1. EBCC MEETING 30 th April 2014

2. AGENDA 1.0Introduction 2.0Minutes and Actions 3.0Operational Update 4.0Modification Proposals 5.0 Significant Code Review Update 6.0Bank Ratings 7.0Review since October 2013 8.0Focus for 2014 9.0AOB - EU Update - Review of Winter 2013/14 - Risk Register - Voluntary Discontinuances 10.0Date of Next Meeting

3. Operational Update March 2014

4. Operational Update March 2014 –1 Cash Call issued and paid on due date. –Cash Collection 100% –Rolling 12 Months 99.98%

6. Modifications

7. Mod 0429 Customer Settlement Error Claims Process –Implemented on 1 st April 2014 –Xoserve developed UNC framework guidelines for managing claims. –Xoserve will provide Transparency of quantity of claims received to EBCC Members. –Link to Modification 474S Inclusion of the guidelines relating to the “Customer Settlement Error Claims Process” within UNC governance and introduction of the User Pays charges associated with such claims – Consultation closes 7 th May 2014.

8. Market Operator Security Provisions Prepayment Agreement was concluded with an expiry date of June 2019 – awaiting signed document. Deposit Deed is now in place.

9. Significant Code Review Update

10. Security of Supply Significant Code Review OFGEM published their final proposal on 12 th February 2014. EBCC response provided to Ofgem on 11 th April 2014. Xoserve are currently working through the Business Rules to address the process through various internal workshops. Work is currently underway to put in place operational procedures as per the mind maps previously discussed on the following slides.

11. Mind Maps - SCR The following mind maps were put together to address areas which it was identified that additional work is required to operate a working through items highlighted as red. –Operating Process –Priority of Scoring for EBCC meetings –EBCC Operation –Relaxing Current arrangements EBCC

12. Operating Process Delegation of Authority Shipper information System access Suspension of all services Emergency MOD Resource Cost Banking Services Review sign off of credit payments Reporting to ofgem/EBCC special arrangements Review current rules Succession + capability MOD 233? Skill setExclude EBI availability Availability Suspension of holidays WLB of key staff Daylight Limit NGD Daily limits Operating limits Availability of CEO due to increased values Contact list Temporary shared area Box account for communication Delegated Authority levels

13. Operating Process Suspension of all Services –As a committee we need to address the areas currently within the powers of the EBCC –Review existing timescales and conclude what would be reasonable to suspend / relax? System Access –existing rules for access require 5 day SLA need to agree special arrangements for identified resource – (On hold) Cost –increase cost of resource consider how budget affected / may need to agree recovery via neutrality possible modification?

14. Powers and Duties of EBCC

15. Relaxing current arrangements Business rules Security Cash collection Market Operator EBCC Meetings Cash calls No changes proposed. Existing rules apply- due to arrangements drafting + under UK termination process S.1.7. timing for convention of meeting Appeal Process Resource issues Extend time? Reduce or suspend appeal notice No appeal criteria Still issue Payment terms extend ? Timing extend? - 4pm – end of gas day Agree with EBCC members no validation FSR Consider suspension for a period beyond invoices issued and paid Validate cash call suite System solution for manual adjustment Manually update letters/notices as we do currently Cost of funding change Communication of delivery Faxes? Scan, email or file interface Aggregate exposure Accepting LOC from lower rated organisations % of exposure underwriting Process going forward Suspending/ excluding peak SAP calc

16. Operating System continued Modification 233v – Discussions with National Grid through the SCR workshops on redrafting modification. Banking Services – We have discussed possibilities of increasing current overdraft facilities to establish if feasible and to what maximum limit. Shipper Information:- We will be writing out to all Users to confirm contact details with an ongoing 12 month review.

17. Priority of Scoring EBCC meetings Risk Categorising all parties to establish how to manage volumes of potential EBCC meetings in the event of an Emergency taking into account various sources of information. Example on following slide provides a suggested template to identify High, Medium or low risk customers. Aspiration to have this in place for all customers before Winter 14. Reviewed monthly through monthly Operational Meetings and we will give some consideration on reporting requirements.

18. Priority of Scoring For EBCC meetings Portfolio growth Communication interaction commercial intelligence reporting Downgrade risk factor risk Security arrangements Party underwriting Payment trends Over or under delivery trends FSRs number of cash calls over previous period Level of helpfulness How they act in market Ability to pay Graydons Moody’s S + P

19. Priority Scoring - Low Risk Categorisation HighMediumlow Shipper A X Shipper B X Shipper C X Shipper A Cash Call Notices Issued last 12 months None Energy Balancing Invoices Paid on due Date All paid on due date. Customer does not respond to communication within agreed time scales. Always responds to communication. Security in place on Renewal Date Yes – All in place prior to or on Renewal Date.

20. Priority Scoring - Medium Risk Categorisation HighMediumlow Shipper A X Shipper B X Shipper C X Shipper B Cash Call Notices Issued last 12 months None Energy Balancing Invoices Paid on due Date No - 2 Occurrences over last 12 months Customer does not respond to communication within agreed time scales. Sometimes Security in place on Renewal Date No – In place D+2

21. Priority Scoring - Medium Risk Categorisation HighMediumlow Shipper A X Shipper B X Shipper C X Cash Call Notices Issued last 12 months 3 Cash Calls and 2 Failure to pay Cash Calls. Energy Balancing Invoices Paid on due Date No - 4 Occurrences over last 12 months Customer does not respond to communication within agreed time scales. Sometimes Security in place on Renewal Date No – In place D+2

22. Priority Scoring - High Risk Categorisation HighMediumlow Shipper A X Shipper B X Shipper C X Cash Call Notices Issued last 12 months 3 Failure to Pay Cash Calls Energy Balancing Invoices Paid on due Date 4 Occurrences over last 12 months Customer does not respond to communication within agreed time scales. Frequently Security in place on Renewal Date No – Repeated Calls

23. EBCC Operation Conflict of Interest Minutes Quoracy Ofgem’s role National Grid’s role

24. EBCC Operation National Grid input Establish who from Xoserve required Conflict of interest INCIDENT ROOM Ofgem’s role Chair Availability Quoracy Gemserve members appointment Communication Agree Adhoc appointment process Consider membership ofgem/another party Priorities on order Of discussion Factors Minutes Checklists Recording Review timing Resources

25. Bank Ratings

26. Current Position Since September 2013 the global economic markets have remained fairly stable resulting in no downgrades outside of our forecast. We advised members in September 2013 that Royal Bank of Scotland and National Westminster were likely to be downgraded and this was reflected in their downgrades in March 2014. The following chart provides a summary of customers exposures to each rating category.

27. FI Risk Profile 8% of all FIs currently providing Security have been subject to a downgrade change during the previous 6 months by Standard and Poors and Moody’s Ratings Agencies. Currently 79% of FIs are in the lowest categories of investment grade rating. This reflects an 18% increase from the last reported figures. This is in part due to a movement within the same rating band.

28. Spread of FI Exposure £62,000,000£25,605,000

29. Outlook Moodys anticipate undertaking a rating review throughout 2014. Since Sept 2013 0% FIs are on possible downgrade. S&P are commencing significant reviews across a large number of FIs, with 58% showing a negative outlook.

30. Deposit Deeds Value of credit secured via Deposit Deed and LOC – comparison between April 2012 to April 2014

31. Summary Whilst we have seen a slight increase in the overall value of security during the period April 12 to April 13, there is a consistent move to lower rated financial institutions within each rating category. Continue to monitor those FI’s which are currently on possible negative outlook with Standard & Poors

32. Review since October 2013 Update

33. Review since April 2013 Cash Collection figures on rolling 12 month performance remain the highest over the past 5 years. Cash Collection Monthly figures 100% over the past 12 months on 10 occasions. Continued pro-active engagement with Users reaching 70% of indebtedness to minimise Cash Calls. No Terminations managed - No financial losses Security Renewals 100% Energy Balancing Credit Rules revised 16 th June 2013 Mod 446S amendments to legal text in UNC Section X4 implemented – quoted legal text amended Section 7 - Appointment of Insolvency Practitioner. Mod 447s implemented to permit smearing of recovered debt where the debt predates the Code Cut Off Date – FAQs added to deal with termination. Successful LRQA Audit

34. Cash Collection

35. Cash Collection Failure To Pay Notices

36. Cash Call Issued

37. Value of Cash Call Issued

38. FTPCCN’s – issued & paid

39. Focus for 2013/14 addressed at April 2013 meeting From the meeting held in April 2013, the following key areas were identified to focus on :- –Increase the profile of the committee –Emergency Credit Rules –Watching brief on EU Reform Members to review if there are any other significant areas that they would like the committee to focus on.

40. Focus EBCC Customer Satisfaction (Nov 12) EBCC Customer Satisfaction

41. Year on Year Comparison

42. Focus for 2014/15 Update

43. EBCC Customer Satisfaction (Nov 13)

44. EBCC Customer Satisfaction Year on Year Comparison

45. Focus for 2014/15 Carried forward from 2013 –Increase the profile of the committee –Significant Code Review –Watching brief on EU Reform Focus for 2014/15 –Gemini Consequential change (UK Link Replacement programme) –Feedback from Customer Satisfaction (November 2013) –Exploitation of synergies with Neutrality finance Members to review if there are any other significant areas that they would like the committee to focus on.

46. AOB

47. EU Third Energy Package Update

48. Risk Register Update

49. Register Part 1 Risk Register as at 26/4/13 : RiskLikelihood - commentsLikelihood H1 loss of Gemini system - sustained loss for 1 working day or more Once in 10 years – to date Gemini over 2 years Gemini has had 1 short overnight outage. Also due to Oracle Software Upgrade, Gemini affected between 22nd and 25th October. Loss of Gemini on 14th and 15th May due to Server problems. GRP implementation planned 9 th June. Suggest move from a 2 to a 3 H2 Calculation for IMS is found to be incorrect. Has happened in Dec 05 and also recently when during Oracle OS upgrade UAT it was found that accruals not included in a D-1 or D-2 recalculation – twice in last 6 to 7 years – once in 5 years. April 08 data was uploaded incorrectly. Recent issues identified on the 7 th of March and 6 th April following batch job issues. Suggest move from a 3 to a 5 H3 APX Gas files containing system prices and trades arrives late. Pre Gemini IMS this used to stop PIMS jobs running – since introduction of Gemini IMS this has not happened – once in 5 years. Controls and monitors are now in place to ensure files are received.3

50. Register Part 2 Risk Register as at 26/4/13 : RiskLikelihood - commentsLikelihood H8 User’s unable to provide CVA data due to the CVA system / website being down This happened once on 13/03/07 – Once in 5 years. Controls in place that would receive notification from CVA.3 H9 In the absence of being unable to adjust the ABI calculation the industry could be unduly exposed to avoidable financial debt. Should NGD be aware of more up to date information. Due to SCR Mod 233 this was put on hold to await outcome of SCR consultations. Potential implementation of OFGEM SCR proposal has the potential to increase the likelihood and impact of this issue. Suggest move from 3 to 4 H10 Due to the current European financial climate, there is a risk that the number of FI’s meeting the relevant criteria to provide security could reduce significantly. Moody’s are currently have a schedule to review all FI’s current rating in June 2012. Moody’s review of FIs completed over the summer of 2012, S&P now anticipate conducting their own review.4

51. Voluntary Discontinuance

52. AOB Questions/ Any further business?