Impacts of Mod 244

1
Impacts of Mod 244

• Steve Nunnington
• xoserve

2
Background

• 96.5 of transportation charges based on
  capacity.
• These are dependent on historical throughput.
• Capacity charges on DM sites are based on-
• Bottom Stop SOQ. (BSSOQ) applicable to certain
  Interruptible sites.
• DM SOQ.
• Interruptible sites still pay 50 of firm costs.
• BSSOQ can only be amended in the AQ Amendment
  window.
• BSSOQ is based on the consumption of the Uncapped
  Winter Peak. (Highest daily demand between Oct
  May)
• Challenges are currently only allowed to those
  meter readings and consequently their derived
  consumption.
• Number of challenges are very low.

3
Background

• DM SOQ can only be reduced by shipper from
  October to January each year.
• DM SOQ cannot fall beneath the value of the
  prevailing bottom stop SOQ.
• DM SOQs are all passed to Networks for approval
  be they increases or decreases.
• DM mandatory level is AQ of 58,600,000 Kwh below
  which they become voluntary.
• Interruptible threshold AQ of 5,860,000 Kwh below
  which sites cannot be interruptible.
• DM threshold. Site cannot be DM below AQ of
  73,200 Kwh. There are currently 158 of these.
• AQ needs to be reduced in line with SOQ to ensure
  the supply point falls within the correct
  charging band.
• Ratchet mechanisms currently apply only Oct
  May.
• All these processes are fully systematised and
  are robust.

4
Analysis

• There are 2058 DM supply points on xoserve
  systems.
• Under Mod 244 there would be the following
  eligible sites-
• DM Interruptible 1410
• DM Firm Mandatory 185
• TOTAL 1595
• There are also 115 Unique Sites which qualify
  under the terms of the Mod but these could be
  dealt with under current US off line processes.

5
Analysis Comparing Feb 2008 Feb 2009
6
Analysis

• This would mean under the terms of Mod 244 for
  all DM Mandatories the number of candidate sites
  would be as follows
• 20 587
• 30 479
• 40 400
• 50 350
• Additionally 51 US would fall in line with the
  20 rate.
• Looking ahead
• Should BSSOQ as a concept be scrapped or the
  definition be changed? (E.G AQ/365)
• Should we allow DM SOQ appeals throughout the
  year?
• Should ratchets be applied all year round for
  eligible sites?

7
Possible solutions

• Rebates on Billing (Off-Line)
• Bills issued as normal using SOQs
• Rebate issued at M2 to amended SOQ values
• Monitoring of usage against various thresholds
  and consumption
• Ratchet process required
• Admin charge
• Re-confirmation of the site under a new MPRN.
  (Off-Line)
• Co-ordinated end date of MPRN and creation of new
  one
• New values to be applied to new MPRN
• Monitoring of usage against various thresholds
  and consumption
• Ratchet process required
• Admin charge
• System solution (On-Line)
• Investigating availability of a screen to amend
  BSSOQ.
• Window for reducing DM SOQ may be parameterised.
• Develop solution to monitor and carry out correct
  solutions when breaches apply.

8
Risks of an Off Line Solution

• UK Link may not reflect true values
• Labour Intensive.
• Unique Sites process handles 115 sites.
• Very labour intensive
• Deals with around 20-25 of throughput
• With 4.75 FTEs
• Mod 244 currently has 587 candidates
• Daily monitoring
• Reads
• SPA process (Does the Mod span transfers?)
• Thresholds
• Ratchets
• Admin charge

9
Risks 2

• Demand forecasting for Networks
• Potential for manual errors in Billing
• AQ could be out of sync with SOQ.
• Process required to increase SOQ/AQ when site
  returns to normal production
• Incorrect information regarding capacity
  availability.
• Potential emergency impact if interruptible
  values are incorrect.
• Development of off-line solution may be time
  consuming. Estimates range from 3 6 months from
  Ofgem approval.
• Where shippers fail to comply there are complex
  activities such as ratchets that will need to be
  undertaken which will be both time consuming and
  labour intensive.
• If analysis is incorrect and large volumes of
  supply points are submitted through this process
  the developed solution may not be appropriate.
• DM CSEPS have not been considered along with
  impacts on IGTs.

10
Conclusions

• Mod 244 should be driven by take up.
• Small numbers will mean off line system
• Larger numbers mean that a systematised solution
  is essential.