Review Group Report Review Proposal Reference Number Rolling AQ Review

Size: px

Start display at page:

Download "Review Group Report Review Proposal Reference Number Rolling AQ Review"

Felicity O’Connor’
5 years ago
Views:

1 Review Grup Reprt Review Prpsal Reference Number 0177 Versin Intrductin This Review Grup Reprt is presented fr the UNC Mdificatin Panel s cnsideratin. The cnsensus f attendees is that this Review Grup has finished its wrk in accrdance with its Terms f Reference. The main elements f a ptential prcess have been identified tgether with the advantages and disadvantages f mving frm the current Annual prcess but a full cst benefit analysis has nt been cnducted. If any UNC party wishes t raise a specific Prpsal t mve t a further develpment wrk wuld be required, including fuller identificatin f the csts and benefits. 2 Review Prpsal E.ON UK raised Review Prpsal 0177, fr which the Terms f Reference are included as Appendix 1. 3 Review Prcess In accrdance with the Mdificatin Rules, at its meeting n 18 Octber 2007, the Mdificatin Panel determined that this Review Prpsal shuld be referred t a Review Grup fr prgressin. This Review Grup Reprt was subsequently cmpiled by the, and apprved by Review Grup attendees. 4 Areas Reviewed The Review Grup discussins fcussed n the fllwing areas: a) Current AQ Prcesses On behalf f the Transprters, xserve gave a presentatin f hw the current AQ prcess perates. This frmed the basis f discussins in the Review Grup under the fllwing headings: i) Resurce Usage Within xserve, the annual nature f the current AQ review requires staff t be available primarily frm April t September each year. Within that perid there are tw Appeal windws that generate additinal peaks f wrklad. The Octber t March AQ wrklad is cnsequently much lwer than this April t September perid. In additin, xserve indicated that mving t a rlling AQ wuld relieve sme strain n systems. xserve has taken steps t manage this peak activity which has mitigated the additinal csts assciated with wrklad peaks and trughs. Fr this reasn it has nt at this stage identified any substantial cst savings that wuld be assciated with a change t a rlling prcess. Users als encunter sme peaks f activity assciated with the current annual prcess but these tended t be f a lesser nature than within xserve. ii) Numbers f Uncalculated AQs iii)xserve prvide each year infrmatin n the ttal numbers f AQs that rll frward frm year t year withut recalculatin. Cncern was expressed by a number fr Review Grup members n the extent f rll frward and whether this was characteristic f an annual prcess. all rights reserved Page 1 f 9 Versin created 02/04/2008

2 iii) Current AQ Amendment Prcess Outside the Annual Windw. A prcess already exists fr amending AQs utside the Annual Windw that invlves recnfirmatin f the Supply Pint. Amngst Review Grup members there was a variety f views n hw straightfrward this prcess is in practice. Shipper members identified that this prcess is nly used where majr changes f cnsumptin are identified. iv) Demand Step Changes 01 Octber Each Year It was recgnised that changes in AQ in sme cases lead t majr step changes in demand. There was a variety f views expressed n the extent t which this is a prblem. It was acknwledged that these changes are predictable and therefre Users can take steps t balance their entry and exit prtflis in anticipatin f the change in demand. Hwever, the Transprters pinted ut that these demand changes are nt knwn in sufficient time fr them t adjust their charges accrdingly. v) Risks fr RbD Shippers A number f Review Grup members believed that Shipper risks areis t be a majr issue with the current annual prcess. The Prpser suggested that the primary risks are frm: (1) The initial misallcatin f energy due t a difference between SSP and LSP markets; and (2) The delay in recnciliatin. An imprvement in allcatin will therefre imprve risk prfiles fr SSP Shippers. Current cnsumer cnsumptin is decreasing. As AQ is histric, there is a lag between AQ and actual cnsumptin. This lag is likely t be greatest in the SSP market due t changes being targeted at the mre temperature sensitive dmestic cnsumers and the lwer read cllectin rates. Based n an imprvement t AQ leading t a 1% change in relative AQ between the SSP and LSP markets; then this will lead t: (1) A 0.8% increase in energy allcated t the LSP market; (2) A crrespnding 0.3% reductin in allcatin t the SSP market; and (3) The Scaling Factr will mve 1.8% clser t 1, frm its current levels. ii)vi) Ptential fr Gaming It was recgnised that tactical use f the amendmentsappeals prcess culd reduce an individual User s transprtatin and gas cst expsure t the detriment f the Transprters and ther Users. Hwever, it was als acknwledged that there was little evidence f this ccurring in practice. b) Advantages and Disadvantages f Mving t a Rlling AQ Prcess Advantages T a great extent the advantages f mving t a Rlling AQ Prcess reflect the drawbacks assciated with the current annual prcess as expressed abve. Taking the areas where mst advantage might be gained: i) Reductins in Numbers f Uncalculated AQs all rights reserved Page 2 f 9 Versin created 02/04/2008

3 Review Grup members acknwledged that changing t a Rlling AQ Prcess wuld nt, f itself, affect the numbers f uncalculated AQs, as a prprtin f the ttal. Hwever, there wuld be a beneficial effect in ensuring that as sn as such Supply Pints were read eg as a must read, the new AQ was reflected in UK Link. This is related t the risk faced by RbD Users. ii) Simplified Prcessing Outside AQ Windw A rlling AQ prcess wuld incrprate all such changes that currently require recnfirmatin f the Supply Pint and thereby vercme any cmplexities assciated with the current Prcess. Prcesses wuld still exist fr recnfirmatin where the User identified majr changes in usage. iii) System Resilience A certain amunt f system disruptin ccurs during the current annual data transfers between the AQ calculatin systems and the main SPA systems. Mving t a mnthly update cycle whilst increasing the ptential incidences f system disruptin twelve fld, wuld be expected t be much less disruptive, due t the reductin in transfer numbers. iii)iv) Risk Reductin The mre frequently the AQ is revised, the smaller wuld be the risk faced by RbD Users. Based n an imprvement t AQ leading t a 1% change in relative AQ between the SSP and LSP markets; then this will lead t: (1) A 0.8% increase in energy allcated t the LSP market; (2) A crrespnding 0.3% reductin in allcatin t the SSP market; and (3) The Scaling Factr will mve 1.8% clser t 1, frm its current levels. v) Mdificatin 0640 Prcess Shippers hlding Larger Supply Pints wuld benefit frm the remval f this prcess. Disadvantages The disadvantages set-ut belw are assciated with Systems. It is expected that csts and impacts wuld be reduced if changes were assciated with UK Link Replacement, althugh this has nt been assessed in detail. i) System Csts After discussing reviewing varius alternative frequencies fr the AQ Reviewalternatives, the Review Grup favured mving frm an annual t a mnthly review. This wuld permit the current system cnfiguratin whereby AQs can be calculated in a discrete part f the system. Hwever, the straw man develped jintly by the Prpser and xserve did identify sme changes that wuld be expected t have system cst implicatins. In additin, system csts wuld be identified with an increased level f autmated validatin (see iii belw) ii)system Resilience A certain amunt f system disruptin might be expected during data transfers between the AQ calculatin systems and the main SPA systems. Mving t a all rights reserved Page 3 f 9 Versin created 02/04/2008

4 iii)ii) mnthly update cycle wuld increase the ptential incidences f system disruptin twelve fld, althugh fr a shrter duratin. Validatin The current prcess, particularly fr appeals invlves bth manual and semi autmated validatin checks. It is envisaged that this level f manual checking wuld nt be feasible if a change was made t a rlling AQ prcess. T maintain a cmparable level f validatin an increased level f autmated validatin wuld be required in rder t adequately cntrl Transprter and Shipper risks. Csts wuld be invlved in develping and implementing this type f system change. iii) Mdificatin 0640 Prcess Shippers hlding Smaller Supply Pints wuld ptentially lse the current benefits f this Md 0640 prcess. b) Practical Aspects f a Rlling AQ Prcess The Prpser and xserve develped a strawman that utlined hw the AQ prcess wuld functin n a rlling basis. This prpsal was as fllws: Meter Reads Submit meter reads. via U01. Reject (U02) r accept (U10) meter read. If accepted MPRN will be put frward fr AQ Review. USRVs will be put frward fr review as per current prcess. All meter read types will be put frward fr review. Exceptin will be pening read estimate which will nly be used as an pening read fr any variance perid. Validatin UK Link will lk back at any earlier read fr the MPRN targetting 42 Weeks fr nn-mnthly read sites. 50 weeks fr mnthly read sites. The system will hwever cnsider all reads between 9 mnths +1 day and 3 years apart. Current Back Stp functinality will n lnger apply. xserve will carry ut a series f systematised validatins t ensure AQ is crrect. Where validatins fail then a rejectin file will be returned t the shipper with a reasn cde and the current AQ will prevail. AQ values which change by less than an apprpriate percentage0.5% will nt be changed. This is a matter that wuld need t be addressed during develpment. Current manual validatins carried ut by xserve will be systematised. Where an excessive AQ increases by an apprpriate percentage 500% these will be rejected. This is als a matter that wuld need t be addressed during develpment. all rights reserved Page 4 f 9 Versin created 02/04/2008

5 Analysis has shwn that 98% f these are incrrect. If a shipper believes these t be crrect the read can be re-submitted and marked with a flag. The incrrect AQ will be present fr n mre than ne mnth. Validatin fr decreasing AQs may will need t be cnsidered. Currently there is n validatin fr lw AQs because f islatins. There is a rejectin cde fr negative AQs. Timescales All meter readings will be prcessed nce pern 15 th f each mnth. The calculatins take place 15 th t 25 th. NRO and NRL files sent t shippers n 25 th. New AQ values g live n 1 st f the fllwing mnth. There will be n amendment prcess r T04 file submissin. Appealing AQ Values Shippers can submit a new meter reading t bring the AQ up t date. Shippers can change meter readings using a U01 read replacement where n subsequent read has been laded. Shippers can crrect errneus asset data using RGMA flws. Shipper may submit an AQ appeal where: Histrically incrrect data is adversely affecting the AQ n a site. There is a manifest change in usage. The prcess means AQs may be incrrect fr as little as ne mnth whereas under the current prcess AQs can be incrrect fr up t a year. Mnitring Currently the AQ Review is mnitred by: UNC Mdificatin 081 stats. Reprting stats fr AQ Ops Frum. Reprting pack specifically fr Ofgem. Much f this will becme redundant. (eg Mdificatin 081 lks in detail at activity during Amendment Windw.) Mnitring requirements will need t be maintained. Shipper appeal activity. Appeals and U01 meter read submissins increasing and decreasing AQs pssibly as an annual activity. Implementatin Pssible pphased implementatin with LSPs implemented first. SSP n mre than ne year later. May lend itself t a mdular apprach fr UKL replacement. Cnsideratin culd als be given t I&C market first regardless f AQ. all rights reserved Page 5 f 9 Versin created 02/04/2008

6 The develpment f this straw man raised the fllwing issues that wuld need t be reslved: Seasnal Nrmal Cmpsite Weather Variable AQs will be crrected by a calculated factr n a given date. AQ will be crrected using revised WAALPs when a meter reading is received after this date. Winter Annual Rrati Calculatins Under rlling AQ this will ccur upn the receipt f the 1 st meter read after the Winter perid. (Winter perid ends in March each year.) Lad Factrs LF are part f SOQ calcs. Updated annually during summer. Change very little year n year. When a meter reading is received the prevailing LF at the time will be used. Fur ptins were discussed briefly but it was acknwledged that this tpic shuld be part f the UNC Prpsal develpment. LSP & SSP Threshld Crssers Sites may tggle between LSP and SSP market. Suggest 0.5% ttlerance change in AQ t prevent small scale mvement shuld be determined in the develpment phase. NDM t DM Again where this ccurs there may need t be UNC rule changes. A site shuld remain abve the DM threshld fr 3 mnthsa perid befre becming mandatry DM. These rules will need t be determined in the develpment phase. Site Specific Crrectin Factrs. Where a site rises abve this threshld and has a site specific crrectin factr then the site shuld remain with its wn site specific crrectin factr. Even if subsequent AQs take the site back belw the threshld. Again it may be that the site stays abve the threshld fr 3 cnsecutive mnthsa perid befre becming mandatry. Once a site has a site specific crrectin factr it des nt revert back. Opprtunity t review crrectin factr rules? These rules will als need t be determined in the develpment phase. ο Independent Gas Transprters Whilst nt discussing the implicatins fr IGTs in detail the Review Grup has kept them infrmed and will be sending them a cpy f this reprt. 5 Recmmendatin The Mdificatin Panel is invited t accept this reprt n the basis that this Review Grup has finished its wrk in accrdance with its Terms f Reference. all rights reserved Page 6 f 9 Versin created 02/04/2008

7 Appendix 1 Terms f Reference Purpse This review prpsal seeks t establish the csts, benefits and pprtunities assciated with a rlling Annual Quantity (AQ) Review. Backgrund The current AQ prcess has been perating in much the same frm and timescales since inceptin f Transc s Netwrk Cde. The AQ Review was riginally instituted fr Larger Supply Pints (LSP) and extended t cver Smaller Supply Pints (SSP) fr Octber The AQ value assigned t each Supply Pint is a fundamental piece f infrmatin. It frms the basis f much f the day t day peratin f the gas industry frm capacity planning, energy balancing, charging and recnciliatin. The accuracy f the infrmatin is therefre f great imprtance t User and Transprter alike. Under the current AQ Review prcess, the AQ being used as a prxy fr future demand is, n average, 18 mnths ld at the time it is used. Where cnsumptin is changing, this prvides a significant cmmercial risk t Users and Transprters. This has been particularly evident ver the Gas Years since 2005 where reductins in dmestic demand, as a reactin t high prices, are still feeding thrugh t SSP AQ. Current recalculatin prcesses are limited due in part t the UK Link System that supprts the prcess. With the UK Link System due fr replacement in 2012, this prvides an pprtunity t review the current prcess and cnsider alternatives that may serve the industry better int the future in a cst effective manner. Ptential implementatin prir t UK Link Replacement is als wrth cnsideratin. The industry is currently investigating pprtunities ffered by Smart Metering and Autmatic Meter Reading (AMR) technlgy. Mves t use AMR t its full ptential, r indeed any changes t current metering patterns, shuld prvide mre infrmatin n actual cnsumptin. It wuld appear sensible t cnfigure the prcesses supprting transprtatin and balancing t make ptimum use f available infrmatin. Scpe and Deliverables The Grup is asked t: 1. Cnsider the existing Annual AQ Review and the current issues assciated with it. 2. Discuss putting in place a mechanism t allw rlling AQ calculatin. 3. Cnsider ther alternatives shrt f rlling AQ calculatin that wuld allw mre timely AQ updates. 4. Identify hw a change t rlling AQ may be implemented and any ptential issues that wuld need reslving, including any phased implementatin. 5. Cnsider csts and benefits and changes t risk prfiles frm adptin f a rlling AQ Review, bth befre and as part f the UK Link Replacement. all rights reserved Page 7 f 9 Versin created 02/04/2008

8 6. Cnsider, at a suitable level f detail, changes t prcesses and prcedures in rder t evaluate the assciated advantages and disadvantages. 7. Cnsider Independent Gas Transprters Supply Pints as part f the Review. 8. Cnsider alternative methdlgies t re-calculate AQs n receipt f meter readings. 9. Examine similar prcesses in ther industries, evaluating the lessns that have been learned. 10. Ensure that cnsideratin is given t the UK Link replacement timeframe. A Review Grup Reprt will be prduced cntaining the findings f the Review Grup in respect f the wrk identified abve. Limits The Review Grup will cnsider changes required t the fllwing: Unifrm Netwrk Cde UK Link The Review Grup in its initial phase will nt cncern itself with: Detailed changes required t prcesses and prcedures Detailed changes required t existing systems Develpment f detailed business rules Other than the details required in rder t reach a cnclusin n the way frward. Cmpsitin The Review Grup will cmprise the fllwing representatin Name Jhn Bradley (Chair) Mike Berrisfrd (Secretary) Sallyann Blackett (Prpser) Andy Smith Chris Warner Janna Fergusn Jel Martin Marie Clark Mark Jnes Mitch Dnnelly Phil Brm Richard Street Organisatin Jint Office Jint Office E.ON UK RWE Npwer Natinal Grid UKD Nrthern Gas Netwrks Sctia Gas Netwrks ScttishPwer SSE Centrica Gaz de France StatilHydr all rights reserved Page 8 f 9 Versin created 02/04/2008

9 Shelley Ruse Simn Trivella Stefan Leedham Steve Nunningtn StatilHydr WWU EDF Energy xserve A Review Grup meeting will be qurate prvided at least 2 Transprter and 2 User representatives are present. Infrmatin Surces Unifrm Netwrk Cde Sectins (t be identified). GT, Shipper and Supplier Licences. Gas Act. Varius Industry legislatin as apprpriate may include reference t: Gas Safety (Installatin & Use) Regulatins. Gas Safety (Management) Regulatins. Industry Cdes f Practice as relevant. Timetable It is prpsed that a ttal perid f 6 mnths be allwed t cnclude this review. Frequency f meetings mnthly. The frequency f meetings will be subject t review and ptential change by the Review Grup. Meetings will be administered by the Jint Office and cnducted in accrdance with the Chairman s Guidelines. all rights reserved Page 9 f 9 Versin created 02/04/2008

Joint Office of Gas Transporters 0209: URolling AQ

Joint Office of Gas Transporters 0209: URolling AQ Development Workgroup Report Rolling AQ Modification Reference Number 0209 Version 1.0 This Development Work Group Report has been prepared by Group Members and follows the format required by the UNC Modification