User Pays – Changed & New Services 19th November 2007

Agency Change Funding Model Further Relevant Objectives ? Degree to Which Furthers Relevant Objectives and Doesn’t Meet User Pays Criteria ? To some extent Fully GT Pay (Class 2) MOD GT & Users Share Costs (Class 3 & 2 Mixed) No Partial Change No MOD Report and Share Benefit User pays if wanted Yes Use Assets for Regulated Services? xoserve No Continue

Key Points from Funding Model Route already exists to fund non-UNC change, so concentrate on UNC change May need changes to relevant objectives to allow more user driven changes to be treated as UNC modifications Scope limited to impacts on Agency

UNC User Pays Decision Tree Change Proposed User pays is limited to the scope of Agency services Unless specifically funded by Price Control, treat as user pays Impacts Agency Activities? N Outside Scope Y Y Core/Price Control? Outside Scope N

UNC User Pays Decision Tree (2) Analysis may not be required in all cases Cost of analysis added to user pays accounts Material value based on cost of user pays processing Cost of development/usage added to user pays accounts Analysis Required? N Y Carry Out Analysis Price Control Funded N Material? Y Share Costs Amongst Users

Conclusions From Last Meeting Everything could fall under user pays in the first instance Upfront assessment of modifications will improve the modifications process Funding of assessments should be a ‘pass through’ arrangement Sharing of costs needs to be simple, with a limited set of alternatives and a default if agreement is not reached

Issues to Consider Some types of mod could be treated as core, e.g. Failure to meet existing obligation Detrimental impacts on other UNC activities Criteria for determining whether analysis is required Criteria for determining if cost is material Transparency and governance of development costs User pays accounts mechanism Late joiners IPR Sharing Mechanisms

Sharing Mechanisms Which market(s) are impacted? What method should be used for charging for development? Is there an appropriate usage basis for ongoing charges? If not usage based, split of charges by supply point, AQ or neither In the event of failure to conclude on above, development and ongoing charges split in proportion to transportation charges