1. Mod 186 July 2009

2. 2 Assumptions No provision for TMA or Tax re-openers at this time (zero value in 2009/10 expected). AQ Review impact in October 2009 – SOQs to fall by 1% in North West and London, No change in East of England and West Midlands. While AQ have reduced the Load Factors indicate that most residential loads have become slightly more peaky offsetting the AQ reduction. 2009/10 allowed revenues based on planned activities at the beginning of July – expect some changes to those set into definitive prices and therefore expect to see an over / under recovery already for 2009/10. Note significant reduction in Shrinkage since charges were set. Note - 2008/9 will not be fully closed out until end of August 2009 and there remains uncertainty to the K brought forward into 2009/10. However, we expect values to be in the range of the final position.

3. 3 East of England Increase of ~£6m in Incentives (mainly MSRA) impacts on 2008/9 and 2009/10

4. 4 North West Increase in Incentives during 2008/9 offset by shrinkage in 2009/10, lower collected revenue in 2009/10 than forecast

5. 5 London Reduction in Incentives of ~£10m (mainly MSRA) in 2008/9 impacting on K brought forward into 2009/10 and further reduction due to shrinkage, increase in forecast collected in 2009/10

6. 6 West Midlands Reduction in Incentives 2008/9 impacting on K brought forward into 2009/10 and further reduction due to shrinkage in 2009/10

7. 7 Changes in London and West Midlands Charges London is forecast to over recover significantly during 2009/10 as a result of MSRA in 2008/9 (impacting on K brought forward) and Shrinkage allowance reductions. 2008/9 Replacement work has increased in North West and East of England offsetting shrinkage reductions. West Midlands allowed revenue has reduced due to shrinkage and incentive updates but initial analysis from the AQ review indicates a minor impact on capacity levels from October. At this time we believe it is prudent to reduce charges in London by 10% and West Midlands by 4% from October in order to bring the allowed revenue and collected revenue into line.

8. 8 London with an October 2009 reduction of 10%

9. 9 West Midlands with an October 2009 reduction of 4%