1. Draft Modification
To Enhance Section X of the UNC to improve the Energy Balancing Further Security Process
25th June 2010

2. Introduction Sponsor – Corona Energy, contact Richard Street
Draft Modification for further review
Timescales for presentation at Transmission Workstream - 1st July 2010 with a view to present to July Modification panel.
EBCR page 3 section 1.2 outlines 10 Objectives for Transco

3. Aim of Modification
To extend provisions of Section X2.10 to make provisions for the deemed value of the User’s existing Security held to be scaled back by 20% to act as an incentive to break the cycle of repeated failure through Cash Call and Further Security Process.
To encourage Users to maintain the appropriate level of Security to cover User’s Energy Balancing Activities
To minimise the financial risk to other Users
To avoid the same offenders repeatedly receiving Cash Calls and Further Security Requests to meet their Energy Balancing Activities rather than putting correct Security in place.

4. Main principles of Modification
3rd occurrence of a Further Security Request (FSR) within a 28 day measurement period will trigger a reduction in the face value of current level of Security by 20% for a period of 12 months.
Any subsequent FSR’s within the 12 month period will also reduce the face value of Security by a further 20%.
If no further FSR’s issued within the 12 month period and provisions of UNC Section X are satisfied, no further action is required.

5. Calculation of a Further Security Request
Calculation is: (peak indebtedness / 85) * 100 = credit limit should be (CL)
CL - Current Security - outstanding FSR’s = further security required (rounded up to nearest £1000)
Example –
Current security = LOC £5,000 peak indebtedness = £15,000 outstanding FSR = £2,000
Therefore we get (£15,000 / 85) * 100 = £17,647
£17,647 - £5,000 - £2,000 = £10,647