EDCM update

1. EDCM update Mo Sukumaran (on behalf of CMG) 1 | Energy Networks Association – DCMF

2. Current position – EDCM demand 2 | Energy Networks Association – DCMF • The EDCM will be used to calculate import charges for qualifying customers from 1 April 2012 • Ofgem has approved the incorporation of the EDCM for import charges into DCUSA (DCP 109) • From 1 April 2012, the EDCM for import charges would be subject to open governance

3. Further work on EDCM demand 3 | Energy Networks Association – DCMF • Ofgem placed 3 conditions on its approval of the EDCM for demand. • 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 • Condition 3 requires the DNOs to: • Consider the circumstances under which costs associated with spare capacity on the network may be “socialised” • Examine different options for doing so • Analyse the impact on customer charges • Provide a well-reasoned recommendation for change (or no change)

4. Condition 3 4 | Energy Networks Association – DCMF • Workstream A of the CMG is working towards meeting condition 3 • Several options and their impact on charges are being considered • We plan to publish a consultation on these options and their impact on charges in mid-April 2012 • DNOs need to submit a report explaining their recommendation to Ofgem by 1 June 2012 • Changes to the methodology, if any, are unlikely to affect tariffs before 1 April 2013

5. Current position – EDCM export 5 | Energy Networks Association – DCMF • The EDCM will be used to calculate export charges for qualifying customers from 1 April 2013 • Ofgem guidance on the methodology for export charges published on 2 February 2012 • DNOs are currently working to develop and submit the methodology by 1 June 2012 • Consultation document with our proposals published on 2 March 2012 (Deadline for responses is 12 April 2012) • Workshop to support consultation held on 8 March 2012

6. Arrangements for Pre-2005 DG 6 | Energy Networks Association – DCMF • Ofgem published its decision on the arrangements for pre-2005 generators • Generators that “connected” on or before 31 March 2005 would be eligible for a time-limited (25 year) exemption from use of system charges • “Designated EHV properties” will default to the exemption from 1 April 2013 (even if they are currently on the CDCM) • Other generators (CDCM) will default to being subject to the CDCM • Generators that connected on or after 1 April 2005 but were charged for their connection based on “pre-2005” arrangements would also be eligible for the 25-year exemption starting from the connection date

7. Arrangements for Pre-2005 DG 7 | Energy Networks Association – DCMF • Designated EHV properties that qualify for the exemption can “opt in” to charges at any time in the future: • Deadline for opting in to charges for 2013/2014 is 30 June 2012 • Deadline for future years is 1 November of the preceding year • Opting in to charges is a “one way” decision • Please contact your DNO before the deadline if you would like to opt in

8. LDNO arrangements 8 | Energy Networks Association – DCMF • Portfolio discounts for CDCM-like generation (export) end users • Extended Method M to calculate discounts • Methodology approved by Ofgem in December 2011 • Charges and credits for EDCM-like generation (export) end users calculated on a “boundary-equivalent” basis • LDNOs to provide boundary-equivalent data to the host DNO for charges to be calculated