1. Retail Energy Forum Andrew Neves Central Networks - CMG Chair 2 March 2011 1 | Energy Networks Association

2. Background 2 March 2011 2 | Energy Networks Association DNOs have licence obligations to develop common DUoS charging methodologies: –CDCM for LV and (most) HV customers –EDCM for EHV and (a few) HV customers CDCM approved and came into effect on 1 April 2010 –typically covers all bar ~ 200 customers in each DNO area EDCM to be submitted to Ofgem on 1 April 2011 –to come into effect (if approved) on 1 April 2012

3. Background (cont.) 2 March 2011 3 | Energy Networks Association CDCM is incorporated into the Distribution Connection and Use of System Agreement (DCUSA), and subject to open governance –Any DCUSA party (or other affected party with the Authority’s consent) may propose changes to the methodology –Proposals considered by the DCUSA panel and its committees –Final decision lies with the Authority EDCM (if approved) will also be incorporated into the DCUSA and subject to open governance

4. Background (cont.) 2 March 2011 4 | Energy Networks Association DUoS tariffs collect DNO’s allowed revenue – so reductions for one class of customer drive increases for others DUoS charges typically ~15% of customers’ electricity bills Some supply contracts specifically ‘pass-through’ DUoS charges, others don’t Customers respond to what’s in their supply contract

5. CDCM 2 March 2011 5 | Energy Networks Association CDCM covers the vast majority of HV and LV customers –Virtually all retail premises will be CDCM CDCM charges are not site-specific (don’t vary across a DNO’s area) and are based on a hypothetical network model The list of tariffs and the methodology for setting them are common to all DNOs However, prices vary between DNO licence areas - driven by differences in allowed revenue and other model inputs Tariffs are published in a common format and available from the ENA web site in a single Excel workbook: http://energynetworks.squarespace.com/use-of-system-charges/

6. CDCM HH charges 2 March 2011 6 | Energy Networks Association CDCM charges for HH metered sites (generally >100kW) consist of: –Fixed charge (p/MPAN/day) –Capacity charge (p/kVA/day) –Unit charges in ‘red’, ‘amber’ and ‘green’ time bands (p/kWh) –Excess reactive power charges (p/kVArh)

7. CDCM capacity charges 2 March 2011 7 | Energy Networks Association Capacity charges form a substantial and relatively fixed part of HH DUoS charges Charges are based on the Maximum Import Capacity (kVA), as set out in the connection agreement, or the maximum demand (if higher) Maintaining Maximum Import Capacities at appropriate level helps minimise capacity charges If you want to adjust a property’s Agreed Capacity, talk to the relevant DNO Since capacity is measured in kVA, excessive reactive power can drive capacity charges to be higher (as well as potentially incurring reactive power charges)

8. Unit rate time-slots 2 March 2011 8 | Energy Networks Association Central Networks’ unit rate time-slots are: ‘Red’ – 1600 to19:00, Monday to Friday ‘Amber’ – 07:30 to 16:00 and 19:00 to 21:00, Monday to Friday ‘Green’ – Any other times (including all weekend) Other DNOs’ may vary slightly Unit rates are strongly differentiated:

9. Effect of profile (HV) 2 March 2011 9 | Energy Networks Association

10. Effect of profile (LV) 2 March 2011 10 | Energy Networks Association

11. CDCM / EDCM boundary 2 March 2011 11 | Energy Networks Association ‘Designated’ (CDCM) properties are: “on and from 1 April 2011, premises or Distribution Systems connected to the licensee’s Distribution System at a voltage level of less than 22 kilovolts, but excluding premises or Distribution Systems connected directly to substation assets that form part of the licensee’s Distribution System at 1 kilovolt or more and 22 kilovolts or less where the primary voltage of the substation is 22 kilovolts or more and the Metering Point is located at the same substation.” (distribution licence)

12. CDCM / EDCM Boundary (cont.) 2 March 2011 12 | Energy Networks Association EDCM customers are therefore those connected at a voltage of 22kV or more, or connected at high voltage directly to a primary substation and metered at that substation EDCM customers are quite rare (generally < 200 per DNO area) It will not always be better to be EDCM, rather than CDCM! If in doubt about the boundary for a particular property, please contact the relevant DNO

13. EDCM 2 March 2011 13 | Energy Networks Association The EDCM is being designed as a forward looking, locational charging methodology Charges will vary from one location to another, and will be higher where network capacity is scarce, and lower where it is plentiful Where capacity is scarce, generators will be rewarded for supporting the network The DNOs have to submit the EDCM to Ofgem by 1 April 2011 Ofgem intends to consult in the spring, before deciding whether to approve the EDCM in late summer

14. EDCM outline timeline Consultation published 21 December DCMF meeting6 January Consultation workshop 13 January Consultation closed 1 February DCMF meeting 15 February EDCM submission deadline 1 April Ofgem consultation~ May Ofgem decision~ August EDCM implementation1 April 2012 See ENA web site for details of timeline and project documentation: http://2010.energynetworks.org/edcm-file-storage/ 2 March 2011 14 | Energy Networks Association

15. EDCM information 2 March 2011 15 | Energy Networks Association Information about the EDCM’s development is available form the ENA website: http://energynetworks.squarespace.com/structure-of-charges-edcm/