1. © British Gas Further Analysis on Meter Reading Validation Tolerances proposed by Project Nexus March 2014

2. © British Gas Slide 2 Aim and data Aim of analysis: –To provide further insight to how Nexus proposed read validations affect MPR’s across ranges of AQ. Data used in the analysis: –MPRNs supplied by British Gas for the whole period 01/10/2012 to 01/10/2013. –Single LDZ sampled. –AQ’s below 293,000 kWh. –MPRNs with meter exchanges in this period excluded. –All reads where a URS10 flow showing acceptance by Xoserve under the current processing rules were used. No reads that were rejected under the current rules were used. –This gave a data set of over 600k MPRNs and over 100k reads per month.

3. © British Gas Slide 3 Method Simulations were undertaken for the sample and extrapolated up to 23 million meter points (estimate of UK gas market including IGT’s) to assess: 1.Is there a consistency across all AQ values. 2.Is there a consistency for the reason for rejection based on upper or lower tolerance failure. Method –15 monthly iterations were run, in line with the monthly AQ timetable. –For each month, reads were selected between the 10 th of the preceding month and the 10 th of the current month. –Consumption between the previous accepted read and the current read was calculated and acceptance/rejection calculated based on the Nexus rules without any override flags(see appendix).

4. © British Gas Slide 4 Results 1 Estimated average volumes of reads that would fail tolerances (extrapolated for the UK) AQ’s of 1 consistently fail. 67% of all tolerance failures are due to consumptions decreasing to much. Over 50% of all tolerance failures occur to MPR’s with an AQ less than 9,000 kWh. And 25% of all tolerance failures occur to supplies with AQ less than 3,000 kWh AQ when tolerance failure occurred % of Average Tolerance Failures per AQ band Average Tolerance Failures per month for UK % of UK supplies with reads that failed due to % Currently accepted reads that failed Tolerance check Upper tolerence Lower tolerance above 732001% 4,3094%96%0.22% 60001 to 732000% 1,57920%80%0.08% 50001 to 600000% 1,56320%80%0.08% 40001 to 500001% 261217%83%0.14% 30001 to 400002% 648316%84%0.34% 20001 to 300008% 29,63310%90%1.55% 10001 to 2000031% 122,61710%90%6.40% 9001 to 100005% 18,58415%85%0.97% 8001 to 90005% 18,25319%81%0.95% 7001 to 80005% 18,57225%75%0.97% 6001 to 70004% 17,49331%69%0.91% 5001 to 60004% 16,86538%62%0.88% 4001 to 50004% 16,88947%53%0.88% 3001 to 40005% 18,03255%45%0.94% 2001 to 30005% 18,97964%36%0.99% 1001 to 20006% 23,07068%32%1.20% 501 to 10003% 13,51472%28%0.71% 251 to 5002% 8,19367%33%0.43% 101 to 2502% 7,0465%35%0.37% 2 to 1003% 10,46955%45%0.55% equals 14% 16,093100%0%0.84% Grand Total100% 390,80833%67%20.39%

5. © British Gas Slide 5 Results 2 No account has been taken for differing weather patterns within LDZ’s The following splits the failures due to upper and lower tolerance limits during each monthly calculation This is the pattern of rejections for supplies within a common LDZ and may be different between northern and southern LDZ based on weather patterns. The first calculation after the final “current AQ review” is exceptional, and thereafter there seems a distinct seasonal correlation

6. © British Gas Slide 6 Options for improved read validation business rules The following is intended to stimulate debate and is not an exhaustive list of options. With the intent being, to accept higher volumes of accurate reads without the use of override flags and or the AQ correction process once defined (for example AQ’s of 1 that should increase) 1. Within certain AQ ranges, accept the read if the annualised (on flat profile) consumption is in the same range. E.g. if the AQ is between 1 kWh and 30,000 kWh and the annualised consumption between the previous and current reads is also between 1 kWh and 30,000 kWh then accept the reading. 2. Apply different tolerances for different AQ ranges (low, mid, high). This would also require exceptional rules for specific cases, e.g. to allow reads to be accepted which show consumption where the AQ is low. 3. Change the tolerances based on season or experienced weather, to reduce high-end rejections over summer and low-end rejections in Autumn. This is a simple version of using the WAALP. 4. Change the market breaker rule to be both an absolute value and a percentage, so if the override flag is applied the read is accepted, unless e.g. the consumption is more than 700% what was expected AND over 500 GWh. The current market breaker rule will prevent an AQ change of e.g. 100 kWh to 10,000 kWh, which will not break the market. 5. When calculating the annualised consumption between two successive reads for tolerance application, include the use of WAALP’s in the calculation? 6. A combination of some of the above

7. © British Gas Slid e 7 Appendix 1 Previous Presentatio n Appendix 1 Previous Presentation (slides 1, 2, 3 and 4) Slide 1 Slide 2 Slide 3 Slide 4

8. © British Gas Slid e 8 Appendix 1 Previous Presentatio n Appendix 1 Previous Presentation (slides 5, 6 and 7) Slide 5 Slide 6 Slide 7