DNPD04 LDZ Exit Capacity Charges- Discussion Report Denis Aitchison 27 th July 2009

DNPD04 From 1 October 2012 the DNs will pay the NTS Exit Capacity charges to the NTS and recover the cost from shippers DNPD04 put forward for discussion several options to effect this recovery There were six responses to the discussion paper

Type of Charge 1. Should LDZ Exit Capacity charges be based on a flat pence per peak day kWh rate as per current NTS Exit Capacity charges All respondents supported this proposal, citing various reasons for support:- -Simple -Cost Reflective -No good reason to change

Application of New Charge Should LDZ Exit Capacity Charges be applied by Offtake, by Exit Zone or by Network By Offtake Five of the six respondents were against this option, mainly because of the likely increased variability of charges and additional costs for shippers. One respondent potentially supported an Offtake or an Exit Zone basis

Application of New Charge By Exit Zone -Five of the six respondents supported this option and one respondent potentially supported it. Main reasons were that it would provide more stable charges, involve the least change for shippers, and provide the best practical degree of cost reflectivity By Network – Three respondents were against this proposal, mainly because of the loss of cost reflectivity. Two respondents supported it along with the Exit Zone option, mainly due to more stable charges and ease of administration. One respondent did not support or oppose the proposal.

No New Charge Should the recovery of the NTS costs be included in the existing LDZ system charges None of the respondents supported this option, on the basis that it would be less cost reflective and less transparent than the alternatives.

Dates for Changing Charges Should the misalignment of the NTS and DN dates for changing charges be addressed No respondents supported an October price change for DNs. Generally they thought it would be better to gain some experience of the operation of the new system before making any changes.

Separate “K” for LDZ Exit Charges Should a separate “K” be introduced for LDZ Exit Capacity charges Four respondents supported this proposal on the basis that it would be more cost reflective and that the “K” would be shared across shippers in the same proportions in which it arose. One respondent did not see a need for it. The “K” would be carried forward to the next formula year. Would be shown in the Mod 186 Reports.

Next Steps Change Order being raised with xoserve 2 nd Discussion Paper? Pricing Consultation Paper as required by the Licence Changes to UNC