UNC Modification Proposal 0225 - Revised Timescales for LDZ Shrinkage Arrangements

Simon Trivella – 25th September 2008

Distribution Workstream

Current Arrangements

• UNC TPD Section N 3.1 & 3.2

– LDZ Shrinkage Quantity and Notification Procedures

• UNC TPD Section N 3.3

– Assessment of LDZ Shrinkage

• UNC TPD Section N 3.4

– LDZ Shrinkage Adjustment (reconciliation)

Current Arrangements

• LDZ Shrinkage Quantity and Notification Procedures

– Initial estimate by 1 July (3 months notice)

– User representations by 1 August

– DNs to review representations by 15 August

– Final estimates by 1 September (1 months notice)

– Application to Ofgem for Disapproval by 15 September

– LDZ Shrinkage Quantity applicable from 1 October

Current Arrangements

• Assessment and Adjustment of LDZ Shrinkage

– Review and report by 31 March (6 months after Gas Year)

– Carry out any necessary reconciliation

• In accordance with the “LDZ Shrinkage Adjustments Methodology”

Intent of Proposal

• Retain all current obligations

– 3 months notice period for Initial Estimates

– 1 months notice for Final Estimates

• Timescales relative to Formula Year instead of Gas Year

– Effectively ‘shift’ the complete process by 6 months

• Assessment and Adjustment Period

– To take place within 4 months instead of 6 months

Current LDZ Shrinkage Arrangements

April, May & early June

Analysis carried out to support

initial Shrinkage proposals

1 JulySubmit estimated LDZ Shrinkage / methodology to

Users“Initial Proposals”

Late June / early JulyOpportunity to present estimated Shrinkage to

Shrinkage Forum

1 SeptemberSubmit final estimated

LDZ Shrinkage / methodology to Users

“Final Proposals”

1 July – 1 AugustUsers may submit representations in

respect of the estimated Shrinkage

1 – 15 AugustDNs to consider User representations and

may convene meeting if deemed

appropriate

1 – 15 SeptemberUsers may request a

disallowance

15 September – 1 OctoberPossible Ofgem

Determination Process

Late Septemberload new LDZ

Shrinkage Quantities into Gemini

Gas Year…

Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Proposed LDZ Shrinkage Arrangements

Oct, Nov & early DecemberAnalysis carried out to support

initial Shrinkage proposals

1 JanuarySubmit estimated LDZ Shrinkage / methodology to

Users“Initial Proposals”

Late Dec / early JanOpportunity to present estimated Shrinkage to

Shrinkage Forum

1 MarchSubmit final estimated

LDZ Shrinkage / methodology to Users

“Final Proposals”

1 Jan – 1 FebruaryUsers may submit representations in

respect of the estimated Shrinkage

1 – 15 FebruaryDNs to consider User representations and

may convene meeting if deemed

appropriate

1 – 15 MarchUsers may request a

disallowance

15 March – 1 AprilPossible Ofgem

Determination Process

Late Marchload new LDZ

Shrinkage Quantities into Gemini

Formula Year…

Oct Nov Dec Jan Feb Mar Apr May Jun Jul

Current LDZ Shrinkage Arrangements

… Gas Year

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

1 OctoberFinal Estimate of LDZ Shrinkage Quantities

become effective (subject to

Representations and Ofgem non-veto)

1 SeptemberSubmit final estimated

LDZ Shrinkage / methodology to Users

“Final Proposals”

1 JulySubmit estimated LDZ Shrinkage / methodology to

Users“Initial Proposals”

by 31 MarchDNs to undertake a reconciliation for any differences between

Estimated and Assessed Shrinkage Quantities

October to MarchOpportunity for DN to

assess LDZ Shrinkage for the previous Gas Year using available historic

information

Proposed LDZ Shrinkage Arrangements

… Formula Year

Jan Feb Mar Apr May Jun Jul Aug Sep Oct

1 AprilFinal Estimate of LDZ Shrinkage Quantities

become effective (subject to

Representations and Ofgem non-veto)

1 MarchSubmit final estimated

LDZ Shrinkage / methodology to Users

“Final Proposals”

1 JanuarySubmit estimated LDZ Shrinkage / methodology to

Users“Initial Proposals”

by 31 JulyDNs to undertake a reconciliation for any differences between

Estimated and Assessed Shrinkage Quantities

April to JulyOpportunity for DN to

assess LDZ Shrinkage for the previous Formula Year

using available historic information

Advantages

• Transporters

– Aligns annual Assessment with Regulatory Reporting requirements

– Aligns annual Assessment with licence incentives (Shrinkage / Emissions)

– Aligns with LDZ Transportation Charging period (now April instead of Oct)

– More timely operational and network information available for estimates

• Users

– Improved accuracy of estimates due to available information

– Reduced timeframe for Adjustments / Reconciliations

Disadvantages

• Transporter

– Shorter timeframe for Assessments and Adjustments

• Users

– None identified

Transitional arrangements

• Oct 07 to Mar 08 period not Assessed in July 09

– Transporters to undertake Assessment / Adjustment in Dec 08

• LDZ Shrinkage Adjustments Methodology (N 3.4)

– Transporter document requiring UNCC Approval

– Changes required to account of Mod 0203V and 0225

– Potential for phased approach / transitional arrangements

– Draft version to be published in October 08

Next Steps (proposed)

• 7th October 08 – Billing Ops Forum

• 16th October 08 – UNC Modification Panel

• 20th October 08 – Consultation Phase commences

• 23rd October 08 – Distribution Workstream

• 7th November 08 – Consultation Phases closes

• 20th November 08 – FMR considered by UNC Modification Panel

• December 08 – Ofgem decision

• 29th December 08 – Proposed Implementation Date

• 31st December 08 – DNs publish Initial Estimates for April 09 LDZ Shrinkage

UNC Modification Proposal 0225 - Revised Timescales for LDZ Shrinkage Arrangements

Simon Trivella – 25th September 2008

Distribution Workstream