ScottishPower, Energy Retail Gas Long Term Vacant (LTV) Proposal January 2010 Elaine Carr ScottishPower

ScottishPower, Energy Retail 2 Background There are approximately 700k homes unoccupied, 300k vacant for more than 6 months in England alone Gas Shippers are unable to effectively reduce their settlement and transportation cost exposure to these sites –An AQ for a site can only be amended through obtaining meter readings –A Shipper cannot gain access to the site to obtain meter readings –The Shipper has no redress to change the AQ of the site to reduce costs In the electricity market this problem has been addressed through BSC MOD196

ScottishPower, Energy Retail 3 What happens in the electricity market.. Initially considered as Issue 14 of the Balancing and Settlement Code in 2005 and seen as a materially significant MOD196 - “Treatment of Long Term Vacant Sites in Settlement” was proposed following Issue 14 consideration MOD196 was introduced on 22 February 2007 Since introduction 50,000 MPANs have gone through the LTV process

ScottishPower, Energy Retail 4 Current process in electricity PRINCIPLE: Allows Suppliers to classify a site as Long Term Vacant (LTV) and set the Estimated Annual Consumption (EAC) to zero for settlement TO QUALIFY: The Supplier must have received two “Notification of failure to obtain reading” flows with the “site visit check code” noted as “site not occupied”. These must be more than three calendar months, but less than seven months, apart EXCLUSIONS: The site should not be classed as LTV if: –any other “site visit check code” is received between “site not occupied” notices –the Supplier receives any other valid flows containing register reading data –there is any indication of consumption at the site

ScottishPower, Energy Retail 5 Ongoing management of electricity LTVs The Supplier must proactively attempt to obtain meter readings and retain a record of these attempts: –extra attempts to contact the owner e.g telephone, post, –attempting to contact the local estate agent or local authority –where dual fuel by checking for a similar pattern with gas consumption The site must remain energised according to the Supplier Meter Registration Service to qualify as an LTV

ScottishPower, Energy Retail 6 Concluding electricity LTV status A site ceases to be an LTV where: EITHER One of the exclusions are met: –any other “site visit check code” is received between “site not occupied” notices –the Supplier receives any other valid flows containing register reading data –there is any indication of consumption at the site OR The Supplier has not registered a “notification of failure to obtain reading” within a seven month period OR The Supplier believes that energy consumption has re-started On meeting any of the criteria above the Supplier must instruct the Data Collector to enter a non-zero EAC into the settlement process

ScottishPower, Energy Retail 7 Safeguards Treatment of LTVs are included in the scope of ongoing audit from 2007/08 The audit assesses the validity of the Supplier LTV classification process MRASCo has made additions to the Working Practice Product Set to clarify the use of site visit codes – “site not occupied” and “no access”

ScottishPower, Energy Retail 8 Gas context There are 700k properties in England alone that are estimated to be vacant, 300k for more than 6 months. In Scotland a recent study found 4% of homes unoccupied At present the Shipper will make continuing attempts to gain access to the property to get readings and make various contact attempts – knowing the site is vacant Although this proposal seeks to reduce Shipper exposure to unwarranted costs, it is a clear solution to a commercial/cost allocation problem This proposal will allow more accurate allocation of costs through RbD

ScottishPower, Energy Retail 9 Proposal for gas PRINCIPLE: Allows Shipper to classify a site as Long Term Vacant (LTV) and asks Xoserve to set the Annual Quantity (AQ) to one for settlement TO QUALIFY: The Shipper must have received two RVV02 flows with validation code E126 (“vacant premises”) and these must be more than three calendar months, but less than seven months, apart EXCLUSIONS: The site should not be classed as LTV if: –any other validation code is received between “vacant premises” notices –the Shipper receives any other valid flows containing register reading data –there is any indication of consumption at the site

ScottishPower, Energy Retail 10 Ongoing management of gas LTVs The Supplier must proactively attempt to obtain meter readings and retain a record of these attempts: –extra attempts to contact the owner e.g telephone, post, –attempting to contact the local estate agent or local authority –where dual fuel by checking for a similar pattern with electricity consumption The site must remain live on the Sites and Meters Database, noted as LTV, to qualify as an LTV

ScottishPower, Energy Retail 11 Concluding gas LTV status A site ceases to be an LTV where: EITHER One of the exclusions are met: –any other validation code is received between “vacant premises” notices –the Shipper receives any other valid flows containing register reading data –there is any indication of consumption at the site OR The Shipper has not registered an RVV02 flow within a seven month period OR The Shipper believes that gas consumption has re-started Shipper must then instruct Xoserve to revert to the previous non-vacant AQ value

ScottishPower, Energy Retail 12 Safeguards Xoserve would monitor the use of the LTV process and report Shipper usage through the RbD Sub-group It is proposed that the draft MOD would be sent for development and the Development Group would consider incentives and appropriate monitoring to ensure that there is no abuse of the AQ process. In addition the Group would consider how the process would work in practice It should be considered that there is an auditable process in the electricity market and that this might be used as a corresponding safeguard that the Supplier is acting in good faith Any LTV MOD proposed ScottishPower would be for the SSP/LSP market only