1. Project Nexus UNC Workstream Consolidation of High-Level Principles Fiona Cottam 19 May 2010

2. 2 2 Objectives  To review the outcomes of the three High-Level Principle Workgroups to …  Understand how the Principles interact with each other  Ensure that the groups are aligned and consistent  Ensure that Transition has been adequately addressed in the groups

3. 3 3 Findings  The groups overlapped but started and finished in sequence Allocation AQ Reconciliation  Each group built on the Principles developed/under development in previous groups  Following slides illustrate Principles as high-level flow to demonstrate alignment

4. 4 4 Allocation Preferred Option Obtain daily consumptions Preferred OptionFallback Arrangements Use daily consumptions for daily balancing Estimate consumption Allocation Receive actual reads Preferred Fallback Apportionment methodology for missing days Reconciliation How? D-7 + weather adj? Other Smarts nearby? MAC + weather adj? Annual Quantity Aspiration – no AQ in Shipper processes Apply balancing correction to all sites Preferred Fallback Adjust balancing correction for all sites Reconcile to actuals for each day Receive all missing days’ data Receive actual data with gaps MAC = Measure of Annual Consumption – see slide 9

5. 5 5 Transition to Future Options  Each group considered transition to future principles  Groups discussed the need to identify a “tipping point” but did not determine what the “tipping point” would be  Might be the same point for all three processes or might differ 2020? now ‘dumb’ meters Smart meters “Tipping point” for transition to be determined

6. 6 6 Allocation Preferred Option - Transition Obtain daily consumptions Smart Meters Receive all missing days’ data Receive actual data with gaps Pre-Smart Use daily consumptions for daily balancing Estimate consumption Allocation Receive actual reads Preferred Fallback Apportionment methodology for missing days Reconcile to actuals for each day Reconciliation How? D-7 + weather adj? Other Smarts nearby? MAC + weather adj? Annual Quantity Rolling AQ for Transition period Apply balancing correction to all sites Adjust balancing correction for all sites Smart Fallback Estimate consumption Receive periodic reads Preferred Fallback How? Smarts nearby? AQ+ Profile+ weather adj?

7. 7 7 Allocation Alternative Option Preferred Option Secondary Option How? D-7 + weather adj MAC + weather adj Apportionment methodology for daily energy Reconcile consumption for each day Reconciliation Reconcile each day to actuals Estimate consumption each day Receive daily consumptions periodically Preferred Fallback Receive single read periodically Apply balancing correction to all sites Adjust balancing correction for all sites Allocation Reconciliation Preferred Fallback Rolling AQ pref. otherwise Annual AQ Annual Quantity

8. 8 8 Allocation Alternative Option - Transition Apportionment methodology for daily energy Reconcile consumption for each day Reconcile each day to actuals Receive daily consumptions periodically Preferred Fallback Receive single read periodically Apply balancing correction to all sites Adjust balancing correction for all sites Allocation Reconciliation Estimate consumption each day Receive actual read periodically Preferred Option Smart MetersPre-Smart Secondary/FallbackPre-Smart How? Smarts nearby? AQ+ Profile+ weather adj? Rolling AQ or Annual AQ for Transition period Annual Quantity

9. 9 9 Alignment of Allocation/Reconciliation to AQ  Shipper aspiration to remove need for an AQ in energy allocation and settlement  Is this consistent with Allocation/Reconciliation?  Fully Smart world using daily actuals – supports this  Fully Smart world with daily estimates and periodic rec – may support this – e.g. if a D-7 read is available for estimating  Fully Smart world with daily estimates and periodic single reads – will still need AQ or similar for estimation  Use of AQ in Transition  All models/scenarios need an AQ or similar for estimation of dumb meters throughout transition  Transporters have ongoing requirement for AQ e.g. for planning purposes

10. 10 Measure of Annual Consumption  Even in a fully Smart world the industry is likely to need a stored value as a standard comparator of scale of consumption  Different to usage type/market sector flag  Would indicate whether site used 20,000 or 20,000,000 kWH last year  Could use a simple 365-day calculation or “Measure of Annual Consumption”  Similar to current DM process – sum of 365 consumptions  If same 365 day base period is used all MACs are comparable even though not stated in seasonal normal terms  Need additional rule to avoid use of estimates for first/last day