## Notes

Detail on the conditions under which this cost is valid:

- All costs in 2009/2010 prices

- Financial Year 2013/14:
- Fixed OPEX Costs 2013/14 = £/a 530m
- Fixed Capital Costs 2013/14 = £/a 720m
- Variable OPEX Costs 2013/14 = cost of gas multiplied by 1525GWh/a (shrinkage level)

- Financial Year 2021/22:
- Fixed OPEX Costs 2021/22 = £/a 420m
- Fixed Capital Costs 2021/22 = £/a 855m
- Variable OPEX Costs 2021/22 = cost of gas multiplied by 1225GWh/a (shrinkage level)

- Costs of decommissioning the entire Gas Distribution Network is in the region of £4,088m (Source: ENA).

- Costs are largely independent of volume, scenarios that indicate reductions in energy conveyed are not likely to materially impact on the fixed cost element. Assuming a cost per unit of energy may lead to inaccuracies in cost calculations.

- Distribution networks are largely fixed costs based on investments in constructing, maintaining and replacing a network designed to function over the peak energy demand at a specified point in time. Approximately 3% of costs associated with leakage, own use and theft of gas on the Gas Distribution System (i.e. Shrinkage Costs) vary to an extent with gas throughput (i.e. variable opex costs).

- Specific replacement programme relating to metallic pipe assets between 2002 and 2032 assumed in investment. Between 2013/14 and 2021/22 it has been assumed that 25% of replacement costs have been expensed within year.

- Operational costs relate to repair, maintenance and the provision of the gas emergency service - these costs remain fixed in line with geographical requirements for existing assets.

- Costs based on 2010 process and exclusive of Tax, Regulatory Licence Fees and Business Rates.

Limitations of this cost estimate

- Costs have been based on National Grid's 4 gas distribution network regulatory plans (apart from decommissioning costs). To obtain true cost estimate of GB's Gas Distribution Network costs from other four networks would be required.

- Figures would need to be doubled to provide an estimate of the total costs for GB's gas distribution grid (accounting for the 4 distribution networks not owned or operated by National Grid).