Allocation of Unidentified Gas Statement 2014/15

1. Allocation of Unidentified Gas Statement 2014/15 15th May 2013

2. Areas Covered • Timelines • Data • Methodology overview • Analysis & methodology updates in 2013 • Consumption calculation improvements/analysis • SN adjustments, meter unit updates, use of meter reads where consumption calc fails, T&P factors, vacant sites • Theft split methodology and assessment of method proposed by ICoSS • Modifications 0398 and 0424 • Other Analysis/Updates • CSEP shrinkage, MMSPs • Next steps

3. Timelines 1/2

4. Timelines 2/2

5. Data 1/2 2013 analyses based on data from 2012 Plus MMSPs provided to investigate a specific query Theft analysis and MMSP data available on UK-Link as of 2nd May under 22. MOD229 AUGE Data Provision / 17. Multi Metered Supply Points 22. MOD229 AUGE Data Provision / 14. AUGS Calculations / J. Theft Analysis 2013 Data used for Interim AUG table will be made available later in the year in two formats Oracle database exports .CSV extracts

6. Data 2/2 Interim AUG table will be based on updated data sets from Xoserve including Historic LSP consumptions including updates plus new data up to end March 2013 New SSP meter reads, consumptions up to end March 2013 Ongoing snapshots of shipperless/unregistered sites Allocations Updated asset information Latest AQs and details of new/lost sites If there are issues obtaining updated data – fallback is to use data sets from 2012

7. Methodology Overview – Total UG

8. Methodology Overview – Total UG

9. Methodology Overview – Forecast UG

10. Consumption Calculation UG to be based on (ΣSN Allocations – ΣSN Consumptions) Correction to logic regarding use of meter read units Considered the use of LSP meter reads when calculation using metered volumes fails T&P factor analysis Vacant sites investigation

11. T&P Factors • Default T&P Factors - 25% Large Meters • Suspect T&P Factors

12. Vacant Sites • No information available from Xoserve • Sensitivity analysis • Meters with no reads for 3 years and AQ>1 • 90GWh difference between 0% and 100% meters consuming (all LDZs) • Assume same proportion non-consuming as wider population

13. Balancing Factor Split • AUGE recommends SN-adjusted throughput (consumption) - Rolling 3-year Average • Detected theft data quality • Estimates of theft quantity and period • Inaccurate AQ – uncertainty in market sector assignment • Assumptions • Influenced by detection rates • Volatility • Non-theft component

14. Example Theft Data Issues • Anomalous number of thefts of 365 days • Significant number of short period thefts • Significant number of small thefts

15. ICoSS Proposed Theft Split Method • Assessed by the AUGE • Full details in AUGS document • Based on average theft rates by sector • Key issues: • Dependent on detected theft data that is not sufficiently reliable to support overall theft calculation • Depends on an assumption that theft occurrence rates are consistent across market sectors • In 2012 we concluded that detected theft data should not be used as a basis for splitting theft and this still holds • The AUGS methodology will therefore be based on throughput for 2014/15

16. Modification 0398: Limitation on Retrospective Invoicing Reconciliation window reduces to 3-4 years from 1 April 2014 Most reconciliation within this window Shipper behaviour change Propose no change to UG Minimal impact UG consistency with other industry processes SMEs – Mod 0429 Data used in consumption calculations Source: Mod0398 Final Modification Report V6.0

17. Mod 0424: Re-establishment of Supply MeterPoints Shipperless sites found to be flowing gas through the same meter will be previous Shipper’s responsibility Shipperless PTS – Temporary UG Effective Date - 25 Jan 2013 Not retrospective Xoserve to provide date in snapshot files AUGE to estimate temporary UG for 2014/15 based on changes between snapshots

18. Other Analysis/Updates CSEP Shrinkage Recommended this issue is raised with the Shrinkage forum NGT have provided an estimate ~13GWh based on information for 8 LDZs We will monitor further progress of this issue through Shrinkage Forum MMSPs Complete list of MMSPs obtained from Xoserve Details on UK-Link Anomalies investigated No changes to methodology required

19. Next Steps Consultation open until 12th June GL Noble Denton will prepare responses and 2nd Draft 2013 AUGS for 2014/15 As data received will undergo validation and seek to address any new issues that arise Assessment of modifications that are implemented over the summer that impact the 2014/15 AUG year

20. Thank you for your attention

21. Supporting Slides • The following slides do not form part of the main presentation but provide useful supporting information and may be used during discussions

22. Methodology Overview

23. Consumption Analysis: Scaling and Sample Size • Actual consumptions based on meter reads can be calculated for a certain proportion of the population • This is the sample • Meters can lie outside the sample for a number of reasons • Consumption calculation failed (AQ check/negative consumption) • Site has no/insufficient valid meter reads • Site is in a CSEP • Sample consumption must be accurately scaled to cover full population

24. Consumption Analysis: Scaling and Sample Size • Non-consuming sites outside the sample must be handled correctly • AQ=1 sites and non-consuming sites are not necessarily the same thing • Some sites with AQ=1 are consuming gas • Some sites with AQ>1 are not consuming gas • Sites in CSEPs are always outside the sample • Scale up correctly to cover all cases

25. Consumption Analysis: Scaling and Sample Size • Scaling up procedure example

26. Consumption Analysis: Scaling and Sample Size

27. Shipperless and Unregistered Sites

28. AQ Variation • This issue affects Unregistered sites • Setting of a representative AQ is in three stages • Requested AQ  Confirmed AQ AQ Following AQ Review • Requested AQ is contained in the Unregistered Sites report sent to the AUGE • This undergoes no validation • It regularly differs from the Confirmed AQ and can be several orders of magnitude out • Confirmed AQ is still on average much higher than the first AQ set by the AQ review for the site • Factors to convert between all stages to give the best possible final estimate of Unregistered UG

29. Consumption Analysis: Scaling and Sample Size • Effect of sample size on UG estimate

30. Theft • Consumption plus Theft Method suffers from the following issues: • The calculations are heavily dependent on the accuracy of the estimate and duration of theft. • Use of AQs - particularly as we can only calculate metered consumption for 50% of the data set. • Accuracy of the metered consumption calculation. • Potential effect of customer changes on pre/post theft AQs. • Site classification issues – e.g. Unregistered sites. • An assumption that the market sector split of unknown theft is the same as that of detected theft. • Throughput method preferred and therefore recommended for future use

31. General Enhancements to UG Calculation • Unregistered Sites: two-stage AQ adjustment process • iGT CSEPs: sufficient snapshot data now exists to identify a trend rather than simply taking forward a fixed value • LDZ offtake meter errors: these are applied to the UG estimate from the Consumption Method