0476 Alignment of DN Charging Methodology with RIIO-GD1 Arrangements

1. 0476 Alignment of DN Charging Methodology with RIIO-GD1 Arrangements Current methodology for deriving DN ECN charges set out in Section Y Part B is based on previous price control i.e. NTS Exit capacity cost pass-through within year and single year K lagging. RIIO-GD1 price control introduced: Initial set allowance for NTS Exit capacity cost pass-through with true-up to actual costs two years later Two year K lagging These RIIO-GD1 changes were intended to help provide greater predictability of transportation charges; application of existing ECN charge methodology would be inconsistent with this Modification proposes that ECN charges be based on: Initial set exit pass-through cost allowance in Licences inflated to price base of relevant year; plus Any true-up between actual costs and set allowance from two years previously; plus Any ECNK from two years previously (ECNK is differences between target and actual income relating to ECN charges Zonal balance of ECN charges is unchanged, reflecting forecast NTS Exit cost balance within same year Modification also proposes deletion of DN charging methodology relating to interruptible transportation charges since DN interruptible transportation ceased at October 2011. All DNs have set indicative April 2014 ECN charges on the basis of the interpretation of the charging methodology with these changes – implementation of modification will therefore clarify how ECN methodology is applied within current price control period Since there are no material changes arising from the proposal, self-governance of the modification is proposed

2. 0476 Alignment of DN Charging Methodology with RIIO-GD1 Arrangements