Distribution and settlement of a surplus in accordance with Article 25 of our Balancing Group Contract Terms & Conditions

In April 2014 the first surplus distribution and settlement procedure as specified in paragraph 6 of Article 25 of our Balancing Group Contract Terms & Conditions has been completed. The distribution and settlement procedure was performed in respect of the summer levy period of 2013 (April to September 2013). A second distribution has been made in July 2014 in respect of the winter levy period (October 2013–April 2014).

The legal basis of a distribution and settlement is Article 25 of our Balancing Group Contract Terms & Conditions, which corresponds to paragraph 6 of Article 15 of the standard balancing group contract for gas (Annex 1 of the ruling concerning gas balancing services issued by the ruling chamber 7 of the German federal regulator Bundesnetzagentur, Ref.: BK7-08-002); for further information please also see the document Key Aspects of the Distribution and Settlement Mechanisms pursuant to Paragraph 6 of Article 25 of the Balancing Group Contract prepared by Freshfields Bruckhaus Deringer LLP.

Under said provision the market area manager is obliged to distribute and settle any surplus realised within any given levy period following a two-step procedure, provided that the surplus exceeds the projected deficit of the following levy period.

Who will receive a distribution?

The distribution and settlement mechanisms are described in Article 25 of our Balancing Group Contract Terms & Conditions. According to Article 25 of our Balancing Group Contract Terms & Conditions, the first step is to distribute the actual control energy levy payments received from the balancing group managers. In accordance with Article 25 of our Balancing Group Contract Terms & Conditions, any remaining surplus will be settled based on the shipped off take quantities of all balancing group managers as recorded in the balancing group accounts. Both distribution mechanisms have been applied in March 2014. In July 2014 only the first distribution step was applied since no further surplus existed.  Under both sentence 1 and sentence 2 payments will only be made to balancing group managers in charge of master balancing groups, as only they are eligible to receive such payments.

Payments under sentence 2 will be made in respect of the allocation time series types non daily metered (SLPsyn, SLPana) and daily metered (RLMmT, RLMoT), given that only these allocation time series types are within the scope of the provision.

What will be distributed?

The surplus is determined based on an estimate which is the result of a projection of a surplus for the current period and of a deficit, if any, for the following levy period, respectively.

In a first step, the full amount of the control energy levy as paid by the relevant balancing group managers will be distributed (Article 25, paragraph 6, sentence 1 of our Balancing Group Contract Terms & Conditions). In addition, the residual surplus, if any, is settled in accordance with sentence 2, based on a price determined in ct/kWh which will be applied on the allocation time series types listed above. The remaining allocation and data groups do not fall within the scope of this mechanism.

When will the distributions be made?

The distribution and settlement processes will be initiated at the beginning of the period which follows the period where the surplus was determined. Given that the final amounts of the control energy levy paid in the relevant period and the final off take quantity in kWh allocated to the allocation time series types affected by the provisions of Article 25, paragraph 6, sentences 1 and 2 constitute the basis for determining the distribution and settlement amounts these must be known before any distribution can be made.

Specifics for balancing groups for biogas

The distribution and settlement payments to balancing group managers in charge of biogas balancing groups will not be made before the invoicing and settlement process for the biogas balancing groups is completed. However, given that the quantities and amounts relevant for billing are already known, this will not affect the overall amount, which, as stated, is based on projections. The sums attributable to the biogas balancing groups under Article 25, paragraph 6, sentences 1 and 2 of our Balancing Group Contract Terms & Conditions will be determined based on the same principles of interpretation as applied in relation to balancing groups for natural gas, and will thus only be suspended until the invoicing for biogas balancing groups has been completed.

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