1Dave Openshaw UK Alpha 6 – Block 3

Barcelona 12-15 May 2003

Network Asset Management as a Contracted Service Provision

based on paper TFS_Openshaw_C1

2Dave Openshaw UK Alpha 6 – Block 3

Barcelona 12-15 May 2003

LE Group UK Networks Branch165,000 km network14.6 GW demand7.7m customers

b

3Dave Openshaw UK Alpha 6 – Block 3

Barcelona 12-15 May 2003

Asset Governance / Asset Management Model

EPN

Network Assets

Network Management

SPN

Network Assets

Network ServiceAgreement

Network ServiceAgreement

Power Networks Asset Governance

LPN

Network Assets

Network ServiceAgreement

LE Group Networks Branch

4Dave Openshaw UK Alpha 6 – Block 3

Barcelona 12-15 May 2003

UK Regulatory Model

+ -

+

+ +

x OpeningValue

-

Investment

DepreciationDepreciation

AssetValue

WACC

RegulatoryReturn

OperatingCosts

AllowedRevenue

Performance Based

Adjustment

Assurance of Stewardship

5Dave Openshaw UK Alpha 6 – Block 3

Barcelona 12-15 May 2003

UK Use of System Charges

£0.00

£10.00

£20.00

£30.00

£40.00

£50.00

£60.00

£70.00

£80.00

£90.00

£100.00

Easte

rn P

ower

Net

works

Seebo

ard

Power

Net

works

East M

idlan

ds

United

Utili

ties E

lectri

city [

Norweb

]

Lond

on P

ower

Net

works

Aquila

Net

works

[Midl

ands

]

YEDL [Y

orks

hire]

NEDL [N

orth

ern]

SE Pow

er D

istrib

ution

[Sou

ther

n]

SP Man

web

Wes

tern

Pow

er D

istrib

ution

(Sou

th W

est)

SHE Pow

er D

istrib

ution

[Sco

ttish-

Hydro

]

Wes

tern

Pow

er D

istrib

ution

(Sou

th W

ales)

SP Dist

ribut

ion [S

cottis

h Pow

er]

Typical Annual DUoS Charges - Residential Unrestricted Customer

6Dave Openshaw UK Alpha 6 – Block 3

Barcelona 12-15 May 2003

Value - Quality vs. Price

SSE North

SPWPD W

WPD SNEDL

SSE South

AquilaEME

SPN

EPN

ManwebYEDLUU

LPN

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

£40.00 £50.00 £60.00 £70.00 £80.00 £90.00 £100.00

Average annual use of system charge - unrestricted residential customer (3,750 units p.a.)2

Cu

sto

mer

Min

ute

s L

ost

per

co

nn

ecte

d

cust

om

er 2

001/

02 1

Quality of Supply / average domestic charges

Sources: 1 - Company 2001/02 Licence Condition 5 Information and Incentives Project submissions

2 - Company 2002/03 Licence Condition 4 statements

7Dave Openshaw UK Alpha 6 – Block 3

Barcelona 12-15 May 2003

Risk Management Assurance• Ofgem Asset Risk Management survey

conducted in 2002

• 12 x distribution / transmission companies surveyed

• Performance against 3 key areas of risk audited:

• Business Strategy & Direction

• Asset & Network Strategy

• Asset Life Cycle Management

• 18- point radar plot compiled for each company