December 2017 Mod186 Pricing Statement Movement from September 17 & Indicatives

Key movements from September 17

Supporting notes – Sept to Dec movements 1 The cost of debt movement reflects Ofgem’s decision to leave the rate at 2.03% vs. our internal projection @ 1.93%. We have assumed that this upside gets adjusted for the year after when Bank of England data becomes available. 2 Pension Deficit adjustments reflect the latest position from the most recent valuation exercise. 3 We have restated 20/21 to reflect Corporation Tax rates at 17% instead of 18% we had previously. 4 RPI reflects the November 2017 HM Treasury report showing RPI @ 3.3% for 18/19. This is what will be used for price setting purposes for 18/19. 5 We have reflected the most recent budget decision in terms of business rates will be inflated by CPI instead of RPI from April 2018 onwards. 6 NTS Pension Deficit charges have been updated to reflect the most recent NTS Pricing Statement published for 18/19. Costs were lower than previously forecast so more money is being returned 2 years later in 20/21. 7 Exit Capacity unit rates from October 2018 have been updated as per the most recent NTS charges. This results in lower costs for 18/19 which results in NGN returning more money 2 years later in 20/21. 8 We have included an estimate of NGN’s share of Coop Energy’s supplier of last resort claim based on our share of supply points in the network (and assuming a 50/50 split between gas and electric). Ofgem will direct the final values in January 2018 in time for 60 day notice publications. 9 Since Project Nexus implementation we have seen slightly higher capacity invoice values each month resulting in a slight over collection of income being returned 2 years later via K. We have built this higher level of invoice values into our future forecasts. 10 We have included a 0.6% increase in capacity levels as per the data from Xoserve’s December snapshot report. This results in a reduction in the price change needed during 18/19 to achieve the required allowed revenue.

Key movements from November 150 day notice Indicatives