04 March 2010 energynetworks.org 1

PRESENTED BY MO SUKUMARAN, CMG DEPUTY CHAIR

CMG Progress Report

4 March 2010

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Common Distribution Charging Methodology (CDCM)

• Covers HV and LV charges from April 2010 • Final tariffs from April 2010 based on approved CDCM • DNOs have met four of the five CDCM conditions and are

working on the fifth (generation dominated networks)• Work to achieve greater commonality in connection charging

methodologies via WS4 continues but nearing completion• CDCM will be subject to open governance via the DCUSA• Information available from ENA web site:

http://2009.energynetworks.org/structure-of-charges/

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EHV Distribution Charging Methodology (EDCM)

• Covers EHV charges from April 2011 using a common charging methodology (LRIC/FCP)

• DNO Joint working encompasses both LRIC and FCP charging options

• Two workstreams:• Workstream ‘A’ - network modelling• Workstream ‘B’ - pricing modelling

• DNOs intend to issue a consultation paper on 31st March which will include illustrative locational prices

• Ofgem remains closely engaged with the work

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EDCM (cont’)

• Treatment of pre-April 2005 EHV Generators in 2010/11• Ofgem confirmed removal of exemption from charges from April 2010• In light of responses to Ofgem’s consultation on WPD’s modification

proposal, Ofgem directed DNOs not to charge this category of generators in the short term pending outcome of collaborative work between DNOs, industry stakeholders and Ofgem.

• WPD and SSE revised Mod Proposals reflecting this view received non veto on 18/19th Feb respectively

• Other DNOs progressing their proposals

• New Workstream C to be set up to develop longer term charging products

• Further stakeholder input on EDCM welcomed!

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What happens next?

• New CDCM tariffs come into effect 1 April 2010• DNOs consultation on EDCM • DNOs will consider consultation responses and submit

proposals to Ofgem• Ofgem is also likely to consult on these proposals• Subject to the Authority’s approval, DNOs will use the EDCM

to set EHV locational charges for April 2011• The EDCM then becomes subject to open governance under

the DCUSA