Recording of the SmartestEnergy Informer Series Consultant Webinar 27th May 2015. To sign up for future webinars, visit www.smartestenergy.com/informerseries. Watch the recording here - https://www.youtube.com/watch?v=Hf1u5_OOPYQ

1. Informer Series: New government and
non-energy charges update
Webinar - 27th May 2015
Speakers:
Dan Smith, Head of Channel Sales
Gavin Baker, Head of Pricing

2. Agenda
Price update
Conservative energy and environment pledges
In the headlines…
FiT Contracts for Difference (CfD) Auction Results
Small-scale Feed-in Tariff (FiT) forecast
Renewables Obligation (RO) forecast
EMR
Distribution of Usage System (DUoS)
Transmission Network Use of System (TNUoS)
Balancing Services Use of System Charges (BSUoS)
2
Wholesale Price
Politics
Environmental
System & Network

3. Wholesale Price Update
How the market has moved since last month…
Front of the curve has been generally lower
LNG continued to be high, with more
expected
Dutch court ruled that production at the
Groningen field would only be restricted in a
limited geographical area, easing fears that
the production cap would be lowered
Rough outage has meant that much less
gas can be injected than a typical summer,
supressing demand
But with some support
Norwegian supply issues have meant
balancing the UK system has been
challenging at times.
Higher carbon has lifted spark spreads
Brent crude is now up $20 since January low
Electricity prices low during Q1
For Q1 as a whole, price averaged
£45.10/MWh - 10% less than the average for
Q4 2014 of £50.40/MWh
3
Wholesale Price
35.00
40.00
45.00
50.00
55.00
60.00
65.00
Front Year £/MWh
40.00
50.00
1-May-2014
1-Jun-2014
1-Jul-2014
1-Aug-2014
1-Sep-2014
1-Oct-2014
1-Nov-2014
1-Dec-2014
1-Jan-2015
1-Feb-2015
1-Mar-2015
1-Apr-2015
Front Year £/MWh

4. Energy and environment pledges
4
Politics
Source: The Carbon Brief

5. In the headlines…
5
Politics
Webinar: Impact of the new government on the energy industry

6. Competition Markets Authority
June 2014 - Ofgem referred the energy market to the
Competitions and Markets Authority (CMA)
Why:
Distrust of Suppliers
Relationship of Supply and Generation Businesses
Rising Profits
No Reduction of Supplier Costs or Improving
Customer Services
July 2014 - Initial report sets out four ‘theories of harm’:
1. Transparency & Liquidity
2. Vertical integration
3. Market power
4. Consumer Switching
6
Politics

7. Competition Markets Authority
Feb 2015 - Report that households that remain loyal to their
supplier by not switching end up overpaying by hundreds per
year.
March 2015 - Ofgem announced its plans for code of
practice for TPIs would be delayed until after the CMA has
published its report into energy sector
The CMA has identified the non-domestic TPI sector as
“worthy of further investigation”
Latest Update - New government have said they will
implement the findings of the investigation
June 2015 - Early CMA results
Nov-Dec 2015 - Final report released
7
Politics

8. Solar
3.3%
Onshore
35.0%
Energy from
waste
4.4%Gasification
2.9%
Offshore
Wind
54.3%
Solar
18.5%
Onshore
55.6%
Energy from
waste
7.4%
Gasification
11.1%
Offshore
Wind
7.4%
FiT CfD Auction Results
8
Environmental
Project allocation Capacity
Click here to see full auction results
Price of renewables
£-
£20.00
£40.00
£60.00
£80.00
£100.00
£120.00
Gasification Offshore
Wind
Onshore
wind
Energy from
waste
Solar
Difference
Wholesale
Source: DECC

9. Newest charges on business electricity
bills as part of EMR
9
Environmental
‘Budget Available’ has been aligned with subsequent RO and FiT costs.
0
5
10
15
20
25
30
35
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
TWhGeneration
£mn
FiT CfD cost snapshot
Forecast Budget Still Available Announced Projects Cost
Biomass Conversion Costs Contracted Generation
2016-17 2017-18 2018-19 2019-20
Central Case Consumer Rate /MWh £1.66 £2.74 £5.20 £7.35

10. Small-scale FiT charge forecast
10
Environmental
3.31
4.15
4.45
4.58
3
3.2
3.4
3.6
3.8
4
4.2
4.4
4.6
4.8
5
2014-15 2015-16 2016-17 2017-18
£/MWh
Feed-in Tariff Costs
Previous
Central Case
Possible Impact
of Summer
Review
Central Case

11. Renewables Obligation (RO) forecast
11
Environmental
12.856
14.11
14.83
15.28
12
12.5
13
13.5
14
14.5
15
15.5
16
2015-16 2016-17 2017-18 2018-19
£/MWh
Renewables Obligation
Previous
Central Case
Possible
Impact of
Early Onshore
Wind Review
Central Case

12. Major Energy Users Exemption
12
Environmental
Consumers who currently receive relief from CCL may be eligible for
renewables costs relief of up to 85% depending upon electricity intensity
and eligibility.
Feed-in Tariff relief brought forwards to 2015-16
Approximately 15TWh relief in budget
RO from 2016
No impact on wider consumers
Administered by government directly
EMR Costs Relief
Socialised amongst all other consumers
Administered by Suppliers
Further details expected in the Summer

13. DUoS
13
*RPI Forecast of 1.2% in 2016 rise and 3.0% in 2017
System & Network
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
2015-16 2016-17 2017-18
DUoS tariff YoY % changes
EELC
LOND
SEEB
MIDE
EMEB
SWEB
SWAE
SOUT
HYDE
SPOW
MANW
NORW
NEEB
YELG

14. Rise in TNUoS from current year
14
Northern
Scotland
Southern
Scotland
N.Wales
S.Wales
S.East
S. Western
System & Network
2015/16 Final
(£/kW)
2016/17 Previous
Forecast
(% rise)
2016/17 Current
Forecast
(£/kW)
2016/17 Current
Forecast
(% rise)
1 Northern
Scotland 23.47 27% 29.34 25%
2 Southern
Scotland 26.79 19% 31.40 17%
3 Northern 32.62 11% 37.38 15%
4 North West 35.68 12% 40.92 15%
5 Yorkshire 36.29 12% 41.67 15%
6 N Wales &
Mersey 35.62 12% 41.28 16%
7 East
Midlands 39.07 11% 44.85 15%
8 Midlands 39.63 11% 45.62 15%
9 Eastern 41.18 11% 46.97 14%
10 South
Wales 37.61 11% 44.09 17%
11 South East 43.74 11% 49.65 14%
12 London 46.24 11% 51.95 12%
13 Southern 44.79 10% 51.00 14%
14 South
Western 43.98 10% 51.30 17%

15. Substantial Capacity Changes
System & Network
Station
2016 Capacity in
Dec14
2016 Capacity in
Apr15
MW Change
Abernedd Power Station 500 0 -500
Barking 950 0 -950
Barry Power Station 235 0 -235
Brigg 155 0 -155
C.Gen Killingholme North Power Station 490 0 -490
Deeside 515 260 -255
Ironbridge 680 0 -680
Killingholme 900 0 -900
Killingholme 2 665 0 -665
Lynemouth Power Station 376 0 -376
Peterborough 245 0 -245
Rampion Offshore Wind Farm 664 332 -332
South Humber Bank 1285 540 -745
Walney Extension Power Station A Offshore Wind Farm 330 0 -330
Walney Extension Power Station B Offshore Wind Farm 330 0 -330
Total 8320 1132 -7188
86%
decrease in
2016 capacity

16. BSUoS
16
System & Network
1.4
1.5
1.6
1.7
1.8
1.9
2
£/MWh
12m Rolling Average BSUoS

17. Market Performance
17
System & Network
50
60
70
80
90
100
110
12 month average Imbalance Costs and Balancing
Performance
(Apr14 = 100)
Imbalance Costs vs Market Price Market Balancing Performance

18. Questions?
18

19. Thank you
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end of the webinar
Any additional questions please send to
events@smartestenergy.com
Next webinar is scheduled for September
2015
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19
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