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Transmission Charging

Transmission Charging. Electricity Regional Initiative Steering Group 26 November 2007. T ransmission N etwork U se o f S ystem Charges Principles. TNUoS charges are designed to: Reflect the cost of installing, operating and maintaining the transmission system

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Transmission Charging

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  1. Transmission Charging Electricity Regional Initiative Steering Group 26 November 2007

  2. Transmission Network Use of System ChargesPrinciples • TNUoS charges are designed to: • Reflect the cost of installing, operating and maintaining the transmission system • Provide economic and locational signals to Tx system users reflecting the incremental costs of supplying infrastructure. • Charges consist of: • A Locational Element • A Residual Element • TNUoS charges set to recover Allowed Revenue • Set by the Authority at the time of the TO Price Control

  3. Transmission Network Use of System ChargesPracticalities • For Generation • Locational & Residual charge based on registered Transmission Entry Capacity (TEC) • For Demand • Locational & Residual charge based on peak demand over the Triad period (for half-hourly metered users) • Triad Charging mechanism – the 3 highest peak system demands recorded between Nov & Feb, separated by 10 days • For interconnectors • Treated in the same way as Generation and Demand • Generation Charges based on registered TEC (connected capacity in MWs) • Demand – based on exports over the Triad period (MWhs)

  4. Electricity Transmission Access ReviewWhat is it considering? • 2007 Energy White Paper announced review of Transmission Access arrangements • To better support the timely and cost-effective connection of renewable generation • Transmission Access Review is investigating an incremental model in which: • Generators could hold long-term access (TEC) or short-term access • Allows for the sharing of existing rights between existing and new generators • Allow everyone to connect provided they are prepared to pay the constraint costs they cause, by offering additional short-term access products:

  5. Transmission Access ReviewWhat could this mean for Generation? • Generators using long-term access continue to pay LRMC (asset related cost) based on capacity (MW)? • Locational element • Generators using short-term access should pay SRMC (congestion related cost) based on utilisation (MWh)? • New charge • Everyone should pay residual (based on MWh)? • Commodity based energy charge (Generation equivalent to Interconnector Import)

  6. Transmission Access ReviewWhat could this mean for Demand? • Users continue to pay LRMC (asset related cost) based on capacity (Triad MW)? • Should the residual element be treated differently? • Charge based on MWh? • Charge based on MWh between 4pm and 7pm Nov to Feb? (Demand equivalent to Interconnector Export)

  7. Transmission Access ReviewNext steps • Transmission Access Review is being led by Ofgem & BERR • Next steps • Interim report Dec 2007 • Final report May 2008

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