Mod 232 Anna Taylor Pricing Manager

1 Mod 232 An alternative methodology for allocating unidentified energy Currently allocated by RbD entirely in SSP market General consensus that current method not equitable 232 one of various proposals 232 moves estimated cost of unidentified energy to DNs and then charges it to all consumers in a manner to be decided by DNs

2 The first hurdle Would require Ofgem approval of a licence change

3 Assuming Licence change made… The DNs are asked to quantify and generate these charges but they are generally post supply point issues. The DNs have no practical drivers on which to allocate these costs and therefore no rationale for cost reflectivity Potential data source from xoserve is not complete – not all shippers report it and so again hard to be cost reflective The industry has already reviewed this issue and been unable to gain evidence of definitive cost levels or drivers Once in the charging methodology, flexibility in the level of charge is reduced

4 Assuming Value quantified… Would need a new charge code and UK Link changes if only to be charged to NDM LSP sites. This could be costly DNs are transporters, not traders. DNs don’t have a gas trader licence and have to buy shrinkage gas through an agent DNs get gas price protection for shrinkage and would probably expect the same here plus an additional fee to cover agency costs and the risk of setting charges on the basis of lower prices. Individual shippers may be able to purchase this gas far more efficiently This is a complicated proposal with ongoing costs, to DNs, xoserve and shippers which need to be weighed against any benefits