Project Nexus Workgroup Reconciliation Scaling Adjustment – Transportation Charging Issue 2nd August 2011 24/02/2019

Action Original action NEX0053: NGD to investigate how best to apply an appropriate charge in future & what any possible transitional impacts there may be. Updated Action: Xoserve to provide a brief presentation of what options are feasible. Original action as a result of an issue raised in the June workgroup meeting around what rate of transportation commodity should apply to the Reconciliation Scaling Adjustment (Smear)?

For Example Shipper share of daily measurement / allocation of energy (on the day) A D B C “Unidentified gas’ shared out in proportion to Shipper measurements / estimates. Energy only, no transportation price issue

Following Reconciliation Actual measurements result in reconciliations, Shipper charges may increase or decrease A D B C Need to re-calculate & re-distribute the ‘unidentified gas’

Issue How is transportation commodity applied to the unidentified gas? Transportation Commodity rates currently derived from site SOQ. The extra energy is shared at portfolio level not site specific

Options Include Apply a Shipper specific average rate based on average SOQ Apply an industry average SOQ + average rate Cease charging Commodity on the unidentified gas – recover GT costs on the site specific element only Total net of all the reconciliation’s for the month, divide it by the average sum of all the LDZ UDQOs for the month and re-charge it out to each shipper as p / kWh of UDQO based on the shippers average monthly UDQO Any others?

Removal of Commodity Charge on Unidentified Gas Impacts; Unit transportation rate would increase – recovered from smaller throughput GTs would need to estimate unidentified gas Possible price corrections needed mid year if estimates were incorrect Large reconciliations could trigger large price corrections