Provision of third party access to licence exempt electricity and gas networks Tony McEntee

1. 5 April 2012 Provision of third party access to licence exempt electricity and gas networks Tony McEntee 1 | Energy Networks Association - DCMF

2. Recent Publications 5 April 2012 2 | Energy Networks Association – DCMF The Electricity and Gas (Internal Markets) Regulations 2011 introduce new obligations on licence exempt distribution and supply undertakings, including a duty to facilitate third party access to their electricity and gas networks. DECC have recently published the following document s • DECC Draft Guidance: Provision of third party access to licence exempt electricity and gas networks, 14 October 2011. • DECC Revised Guidance: Provision of third party access to licence exempt electricity and gas networks, February 2012. Ofgem have recently published the following document • Guidance on third party access charges for licence exempt gas and electricity distribution networks 151/11 dated 10 November

3. Issue 5 April 2012 3 | Energy Networks Association – DCMF • It is not clear how these any arrangements will work in practice. • The Ofgem document covers charging methodologies for licence exempt distributors should they wish to charge for network use. • The DECC document does not specify how third party access is to be achieved in practice. “We are not prescribing in Regulations how stakeholders manage the technical and contractual means of providing for third party access. Market participants (e.g. distribution exemption holders, suppliers and distribution companies) are best placed to determine this” • DECC have identified a ‘full settlement metering’ approach and a ‘difference metering’ approach as possible solutions. • The impact of these on existing processes have not been identified, e.g. DUoS billing. • ENA’s Commercial Operations Group (COG) met in January to discuss with Ofgem, Elexon and Gemserv possible approaches to this should the situation arise.

4. Next Steps 5 April 2012 4 | Energy Networks Association – DCMF • An invitation to participate in a TPA working group was issued in February to the DCMF circulation list. • Nominations have been received from a wide cross section of the industry including licence exempt network operators. • Terms of Reference for the working group has been drafted and a copy circulated with DCMF slides • First meeting of the working group is currently being organised

5. 5 April 2012 Demand Side Management Tony McEntee 5 | Energy Networks Association - DCMF

6. Ofgem Decision on EDCM 5 April 2012 • Ofgem EDCM Decision Document: • Customer measure 2: To formalise the arrangements for demand side management agreements • Ofgem asked the DNOs to clarify: • Whether any customer can enter a DSM agreement with the DNO, provided the customer agrees to have interruptible capacity subject to such terms as defined by the DNO. • Whether the DNO can refuse to enter such agreements. We also expressed a view that if charging arrangements under these agreements are appropriately reflective of costs, they should be available to every customer

7. Current Situation 5 April 2012 7 | Energy Networks Association – DCMF EDCM has provision for a discounted import rate for EHV customers with a DSM agreement in place The EDCM does not specify the type or form of DSM contract where this would apply. DNOs have set down their approach to DSM in section 5.3 of their Charging Statements and this varies between DNOs. DNOs are setting up a working group to look at developing a standardised DSM contract that can be made available to EHV customers. Any standardised contract should not restrict DNOs from developing alternative DSM arrangements that could be applied. Terms of Reference for the working group has been drafted and a copy circulated with DCMF slides. Please contact Electralink if you are interested in sitting on the DSM working group.