1. NATIONAL GRID Winter Peak Demand Reduction Scheme (WPDRS) Michael Walsh ESB National Grid Sustainable Energy Ireland – LIEN Workshop Kilkenny, 22 nd July 2004

2. NATIONAL GRID Presentation Overview  Winter Demand Reduction Incentives  How does WPDRS work?  Results from 2003/04  Product Development  Next Steps  Information

3. NATIONAL GRID Winter Demand Reduction Incentives  An incentive to reduce load at peak  System security  Previously most Customers participated in WDRI  Many large Customers moved to Independent Suppliers  WPMP introduced, but not successful  By 2003/03 no real incentive available to independently supplied Customers…and it showed

4. NATIONAL GRID 1999 – 2000 Effect on Peak

5. NATIONAL GRID 1999 – 2000 2000 – 2001 Effect on Peak

6. NATIONAL GRID 1999 – 2000 2000 – 2001 2001 – 2002 Effect on Peak

7. NATIONAL GRID 1999 – 2000 2000 – 2001 2001 – 2002 2002 – 2003 Effect on Peak

8. NATIONAL GRID 1999 – 2000 2000 – 2001 2001 – 2002 2002 – 2003 Effect on Peak No noticeable effect on Peak in 2002/03!

9. NATIONAL GRID Introduction of WPDRS  ESBNG introduced WPDRS in 2003/04  Ensured all Customers had access to incentive  Open to: –Customers in the Eligible Market –Supplied by Independent Supplier –Appropriate metering etc. also required

10. NATIONAL GRID How does WPDRS work?  Reliable load reductions and reduced energy consumption rewarded –Rebate charged if Customer is unreliable  Customers reduce consumption or bring on generation to replace demand from system  Incentives offered for Customers with generators who can export load  Suppliers receive administration fee

11. NATIONAL GRID Payment Structure - summary ENERGY RELIABILITY €50/MWh Paid for reduced energy consumption Can vary day to day €160/MW Paid for remaining below committed quantity Set for the month Rebate mechanism for breach (€3200/MW) Total Available Payment: €210/MW/h = 21c / unit

12. NATIONAL GRID Payment examples – indicative (assuming 100% reliability) Company A Company B Company C Baseline Demand (MW)0.53.515 Committed Level (MW)0.22.53 Committed Quantity (MW)0.3112 Daily Reliability Payment€96.00€320.00€3,840.00 Expected Energy Consumption (Units)1000700030000 Actual Energy Consumption40050006000 Reduced Energy Consumption600200024000 Daily Energy Payment301001200 Total Daily Payment€126.00€420.00€5,040.00 Total Winter Payment€10,332.00€34,440.00€413,280.00

13. NATIONAL GRID Results from 2003/04  Customers signed up  Load reduction each day  Total paid out  Effect on Peak?

14. NATIONAL GRID 2003/04 Results: Customers Signed-up  Level of Participation Total of 639 Customers able to take part 29% signed up Increased Customer Base for 2004/05 season 186 participating 453 non- participating

15. NATIONAL GRID 2003/04 Results: Monthly Peak Reduction  How much was delivered under the WPDRS in 2003/04? 82.5 MW83.0 MW84.4 MW81.3 MW Peak Reduction Delivered ~ 80 MW 0 10 20 30 40 50 60 70 80 90 NovDecJanFeb Month Average MW Reductions

16. NATIONAL GRID WPDRS Results - Payments and Rebates  Overall Payments and Rebates by Month Actual Payments -200000 -100000 0 100000 200000 300000 400000 500000 600000 700000 NovDecJanFeb Month € Energy Reliability Rebate Total

17. NATIONAL GRID WPDRS Metrics and Results: Sign-up (3)  Sign-up breakdown by industry Mining offered little 19 MW 86 MW 143 MW 105 MW 16 MW 24 MW 330 MW 40 MW 39 MW 56 MW 18 MW Sum of baselines Areas of possible improvement can be identified with suppliers on an individual basis 0 10 20 30 40 50 60 70 80 Agricultural Cement / Paper Chemical / Pharmaceutical Food (not meat) / Beverage Food Retail Hotel / Hospital Manufacturing / Textile Mining Office / Banking / Retail Refrigeration / Meat Telecoms / Transport Industry Sector % % Number of Participants % of Total Baseline Load Subscribed % of Participants’ Total Baseline Load Subscribed

18. NATIONAL GRID 2003/04 Results – Peak down though Consumption overall up

19. NATIONAL GRID 2003/04 Results Summary  186 Customers  ~ 80MW load reduction each day  Total paid out : Customers: €2.4m Suppliers: €120,000  Effect on Peak…

20. NATIONAL GRID 1999 – 2000 2000 – 2001 2001 – 2002 2002 – 2003 Effect on Peak?

21. NATIONAL GRID 1999 – 2000 2000 – 2001 2001 – 2002 2002 – 2003 2003 – 2004 Effect on Peak Effect on Peak returns in 2003/04!

22. NATIONAL GRID WPDRS Development  Results published  Consultation Process May – June 2004  Responses received from Suppliers, Customers and others  Changes to Scheme proposed

23. NATIONAL GRID Proposed Changes – Not finalised CHANGES HAVE NOT BEEN CONFIRMED  Key Change: Protect Energy Payment from Rebates (see example below) Still require a minimum level of performance  Other Changes: Extend Scheme into March PES Customers will be allowed to participate  More Information Optimal Committed Level to be calculated Spreadsheet examples to be published

24. NATIONAL GRID Effect of protecting the Energy Payment 2003/04 Customer ACustomer BCustomer C Reliability200050008000 Energy Payment (unprotected)50030005000 Reliability Rebate-800-7500-15000 Total Payment17005000 (Capped) 2004/05 Reliability200050008000 Reliability Rebate-800-7500-15000 Total Reliability Payment12000 (Capped) Energy Payment (protected)50030005000 Total Payment 170030005000

25. NATIONAL GRID Next Steps  ESBNG to finalise and publish updated Rules  Baselines and Benchmark Ratios available in August  Workshops in September  Application deadline 1 st October 2004 All Applications must be made through Supplier  Scheme begins 1 st November 2004

26. NATIONAL GRID Information - Proposed Workshops WATERFORD Dooley’s Hotel Tuesday 7 th September 1:30pm - 4:30pm CORK Silver Springs Wednesday 8th September 9:00am - 1:00pm LIMERICK Jury’s Hotel Thursday, 9 th September 9:00am - 1:00pm SLIGO Riverside Hotel Tuesday 14 th September 1:30pm - 4:30pm DUNDALK Ballymascallon Hotel Wednesday 15 th September 1:30pm - 4:30pm DUBLIN Citywest Hotel Thursday 16 th September 1:30pm - 4:30pm

27. NATIONAL GRID Information - Available Documents  All information available on www.eirgrid.comwww.eirgrid.com –Results of 2003/04 Season –Consultation Document –Summary of Responses to Consultation –Final Rules published shortly

28. NATIONAL GRID Information – Contacting ESBNG  Telephone queries to ESBNG Customer Relations –Telephone: 01 702 6642  E-mails enquiries to wpdrs@eirgrid.comwpdrs@eirgrid.com ALL APPLICATIONS MUST COME VIA SUPPLIER

29. NATIONAL GRID www.eirgrid.com

30. NATIONAL GRID www.eirgrid.com

31. NATIONAL GRID www.eirgrid.com

32. NATIONAL GRID 2003/04 Results – Effect on Peak 2002/03 Peak : 4400MW (7 th January 2003)

33. NATIONAL GRID 2003/04 Results – Effect on Peak 2002/03 Peak : 4400MW (7 th January 2003) 2003/04 Peak : 4329MW (27 th January 2004)