1 v1 iGT CSEP Billing Solution ScottishPower Proposals April 08

2 v1 Current Position Mismatch between CSEP v iGT Invoicing 75,750 (Gas Forum data - January 08) Average domestic CSEP Transportation Charge per annum - £33.36 (CSEP Invoice) Estimated under-recovery of CSEP Transportation for DNs - £2.53m RbD energy misallocation = 1.309,263,000kWh (1.309TWh) 44,673,919Therms (Based on average customer AQ 17,284k – SP CSEP Invoices) Average SAP Price = 52p/Therm Potential misallocated energy based on average SAP = £22.23m per annum CSEP Rejections do not stop energy flow – impacting Shipper billing and RbD allocations only No incentives for DNs and iGTs to resolve

3 v1 Overview of xoserve Role Will accept daily updates of AQ movements provided by iGT at MPRN level Process will take account of more frequent updates resulting from outputs of AQ Review process, potential Rolling AQ changes xoserve will no longer reject AQ updates that are a direct result of failures within the connection process (including information exchange) Rejection will only occur due to file structure/file format errors only Updates that would have previously rejected due to connection process failures will be handled offline and resolved directly between iGTs and DNs within acceptable timescales outlined within NExA CSEP Invoice will be at MPRN level split by Charge Type (no need to use LMNs) – see Appendix for draft invoicing file formats AQ Updates passed within day to Gemini for gas allocations (D+8)

4 v1 Overview of iGT Role IGTs will provide xoserve with daily updates of connections and changes of supply. iGTs involved in Nests will be permitted to nominate portfolio movements directly to xoserve Reconciliation volumes will be submitted directly by all iGTs (including Nested) Updates will be provided on a daily basis at MPRN level Invoice Shippers at MPRN level on a monthly basis (Shippers can challenge iGT invoice for data inconsistencies when directly compared made against CSEP Invoice)

5 v1 CSEP Billing Solution Xoserve (Transmission & DN) IGT (including nests) nominates directly to xoserve On daily basis Shipper Transmission & DN agent issues bill for transportation to shipper on an MPRN basis each month Invoice Transportation is billed to a shipper on a MPRN basis each month Dataflow of energy allocations – daily from Gemini to shipper Gemini IGT Transmission & DN Agent aggregates information about CSEP and inputs into Gemini UNC IGT UNC

6 v1 Discrepancies will be managed offline and resolved under terms specified in Network Exit Agreement between DNs & IGTS (this will not affect invoicing) File Formatting Rejections CSEP Billing Solution – Data Processing Xoserve (Transmission & DN) IGT (including nests) nominates directly to xoserve On daily basis IGT Network Offtake Discrepancies Rejections will be resolved within 2 Business Days

7 v1 Governance Framework Network Exit Agreement The relationship between each DN and iGT and each other DN or iGT should be set out within a generic Network Exit Agreement. This document will outline the rights and obligations with regard to engineering and operating arrangements for network connections and offtake from system(s). Governance of this Agreement should be considered under SPAA. UNC Terms will be extended to reflect DN obligations in relation to accepting and processing update files from IGTs and the invoicing of Shippers at MPRN level by charge type. Will also reflect any additional obligations specified under the terms of the Network Exit Agreement that affect the calculation of offtake quantities, the proportion of Transportation Costs and to facilitate the reconciliation of Larger Supply Points. iGT UNC Terms will reflect that iGTs should submit updates at MPRN level on a daily basis. Nested networks will be permitted to submit updates and I&C reconciliations directly to xoserve. The iGT UNC will also be updated to reflect any additional obligations specified under the terms of the Network Exit Agreement that affect the calculation of offtake quantities by DNs, the Review of Annual Quantities and the reconciliation of Larger Supply Points.

8 v1 Next Steps Immediate steps to be taken to reduce the mismatch of Meter Points between CSEP and iGT Invoicing. One off downloads from each iGT –Xoserve to confirm if they can accept LMN updates directly from Nested iGT if not interim solution should be urgently explored Review of current rejection codes to ensure that network connection failures do not impact iGT AQ updates I.e. allow CSEP AQ values to be updated and CSEP Invoicing to be corrected Commitment from iGTs/DNs to seek and resolve network connection issues within set timescales - priority UNC/iGT UNC Development Workgroup to be formed to outline and agree Business Rules and procedures for proposed Solution Development of multi-lateral Network Exit Agreement Gemini solution should be pursued to reduce D+8 timescales for gas allocations (2012) Review of CSEP Administration charge – already deemed as User Pays