit limit Either of the above and also allow the DNs to “cap” the amount of unsecured credit if the recommendation from the agency is lower than the table proposes Other combinations?