National Grid UK Distribution Update
Gas Customer Forum
29th January 2007
Kerri Matthews
Content

Transportation Charging
 Changes
to DN Transportation Charges
 October 2007 Price Changes

General Updates
 Changes
to Siteworks Terms & Conditions
 Developing Competition in Connections Services
 National Grid Code of Practice
 I&C Round Table
Transportation Charging
DN Transportation Charges

Changes following Ofgem’s review of DN Charges
 Rebalancing
of Capacity / Commodity split
 Change to the Domestic Customer Charge
 Updating of the Economic Test
 Update of data used to determine structure of Charges

DN Interruption Reform
 Removal
of Interruptible status
 Tender process for DN interruption
Rebalancing of Capacity / Commodity split
Forthcoming Pricing Consultation
 Move to new capacity / commodity system charge split and
adjustment to interruptible discount from April 2008
Move to high capacity element
 Better reflects costs
 Bring charging structure more into line with expected Price Control
structure, to give better price stability
 Adjust interruptible discounts to keep them at the same level as at
present
 May allow move to April rather than October price changes


Initial Discussion Paper expected February
Change to the Domestic Customer Charge


Move from commodity to capacity charging basis
Better reflects costs which don’t vary with throughput:
Service pipe costs
 Emergency service costs


Reduces sensitivity of collected income to throughput from
63% to 35%
Helps provide price stability
 But Price Control income fixed for 2007/8


April 2007 implementation
Allows capacity charge to be set at annual level
 Change is revenue neutral for DNs
 Billed by adjusting LDZ System Capacity Charge rate in short-term
 New rates will be published by 1 February 2007

Updating of the Economic Test

New DN-specific Economic Test for new connections to be
introduced shortly
Test is used to meet Gas Act obligation to connect loads where it is
economic to do so
 Operates in same manner as existing test
 Excludes NTS costs and income
 Reflects DN-specific costs and transportation income


Explanatory note issued on application of Economic Test if
Interruption Reform goes ahead
Data used to determine Charging Structure
Forthcoming Pricing Consultation
 The data and calculations to determine current charging
structure is on a national basis for all DNs
 Ofgem have requested DNs to update this analysis to
reflect the individual nature of each DN
 Changes to be implemented in October 2008
DN Interruption Reform
Forthcoming Pricing Consultation
 End of Interruptible Discounts from 2010


How costs of purchasing NTS offtake capacity will be
reflected in Distribution Charges from 2010



subject to Mod 90
subject to Exit Reform
Both expected in next month or two
Note that Pension Cost payments to NTS will be reflected
through existing DN charging structure
October 2007 Price Changes
 Several





Increased allowed revenue (11%) to cover increased costs
Material under-recovery in 2006/7 (weather effect)
Reductions in SOQ’s in October 2006
October price effect (1.5 x)
Impact of previous price changes
 Allowed


factors driving price changes
revenue for 2007 still uncertain:
DNMRA still being determined
Under recovery from 2006/7
 Indicatives
to be provided asap,
updated on ongoing basis East of England
2005 - October
2006 - October
12.0
12.3
London
4.7
-12.1
North West
-5.9
19.7
West Midlands
4.2
12.2
2007 - October
?
General Updates
Changes to Siteworks Terms & Conditions
Background


Changes are necessary to ensure recovery of connections costs from
customers and alignment with the Ofgem’s views that DNs should take
“…additional steps to manage under-recoveries in connection costs
from customers due to time lags and conservative charging…”
In providing fixed quotations for connections, National Grid Gas is
exposed to any changes to its cost base between issuing the quotation
and final completion



This period is currently 1 calendar year - the combined effect of the changes
reduce this risk period down to 6 months
Following the changes to charging methodology in July 2006, where
charges now reflect the costs we reasonably expect to incur, we believe
that 6 months is a reasonable and manageable time frame on which to
base our quotations
Section G7.2.4 of the Uniform Network Code requires National Grid to
give Users 3 months notice of any change to contract terms

Formal notice was issued 29th December 2006.
Changes to Siteworks Terms & Conditions
Changes effective from 1 April 07

Changes will be effective for all new requests received on or after 1
April 2007 - key changes are detailed below:
 Quotation validity period


Termination



Quotation to substantial completion (gas on) - reduced from 270 days to
120 days and Quotation to final completion - reduced from 1 calendar
year to 6 months
Customers will be able to extend works beyond these timescales on
payment of a variation to cover any increases in costs where they arise
Stage Works Notice Period


Reduced from 90 to 45 days, and
An alignment of the notice period (from the customer) for non main
laying works with the notice period for main laying works – customer to
notification increase from 15 to at least 30 working days
Guidance Notes

Currently significant duplication between the Guidance Notes
(introduced in 2004) and Siteworks Terms – guidance notes therefore
to be withdrawn
Changes to Siteworks Terms & Conditions
Changes effective from 1 April 08

National Grid also intends to carry out a complete review of
the Siteworks Terms during 2007 - this will involve:
Bringing the terms into line with the Engineering and Construction
Short Contract
 Moving all customers onto pre-payment terms


National Grid will provide detail of these changes once
proposals have been developed further
Developing Competition in Connections Services
Background

National Grid is committed to the ongoing support for a
competitive connections market
JUL 2002
SEP 2005
JAN 2007
UIP/GT final connection
Procedures <7barg
implemented
‘fast track’ self quote process
implemented for self connections
Further Industry
Consultation issued
1996
‘Self Lay’ framework
Introduced <2,196,00 kWh
NOV 2001
FEB 2004
>7barg ‘Self Lay’
Procedures
implemented
NOV 2006
Removal of GT stub
connection facility
External publication of standard
connection charges
1998
SEP 2003
JUL 2006
‘Self Lay’ framework
extended to all <7barg
Alteration/ Disconnections
Procedures <7barg implemented
External Publication of
T/SP/NP/14/E
MAR 2002
SEP 2005
NOV 2006
Gas Industry Registration
Scheme (GIRS) launched
Mains Location process
implemented
‘fast track’ self quote process implemented
for National Grid connections
Developing Competition in Connections Services
National Grid Consultation

Consultation launched proposing specific changes to
improve and simplify business processes
Published 12th January 2007
 Closing Date 1st March 2007


Initiatives remain consistent with established National Grid
principles, namely
Every Customer should have a choice of Connection Service
Provider
 There must be equality of treatment between Connections Service
Providers
 Customers should pay market price for connection services
received*

* except where a gas transporter has a legal or licence obligation to fund part of the cost (which may be
recovered from transportation customers)
National Grid Code of Practice
for Gas Customers


National Grid has a Licence
obligation to make available to
the general public its Code of
Practice
The Code informs customers:
When and how we might contact
them
 How they can get in touch with us
to enquire or complain about any
service we provide
 The steps we take to ensure that
only properly trained staff or
contractors make visits to their
home
 The special services available to
those customers who are blind,
partially sighted, deaf or hearing
impaired

National Grid Code of Practice
Raising Awareness

Availability from February:
Hard Copies: 9 language versions, Braille, Audio, Large Print
 Website: as above and an easy to read version


http://www.nationalgrid.com/uk/gas
0845 070 0203
External Organisations to be contacted
Shippers/suppliers
 Care agencies
 Libraries


All employees and contractors in the UK gas business will
be briefed from February
National Grid I&C Round Table

Next “I&C Round Table” date confirmed!
Date: Tuesday 20th March
 Time: 11.00am – 1.00pm
 Venue: National Grid House, Gallows Hill, Warwick, CV34 6DA


Agenda items would be welcomed as early as possible to
assist in collating information and arranging speakers