Modification Proposal 0220 – “Invoicing Arrangements for Late Payments”

National Grid (Distribution) Comments

Chris Warner

Issues – Application / Set Off

• Assumption that the Proposal applies to all Interest (due to Transporters and Users)

• Set Off provisions appear to only apply to credits to the User

• Although Transporters have existing set off rights in the UNC (S3.8) this requires the User’s consent

• Set Off in the context of this proposal appears to not require the consent of the Transporter (beyond a pre-notification)

• This ‘unconditional’ set off right should apply in instances of both credit and debit interest

• Set Off terms propose that this is applied in the “next scheduled payment run”

• This may require further clarification (eg: specification of the invoice types that qualify as the “next scheduled payment run”)

• The practical application of the Set Off in respect of User Credit interest would require the User to establish the interest value due to it

• Further provision may be necessary for Transporter to query the credit interest value as determined by the User

Issues – Deadline for Payment

• NG(D) preference is to issue interest invoices monthly

• Minimises processing costs

• Minimises validation burden

• Proposal may not facilitate this for 31 day months, for example:

• Interest invoice is issued on 20th Jan

• Interest that is accrued (i.e. date of late payment) on 20th Jan unlikely to be included on the above interest invoice

• Under the proposed terms it would become due for payment on 19th Feb (the day prior to when the next monthly Interest invoice is schedule for issue on 20th)

• Solution is to slightly extend the payment period (to at least 31 days)