EDCM update

1. EDCM update Mo Sukumaran (CMG Chair) 16 August 2012 1 | Energy Networks Association – DCMF

2. Current position – EDCM 16 August 2012 2 | Energy Networks Association – DCMF • The EDCM for import charges is currently in force (from 1 April 2012) and is subject to open governance. • On 1 June 2012, DNOs submitted new proposals for the EDCM for export charges. • NPG (on behalf of the DNOs) has submitted a DCP (DCP 152) to incorporate the EDCM for export charges into DCUSA for implementation on 1 April 2013. • On 1 June 2012, DNOs submitted a report to Ofgem to meet Condition 3 of Ofgem’s approval of the EDCM for import charges. Condition 3 relates to “network use factors”.

3. EDCM update EDCM for export charges 16 August 2012 3 | Energy Networks Association – DCMF

4. EDCM for export charges 16 August 2012 4 | Energy Networks Association – DCMF • Ofgem guidance on the methodology for export charges published on 2 February 2012. • DNOs have been working jointly to develop new proposals through Workstream B and stakeholders consulted. • We received a large number of responses to our consultation with constructive suggestions for improvements. • We improved our proposed method in light of consultation responses.

5. EDCM for export charges 16 August 2012 5 | Energy Networks Association – DCMF • Our final proposals for export charges were submitted to Ofgem on 1 June 2012. • Submission documents, including illustrative export charges for 2012/2013 and our responses to the consultation responses are available to download on the ENA website. • We are waiting for Ofgem to make a decision on proposed EDCM for export charges. • Ofgem’s decision is expected in the autumn.

6. Next steps 16 August 2012 6 | Energy Networks Association – DCMF • Have submitted a DCUSA change proposal that seeks to incorporate our proposed method into DCUSA. • Allows the DCUSA panel and stakeholders sufficient time to consider these proposals before they are used to set indicative charges for 2013/2014. • Also, the deadline for opting in to the EDCM for export charges/credits for 2013/2014 has now passed (30 June 2012).

7. EDCM update Condition 3 of the EDCM for import charges 16 August 2012 7 | Energy Networks Association – DCMF

8. EDCM import – Condition 3 16 August 2012 8 | Energy Networks Association – DCMF • Ofgem had placed 3 conditions on its approval of the EDCM for import. • Conditions 1 and 2 have been met and the methodology updated. • Condition 3 relates to the treatment of spare capacity in calculating network use factors for demand. • Workstream A of the CMG has developed new proposals that satisfy the requirements of Condition 3 and stakeholders consulted. • We received two responses to the consultation which supported the proposals but raised concerns on the potential change to import charges.

9. Next steps 16 August 2012 9 | Energy Networks Association – DCMF • We believe that the change represents an improvement to the method and addresses concerns raised by stakeholders about the treatment of spare capacity on the network. • We have submitted our report to Ofgem on 1 June 2012 along with our recommendation that the change be implemented as soon as practicable. • DNOs have submitted a DCUSA change proposal to this effect (DCP 138).