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Mod Proposal 0268 : AQ Backstop Date

Mod Proposal 0268 : AQ Backstop Date. Phil Lucas (22 October 2009, Solihull). Background. AQ is derived from historic consumption to represent a view of expected consumption in the next 12 months AQs revised on 1 October each year

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Mod Proposal 0268 : AQ Backstop Date

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  1. Mod Proposal 0268 : AQ Backstop Date Phil Lucas (22 October 2009, Solihull)

  2. Background • AQ is derived from historic consumption • to represent a view of expected consumption in the next 12 months • AQs revised on 1 October each year • Historic consumption adjusted by a Weather Adjusted Annual Load profile (WAALP) to a Seasonal Normal value • UNC defines which periods are able to be utilised to quantify historic consumption - the ‘Relevant Metered Period’ (UNC H3.2)

  3. Relevant Metered Period • Metered between two reads: • Ending Meter Read (last valid reading prior to 10 August) • Target Opening Date (42/50 weeks prior to ending Meter Read for Annual/Monthly Read) • Earliest possible ‘starting Meter Read’ specified as • last valid meter read prior to the Target Opening Date (up to 3 years preceding such Date), or • If no valid reading in this 3 year period, the first valid reading after the Target Opening date, provided that • the starting Meter Read is no earlier than 1 October 2002 (the ‘AQ backstop Date’)

  4. Existing Backstop Date • UNC Modification 0018 (2005) • Impact • At that point - period that could be used in AQ Calculation (1 October 2002 to March 2005) was 2 years 5 months • Number of Meter Points that did not calculate as a result was 446 (11 SSP, 435 LSP) • Representing 0.01% of 4.5 million total that did not calculate

  5. Treatment of Un-calculated AQs • For AQs that are not calculated (i.e. Carry Forward AQs) • A multiplicative factor per EUC is applied to the current AQ value to adjust from the old SN basis to the new SN basis • Defined in UNC H3.4.4 (AQ = (Current AQ x (A/B)) • e.g. An AQ of 20,000 kWh in EUC Band 1 • Adjusted by multiplying difference between the old aggregate WAALP (eg: 356) and the new aggregate WAALP (eg: 352) • Result 0.9888 • AQ to be effective from 01/10/10 on the new basis is 19,776 kWh

  6. Issue • As the ‘AQ Backstop Date’ is currently static, it becomes increasingly irrelevant • Cyclic reading and associated must read provisions effectively move the earliest potential starting Meter Read date forwards • Maximum gap between readings for Annual Read meter is 2 years • Maximum gap between readings for Monthly Read meter is 4 months • Revised WAALPs will apply for 2010 AQ Review as a consequence of the 2010 SN review • Need to be applied to any retrospective consumption periods that could be utilised within the 2010 AQ Review. Under current terms this is notionally 1 October 2002 • WAALPs will be recalculated using new SN basis back to 1st October 2006

  7. Requirements • Replacement of the existing ‘hard coded’ date with an enduring solution • A backstop date which rolls forward upon the implementation of revised SN values (as required by H1.4.2) • This would be 1 October in the 4th year prior to the start of the Gas Year in which a SN Review becomes effective, and • the new ‘Backstop Date’ would become effective from 1st February of the preceding Gas Year (enables the provisional AQs to be calculated using the revised SN values) • Examples • For a SN Review which becomes effective from 1 October 2010, from 1 February 2010 the backstop date will be 1 October 2006 • For a SN Review which becomes effective from 1 October 2015, from 1 February 2015 the backstop date will be 1 October 2011

  8. Consequences of Implementation • On a normal 5 yearly SN Review cycle, the backstop date would be • at its shortest point (February prior to SN change effective year) 3 years 4 months • at its longest point (January prior to SN change effective year) 8 years 4 months • The impact of this option in regards to AQs not being calculated is anticipated to be small: • Full detailed impact analysis available on presentation given to DESC in early October • Seasonal Normal Review 2005: Backstop date change • Shortest period that could be used (01/10/02 to March 2005) was 2 years 5 months • Shortest period in this proposal (01/10/2006 to 01/02/2010) will be 3 years 4 months (additional year)

  9. Effect of Implementation

  10. Timetable • 2nd October Topic raised & discussed at DESC • 15th October UNC Mod raised at UNC Mod Panel – referred to Workstream • 22nd October Discuss at Distribution Workstream • 10th November Discuss at DESC • 26th November Discuss at Distribution Workstream – finalise Workstream Report • 17th December Modification Panel consider Workstream Report – issued for consultation • Mid January Representations close out • 21st January Modification Panel make recommendation – Final Modification Report issued to Ofgem • 11th February (max) Ofgem determination & Implementation • 12th February UK Link system update of backstop begins • March UK Link system update complete

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