KEY CONSULTATIONS an overview Louise Masters InnogyOne, Innogy UK Offshore Wind 2003

INTRODUCTION To highlight the raft of ongoing regulatory and technical consultations that will impact upon the connection of offshore wind farms onto the transmission and distribution systems of Great Britain.  Key Ofgem and DTI Consultations (current and recent)  Grid Code Reviews  Scottish Grid Code Review  England and Wales (NGT) Grid Code Review  GB Grid Code  Distributed Generation Coordinating Group (DGCG) UK Offshore Wind 20032

KEY OFGEM AND DTI CONSULTATIONS UK Offshore Wind  Transmission losses in a GB market  NGT system operator incentive scheme  Distributed generation: a review of progress  Developing network regulation: open letter to the DNO’s  Structure of electricity distribution charges  Electricity distribution losses  Modifications to the Distribution Code to clarify the data interchange requirements between Users and DNOs  Developing network monopoly price controls  Distribution Price Control Review (DPCR)  BETTA (various consultations)

TRANSMISSION LOSSES IN A GB MARKET  DTI launched consultation in January Examines the use of average zonal losses to charge for losses in the new GB market.  In particular it invites views on the impact that average zonal losses will have upon the development of renewables in the short to longer term  Responses required by 28 th March 2003 UK Offshore Wind 20034

NGT SYSTEM OPERATOR INCENTIVE SCHEMES  Initial consultation published October 2002  Further consultation published December Proposed phased implementation  Phase 1- revised “shallow” incentive scheme until October requirement on NGC to put into place a new transmission access regime  Phase 2- SO transmission capacity buy-back and balancing incentive, in October SO transmission capacity release incentive, with long- term firm tradable rights, no later than April 2004  Closed for comments in February 2003  Final proposals on Phase 1 expected February Further Consultation on Phase 2 expected during 2003 UK Offshore Wind 20035

DISTRIBUTED GENERATION: A REVIEW OF PROGRESS  Consultation held March 2002, workshop held September Proposed interim measures for removing barriers to the connection of distributed generation until the next DPCR  Review of Progress published January Responses required by 7 th March 2003  Further work is being taken forward by Ofgem through:  framework of price controls for monopoly networks consultation  distribution charging structures consultation  open letter to DNO Chief Executives  DPCR UK Offshore Wind 20036

DEVELOPMENT OF NETWORK REGULATION: OPEN LETTER TO THE DNO’S  Open Letter from Callum McCarthy to the DNO’s in January 2003  Responses required in February 2003  Brings together the issues and proposals that are being put forward in the many consultations  Sets out Ofgem’s thoughts on how a future regulatory framework can be developed to give the appropriate incentives to DNO’s UK Offshore Wind 20037

STRUCTURE OF ELECTRICITY DISTRIBUTION CHARGES  Consultation held late 2002, followed by a workshop in February 2003, to gather views on the proposed new connection and UoS charging arrangements  Suggests a move from deep to ‘shallow-ish’ or shallow connection charges with a new UoS charge for generators  Initial proposals document expected for consultation in March/April 2003  Proposals document expected to be issued in June 2003 UK Offshore Wind 20038

ELECTRICITY DISTRIBUTION LOSSES  Initial consultation paper issued in January 2003, to gather views on the suggested incentives. Closed February 2003  Suggests new mechanisms/incentives to encourage DNO’s to reduce losses, within the context of the DPCR  Possible industry workshop planned for March/ April 2003  Further consultation paper expected May 2003, to set out the developed thinking and invite comments.  Final decision paper expected August 2003 UK Offshore Wind 20039

DISTRIBUTION CODE - DATA INTERCHANGE REQUIREMENTS  DCRP issued consultation in February Proposed changes to the Distribution Code and a Guide to Data Interchange for Distributed Generation Projects  Clarifies the terminology in the Distribution Code in line with Grid Codes  Introduces other terminologies from the Grid Codes  Proposes data requirements for non-synchronous and converter connected generation  Proposes standard network data, for networks below 33 kV, that should be provided by DNO’s  Comments required by 28 th March 2003 UK Offshore Wind

DEVELOPING NETWORK MONOPOLY PRICE CONTROLS  Update on Ofgem’s work on developing network monopoly price controls and its impact on the next DPCR, published February 2003  Open letter published 13 th March 2003, detailing,  Frontier Economics work on dealing with uncertainty and the incentive framework for price controls  a detailed timetable and workplan for the next DPCR  Comments on both required by 14 th April 2003  Statement Document on Developing Price Controls to be published May 2003, which will feed into the work on the next DPCR UK Offshore Wind

DISTRIBUTION PRICE CONTROL REVIEW (DPCR)  Current Price Control runs until March  Preparation for setting the next Price Control will commence this year, building on work done in “Developing network monopoly price controls” and other consultations  Initial consultation document on the DPCR expected May  Initial proposals on the DPCR expected for consultation June 2004  Final proposals expected October 2004  Price Control implemented April 2005 UK Offshore Wind

BETTA CONSULTATIONS  British Electricity Trading and Transmission Arrangements (BETTA) expected to “go live” late 2004-mid 2005  BETTA is an extension of NETA to incorporate Scotland  Several consultations out at the moment,  The Grid Code under BETTA  The Connection and Use of System Code under BETTA  The Balancing and Settlement Code under BETTA  Changes to electricity generation, distribution and supply licences under BETTA  Numerous further consultations expected UK Offshore Wind

GRID CODE REVIEWS  Scottish Grid Code Review  England and Wales (NGT) Grid Code Review  GB Grid Code UK Offshore Wind

SCOTTISH GRID CODE REVIEW UK Offshore Wind  Formal consultation in March 2002  Currently with Ofgem for approval  Main issues,  timescales for phasing in of requirements  MW thresholds  manned control points  capability of wind turbine technology to meet the requirements for frequency response, frequency control, range of power factors, fault ride through, ramp rates

NGT GRID CODE REVIEW UK Offshore Wind  Generic Provisions Working Group looking at the requirements for asynchronous generators and converter connected generation, for inclusion into the Grid Code  Interim requirements for medium wind farms that apply for Licence Exemption listed in Bilateral Agreement  Main issues of the interim requirements,  timescales for phasing in of requirements  capability of wind turbine technology to meet the requirements for frequency response, frequency control, range of power factors, fault ride through

GB GRID CODE  Consultation issued in December Seeking views on a single GB Grid Code, based on the England and Wales Grid Code, and the differences between the existing Grid Codes and how they should be resolved. Responses by 27 January 2003  Report on the conclusions to be published in March 2003  Two further consultations on the draft text to be published in April 2003, and July 2003  Conclusions and final draft text to be published by September 2003  GB grid code to be given legal force after the Electricity (Trading and Transmission) Bill has been given royal assent UK Offshore Wind

Distributed Generation Coordinating Group (DGCG) UK Offshore Wind DTI/Ofgem DGCG Ofgem Internal Distributed Generation Board Technical Steering Group TSG Workstream 1: Distributed generation status and projections Workstream 2: Standardisation of information solutions Workstream 3: Short term network solutions Workstream 4: Short term micro-generation solutions Workstream 5: Long term network concepts and options Workstream 6: Industry skills and resources

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