DNPC03 CONSULTATION PAPER LDZ System Charges Capacity/Commodity Split and Interruptible Discounts

The Proposals Change the LDZ system charges target capacity/commodity split from 50:50 to 95:5 Introduce partial capacity charges for Interruptible supply points (This will need UNC Mod to introduce) Implementation date April or October 2008 The proposal the DN are putting forward is to change the customer charge for the 0 – 73 MWh loadband from a commodity based charge to a capacity based charge. Implementation date of 1st April 2007 – reason will be explained later in presentation.

Why Change the Cap/Com Split Improve Cost Reflectivity Improve the stability of charges Improve competition

Why Capacity Charges for Interruptibles Currently Interruptibles receive discounts of approx 50% of the LDZ system charges If the capacity element of these charges is increased to 95% the discount would increase to 95% Proposal is designed to maintain the discount at its current level

Charge Adjustment Factors Commodity Capacity Eastern 0.0996 1.8632 London 0.1037 1.8055 North West 0.0981 1.8805 West Mids 0.1054 1.7854 Scotland 0.093 1.96 Southern 0.106 1.77 Wales&West 0.106 1.788 Northern 0.1003 1.8692

Questions for Consultation Change the LDZ system charges target capacity/commodity split from 50:50 to 95:5 ? Introduce partial capacity charges for Interruptible supply points ? Implementation date April or October 2008 ?

Responses Responses should be sent to enquiries@gasgovernance.com By close of play on Tuesday 28 August 2007