Changes to ESTA boundaries in London North Eastern Route. Dear colleague,

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1 Alan Bullock Senior Analyst The Quadrant: MK Elder Gate Milton Keynes MK9 1EN 4 th May 2017 To: Traction Electricity Steering Group (TESG) Changes to ESTA boundaries in London North Eastern Route Dear colleague, 1. Purpose The purpose of this letter is to notify you about our proposals to change the boundaries of the Electricity Supply Tariff Areas (ESTAs) in the London North Eastern Routes due to a new supply point between Peterborough and Grantham. We are writing to you about this now, since the electrification works are due to complete in August The change will be briefed to the Traction Electricity Steering Group on the 22 nd May Structure This letter is structured as follows: Background; Current ESTA configuration; Proposed change; Next steps; Annex A ESTA diagrams; Annex B ESTA definitions; 3. Background ESTAs are used to charge train operators for Electric Current for Traction (EC4T). In particular, the year-end volume reconciliation and (for CP5) delivery costs for the year-end cost-reconciliation are calculated by ESTA; and the uplift on metered consumption to reflect transmission losses varies by ESTA. ESTAs are primarily defined by the physical electrical boundaries between Grid Supply Points (GSP). On the AC overhead line system GSPs are bounded by insulated areas known as neutral sections. It is possible, through switching, to extend feeding areas to cover maintenance and/or operational outages of adjacent GSPs. Most GSPs have two separate circuits which effectively back each other up. Where possible, ESTA boundaries are located between two double circuit GSPs. There are currently 16 AC only ESTAs. The DC systems are continuous at the DC third rail so it is not possible to specify boundaries by way of neutral sections. For this reason the DC systems are not split across GSP boundaries. There are currently two DC only ESTAs: one for the south of England (ESTA U) and one in Merseyside (ESTA M). There are also two ESTAs (R and T) where both AC and DC power is provided and billed. 3.1 Transmission Losses Currently, operators who are charged by way of metered data are charged an uplift on their metered consumption, to recover the cost of electrical losses between the GSP meter and the train meter and this is known as the distribution system loss factor (DSLF). The DSLFs vary by ESTA and are fixed for CP5. They are published in Appendix 3 of the Traction Electricity Rules (TER) Delivery Charges Delivery charges recover the costs incurred by Network Rail in respect of the delivery of traction electricity from the power station to Network Rail through transmission and distribution networks for each GSP. These charges are also 1 :

2 differentiated by ESTA because delivery charges vary by GSP. The charges relating to each GSP are grouped according to ESTAs, giving a reasonable compromise between data processing and localised charging. 3.3 Physical ESTA changes ESTA boundary changes are normally required if a new GSP or new electrification is introduced in such a way as to change the location of the boundary neutral section. This would reflect a physical alteration to the EC4T network, most likely as a result of new electrification. These changes may be permanent or temporary. To ensure operators are correctly charged for their EC4T usage, any changes to the ESTA boundaries within the billing system need to be synchronised with the physical changes, which could occur at any time during a control period. 3.4 ESTA descriptions ESTA definitions are currently set out in Appendix 5 of the TER 1. Any contractual changes to the descriptions of ESTAs may be formally amended through the change provisions for the TER, which are to be included in the TER. 4. Current ESTA configuration 4.1 Background The introduction of bi-mode trains to East Coast route means increased electrical demands. Many supply points are being upgraded and a few new connections are under construction. Most of the changes will not affect ESTA boundaries but a new connection at Essendine between Peterborough and Grantham is located very close to the existing boundary between ESTAs A and R. 4.2 Current ESTA Configuration The current contractual definitions (set out in Appendix 5 of the TER) state that ESTA R - East Coast Comprises the electrified Line from Kings Cross to the neutral section at Main Line South Tallington (between Peterborough and Grantham), the electrified route between Moorgate and Finsbury Park; the electrified route between Canonbury West Junction and Finsbury Park; the Kings Cross Incline between Camden Road East Junction and Freight Terminal Junction and the link to St Pancras Thameslink. A new link to the Gospel Oak to Barking line will also be added. ESTA A - East Coast Main Line Central Comprises the electrified Line between the neutral sections at Tallington (between Peterborough and Grantham), South Kirkby and Hambleton Junction (between Doncaster and York). The DSLFs are 3.21% for ESTA R and 4.23% for ESTA A. The current ESTA configuration is illustrated in Figure 1 in Annex A. 5. Proposed Change The new Essendine supply point will be adjacent to a number of single circuit supply points which would mean temporary cross boundary feeding would be more likely. There are two options for where the boundary can be moved to such that cross boundary feeding will be minimized: 1. The neutral section at Holme (69miles) between Peterborough and Huntingdon or; 2. The neutral section at Stoke (100miles) between Peterborough and Grantham. The table below shows the Energy, Mileage and Losses for the current ESTAs and the proposed options: ESTA 15/16 Approx GWh Miles Loss Loss Total Target R GWh Miles Change Change Factors GWh Loss Loss GWh A Current 9.8 R Option 1 (Holme) Option 2 (Stoke) Proposed LF A R A R The two options are illustrated in Figures 2 and 3 in Annex A As the ESTAs have different loss factors, moving the boundary would change the total loss consumption. Moving the boundary would change the assets incorporated in each ESTA. The table includes options for adjusting the loss factor to maintain the loss consumption at the current level. Views are sought as to whether such a change should be made. Keeping the factors as they are would mean metered operators would pay slightly more with Option 1 and modelled operators slightly less and vice versa for Option 2. It is suggested that Option 1 is selected as it brings the sizes of the 2 ESTAs closer together. 6. Next steps We are inviting submission of written representations in respect of these proposals. Please send your responses, in electronic format, to Aaren.Healy@NetworkRail.co.uk by Friday 2 nd June 2017.

3 Subject to no material modification, we will, as soon as is reasonably practicable, submit these proposals to ORR for approval. The change can be implemented any time before Essendine is energised in August 2017 so we propose making the change on the 1 st August If you would like to discuss any of the issues in this letter and its annexes, please contact Alan Bullock. (Alan.Bullock@networkrail.co.uk). Yours sincerely Alan Bullock Senior Analyst

4 Annex A ESTA Diagrams Fig 1: Existing East Coast Route Fig 2: Option 1 Boundary at Holme NS Fig 3: Option 2 Boundary at Stoke NS

5 Annex B: ESTA Definitions Option 1 ESTA ESTA Name Description R A Line South Line Central Comprises the electrified Line from Kings Cross to the neutral section at Holme (between Huntingdon and Peterborough), the electrified route between Moorgate and Finsbury Park; the electrified route between Canonbury West Junction and Finsbury Park; the Kings Cross Incline between Camden Road East Junction and Freight Terminal Junction and the link to St Pancras Thameslink. A new link to the Gospel Oak to Barking line will also be added. Comprises the electrified Line between the neutral sections at Holme (between Huntingdon and Peterborough), South Kirkby and Hambleton Junction (between Doncaster and York). Option 2 ESTA ESTA Name Description R A Line South Line Central Comprises the electrified Line from Kings Cross to the neutral section at Stoke (between Peterborough and Grantham), the electrified route between Moorgate and Finsbury Park; the electrified route between Canonbury West Junction and Finsbury Park; the Kings Cross Incline between Camden Road East Junction and Freight Terminal Junction and the link to St Pancras Thameslink. A new link to the Gospel Oak to Barking line will also be added. Comprises the electrified Line between the neutral sections at Stoke (between Peterborough and Grantham), South Kirkby and Hambleton Junction (between Doncaster and York).