Genuine Reconciliation Distribution Workstream 23rd October 2008

Background Modification Proposal 228 Raised on 8th October Contains element of ‘Genuine Reconciliation’ Reflects fact that LSP AQs are reducing at a faster rate than SSP AQs

AQ impact on reconciliation Initial Allocation of Gas is based on AQ values, scaled to match the total consumed. If AQs were all accurate then no reconciliation would take place If AQs are equally inaccurate then no reconciliation would take place If AQs in one market are more or less accurate than the other then reconciliation will occur.

Site by Site Reconciliation At a site level AQs will be higher or lower and this will always generate reconciliations. However, these reconciliations should ‘net-off’ if the aggregate AQ was correct in the first allocation.

Change between 06/07 and 07/08 Modification 0081 data shows that; LSP AQs reduced from 156.6TWh to 147.46TWh between the two gas years SSP AQs reduced from 553.7TWh to 527.5TWh during the same period Therefore LSP AQs are dropping at a faster rate

Methodology

Worked Example (27.956% - 28.283%) x 527.5 TWh = - 1.72 TWh.