Southern Gas Networks Assisted Connections: Making a difference to Fuel Poverty Mark Smith: Commercial Manager Teresa Tucker: Connections Support Manager 28 th January 2010

Who are we? Southern Gas Networks owns and operates the gas distribution network in the South of England, serving almost four million customers. Southern Gas Networks is owned by Scotia Gas Networks which is a consortium of Scottish and Southern Energy plc and Borealis Infrastructure Management Inc and Ontario Teachers Pension Plan Board.

SGN

System Extensions Network Extensions Costs and affordability 32,000 remote community enquiries Regulatory investment rules

Scheme Introduction. Fuel poverty impacts some 5 million homes across the UK many of whom do not have access to the mains gas network. Ofgem were particularly keen to see system extension work take place that would provide connections to vulnerable communities Following discussions with network owners the scheme was expanded to include connections to individuals as well as communities For qualifying communities or individuals the scheme allows the network owners to provide an allowance to offset the cost of providing a connection The allowance is based on the net present value of future transportation revenues.

Eligibility criteria. Existing, domestic properties that fall within the 20% most deprived area as measured by the Government’s Index of Multiple Deprivation (IMD) Households that are eligible under Warm Front (England) or Central Heating Programme and Warm Deal (Scotland) Households which fall within a priority group (low income households and over 70 years of age) for measures under the Carbon Emissions Reduction Target (CERT) Households that are in fuel poverty – that is they spend more than 10% of their disposable income on household fuel. The scheme does not apply to new homes or to non domestic connections

Scheme Introduction We have appointed Eaga as our business partner for this project in South and also initially for Scotland. Moving forward, ESSACS will be our partner for Scotland. We will be utilising their extensive knowledge and experience in assisting with eligibility checks, as well as advising customers of any associated grant entitlement for heating systems etc.

Process outline All individual requests for connections in our network are being given the opportunity to take advantage of our assisted connections scheme. Customers not in IMD areas, are encouraged to contact eaga if they think they qualify for an assisted connection under any of the eligibility criteria Those in IMD areas are contacted by eaga to ensure they are taking advantage of all available assistance from government or supplier schemes. Individual enquiries from local authorities or housing associations can be also be assessed by eaga if those organisations have no alternative arrangements in place. Where alternative arrangements exist SGN will ensure they are appropriate to accurately assess eligibility and the installation of in house measures. Community schemes can be assessed in a similar manner.

Our Ambition We have advised our regulator that our aim is to complete 10,000 fuel poor connections over the next 4 years and we are pleased to say that we are currently on target to do so. We will work very closely with Social Housing Providers, including Housing Associations, Local Authorities and Councils, to ensure they are aware of the scheme, and to engage them in discussions as to how we can best work together, to the benefit of those that need it most. We particularly want to reach out to the mobile home community as they are acknowledged as being some of the hardest to treat homes We are also interested in supporting innovative solutions to improving the energy efficiency of those in the most vulnerable homes

Summary. Though we acknowledge its limitations, mains gas retains its economic advantage over other sources of energy for primary heating. As well as being more affordable it remains a more efficient source of heating, and can contribute towards meeting the decent homes standards and to reducing the carbon footprint for each household. We will take responsibility to ensure that all new connections provided under the scheme are eligible and delivering appropriate benefits to those most in need. Our Assisted Connections schemes provides a new incentive that will allow us to invest in connections to Fuel Poor customers and communities This is a new incentive! It’s not CERT money It’s not Government Money We want to target the most deserving We are looking for a partnership approach