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Draft Modification

This draft modification aims to improve the energy balancing process by incentivizing users to maintain appropriate levels of security and avoid repeated failures. It proposes a reduction in the face value of security for users who have multiple instances of further security requests within a specified period.

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Draft Modification

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  1. Draft Modification To Enhance Section X of the UNC to improve the Energy Balancing Further Security Process 25th June 2010

  2. Introduction • Sponsor – Corona Energy, contact Richard Street • Draft Modification for further review • Timescales for presentation at Transmission Workstream - 1st July 2010 with a view to present to July Modification panel.

  3. Aim of Modification • To extend provisions of Section X2.10 to make provisions for the deemed value of the User’s existing Security held to be scaled back by 20% to act as an incentive to break the cycle of repeated failure through Cash Call and Further Security Process. • To encourage Users to maintain the appropriate level of Security to cover User’s Energy Balancing Activities • To minimise the financial risk to other Users • To avoid the same offenders repeatedly receiving Cash Calls and Further Security Requests to meet their Energy Balancing Activities rather than putting correct Security in place.

  4. Main principles of Modification • 3rd occurrence of a Further Security Request (FSR) within a 28 day measurement period will trigger a reduction in the face value of current level of Security by 20% for a period of 12 months. • Any subsequent FSR’s within the 12 month period will also reduce the face value of Security by a further 20%. • If no further FSR’s issued within the 12 month period and provisions of UNC Section X 2.3.5 are satisfied, no further action is required.

  5. Calculation of a Further Security Request • Calculation is: (peak indebtedness / 85) * 100 = credit limit should be (CL) CL - Current Security - outstanding FSR’s = further security required (rounded up to nearest £1000) • Example – Current security = LOC £5,000 peak indebtedness = £15,000 outstanding FSR = £2,000 Therefore we get (£15,000 / 85) * 100 = £17,647 £17,647 - £5,000 - £2,000 = £10,647

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