Consideration of issues raised by UNC Modification Proposal 0244

Gas Customer Forum

27 July 2009

2

Background

Reduced demand at DM Supply Points as a consequence of

economic downturn Mothballed plant Reduced / curtailed production

Current UNC rules limit opportunities for the reduction ofRegistered DM Capacity

Concerns raised by Consumers at Gas Customer Forum

UNC Modification Proposal 0244 (and 2 alternates) soughtchanges to UNC regime governing reduction of theRegistered DM Capacity

Ofgem rejected all three proposals in May 2009 Decision letter “…it may be appropriate for GDNs to consider whether

some form of transitional relief is appropriate…”, “…The industry may wish to consider whether…they wish to consider developing further proposals…”, “…We therefore consider that the GDNs should consider alternative solutions to target the potential problem identified…”

3

Proposed Approach

xoserve ‘Rules and Options Analysis’ in progress

Raise UNC Review Proposal – Convene Review Group Involves all UNC parties in consideration of whether change is necessary Requires participation of Users and consumers to accurately identify the

scale and significance of the issue Opportunity to identify and collate evidence

– Ofgem identified that there was a lack of analysis in respect of the 0244 Mods Priority given to discussion and development of short term measures

– Xoserve’s analysis used as necessaryFeedback welcome in respect of the scope of work: possible ‘transitional relief’ (short term).

– Focus on charging regime?– UNC or other e.g. supply contract remedy?

possible changes to the BSSOQ / ratchet regimes (long term) In respect of any solutions identified

– mitigation measures to prevent inappropriate behaviours – likely impact of any changes on consumers affected – likely impact of changes on other consumers charges (i.e. costs that are

recovered from the rest of the GDN consumer base)– the impact on investment decisions

Raise UNC Modification Proposal if necessary (can beduring course of group discussion)

4

Proposed timetable of events

xoserve ‘Rules and OptionsAnalysis’ request raised

Publish proposed timetable toUNC Distribution Workstream

Publish proposed timetable toGas Customer Forum

Raise Review Proposal at UNCModification Panel. Identify andagree Terms of Reference (toinclude a requirement to Identifypossible short and long termsolutions). Convene group

Review Report to UNCModification Panel

Raise UNC ModificationProposal (if required)

Develop and implement processand systems solutions (ifrequired)

1st June 2009

23rd July 2009

27th July 2009

6th August 2009

December 2009

January 2010

January 2010onwards

Short term measures pursued as a priority (eg: UNC Mod)