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Gas Industry Modification 0232 Proposal Presentation

Modification 0232 proposes using current shrinkage mechanisms to share unidentified gas costs across the industry. Await Ofgem's feedback on adjusting price controls. Develop the modification further with a focus on implementation and impacts. Ensure clarity for all parties involved. Consider impacts and aim for a simple, low-cost solution with license and price control implications. Calculate the energy to be purchased by a third party based on LDZ shrinkage timescales. Collect revenue to cover these costs with ICE Natural Gas Futures Settle Price as a basis. Recovery of revenue back to end users to follow existing rate codes. Future discussions include license changes, third party identification, and shipper oversight. Contact Gareth Evans for inquiries.

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Gas Industry Modification 0232 Proposal Presentation

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  1. Modification 0232 Presentation for Total By Gareth Evans

  2. Scope Setting • Modification 0232 looks to use current Shrinkage mechanisms to socalise the cost of unidentified gas to the whole industry. • Ofgem has been requested to provide a view on their amenability to adjust price controls to allow this modification to proceed. • Until this view has been received, continue to develop the modification so that all Parties are clear on implementation method and impacts.

  3. High-level Impacts Have considered what we want this Modification to achieve. Desire a simple and low cost solution It will have licence and Price Control Implications

  4. Business Rules The unidentified energy (VA) to be purchased will be calculated by a third party in line with the LDZ Shrinkage timescales, so initial proposals will need to be calculated by the 1 March. Each transporter will be permitted to collect revenue to cover these costs.

  5. Business Rules (cont) The price (PM) to be used to determine the level of allowed revenue will be based on ICE Natural Gas Futures Settle Price for the Month as @ 1st February of the relevant year. Therefore the amount of Allowed Revenue (UG) is:

  6. Business Rules (cont) The recovery of Allowed Revenue (UG) back to the end user by GDNs is not to be prescribed but should utilise one of the existing rate codes The purchased energy should be deducted from the initial daily allocation in line with DN Shrinkage in accordance with :

  7. For Future Discussion • Desirability of licence changes • Identity of Third Party • Shipper oversight

  8. Contact Details • Happy to answer questions : Waters Wye Associates: Gareth Evans - 01473 822503 gareth@waterswye.co.uk www.waterswye.co.uk

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