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Considerations for EHV Charges in 2010: Options and Implications

This document outlines potential charging options for Extra High Voltage (EHV) customers in 2010, exploring four distinct models: 1) Current DRM model for all EHV customers, 2) EHV demand and average CDCM for generation, 3) CDCM end-to-end implementation, and 4) a long-term EHV charging method. Each option presents advantages and disadvantages regarding price stability, governance issues, and customer confusion. The analysis anticipates potential price disturbances and the need for modifications to integrate new methodologies smoothly, ensuring clarity amidst ongoing regulatory changes.

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Considerations for EHV Charges in 2010: Options and Implications

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  1. Considerations for EHV charges for April 2010María Isabel LiendoSP Energy NetworksDCMF, 04 June 2009

  2. EHV charging • Four options for EHV charges for 2010: • Current DRM-type model for all EHV customers • Current DRM-type model for EHV demand customers and average CDCM charges for generation • Use CDCM end-to-end (for all customers) • Use longer-term EHV charging method

  3. Option 1 - Current model for all EHV customers • Pros: • No modification proposal other than CDCM needed (? – see comments) • Potentially less price disturbances for EHV customers • Cons: • Two methodologies (and models) co-existing for one year, confusing to customers • Existing models treat DG allowed revenue as a separate “pot”, no clear way of incorporating the decision of one revenue pot • Comments: • Price disturbances are expected in 2010 regardless, DPCR5 settlement • Would a modification still be needed to “integrate” the CDCM and the exiting methodology? • A modification proposal could still be needed to deal with the DG issue

  4. Option 2 - Current model for EHV demand and CDCM for generation • Pros: • Potentially less price disturbances for EHV demand customers • Able to deal with DG customers and merged pots of allowed revenue • Cons: • Two methodologies (and models) co-existing for one year, confusing to customers • Two modifications needed. One (EHV) governed by the existing SC13 and one (HV/LV) governed by the new SC50 – how does this work? • Comments: • Price disturbances are expected in 2010 regardless, DPCR5 settlement

  5. Option 3 - CDCM end-to-end • Pros: • Only one methodology applied, consistency • Able to deal with DG customers and merged pots of allowed revenue • Cons: • There could be price disturbances to EHV customers • Comments: • Governance is not clear for a scenario of one modification proposal being governed by two standard conditions • Ofgem has indicated to DNOs that they will need a “clear justification for two step changes” • If moving to a “nodal” locational approach from 2011, frequent disturbances might be common

  6. Option 4 - Use longer-term EHV charging method • Ofgem’s LRIC guidance has been published • Not the case for FCP, but March decision document mentioned a version” of FCP to be implemented – this does not exist yet • This option is unlikely to be realistic by 2010

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