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MOD0335: Offtake Meter Errors. David Watson Distribution Workstream - 28 th October 2010. Solution must solve all cash-flow issues. We agree with the Proposer that the cash-flow impacts of Offtake Meter Errors (OME) can be severe.

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mod0335 offtake meter errors

MOD0335: Offtake Meter Errors

David Watson

Distribution Workstream - 28th October 2010

solution must solve all cash flow issues
Solution must solve all cash-flow issues
  • We agree with the Proposer that the cash-flow impacts of Offtake Meter Errors (OME) can be severe.
    • Recognise that some of the benefit / cost for Shippers from OMEs is reconciled back eventually through NTS Shrinkage charges.
  • Significant issue is that NTS commodity rate change happens on a different timeline to the RbD credit / debit. Post determination:
    • RbD invoices changed in one go, within ~2 months.
    • NTS commodity rate reduction starts within ~2 months and then smeared over ~6 months.
  • Solution needs to
    • Align the RbD and NTS commodity rate change timelines for part which is reconciled, and
    • Mitigate cash-flow issues on part which is not reconciled.
example of impact on ssp shipper under recovery
Example of Impact on SSP Shipper (under-recovery)

Period of cash-flow issues.

Important to note that only the element of NTS Shrinkage above / below incentive collars is paid back, leaving gap in funding to be met by SSP Shippers. Solution also needed to ensure cash-flow impact of this is minimised.

Offtake Meter Error RbD charge made in one go.

Reduction in NTS commodity rate received over ~6mnth period.

solution 1
Solution 1

Solution 1: Remedy still required for the surplus cost; reconciliation should be smeared over same period of time as the error occurred over.

Solution 1: Align RbD Charge repayment with the NTS Commodity Rate reduction.

***NB: In instances where the meter over-measures, the cash-flow impact is currently on NTS. In cases of under-measurement, the cash-flow impact is on Suppliers. This solution will solve both sides of the issue.

solution 2
Solution 2

Solution 2: Align NTS Commodity Rate reduction with the RbD charge; i.e. received in one go..

Solution 2: Remedy still required for the surplus cost; reconciliation should be smeared over same period of time as the error occurred over.

***NB: In instances where the meter over-measures, the cash-flow impact is currently on NTS. In cases of under-measurement, the cash-flow impact is on Suppliers. This solution will solve both sides of the issue.

conclusions
Conclusions
  • Elements of the RbD Charge which are reconciled back through NTS commodity rate change must be repaid on the same timeline as that reconciliation.
    • Avoids cash-flow issues on both Shippers (offtake meter under-recovery) and NTS (offtake meter over-recovery)
  • Elements of RbD Charge which are not to be reconciled must be repaid over the same period of time as it took to identify the error.