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3 Mod Review Group 126 Mar 2007 slides 5 year model (4yrs to 4yrs 364 days) 1 st Feb R R R R4 RIP1 RIP2 RIP3 First implementation in April 2008 With effect from all charges raised from this date and up to 31st March 2009 are restricted to an earliest start date of 1 st April 2004 In April 2009, the restricted invoicing period will roll-forward one year. With effect from , all charges raised from this date and up to 31st March 2010 will be restricted to an earliest start date of 1 st April 2005.
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1Mod Review Group 126 Mar 2007 slides
126 Review Group – Restriction of Invoice Billing Period
The review proposal is primarily concerned with restricting the invoicing period in equitable manner on an enduring basis.
The following slides describe the factors to be considered in implementing and maintaining a rolling restricted invoicing period.
The dates and durations used are for the purpose of explaining the factors to be considered, the review group will be responsible for recommending business rules
2Mod Review Group 126 Mar 2007 slides
Business Rules
Business rules are required for: Setting the effective start and end date for each restricted invoicing
period (RIP), the timing and frequency of the roll-forward cut-off date Cutover principles Operational queries and adjustments Reconciliation by Difference charging USRVs
In addition, the review group should be mindful of: Other UNC activities and timescales e.g. must reads Current RbD discussions USRV discussions at the Distribution Workstream
3Mod Review Group 126 Mar 2007 slides
5 year model (4yrs to 4yrs 364 days)
1st Feb 98
1.4.04 1.4.05 1.4.06 1.4.07 1.4.08R1
1.4.09R2
1.4.10R3
1.4.11R4
RIP1
RIP2
RIP3
First implementation in April 2008With effect from 1.4.08 all charges raised from this date and up to 31st March 2009 are restricted to an earliest start date of 1st April 2004
In April 2009, the restricted invoicing period will roll-forward one year. With effect from 1.4.09, all charges raised from this date and up to 31st March 2010 will be restricted to an earliest start date of 1st April 2005.
4Mod Review Group 126 Mar 2007 slides
4 year model (3yrs to 3yrs 364 days)
1st Feb 98
1.4.04 1.4.05 1.4.06 1.4.07 1.4.08R1
1.4.09R2
1.4.10R3
1.4.11R4
RIP1
RIP2
RIP3
First implementation in April 2008With effect from 1.4.08 all charges raised from this date and up to 31st March 2009 are restricted to an earliest start date of 1st April 2005
In April 2009, the restricted invoicing period will roll-forward one year. With effect from 1.4.09, all charges raised from this date and up to 31st March 2010 will be restricted to an earliest start of 1st April 2006
5Mod Review Group 126 Mar 2007 slides
3 year model (2yrs to 2yrs 364 days)
1st Feb 98
First implementation in April 2008With effect from 1.4.08 all charges raised from this date and up to 31st March 2009 are restricted to an earliest start date of 1st April 2006
In April 2009, the restricted invoicing period will roll-forward one year. With effect from 1.4.09, all charges raised from this date and up to 31st March 2010 will be restricted to an earliest start date of 1st April 2007
1.4.04 1.4.05 1.4.06 1.4.07 1.4.08R1
1.4.09R2
1.4.10R3
1.4.11R4
RIP1
RIP2
RIP3
6Mod Review Group 126 Mar 2007 slides
Business Rules
The following business rules are illustrated using the 5 year model, the principles apply regardless of period used.
7Mod Review Group 126 Mar 2007 slides
Impact of moving the earliest start date forward, illustration using 5 year model
1.2.981.4.08
Charge duration
With effect from 1st April 2008, charges (where required) will be calculated back to 1st April 2004
1.2.98 1.4.2004 1.4.08
Period now closed Out – not reconciled or adjusted
Charge duration
Up to 31st March 2008, charges (where required) will calculate back to 1st Feb 1998
8Mod Review Group 126 Mar 2007 slides
Impact of moving the earliest start date forward, illustration using 5 year model - reconciliations
1.2.981.4.08
Reconciliation charge duration
With effect from 1st April, charges (where required) will be calculated back to 1st April 2004
1.2.98 1.4.2004 1.4.08
Period now closed out – not reconciled
Reconciliation charge duration
Up to 31st March 2008, charges (where required) will calculate back to 1st Feb 1998
R1
R1
R2
R2
The period pre 1.2.98 is unreconciled on current business rules
9Mod Review Group 126 Mar 2007 slides
Illustration of reconciliation
Estimatedconsumption
Actualconsumption
Meter reading period
R1 R2
DIFFERENCE
D1 D2 D3 D4 Dn
The reconciliation charges are calculated on a daily basis. To implement the rule in slides 8 and 9 xoserve systems will truncate the reconciliation at 1.4.2004. Reconciliation volumes for D1, D2 and D3 will not be invoiced and will remain unreconciled.
1.4.2004
10Mod Review Group 126 Mar 2007 slides
Business Rule – applying the effective date
The implementation date for each period will be known in advance i.e. 1st April each year.
Relevant invoice charges e.g. reconciliation charges, will be calculated to 31st March, and processed on an invoice issued in April.
The business rule must allow these charges relating to March, but calculated in April to be valid under the restricted invoice period regime
11Mod Review Group 126 Mar 2007 slides
1.2.98
1.4.08
Reconciliation invoice issued
24th April
A MPRN reconciliation charge
Applying the effective date, illustration using 5 year model continued
Specifically for the month immediately prior to the RIP roll-forward, charges (where required) will be calculated back to the current earliest start date (in the example below 1st February 1998) and up to the end date (in the example below sometime in March 2008). This charge will appear on the Reconciliation invoice to be issued on 24th April.On 1st April the end date rolls-forward to 1st April 2004.The regime must recognise the charges on the March 2008 Reconciliation invoice to be validThe new restricted invoicing period will roll forward on 1st April each year, and applies to charges to be calculated from 1st April each year.
R1 R2
12Mod Review Group 126 Mar 2007 slides
Applying the effective date, illustration using 5 year model continued
24th April1.2.98 1.4.2004 1.4.08
Period now closed Out – not reconciled or adjusted
A MPRN reconciliation charge Reconciliation invoice issued
28th May
Reconciliations processed on the May 2008 invoice will end date at 1.4.2004.
13Mod Review Group 126 Mar 2007 slides
Business Rule – operational query adjustments…
Working on the principle of a hard cutover, the maximum adjustment period for operational query adjustments will be set as the earliest start date which applies when they are invoiced.
Operational queries are generally raised when the issue surfaces and therefore not all adjustments go back to the relevant earliest start date.
14Mod Review Group 126 Mar 2007 slides
Business Rule – operational query adjustments continued, examples….
1.2.98 1.4.2004 1.4.08
Query submitted
1.4.09
Maximum adjustment period
(using 5 year model)
Financial adjustment invoiced
Period now closed out – not adjusted
15Mod Review Group 126 Mar 2007 slides
Business Rule – operational query adjustment examples continued
1.2.98 1.4.2004 1.4.08
Query submitted
1.4.09
Maximum adjustment period
1.2.98 1.4.2004 1.4.08
Query submitted
1.4.09
Maximum adjustment period
1.4.2005
(using 5 year model)
RIP 1.4.2004 – 31.3.2009
RIP 1.4.2005 – 31.3.2010
Financial adjustment invoiced
Financial adjustment invoiced
Period now closed out – not adjusted
Period now closed out – not adjusted
16Mod Review Group 126 Mar 2007 slides
Business Rule RbD treatment ….
Reconciliations and adjustments are processed as a “primary” activity.
Each reconciliation and adjustment will generate a “secondary” activity - an equal and opposite energy adjustment to the smaller supply point market through the Reconciliation by Difference (RbD) process.
Not all RbD processes are completed at the same time as the “primary” activity. Some reconciliations and adjustments are processed a month later in RbD than the “primary” reconciliation or adjustment
17Mod Review Group 126 Mar 2007 slides
Business Rule RbD treatment continued
1.4.04
RIP1
RIP2
Adjustment charge period Adjustment invoice issued
1.4.05 1.4.06 1.4.07 1.4.08 1.4.09 1.4.10
Period now closed out – not reconciled or adjusted
The RbD charges associated with the adjustment processed in March 2009 are processed on the reconciliation invoice issued in April 2009.The business rules must allow the RbD charges to flow in full, including those relating to the period 1st April 2004 to 1st April 2005, which is now “closed-out”.
RbD charges processed
18Mod Review Group 126 Mar 2007 slides
Business Rule USRVs…
Reconciliation charges that exceed certain tolerances are suppressed and submitted to shippers for resolution.
A reconciliation charge can extend back to the earliest start date.
A business rule is required, with a supporting incentive scheme, to deal with periods in the USRVs that become “timed-out” as the RIP rolls forward.
19Mod Review Group 126 Mar 2007 slides
Business Rule USRVs…
1.2.98 1.4.2004 1.4.08 1.4.09 1.4.2005
In April 2009, part of the reconciliation charge is now “timed out”.
1.2.98 1.4.2004 1.4.08 1.4.09
Reconciliation charge period(USRV)
In February 2008, a reconciliation charge is calculated which results in a USRV
Reconciliation charge period(USRV)
Period now closed out – not reconciled
Period now closed out – not reconciled
R1
R1
R2
R2
20Mod Review Group 126 Mar 2007 slides
Business Rule USRVs continued, recommended treatment
1.2.98 1.4.2004 1.4.08 1.4.09
Revised reconciliation charge period
1.4.2005
In April 2009, part of the reconciliation charge is now “timed out”. The reconciliation charge is re-calculated (this may or may not pass USRV tolerances)
1.2.98 1.4.2004 1.4.08
Period now closed out – not reconciled
1.4.09
Reconciliation charge period(USRV)
In February 2008, a reconciliation charge is calculated which results in a USRV
Period now closed out – not reconciled
21Mod Review Group 126 Mar 2007 slides
Business Rule USRVs continued, recommended treatment
Other options for treatment exist such as releasing the USRV immediately prior to the 1st April roll-forward, or holding the full USRV for how ever long it takes to be resolved. Neither of these options were considered to meet the terms of reference of the review group.
An appropriate USRV incentive scheme should be developed to ensure correct industry behaviour. Note: the present incentive regime is not considered appropriate.
22Mod Review Group 126 Mar 2007 slides
Reconciliation volumes
The following 4 slides show the reconciliations processed in each year (2006,2005,2004,2003) and the year the reconciled energy relates to
23Mod Review Group 126 Mar 2007 slides
Reconciliation values processed in 2006
Total RbD volumes based on issued Reconciliation invoices for 2006 billing months
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
1998 1999 2000 2001 2002 2003 2004 2005 2006
Year Reconciliation applied to
Ener
gy (T
whs
)
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
% o
f I&
C T
hrou
ghpu
t
RbD Volume % of I&C Throughput
Mod 640 Adjustment
24Mod Review Group 126 Mar 2007 slides
Reconciliation values processed in 2005
Total RbD volumes based on issued Reconciliation invoices for 2005 billing months
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
1998 1999 2000 2001 2002 2003 2004 2005 2006
Year Reconciliation applied to
Ener
gy (T
whs
)
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
% o
f I&
C T
hrou
ghpu
t
RbD Volume % of I&C Throughput
Mod 640 Adjustment
25Mod Review Group 126 Mar 2007 slides
Reconciliation values processed in 2004
Total RbD volumes based on issued Reconciliation invoices for 2004 billing months
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
1998 1999 2000 2001 2002 2003 2004 2005 2006
Year Reconciliation applied to
Ener
gy (T
whs
)
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
% o
f I&
C T
hrou
ghpu
t
RbD Volume % of I&C Throughput
26Mod Review Group 126 Mar 2007 slides
Reconciliation values processed in 2003
Total RbD volumes based on issued Reconciliation invoices for 2003 billing months
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
1998 1999 2000 2001 2002 2003 2004 2005 2006
Year Reconciliation applied to
Ener
gy (T
whs
)
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
% o
f I&
C T
hrou
ghpu
t
RbD Volume % of I&C Throughput
27Mod Review Group 126 Mar 2007 slides
Unreconciled energy
The following slide shows the amount of deemed energy by year that is yet to be subject to a reconciliation. The deemed energy is split into energy reconciled but held in suppression and energy not yet reconciled.
28Mod Review Group 126 Mar 2007 slides
Unreconciled I&C energy
Unreconciled Energy by Calendar Year
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
1998 1999 2000 2001 2002 2003 2004 2005 2006
Year of Unreconciled Volumes
Ener
gy (T
whs
)
0.00%
4.00%
8.00%
12.00%
16.00%
20.00%
24.00%
% o
f Orig
inal
Allo
catio
ns
Unr
econ
cile
d
UnRead Suppressed % Unreconciled
29Mod Review Group 126 Mar 2007 slides
Pre first cutover considerations
Based upon a first cutover date of [1st April 2008], bringing the earliest start date to [1st April 2004], the industry may wish to work towards: Resolution of any aged operational queries Resolution of USRVs Reconciliation of unread meters
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