Transmission arrangements for distributed generation DCMF 9 April 2008 Pre consultation document

Pre-consultation document Issues associated with DG  Transmission charging arrangements do not provide a level playing field for transmission and distribution connected generation in terms of cost-reflectivity  Access arrangements do not provide a level playing field in terms of access allocation as DG “jumps the queue”  No contractual framework for exporting GSP’s  DG not directly visible to NGET causing difficulties in  Investment planning  Demand forecasting  Outage and fault level planning

Pre-consultation document Transmission charging  Current arrangements do not reflect the transmission investment costs incurred as a result of generation connecting to the distribution networks  ‘Embedded benefit’ of ~£18/kW provides additional incentives for generation to embed  ‘Actual’ embedded benefit estimated to be ~£7.50/kW  Demand savings ~£5.75/kW  Generation connection savings ~£1.50/kW  Commoditisation of the residual element would not reduce the embedded benefit for average load plant

Pre-consultation document Proposals  CUSC modification regarding thresholds associated with a request for a Statement of Works by the DNO (CAP097) shortly  Inviting views regarding second CUSC modification to introduce a new entry product for exporting GSP’s  Presenting two competing potential enduring solutions for industry comment  GNSAM strawman  Net DNO Agency Model strawman

Pre-consultation document GNSAM (1) GBSO CVA Registered Embedded Generator Pays TNUoS generation tariff directly to National Grid, minus a cost reflective discount for explicit access rights SVA Registered Embedded Generator Distribution Network Operators Contract with the DNO for connection Supplier Pays supplier TNUoS generation tariff minus cost reflective discount for implicit access rights Responsible for SVA generator output and pays TNUoS generation tariff minus discount on behalf of SVA registered generator

Pre-consultation document Net DNO Agency Model (1) Transmission Generator Books and pays for TEC + short- term products Directly connected demand Books and pays for TOC + short-term access products via supplier Distribution Network Operators Supplier Embedded Generator Books and pays for TEC/TOC + short-term products (overrun, sharing. Non- obligated release, short-term demand product) Notify demand requirement and pay for TOC Notify requirement and pay for TEC Supplier

Pre-consultation document Next steps  Pre-consultation expected to be published mid- April for a six weeks consultation period  Proposing modification to existing CAP097 thresholds  Inviting views on:  GNSAM and Net DNO Agency Models presented as potential enduring solutions, in consideration of TAR  Appropriateness of developing an entry product for exporting GSPs at this time, given that this is a step in the direction of a Net DNO Agency model