EDCM update Mo Sukumaran (on behalf of CMG) 1 | Energy Networks Association – DCMF 5 April 2012 1

Current position – EDCM demand The EDCM will be used to calculate import charges for qualifying customers from 1 April 2012 Ofgem has approved the incorporation of the EDCM for import charges into DCUSA (DCP 109) From 1 April 2012, the EDCM for import charges would be subject to open governance 2 | Energy Networks Association – DCMF 5 April 2012 2

Further work on EDCM demand Ofgem placed 3 conditions on its approval of the EDCM for demand. Conditions 1 and 2 have been met and the methodology updated Condition 3 relates to the treatment of spare capacity in calculating network use factors for demand Condition 3 requires the DNOs to: Consider the circumstances under which costs associated with spare capacity on the network may be “socialised” Examine different options for doing so Analyse the impact on customer charges Provide a well-reasoned recommendation for change (or no change) 3 | Energy Networks Association – DCMF 5 April 2012 3

Condition 3 Workstream A of the CMG is working towards meeting condition 3 Several options and their impact on charges are being considered We plan to publish a consultation on these options and their impact on charges in mid-April 2012 DNOs need to submit a report explaining their recommendation to Ofgem by 1 June 2012 Changes to the methodology, if any, are unlikely to affect tariffs before 1 April 2013 4 | Energy Networks Association – DCMF 5 April 2012 4

Current position – EDCM export The EDCM will be used to calculate export charges for qualifying customers from 1 April 2013 Ofgem guidance on the methodology for export charges published on 2 February 2012 DNOs are currently working to develop and submit the methodology by 1 June 2012 Consultation document with our proposals published on 2 March 2012 (Deadline for responses is 12 April 2012) Workshop to support consultation held on 8 March 2012 5 | Energy Networks Association – DCMF 5 April 2012 5

Arrangements for Pre-2005 DG Ofgem published its decision on the arrangements for pre- 2005 generators Generators that “connected” on or before 31 March 2005 would be eligible for a time-limited (25 year) exemption from use of system charges “Designated EHV properties” will default to the exemption from 1 April 2013 (even if they are currently on the CDCM) Other generators (CDCM) will default to being subject to the CDCM Generators that connected on or after 1 April 2005 but were charged for their connection based on “pre-2005” arrangements would also be eligible for the 25-year exemption starting from the connection date 6 | Energy Networks Association – DCMF 5 April 2012 6

Arrangements for Pre-2005 DG Designated EHV properties that qualify for the exemption can “opt in” to charges at any time in the future: Deadline for opting in to charges for 2013/2014 is 30 June 2012 Deadline for future years is 1 November of the preceding year Opting in to charges is a “one way” decision Please contact your DNO before the deadline if you would like to opt in 7 | Energy Networks Association – DCMF 5 April 2012 7

LDNO arrangements Portfolio discounts for CDCM-like generation (export) end users Extended Method M to calculate discounts Methodology approved by Ofgem in December 2011 Charges and credits for EDCM-like generation (export) end users calculated on a “boundary-equivalent” basis LDNOs to provide boundary-equivalent data to the host DNO for charges to be calculated 8 | Energy Networks Association – DCMF 5 April 2012 8