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Review Group 221: 23 January Analysis of the impacts of the proposal on Users

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Review Group 221: 23 January Analysis of the impacts of the proposal on Users

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Review Group 221: 23 January Analysis of the impacts of the proposal on Users

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  1. Review Group 221: 23 January Analysis of the impacts of the proposal on Users

  2. Analysis of the impacts of the proposal on Users • New analysis tool • Tool developed to analyse RG221 Proposals • Utilises all Auction Bid Values – AMSEC & QSEC • Data is provided by ASEP and User • Apology • Error (double counting) identified with previous Auction Bid Values presented at 10 December RG221 meeting • £1.9bn total QSEC auction bid value figure less at £1.3bn • Figures for other options have also been impacted (but to a lesser degree) • See graph for full details • Split by Baseline and Incremental capacity to be confirmed

  3. Analysis of the impacts of the proposal on Users

  4. Analysis of the impacts of the proposal on Users • Credit Rating - 50% to be applied to this risk element • Element X (25%) – applied to all Users • Element Y (25% * Credit rating risk (See table))

  5. Analysis of the impacts of the proposal on Users • Credit Rating - 50% to be applied to this risk element (25% minimum) • Observations • User Credit Rating (IGR) – not available in all cases • Parent Credit Rating is available (where a PCG is currently used as security) • Large number of Users where no credit rating is available/recorded (27 Users)

  6. Analysis of the impacts of the proposal on Users • Project risk - 25% to be applied to this risk element • Only 3 Users have an entry capacity holding and have projects that are currently under construction • 1 User has been allocated the full 25% • 1 User has been allocated 20% (feasibility study in place) • 1 User has been allocated 20% but the affect is reduced when aggregated to an all ASEPs level (has capacity at more than 1 ASEP) • All (49) Users are unaffected by this risk element

  7. Analysis of the impacts of the proposal on Users • Community Impact Risk - 25% to be applied to this risk element • The risk to the community can be measured by the proportion of the revised auction bid value against the existing User holding • Difficulties experienced on how to implement/test • Test assumption: last years auction data used to derive a revised auction bid value • Impact • Suggest percentage for this risk element (currently 25%) be reduced to 10% and all figures updated at next years auction

  8. Review Group 221: Assessment of Implementation Risks

  9. Assessment of implementation risks • Risk1: Users may decide not to provide the security required and project fails • 2 single ASEP Users • Barrow • Fleetwood • £190m combined Auction Bid Value • High risk but this risk exists today • No security currently required

  10. Assessment of implementation risks • Risk2: Users may decide not to provide the security required and repurchasing some of the cancelled capacity at a later date. • Risk could apply to 8 Users at St Fergus that have capacity holding at this entrypoint but have little holding at other terminals. • 2009 St Fergus auction price higher than historical prices