Transcript Modification Proposal 0395 & 0398 - Joint Office of Gas Transporters

Modification Proposal 0395 & 0398 – Limitation on
Retrospective Invoicing and Invoice Correction
1st December 2011
Modification Proposal 0395 / 0398
Both Modification Proposals seeks to reduce the
meter reconciliation period
0395 sets it to a minimum of 2 years and a
maximum of 2 years and 364 days
0398 sets it to a minimum of 3 years and a
maximum of 3 years and 364 days
Current UNC sets it to a minimum of 4 years
and a maximum of 4 years and 364 days
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Cash Impact of the retrospective invoicing limits
£10,000,000
£9,000,000
£8,000,000
£7,000,000
£6,000,000
£5,000,000
£4,000,000
£3,000,000
£2,000,000
£1,000,000
£Current Cut-Off
3 Year Cut Off
2 Year Cut Off
Meter Error Not Reconciled
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Aberdeen SC006 SMER
 Early estimate of the magnitude of the error included daily correction factors
of:
 1.55787 for the period 21/09/09 to 27/07/10
 3.01056 for the period 28/07/10 to 09/08/10
 Using actual flow data and system average prices gives a result of:
 2009-10 £18,657,966
 2010-11 £7,814,778
 Bearing in mind the timescales for delivering the SMER through the
industry’s LDZ Meter Error Guidelines and invoicing it, clearly there is a risk
to the NTS shipping community were the £18M to fall outside the timescales
proposed in 0395 or 0398.
 Later implementation of either mod proposal would perhaps allow Aberdeen
to be reconciled.
It must be stressed the figures quoted here are illustrative only. The results of the
Aberdeen SMER are for expert determination.
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Mod 0395 impact on Error Detection
& Reconciliation Timeline
Period reconcilable under Mod 0395
Industry Process
NG Process
• Appointment of ITE(s)
• ITE Testing/Analysis
• Compilation of Report
• Agreement of Report (Potential of feedback
loop)
• Publication of Final Report
Data sent to xoserve via RBD return
Reconciliation invoices due date
Typical Process
Reconciliation invoices issued
It is in the gift of the industry to determine the
time of total time to produce the final report.
Data sent to xoserve via RBD return
UKT obtain financial sanction
SMER Process
UKT begin review of SMER
27/09/10 Notification to Joint Office
21/07/10 Error detected following 2010 validation
01/04/10 Code cut-off date under mod 395
for fiscal year 2012-13
21/07/09 Last Good meter reading (2009 validation)
3 months
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Impact of proposed retrospective invoicing limit
on the Transmission Activities
 Much of the evidence presented in support 0395/0398 is
in terms of DN RbD activities.
 Less analysis of impact that Proposals may have on
NTS Users, particularly in respect of NTS/LDZ meter
reconciliation.
 0395 proposer’s analysis identifies that majority of LDZ
meter errors are under-reads.
 The risk from not re-apportioning under-read energy at
an NTS/LDZ offtake sits with the NTS Shippers through
the Shrinkage Incentive.
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Background information
National Grid Transmission’s
UAG role and performance
National Grid NTS role in reducing UAG
 NG NTS is cash neutral with regard to NTS/LDZ Offtake
Meter Reconciliation.
 NG NTS does not own NTS/LDZ meters.
 NTS Connected Meter Assets predominantly owned by
DN’s, Terminal Operators and Large Industrial End
Consumers
 NG NTS has a Meter Assurance role and therefore
monitors Asset Owners’ compliance with meter validation
obligations
 NG NTS may also assist the Asset Owner in the
discovery of meter errors through its Data-mining
initiatives.
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NG NTS Meter Assurance Role
 NG NTS has to date received zero UAG incentive
revenue.
 Since 2009 NGG NTS has undertaken a range of
activities to address UAG.
 NGG NTS has incurred additional cost for carrying
out these activities and delivered User benefits.
 Costs of Data Mining from April 09 to date ~£240,000.
 NG NTS Data Mining has contributed toward
discovering measurement errors at both entry and
exit.
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UAG Costs as a % of throughput
For 2009/10 value of UAG compared to overall
system throughput was 0.6%.
With a gross value of ~£100m p.a for 2009/10
With correction of recent Significant Meter Errors,
Data mining has contributed to an estimated UAG
reduction to 0.5% of overall system throughput,
with a significant reduction in gross cost to the
industry.
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