UNC 224 User Pays Charging Phil Broom 29 January 2009

User Pays charging principles for UNC 224 23/05/2019 User Pays charging principles for UNC 224 UNC 224 will create user pays services and user pays charges which will be published in the Agency Charging Statement (ACS) High level principles: Cost reflective – ensure charges recover actual costs Targeted – are the costs fair to all parties? Transparent – easy to understand and administer Encourage confidence – No hidden charges or unknowns

Charging Methodology for UNC 224 development costs 23/05/2019 Charging Methodology for UNC 224 development costs Two potential models (and variants) developed: “Membership fee” 1a) Flat 1b) Banded “Availability fee” 2a) Flat 2b) Banded

1. Membership fee model Joining fee paid on confirmation as DME 23/05/2019 1. Membership fee model Joining fee paid on confirmation as DME Costs targeted only at those who participate Fee is based on forecast take-up (demand) Risk of under/over recovery Risk of reconciliation fees if under-recovery 1a) Flat fee – all users pay the same regardless of which EUC band 1b) Banded fee eg. EUC band 6-8 multiplier = 2 EUC band 5 multiplier = 1.5 EUC band 4 multiplier = 1

Example of model 1b – Banded membership fee 23/05/2019 Example of model 1b – Banded membership fee Assume fee = £10 per eligible meter point MPR snapshot determines which band at start of UNC 224 rollout EUC 6-8 would pay: £10*1 (phase 1) + £10*0.5 (phase 2) +£10*0.5 (phase 3) = £20 total EUC 5 would pay: £10*1 (phase 2) + £10*0.5 (phase 3) = £15 total EUC 4 would pay: £10*1 (phase 3) = £10 total Fees set to forecast demand under/over recovery reconciled from all members or all eligible users.

2. Availability fee model 23/05/2019 2. Availability fee model All eligible meter points pay towards the development cost DME is made available to all users where EUC 4 and above (subject to rollout) Costs targeted only at those who participate Fee is not based on forecast take-up (demand) No risk of under/over recovery No risk of reconciliation fees if under-recovery 1a) Flat fee – all users pay the same regardless of which EUC band 1b) Banded fee eg. EUC band 6-8 multiplier = 2 EUC band 5 multiplier = 1.5 EUC band 4 multiplier = 1

Example of model 2b – Banded Availability fee 23/05/2019 Example of model 2b – Banded Availability fee Assume fee = £10 per eligible meter point MPR snapshot determines which band at start of UNC 224 rollout EUC 6-8 would pay £10*2 (multiplier) = £20 EUC 5 would pay £10*1.5 (multiplier) =£15 EUC 4 would pay £10*1 (multiplier) =£10 All development costs recovered immediately, no under/over recovery or reconciliation charges for users.

Relative merits Membership fee – Model 1 Availability fee – Model 2 23/05/2019 Relative merits Membership fee – Model 1 Availability fee – Model 2 Objectives 1a Flat 1b Banded 2a 2b Cost reflective Targeted Transparent Confidence