Options for Mod 640 Replacement

1
Options for Mod 640 Replacement

2
Mod 640 Process

• Implemented in June 2004
• Supply Point AQ revision resulted in SSP becoming
  a LSP
• Reconciled energy and transportation commodity
  charges

3
Mod 640 Options

• Annual Process
• Monthly Process
• Quarterly Process
• Scrap Mod 640 Principles

4
Monthly Process

• Threshold crossers determined monthly
• Reconciliation from last meter read date
• Process similar to current LSP reconciliation
• Monthly invoice for threshold crossers
• Potential review period for large adjustments

5
Advantages

• Correct allocation of gas as exact amounts
  reconciled
• LSP reconciliation process currently exists
• No incentive on shippers to hold back reads

6
Disadvantages

• New statement and increased resource
• Significant xoserve system development
• Shipper system development
• May cross threshold a few times a year
• Another filter failures process?
• Big change for relatively small amount of
  improved gas allocation

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Annual Process

• Calculation performed at 1st October
• Reconcile all threshold crossers where AQ had
  rolled over the previous gas year
• Process would be similar to present
• Number of potential timing options
• Similar principles as at present

8
Advantages

• Process currently exists in a similar form
• Leads to a reasonably accurate allocation
• Allows shippers to review threshold crossers
• Encourages shippers to ensure AQs are reviewed
  annually

9
Disadvantages

• Shippers may hold back reads
• Less accurate gas allocation than other options,
  but similar to present
• Only goes back to start of previous gas year

10
Quarterly Process

• Determine threshold crossers each quarter
• Calculate from start of quarter following
  previous read
• Ignore reconciliation periods of one quarter or
  less
• Possible time limit on reconciliation length

11
Advantages

• Very accurate gas allocation
• Reduced workload from monthly process
• Similar principle to current 640 process
• Eliminates multiple AQ calculation issues
• Incentivises quarterly reads and AQ amendments

12
Disadvantages

• Xoserve system development
• Shipper system development
• More frequent process than at present

13
Scrap 640

• Intention of Mod 640 was to encourage shippers to
  increase AQs when aware
• Rolling AQ will mainly achieve this
• Large part of lag in AQ review process eliminated
• Most mod 640 adjustments are relatively small in
  value

14
Advantages

• Very easy to implement
• Leaves the option open to wait and see

15
Disadvantages

• Less accurate allocation of gas
• May need a process to address manifest AQ errors
• Monitoring and reporting still required
• Incentive on shippers to avoid reading
  incorrectly low AQ sites

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Other Considerations

• Movement tolerance
• Timescale tolerance and limits
• Timing of implementation
• Mod 209 decision
• Separate modification
• Costs of new process