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UNC Modification 0213 – User Pays Governance Arrangements

UNC Modification 0213 – User Pays Governance Arrangements. Simon Trivella – 19 th June 2008 Governance Workstream. Considerations. Change Strategy What does industry want to achieve, target issues, predict changes Change Definition

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UNC Modification 0213 – User Pays Governance Arrangements

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  1. UNC Modification 0213 – User Pays Governance Arrangements Simon Trivella – 19th June 2008 Governance Workstream

  2. Considerations • Change Strategy • What does industry want to achieve, target issues, predict changes • Change Definition • What are the objectives, drivers and requirements (avoid early solution focus) • Change Effectiveness • Is there industry support and what can be done to improve it • Change Priority • How do we prioritise change evaluation and delivery • Change Parties and Providers • Are all parties / providers party to the governance process

  3. What is a User Pays Modification Proposal • Questions.. • Does the Proposal involve changes to GT systems • Does the Proposal result in an additional (or change to) GT service or process • Who are beneficiaries of the Proposal • GTs • Users • Others • Mixture • Are the GTs funded for implementation and operation of the change

  4. Transporter and User Allocations • Potential for no agreement on ‘beneficiaries’ • Simple process required • 5 basic possible allocations (Users : GTs) • 100% : 0% (User benefit only) • 75% : 25% (User benefit > GT benefit) • 50% : 50% (approx equal benefit) • 25% : 75% (GT benefit > User benefit) • 0% : 100% (GT benefit only) • Option for Alternative Proposals if no agreement reached

  5. Transporter Cost Allocation Methodology • Governance for GT cost allocation (funding and liabilities) • Joint Governance Arrangements Agreement (A12) • Agency Service Agreement (A15) • 5 GT Cost Allocation ‘Pots’ used for Agency costs • UKT : DNs • 100% : 0% • 20% : 80% • 11% : 89% • 0% : 100% • Ad-hoc Individual GT’s Requirement • e.g. Changes to SIUs arrangements would be 100% SGN

  6. User Allocation ‘Pots’ • Similar process to GT Allocation to avoid ‘Class 3 Mod Syndrome’ • Small Supply Point count? • Large Supply Point Count? • AQ Proportions? • DM Portfolio? • Existing service / process usage? • Adhoc? • Users to have appropriate governance arrangements to reach agreement • Not a GT issue although would be specified on a GT Proposal • Utilisation of existing group, Gas Forum? • Option for Alternative Proposals

  7. Cost & Implementation Timescale Analysis • Panel decision on requirement for analysis pre DMR stage • Early view from GTs on Proposal • Are Requirements, Assumptions & Business Rules clearly defined • What additional clarification is required • Lead Representative (similar to SME) required to provide • What level of analysis can be provided • Analysis, Investment and Transaction costs • Tolerances • Timescales (Initial Analysis, Full & Firm Analysis and Implementation timescales) • Panel decision on delivery timescales • Ability to extend as necessary (change in scope, prioritisation etc.)

  8. Cost & Implementation Timescale Analysis • GT to cover cost of analysis if required pre DMR stage • UNC Panel decision • Adequate governance and protection • Reflects industry views • No additional funding mechanisms required (i.e. Joint Office) • Business as usual approach

  9. Cost & Implementation Timescale Analysis • Full & Firm analysis may be required for Consultation (DMR Stage) • Similar process to pre DMR stage • UNC Panel decision • Additional clarity maybe required • F&F costs recoverable if significant • GTs to identify prior to analysis • If implemented: • cost recovery based on ‘beneficiary’ proportions (User Pays Code Service) • Defined period for collection • If not implemented: • cost recovery based on ‘standard’ allocation basis (User Pays Code Service) • Defined period for collection

  10. Investment and Transactional Costs • Investment Costs • Payable by defined Beneficiaries • Ensures cost recovery • All parties treated equally • Early / late usage not discriminated against negatively or positively • Recoverable as User Pays Code Service over defined period of time • Transactional Costs • Governed by ACS process (as is)

  11. Next Steps • Continue development of business rules • Gain industry agreement and support (where possible) • Ensure solution is fit for purpose • Comparisons from electricity (cost provision) • Would the proposal work for previous Modifications? • Additional issues to consider • Third Party Modifications • Special arrangements required? • Urgent Modifications • Can these be User Pays and if so how are they accomodated? • ACS and Alternative Proposals • Will we be swamped, Is there a better way?

  12. UNC Modification 0213 – User Pays Governance Arrangements Simon Trivella – 19th June 2008 Governance Workstream

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