Proposed Agreement For Identification And Administration Of Unregistered Sites

1. Proposed Agreement For Identification And Administration Of Unregistered Sites Chris Warner Network Code Manager

2. Unregistered Sites • An “Unregistered Site” is: • new Meter Point Reference Number in Transporters’ Supply Point Register (SPR) • no User Registration (or prior registration) in SPR • legitimate status where no gas is flowing (usually ‘siteworks’ in process) • illegitimate status where gas is being consumed i.e. potential that gas has been illegally taken whilst in the course of conveyance • no supply contract between supplier and consumer (NB: Ofgem has the view that a Supply Contract is not ‘valid’ if there is no User Registration in SPR) • socialised risk (energy reconciled via RbD) • Shipperless Sites are not within scope of this agreement

3. Transporter Obligations • Transporters Licence Condition 7 obligations • to investigate where it appears gas is taken whilst it is ‘in the course of conveyance’ • to use reasonable endeavours to recover the value of the gas taken in such circumstances (Gas Act Sch 2B provides legal ability to do so) • ‘ in the course of conveyance’ • where a supply contract (or a deemed supply contract) is in place, any point upstream of the ECV • where there is no supply contract (or deemed supply contract) is in place, at any point

4. NGD / BGT Agreement (Pilot) – BGT to Provide Service on behalf of NGD • information from existing Xoserve Unregistered Sites (“Orphaned”) reporting • for ‘shipper activity’ MPRNs, relevant shippers have confirmed ‘no interest’ or not responded to request • undertake investigation (LC7) on behalf of NGD to • establish whether gas is being consumed • establish if a supply contract is in place • BGT to comply with requirements in respect of treatment of vulnerable customers • if gas is being consumed and there is no supply contract in place • use reasonable endeavours (LC7) on behalf of NGD to recover the value of the gas costs (NB: no investigation costs) • notify consumer that it must enter into a supply contract with a supplier • possible future service to undertake disconnection on behalf of NGD where instructed to do so by NGD

5. BGT Service – Treatment of Cost and Revenues • Value of gas costs recovered by BGT on behalf of NGD are returned to NGD • NGD pays BGT for investigation and cost recovery services • BGT charges required to be reasonable and cost reflective • NGD treats revenue recovered and investigation and costs recovery charges in accordance with Licence Condition 7(3) Scheme • Changes made to Licence “Transportation Revenue” to maintain revenue neutrality

6. BGT Service – Status • Ofgem is aware of proposal and following various challenges dialogue has taken place to ensure arrangement is acceptable • NGD and BGT intends to commence pilot as soon as possible • bilateral arrangements to be finalised • operational processes/interfaces to be concluded

7. BGT Service – Next Steps • Costs and revenues to be monitored on an ongoing basis • Pilot likely to commence Q1 2011 and last 12 months • At this point review to be conducted and decision taken on whether to extend duration of arrangement • Potential success criteria • volume of consequential User registrations • proportion of invoiced charges recovered • extent to which costs recovered meet service charge • residual theft detection

8. BGT Service – Next Steps • Comments? • To National Grid • To Ofgem