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Structure of electricity distribution charges Ofgem workshop 15 th July 2003

Structure of electricity distribution charges Ofgem workshop 15 th July 2003. A retail market perspective Rodney Brook. A retail market perspective . Ofgem’s Initial Conclusions document Supply-related issues Retail context Market developments Implementation DPR4.

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Structure of electricity distribution charges Ofgem workshop 15 th July 2003

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  1. Structure of electricity distribution charges Ofgem workshop 15thJuly 2003 A retail market perspective Rodney Brook

  2. A retail market perspective • Ofgem’s Initial Conclusions document • Supply-related issues • Retail context • Market developments • Implementation • DPR4

  3. Ofgem’s Initial Conclusions • Getting to grips with new and old issues • Principles • Decision will have a material impact on suppliers • Impact on financial planning, cash-flow, P&L • Micro-generation of special interest

  4. Retail context Distribution Energy/ Risk Management £350m Customers Supplier £1.2bn Transmission Other

  5. Electricity competition • Choice made on perception of price, service, brand, added-value • Domestic market competitive but not mature • Pricing strategies • Economic purity and market reality

  6. Cost reflectivity • Are costs understood? • How can costs be reflected in charges? • What happens when costs are reflected to the supplier or the customer? • Do the billing processes work?

  7. Retailers Customers/segments Products/services Relationships/contracts Competition and market environment Costs Charging regimes and operations Distributors Voltage Delivery/services Location Urban/rural Entry points Revenues Perspectives on distribution charges

  8. Distribution services UoS MPAS Metering Repairs Fault-call handling Additional load Connections Retailer Customer ? Developer

  9. Charging structures and DPR4 • To what extent are suppliers involved? • What about cost-reflectivity? • How will improvements be introduced, in the context of other structural changes?

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