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PARCA: Contractual Overview. TX Workgroup 27 th February 2013. Steve Pownall. Purpose of today…. Is to provide an overview of PARCA contract as follows: Pre-PARCA Assessment (proforma) PARCA Phased ‘Works’ Provision of capacity inc ‘fine tuning’ Customer fees and financial commitment

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Parca contractual overview

PARCA: Contractual Overview

TX Workgroup

27th February 2013

Steve Pownall

Purpose of today
Purpose of today…

Is to provide an overview of PARCA contract as follows:

  • Pre-PARCA Assessment (proforma)

  • PARCA Phased ‘Works’

  • Provision of capacity inc ‘fine tuning’

  • Customer fees and financial commitment

  • Information provision

    • Demonstration Data

    • Milestone Information

But before we commence
…but before we commence..

  • Going forward, for the purposes of the proposed ‘PARCA’ contract /arrangements ONLY, we intend to use a simplified naming convention:

    WasWill becomeWorks

    Stage 1a Phase 1 Needs Case/Technical Options

    Stage 1b Phase 2, Schedule A Strategic Options

    Stage 2 Phase 2, Schedule B Outline routing & siting

    Stage 3 Phase 2, Schedule C Detailed routing & siting / EIA

    Stage 4 Phase 2, Schedule D Proposed DCO Application

    Stage 5 Phase 2, Schedule E Submit DCO Application / hearings

    Stage 6 Phase 2, Schedule F Secretary of State decision

    Note: ‘Local Planning’ Works will be under Phase 2, Schedule G (to be defined)

Pre parca assessment
Pre-PARCA Assessment

  • Customer to provide the following information to National Grid:

    • Details of customer

    • Proposed project location including facility site and NTS connection site

    • Indicative capacity requirement (profiled if appropriate)

    • Indicative capacity upper/lower range – for ‘fine tuning’ purposes only

    • For DNO Users; Pressure and Flex requirements

  • Used to populate the PARCA data items prior to signature by both parties

  • We anticipate dialogue between the customer and National Grid prior to the submission of this information

Parca phased works overview 1
PARCA Phased Works - Overview (1)

The PARCA Works will be contained within two Phases

  • Phase 1 - Needs Case & Technical Options

    • Where no NTS reinforcement is required the PARCA becomes primarily a customer ‘Demonstration Data’ contract up to point of capacity allocation

  • Phase 2 - Statutory Planning Works either:

    • National planning (Planning Act 2008) for Development Consent Order

      • Schedules A - F (please see below)

    • Or:

    • Local planning

      • Schedule G [to be defined]

  • Note: Where we identify NTS reinforcement that requires planning, this could be met through either build or through non-build alternatives e.g. commercial contract or a combination of both. We anticipate that a proportion of the Phase 2 Statutory Planning Works will still need to be carried out under an alternative to a full-build option.

  • Parca phased works overview 2
    PARCA Phased Works - Overview (2)

    • Two natural ‘customer’ breakpoints

      • Following output from Phase 1

        • Customer to indicate whether it wishes to progress to Phase 2 - if NG indicates a Needs Case for NTS reinforcement

        • Where no NTS reinforcement is identified the customer will be required to pay a reservation fee; or the customer may bid through the capacity auction process

      • Phase 2 - following Secretary of State (or local authority) decision on our planning application

    • Customer may terminate PARCA Works at any time but liable for costs incurred (and committed) up to the point of termination

    Parca phase 1 works establish needs case and technical options
    PARCA Phase 1 Works: Establish Needs Case and Technical Options

    Parca phase 2 works schedule a strategic options works
    PARCA Phase 2 Works: Schedule A – Strategic Options works

    Parca phase 2 works schedule b outline routing and siting works
    PARCA Phase 2 Works: Schedule B – Outline Routing and Siting works

    Parca phase 2 works schedule c detailed routing siting works
    PARCA Phase 2 Works: Schedule C – Detailed Routing & Siting works

    Parca phase 2 works schedules d e and f
    PARCA Phase 2 Works:Schedules D, E and F

    Milestone Information: Provide customer with update ‘report’, reconfirm NG Project Plan timescales, as necessary for each schedule

    Provision of capacity timeline 1
    Provision of Capacity timeline (1)

    • Effective Date (ED):

      • At which the customer and National Grid sign the PARCA

      • From which National Grid agrees to undertake Phase 1 Works – will require the customer to pay the fee prior to commencement of the Works

    • Reservation Date (RsD):

      • The customer will have its capacity requirement reserved

    • Allocation Date (AD):

      • The customer (where not a User) must have nominated one (or more) User(s) up to 1 month prior to this date

      • The default date that is between 24 and 35 months prior to the Registration Date

    • Registration Date (RgD):

      • Date from which the User holds the capacity

    Provision of capacity timeline 2

    Reservation Date


    Allocation Date (AD)

    Registration Date





    Nominate user up to

    1 month before AD


    Phase 1 Works

    Date from which the User holds the capacity

    Date PARCA signed by the customer and National Grid

    • Price

    • NPV (entry only)

    • Quantity (& range) reservation fee or security due

    • Capacity ‘tagged’ in Gemini from this date and no longer forms part of unsold.

    • Capacity allocated to the User

    • NPV (entry only)

    Default Allocation Date is between 24 and 35 months prior to the RgD

    Provision of Capacity timeline (2)

    Effective Date (ED)


    Provision of capacity fine tuning
    Provision of Capacity & ‘fine tuning’

    Fine tuning of customer’s capacity requirement:

    • Customers have requested the flexibility to ‘fine tune’ their capacity requirement prior to the capacity Allocation Date

    • As a project progresses, a customer will have more certainty as to its ‘final’ capacity requirement: linked to a number of factors e.g. chosen turbine manufacturer

    • We understand that capacity fine-tuning is an important customer consideration

    • Fine tuning will be allowed within an agreed upper and lower range

      • Pre-PARCA Assessment proforma

    • We will require the customer to provide demonstration data to support its request to fine tune its capacity requirement

    Customer fees and financial commitment 1
    Customer fees and financial commitment (1)

    PARCA Phase 1 (Needs Case and Technical Options) Fee

    • Customer will fully fund the PARCA Phase 1 Works: fee approx £120,000 ~ £150,000 – similar principles to 0373 NTS Connection (excluded service, cost pass through)

    • Fee reconciled against outturn costs with ££ difference refunded to, or recovered from, the customer

      PARCA Phase 2 (Statutory Planning Works) - securitisation

    • Where Phase 1 Works identifies either:

      • Requirement for physical NTS reinforcement and, Local or National planning consent is required or;

      • Use of a commercial contract can be utilised to meet the customer’s capacity requirement then:

    • The customer will securitise 100% of the proposed Pre-Capacity Allocation Revenue Driver(see last TX Workgroup PARCA Funding presentation for details)

    Customer fees and financial commitment 2
    Customer fees and financial commitment (2)

    Capacity Reservation Fee

    • This could be applied following the completion of PARCA Phase 1 Works, where the customer’s capacity requirement will be met entirely through existing system capability

    • In this scenario, the customer may secure its capacity requirement either by bidding in the capacity auction or by reserving through the PARCA

    • The Capacity Reservation Fee could be calculated:

      • Following PARCA Phase 1 Works and customer agreeing that it wishes to progress its project

      • The Capacity Reservation Fee will be calculated based on (to be discussed in March TX Workgroup)

    Parca funding revised for phases proposal for a planning act 2008 project
    PARCA Funding (revised for ‘Phases’) Proposal for a Planning Act 2008 project

    Phase 1


    Phase 2 Works

    NTS Investment: Project Needs Case / Technical Options

    NTS Reinforcement (or other commercial method) required

    PARCA Phase

    Strategic Options

    Schedule A


    Routing & siting

    Schedule B

    Detailed EIA

    Routing & siting

    Schedule C


    DCO Application

    Schedule D

    DCO Application

    and hearings

    Schedule E

    DCO submission

    & SoS decision

    Schedule F


    Pre-Capacity Allocation

    Revenue Driver

    calculated by end of Phase 1

    Pre-Capacity Allocation Revenue Driver triggered and profiled over 4 years


    Post-Capacity Allocation RD

    triggered &

    profiled over 3 yrs

    Post-Capacity Allocation Revenue Driver calc’d

    during Phase 2 Appendix 3



    All costs charged to PARCA Signatory

    Classified as 100% Excluded Services – no impact on Allowed Revenue

    Invoiced up front and reconciled

    Post Capacity Allocation RD triggered

    RD* added to Allowed Revenue and charged to industry via Transportation Charges

    Pre Capacity Allocation Revenue Driver triggered

    RD* added to Allowed Revenue and charged to industry via Transportation Charges.

    PARCA Signatory securitises value of RD

    Pre Capacity Revenue Driver runs up to DCO

    Funding / Charging


    *Value of RD’s are reconciled with actual costs, reconciliations through Transportation charges.

    Information provision
    Information Provision

    Demonstration Data (from customer)

    • Please see overview…

    • Most categories seem to be required towards the end of the PARCA process e.g. Phase 2, Schedules E, F

    • We would appreciate views (please!) from all categories of our customers e.g. entry, storage and exit as to whether there might be additional items

      PARCA Phased Works – Milestone Information (from National Grid)

    • Please see overview…

    • The proposed categories of information that customers will receive from National Grid are aligned to the PARCA Phased Works and associated milestones

    • Is there any other additional information that customers might wish to see from National Grid?

    And finally
    And finally…

    Do you have any further questions, comments?