Ofgem RIA – UNC Modification Proposal 0229

1. Ofgem RIA – UNC Modification Proposal 0229 Chris Warner

2. DNO concerns • Ofgem RIA states that it is ‘minded to accept’ Mod 0229 • DNOs accept that 0229 principles essentially sound. However: • Proposal as drafted (including guidelines) • Unduly complex • Numerous challenges and process ‘stop points’ • Unlikely to result in timeline to conclusion • Unmitigated risks exist • AUGE tender controlled by UNC Committee • Not acceptable for UNC Committee to select AUGE and then for Transporters to be forced to contract with selected party. • Eventualities - Suitability of candidate/or no candidates?

3. DNO concerns (continued) • Multiple opportunities for parties to challenge/agree output of AUGE (AUGS) – undermines purpose of independent agent • Risk that challenges driven by commercial interests - undermines ‘neutrality’ of AUGE • Once appointed need to let AUGE conclude • Risk of changes to Guidelines which could impact Transporter contractual arrangements • Guidelines appear to be unclear as to the specific output i.e. the ‘methodology’ or ‘Statement’ or ‘AUGS’? Also timing and deliverability not clear. • Complexity threatens delivery within timescales – high likelihood that ‘zero volumes’ would result. • Process for AUGE/AUGS output unduly protracted – no output for up to 2 years from implementation.

4. Possible alternative proposal • Based on Mod 0229 principles (includes appointment of independent AUGE & production of AUGS) • Simplified AUGE tendering and appointment process – wholly a Transporter responsibility • Addresses the scenario where AUGE is not appointed • Allows challenge and review but process will conclude in acceptable timescale • Reliance on AUGE as ‘independent’ authority ensures AUGS not influenced by commercial drivers/interests