1 / 17

Third Workstream meeting re Baseline Re-consultation and Substitution

Third Workstream meeting re Baseline Re-consultation and Substitution. 12 September 2007. Recap of previous two workstream meetings (1). Outlined the basis for Ofgem’s TPCR baselines National Grid provided network analysis following Ofgem’s prescribed methodology

josephroberson
Télécharger la présentation

Third Workstream meeting re Baseline Re-consultation and Substitution

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Third Workstream meeting re Baseline Re-consultation and Substitution 12 September 2007

  2. Recap of previous two workstream meetings (1) • Outlined the basis for Ofgem’s TPCR baselines • National Grid provided network analysis following Ofgem’s prescribed methodology • Based on 2008 network, average of three TBE scenarios (Auctions +, Transit UK and Global LNG) using supply substitution • Using least favourable node as supply balance • TPCR baselines were set based on: • ‘Baseflow’ under each scenario as starting point, then split remaining ‘unallocated’ entry capacity on 10YS forecast flows for 2008

  3. Recap of previous two workstream meetings (2) • Resulted in aggregate baselines of 8814 GWh/d • Discussed alternative methods for splitting the unallocated capacity within Ofgem’s spreadsheet • National Grid asked for input from workstream members, in particular on: • Views on ‘re-cutting of the cake’ (i.e. aggregate the same, i.e. 8814 GWh/d) • Vs setting higher baselines (aggregate greater)

  4. Summary of responses

  5. Where do we go from here? • No real consensus view from the industry • No particular comments on a methodology to apply • Consider the two alternative approaches: • ‘re-cutting of the cake’ (i.e. aggregate the same, i.e. 8814 GWh/d) • Vs setting higher baselines (aggregate greater)

  6. Re-cutting the cake – how do you allocate the 8814 GWh/d? (1) • Start with current level of capacity obligations (take maximum booked for April 2008 onwards from August 2007 report on website) (8210 GWh/d) • Take off the Incremental Obligated (IO) which has been sold in Sept 2006 QSEC auction (1310 GWh/d) • This leads to 6900 GWh/d having been allocated • If previously sold out at an ASEP, add back 20% previously reserved for S-T (based on old TPCR baseline) • This affects Cheshire, Easington, Hornsea and Isle of Grain (359 GWh/d) • This leads to 7259 GWh/d which would be allocated … this then leaves 1554 GWh/d of entry capacity unallocated

  7. How do you allocate the 1554 GWh/d? • Believe need to take account of physical capability • New baselines should be constrained to not exceed previous obligations • Needs to be broadly commensurate with the buy-back target • Therefore, based on the above, need to preserve the zonal limits • Applied above logic and used four different ways of splitting the 1554 GWh/d • On existing obligated level; • 2005 TYS; • 2006 TYS; • Max flow seen over 2 winters, 2005/6 and 2006/7.

  8. Possible sets of baselines (1) Obligated Allocation based on sold + 20% old TPCR baseline where sold out

  9. Re-cutting the cake – how do you allocate the 8814 GWh/d? (2) • Start with the current level of capacity obligations (take maximum booked for April 2008 onwards from August 2007 report on website less Incremental Obligated) (6900 GWh/d) • Add back 20% previously reserved for S-T (based on old TPCR baseline) at all ASEPs (but cap resultant figure at the old TPCR baseline) • This leads to 8400 GWh/d being allocated … this then leaves 414 GWh/d of entry capacity unallocated:

  10. Possible sets of baselines (2)

  11. Zonal analysis of possible baselines (2)

  12. Re-cutting the cake – how do you allocate the 8814 GWh/d? (3) • Alternative starting position - could use historical flow over the last two winters (subject to the old TPCR baseline) • Then adjust for the current level of capacity obligations • This leads to 7802 GWh/d being allocated … this then leaves 1012 GWh/d of entry capacity unallocated:

  13. Alternative ‘re-cutting of cake’ – possible baselines (3)

  14. Zonal analysis of possible baselines (3)

  15. Alternative of higher baselines – Capex requirement • Can Use the TPCR agreed revenue drivers as proxy for capital expenditure • If baselines increased back to pre 2007 TPCR levels • Around £275m extra capex needed to provide the increased baselines

  16. Alternative of higher baselines – Buyback modelling • Alternatively, can examine the incremental buyback risk. Preliminary results indicate that: • Just at Teesside, increasing the baseline back up to 70 mscm/d could lead to around £90m incremental buyback risk (mean level of £20m) per year (assuming that the incremental flow at Teesside is off-set by reduction of flow at Milford Haven) • Similar level of risk at Barrow of increasing baseline back to 66 mscm/d

  17. Summary • Discussed how baselines were set • Presented feedback received from industry • Proposed alternative ways of ‘cutting the cake’ • Demonstrated that going back to higher baselines means either: • significant capex needed • or that buy-back risk is likely to be high • Will provide a summary report to Ofgem in the next two weeks • Ofgem to commence their consultation

More Related