Future Funding Allocation for Change Development  Action came about during discussions on BSC panel  The analysis of change and development of potential service options by Elexon is funded by parties impacted by the change proposal  Funding is by market share and agreed at the BSC panel  How might we in gas wish to fund the development of change?  Who drives change?  Regulator/Government/Europe  GTs  Shippers  Multi-party

How could it work in gas?  Regulator/Government/Europe  Funded by Industry as a whole, only those parties impacted, or just the GTs through their allowance/clocking up mechanism?  GTs  100% GTs, only those who could benefit, or only those who will use the service?  Shippers  100% Shippers, only those who could benefit, or only those who will use the service?  Multi-party  Those proposing the change, those who benefit, or those who take the service?

Potential Ways to Fund Development Costs  Market share  Supply points e.g. Mod 224 (DME)  Energy use/throughput  Benefit of market share  Transparent and easy to implement  Links costs to the Mod  Invoice once development work is complete?  Downside of market share – parties paying the most may benefit the least from the change and visa versa  Only those who wish to use the service pay  Requires an allocation mechanism  Market share/share of use of the service?  Requires an early commitment by parties to take the service  Others may join the service later – should they pay something towards the development?

Potential Ways to Fund Development Costs  Bundling up the analysis and development costs and then invoicing the industry at a regular interval  Requires an allocation methodology  Cost of development and payment not as clearly aligned to a particular Mod  Requires regular reporting to and monitoring by the industry  An upfront central change fund  Need to agree how much each party puts in  Approval of draw down of funds required  How do we ensure fairness of use?  Links costs to a specific Mod  What happens when fund is used up, or not spent?

With Funding Comes Responsibility  When it comes to direct funding arrangements for development of proposed Modifications, parties will require;  Some formal say as to how the funding is used  Transparency of overall cost plus an understanding of their share  A way of ensuring money is not spent on “red herrings”  Consensual sanctioning to undertake development work  How do we achieve this?  Does current governance provide a route?  Or do we agree funding principles first and then build governance around it?  Future proofing any solution