Presentation to DCMF Profiling and Settlement Review Group John Lucas 3 August 2010

» Report to SVG (a BSC Panel Committee) on whether current arrangements for profiling and settlement remain appropriate, given rollout of HH-capable metering to all customers: Profile Classes 5-8 by 2014 Then Profile Classes 1-4 [rollout targets to be defined] » ELEXON, Supplier, DNO and Ofgem participants Purpose of Profiling and Settlement Review

» 4 meetings so far » Discussions have homed in on question of why ‘elective’ Half Hourly settlement is so little used Are there artificial barriers to HH settlement that ought to be removed? Would mandatory HH settlement be more accurate and equitable? » Consultation (May 2010) on factors driving choice of HH or NHH settlement Process Followed

» Choice of HH or NHH settlement is customer driven in most cases HH settlement currently means a more complex supply contract » HH settlement means higher cost to serve Supplier Agent costs, BSC Charges » Concern about network charges DUoS charges higher? TNUoS charges less predictable? (Triads) Views from May Consultation

» PSRG intends to continue exploring: Options for removing barriers to elective HH Cost-benefit of mandatory HH settlement » Late August – will be issuing impact assessment requests for: Mandatory HH settlement in PC5-8 (from April 2014 onwards) Impact of applying some GSP Group Correction to HH market Next Steps

» 1 October - Impact assessment responses received back » 1 November – report drafted » 30 November – report to SVG Next steps (cont.)

» We tried to quantify this as part of our May consultation: Calculated HH and NHH charges (in each DNO area) for typical customer in PC5 to PC8 Used average load research data for demand shape (and assumed NHH night rate from 00:00-07:00 GMT) Capacity based on peak demand and appropriate Load Factor Assumed no reactive power charges DUoS Charges a Potential Barrier to Elective HH?

» Our rough calculation gave some support to Supplier concerns that HH DUoS charges are higher: 14% higher for PC5 8% higher for PC6 3% higher for PC7 1% lower for PC8 » Not huge differences, but consultation responses suggest Suppliers see it as a concern DUoS Findings

» Do DUoS charges create an artificial incentive to choose NHH over HH settlement (for below- 100kW customers, where the choice exists)? » Would a different approach to DUoS for the HH elective market better facilitate the Charging Objectives? » For example – apply NHH charges to everyone below 100kW? Request for DCMF Help