SGN’s April 09 Mod 186 Report DCMF Meeting – April 27 th 2009

Scotland Revenue Data

Scotland – Commentary (1) 2007/08 Pass through movement is due to a reduction in Formula Rates and Licence Fees The increase in the Mains Replacement allowance has outweighed the decrease in the Shrinkage allowance K movement is an under recovery from 2006/7 The under recovery in 2007/08 is mainly due to the under recovery being brought forward from 2006/07 - this effect being reduced by the higher than forecast throughput 2008/09 Pass through movement is due to a change in Formula Rates, NTS Pension and Licence Fees K movement is an under recovery from 2007/08 Incentive movement is primarily driven by decreases in the Shrinkage and Mains Replacement allowances offsetting increases in Innovation Funding allowance 95/5 Capacity/Commodity methodology implemented from 1 October 2008

Scotland – Commentary (2) 2009/ /13 Pass through movement is due to a change in Formula Rates, NTS Pension, Licence Fees and the Traffic Management Act (from 2010/11 onwards) Incentive movement includes increases in the Environmental Emissions and Innovation Funding Incentive mechanisms, and the Discretionary Reward Scheme from 2010/11. From 2008/09 to 2009/10 the shrinkage allowance decreases from the inflated PCR shrinkage - however from 2010/11 onwards the shrinkage allowance increases. 2009/ /13 Due to 2013/14 being in a period of a yet undetermined Price Control Review - a working assumption has been made of total allowed revenue being 2012/13 allowed revenue with forecast RPI applied Sensitivity Analysis – Refer to published report Further Information * This is an increase to new rates under 95/5 methodology, not an increase to Oct 07 rates Disclaimer - Refer to published report

Southern Revenue Data

Southern – Commentary (1) 2007/8 Pass through movement is due to a reduction in Formula Rates and Licence Fees The decrease in the Shrinkage allowance has offset increases in Mains Replacement and Exit Incentive allowances K movement is an under recovery from 2006/7 The over recovery is due to higher than forecast volumes 2008/9 Pass through movement is due to a change in Formula Rates, NTS pension and Licence Fees K movement is an over recovery from 2007/08 Incentive movement is primarily driven by decreases in the Shrinkage and Mains Replacement allowances offsetting increases in Innovation Funding, Exit Incentive and Environmental Emissions allowances 95/5 Capacity/Commodity methodology implemented from 1 October 2008

Southern – Commentary (2) 2009/ /13 Pass through movement is due to a change in Formula Rates, NTS Pension, Licence Fees and the Traffic Management Act (from 2010/11 onwards) Incentive movement includes increases in the Environmental Emissions, Exit Incentive and Innovation Funding Incentive mechanisms, and the Discretionary Reward Scheme from 2010/11. From 2008/09 to 2010/11 the shrinkage allowance decreases from the inflated PCR shrinkage - however from 2011/12 onwards the shrinkage allowance increases. 2009/ /13 Due to 2013/14 being in a period of a yet undetermined Price Control Review - a working assumption has been made of total allowed revenue being 2012/13 allowed revenue with forecast RPI applied Sensitivity Analysis – Refer to published report Further Information * This is an increase to new rates under 95/5 methodology, not an increase to Oct 07 rates Disclaimer - Refer to published report