Ofgem’s EDCM consultation Overview of responses

1. Ofgem’s EDCM consultation Overview of responses Ynon Gablinger 4 August 2011 DCMF

2. Overview We received about 31 responses (3 confidential) • Demand customers (4) • Generators and representatives (11) • DNOs (6) • IDNOs (2) • Suppliers (6) • Other (2) General comments: • General support of what the methodology tries to achieve overall (commonality, cost reflectivity etc.) but… • Criticism of the complexity of the EDCM • Concerns about stability and predictability • Transparency of the locational signals

3. Implementation We received responses from 28 parties: 4 demand customers, 9 generators, 5 DNOs, 2 IDNOs, 6 suppliers and 2 ‘other’.

4. Calculation of network use factors (“spare capacity”) (issue 5) Overall the view was that costs associated with spare capacity should not be borne by the user of the asset. However, respondents suggest that this may require further work to understand the circumstances in which it arises and the impact on customers A sample of responses: • “it is appropriate to recover the associated costs [of spare capacity] across all users, through the scaling process” • “Surplus capacity might be treated in different ways depending […] on local circumstances” • “further work is required to better understand how to allocate costs associated with spare capacity […] it does seem inappropriate that a customer should bear the sole burden of funding the operation of assets with spare capacity.” • “there may be a case to socialise these costs” • “It only needs to be addressed if it causes significant issues for customers.”

5. Credits for intermittent generation (issue 11) • Recognition that intermittent generation cannot be relied upon to the same extent as intermittent and that if credit is paid the unit rate should be reduced

6. Next steps