energynetworks.org 1 PRESENTED BY Andrew Neves, Chair CMG CMG and Workstream Update

3 June 2010 energynetworks.org 2 EDCM Overview Two workstreams (WSA & WSB) set up to deliver EDCM charging methodologies as outlined in Ofgem’s July 2009 decision document (ref: 90/09) Open to all stakeholders Current representation from all DNOs, suppliers, IDNOs (where relevant) and Ofgem Submission deadline -1 September 2010

3 June 2010 energynetworks.org 3 WSA Update Progress so far: ‘Working Draft’ LRIC / FCP Methodology Statements and Implementation and Guidance Notes were produced in March: documenting the common understanding, of the individual EDCM methodologies outlined in Ofgem July 2009 decision document (ref: 90/09) sent to Ofgem for review published on the ENA’s Structure of Charges website

3 June 2010 energynetworks.org 3 WSA Update (cont.) Ofgem subsequently indicated that further development is required to address its concerns on some aspects of the LRIC and FCP methodologies In response, WSA has developed a number of improvements to the EDCM methodologies for inclusion in the forthcoming consultation

WSA Update (cont.) LRIC Improvements Revised modelling of generation in the minimum demand scenario ‘Sense checking’ of powerflows derived from application of security factors FCP Improvements Revised generation analysis – increases the number of locations that a Test Size Generator is applied (increasing the extent of network ‘tested’) ‘Sense checking’ of TSG sizes energynetworks.org 53 June 2010

WSB Update Progress so far Recent consultation on EDCM/CDCM boundary received 10 responses (including all DNOs), which have now been summarised Response to CDCM condition on generation-dominated areas being developed Draft EDCM models based on current proposals provided to Ofgem for feedback and further development energynetworks.org 63 June 2010

WSB Update (cont.) Current proposals for tariff elements: 1. Demand (import tariffs) Charge 1 from FCP/LRIC (p/kVA/day) Transmission exit (p/kVA/day) Sole user asset charge (p/day) Scaling (p/kVA/day) (might be negative) energynetworks.org 73 June 2010

WSB Update (cont.) 2. Generation (export tariffs) Charge 1 from FCP/LRIC (p/kWh) credit for non- intermittent generation Charge 2 from FCP/LRIC (p/kVA/day) Transmission exit (p/kVA/day) charge or credit energynetworks.org 83 June 2010

WSB Update (cont.) 3. Network interconnections LDNOs: portfolio with CDCM-like and EDCM-like parts Offshore: portfolio ? DNO-to-DNO: treat as demand? energynetworks.org 93 June 2010

Next steps Agree key outstanding issues and seek positive opinion from Ofgem for consultation paper Revised WSA documentation to be produced to accompany the consultation Continued development of LRIC/FCP as issues identified through implementation/ consultation phase DNOs populate EDCM pricing model to produce illustrative tariffs for consultation paper Issue EDCM consultation on 18 June 2010 Complete work on CDCM generation-dominated areas energynetworks.org 103 June 2010

Revised EDCM timeline energynetworks.org 113 June 2010