GCF 9th July 2007 LDZ System Charges Capacity/Commodity Split and Interruptible Discounts

The Proposals Restructure the LDZ system charges target capacity/commodity split from 50:50 to 95:5 Introduce partial capacity charges for Interruptible supply points, to maintain their current discount relative to having firm transportation, until interruption reform comes into force Target Implementation date 1 April 2008

DN Rationale Proposal is more cost reflective Will largely eliminate weather uncertainty Will produce more predictable charges Impact for domestic transportation: very small Impact for I&C transportation: depends on the supply point Load Factor Interruptible discounts maintained Implement in 2008 in line with interruption reform tenders

Responses to Main Proposal More information required re cost base and relative impact on customers Impact on Domestic / fuel poor consumers Energy efficiency DN Response: Detailed information provided on Cost base for each DN Impact for each load sector by DN Proposal does not have disproportionate effect on fuel poor Wider issues need to be handled through energy policy and price control discussions

Responses to Interruption Element Cost reflectivity of interruptible element DN Response: This is an interim measure which maintains the current position Not looking to change interruptible benefits prior to Interruption Reform Overall impact of Cap/Com change on interruptible loads depends on load factor Many interruptible loads appear to have lower than expected load factors, leading to negative overall impact Opportunity for all DM loads to review their booked SOQs to ensure they reflect their load characteristics

Responses to Implementation Date A variety of alternative implementation dates were suggested DN Response: This proposal improves our licence objectives and so should be done as soon as practicable. April or October 2008 seem appropriate We will consider further prior to definitive proposal

Information More detailed presentation from DCMF Discussion Paper Responses to Discussion Paper All available on Joint office Website