Charging methodology update – Proposal “non-vetoed”

1. Charging methodology update – Proposal “non-vetoed” In summary, our change proposal consisted of the following: • Revised section 3 to make references to the CDCM clear as the methodology for calculation of HV/LV charges and how allowed revenue is determined for the purpose of the CDCM; • Revised section 5 to refer only to the calculation of EHV generation charges because both HV and LV generation charges will now be covered under the CDCM; • Removed section 6 ‘Application of use of system charges’ because it will be covered in the CDCM; • General house-keeping including updating diagrams to reflect the changes in industry agreements (clause 2.4); • Update references to licence conditions; and • Removal of appendix 1 ‘Losses Methodology’ because this will now be published on CE’s website as a standalone document. • Awaiting approval of change of the form of the statement from Ofgem prior to applying the retrospective IDNO charge On 26 January 2010, CE submitted a modification report to the Authority setting out proposals to modify their UoS charging methodologies, which are intended to reflect changes in the industry Ofgem issued a “non-veto” to this application on the 23 February 2010

2. Other charging issues • Awaiting approval of change of the form of the statement from Ofgem prior to applying the retrospective IDNO charge at LV/HV; • Working within the CMG on EHV IDNO charges; • Maintaining focus on the interim IDNO billing process within the industry group; • Developed a proposal for pre-2005 DG, but are looking to take ideas forward in the industry working group as a matter of urgency; • Have begun dialogue with generators on pre-2005 DG issue; • Maintaining focus on the EDCM with particular emphasis on the EHV boundary issue and generation charging issues; • Working with workstream 4 on the joint connections statement of charges. Our main focus continues to be the EDCM and developing mechanisms to bill IDNOs

3. Customer communication prior to the CDCM publication • Met with the YEPO and NEPO (street lighting) purchasing organisations • Delivered charges seminar with one-Northeast with over 60 industrial and commercial customers present; • Scheduling meetings with pre-2005 DG customers; • Met individually with both Water companies in our area regarding their charges – in particular reactive power; • Held a conference call for suppliers following the publication of final charges; • Looking to schedule a workshop during the consultation phase of the EDCM in May 2010. • Numerous individual calls advising customers of the impact of the CDCM We have found an increased requirement from customers to wish to understand their DUoS charges in suppliers bills