Proposals For

New DUoS Billing System

CER/03/290 12 December 2003

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Index

1.0 Introduction..............................................................................................2 2.0 Billing and Invoicing..................................................................................3

2.1 Billing ....................................................................................................3 2.2 Invoicing ................................................................................................3 2.3 Payment.................................................................................................3

3.0 Surcharging ..............................................................................................4 3.1 Maximum Import Capacity Surcharge .......................................................4

3.1.1 Existing MIC Surcharge - NQH...............................................................4 3.1.2 Proposed MIC Surcharge - NQH .............................................................5 3.1.3 Existing MIC Surcharge - QH.................................................................5 3.1.4 Proposed MIC Surcharge - QH ...............................................................6

3.2 Low Power Factor Surcharges ......................................................................7

3.2.1 Existing Rule for LPF Surcharge for DG5................................................7 3.2.2 Proposed Rule for LPF Surcharges for DG5 & DG6 (NQH) .......................7 3.2.2 Existing Rule for LPF Surcharge for QH ................................................9 3.2.3 Proposed Rule for LPF Surcharges for QH ..............................................9

4.0 Proration ...................................................................................................10 5.0 Change of Legal Entity (CoLE) ...................................................................12 6.0 Change of Supplier (CoS) ..........................................................................12 7.0 Change of MIC ........................................................................................13 8.0 Change of DUoS Group.............................................................................13 9.0 Public Service Obligation (PSO) ..................................................................13

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1.0 Introduction

As part of the Market Opening IT Programme (MOIP), approved by the Commission in March 2003, ESB Networks are required to facilitate a separate Distribution Billing system in advance of full Market Opening in 2005. This is to assist firstly, in completing full separation from the supply arm and secondly, to ensure the distribution business can cater for the requirements of full market opening in 2005.

The existing DUoS Billing System was put in place in 2000 as an interim system to support initial market opening. ESB Networks have taken this opportunity to review the current procedures and charging methods and have put forward to the Commission some changes, which it is proposed, will be introduced in conjunction with the new billing system.

Specifically, ESB Networks is proposing to modify some of the existing procedures which are dealt with under the following headings:

• Frequency of Billing and Payment of Invoicing • Surcharging • Proration (annualise standing charges and capacity charges) • Change of Legal Entity • Change of Supplier • Change of MIC • Change of DUoS Group • Public Service Obligation (PSO) Levy

This document aims to outline and advise suppliers on the proposals that have been put forward by ESB Networks. The main aim of these proposals is to simplify the current charging and administration procedures that are in place.

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2.0 Billing and Invoicing

ESB Networks are proposing the following changes in relation to the frequency of Billing and Invoicing:

2.1 Billing

Billing is the calculation of DUoS charges for each MPRN according to the meter reading schedule. A billing document is produced for each MPRN as per the schedule.

• Non Quarter Hour (NQH) Meter Point Registration Number (MPRN) to be billed once per bi-mensal cycle.

• Quarter Hour (QH) MPRNs to be billed once per month • Unmetered Supply MPRNs to be billed once per month

Billing details at MPRN level will be provided in the form of a market message when the Supplier invoice is issued.

2.2 Invoicing

Invoicing is the aggregation of the billing documents outstanding for each Supplier approximately every fortnight.

• Supplier Invoicing twice per month

On the 2nd working day for each month an aggregated invoice will be sent to the suppliers for the first tranche of NQH MPRNs, this will pick up all the MPRNs that have been billed during the previous 2 week period. On the 12th working day an aggregated invoice will be sent out to suppliers for the 2nd tranche of NQH, all QH MPRNs and Unmetered supply MPRNs.

2.3 Payment • It is expected that DUoS invoices will continue to be paid in full. • Where only partial payments are made, a specific dispute line item

must be provided at MPRN level. Payment withholding at MPRN level can only be for a designated dispute.

• Disputes must highlight all MPRNs for which payment is being withheld and why, using an agreed reason code outlining reasons for withholding.

• Upheld disputes raised after payments have been made will be reflected as adjustment lines in subsequent invoices.

• MPRNs associated with disputes will appear in the following bill if adjustments in calculations are applied.

• Invoices for Transaction and MRSO charges will be separated from DUoS Energy Invoices.

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Commissions View These proposed changes will provide for a more transparent billing and invoicing procedure for Independent suppliers and may give rise to initial cash flow benefits to suppliers in the first quarter of 2005. The changes to the payment mechanism give rise to more transparency, which will benefit both suppliers and customers. 3.0 Surcharging

Maximum Import Capacity (MIC) and Low Power Factor (LPF) surcharges, which appear as a component of the Distribution Use of System Charges, are an additional charge to the customer and are controllable. The surcharge is applied in two cases, firstly, when the customer exceeds their contracted MIC and, secondly, when the customer has reactive or “wattless” power above a defined proportion of active power.

Present characteristics of surcharge calculation

• Present formulae for calculation of Capacity and LPF Surcharges are

complex and difficult to understand. • The Surcharges were initially set up to mirror the Public Electricity

Supplier formulae; this was for equality of treatment. • They were bi-mensal and charges were devised accordingly. • There was a carry-forward element into the following month • Surcharges are applied in full.

3.1 Maximum Import Capacity Surcharge

A customer’s MIC (in kVA) is the maximum electrical capacity of the connection point agreed between ESB as Distribution System Operator and the customer. The MIC surcharge is applied to NQH customers in every two monthly billing period and to QH customers monthly, both have a carry forward element. The Surcharge is applied when the customer exceeds their contracted MIC. The purpose of the surcharge is to discourage users of the distribution system from exceeding their MIC, which has considerable safety implications.

3.1.1 Existing MIC Surcharge - NQH

Presently, in cases where peak demand in kW (converted to kVA) exceeds the MIC, the following rule applies:

• A surcharge of 2 * capacity charge rate * excess kVA will apply in

the month during which the MIC was exceeded and in the following month.

• There is no pro-rata application of surcharges, they are applied in full.

Where peak demand in kVA is calculated from the maximum demand in kW and the nominal power factor of 0.95.

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3.1.2 Proposed MIC Surcharge - NQH

• Surcharge rate of 4 * Capacity Charge Rate * Excess kVA • Applied on a bi-mensal basis (billing cycle) • No carry forward of surcharge • No pro-rata application of surcharge, surcharge is applied in full

for part billing periods.

Where peak demand in kVA is calculated from the MD in kW and the power factor. The power factor will be calculated from the kWhs and kVArhs measured during the period.

An example of how this will be administered is outlined in Table A. The increase from 2 to 4 * Capacity Charge Rate* Excess kVA is offset by eliminating the carry forward element. The changes proposed have no effect on the charge that will be billed to the Supplier.

Table A (NQH)

MIC = 1000 kVA JAN FEB MAR APR MAY JUN JUL TOTALS

MD Read kVA 100

0 1100 1200 1000 1500 1200

NQH Excess kVA 100 200 500 NQH Surcharge (Bi-Mensal) kVA

200 200 400 400 1000 1000 3200

NQH excess units kVA

100 200 500 800

NQH Money*4 400 800 2000 3200

3.1.3 Existing MIC Surcharge - QH

Presently, in cases where peak demand (converted to kVA) exceeds the MIC the following rule applies:

• A surcharge of 2 * capacity charge rate * excess kVA will apply in

the month during which the MIC was exceeded and in the following month.

• There is no pro-rata application of surcharges, they are applied in full.

Where peak demand in kVA is calculated from the maximum demand in kW and the power factor.

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3.1.4 Proposed MIC Surcharge - QH

• Surcharge rate of 3 * Capacity Charge Rate * Excess kVA • Applied on a monthly basis (billing cycle) • No carry forward of surcharge • No pro-rata application of surcharge, surcharge is applied in full for

part billing periods, i.e. CoS, CoLE. Where peak demand in kVA is calculated from the QH profiles for the billing period.

An example of how this will be administered is outlined in Table B. The increase from 2 to 3 * Capacity Charge Rate * Excess kVA is offset by eliminating the carry forward element. The changes proposed have minimal effects on the charge that will be billed to the Supplier.

Table B (QH) MIC = 1000 kVA JAN FEB MAR APR MAY JUN JUL TOTALS MD Read in kVA 1000 1100 1200 1000 1500 1200 QH Excess kVA 0 100 200 0 500 200 QH Surcharge kVA (monthly)

0 200 600 400 1000 1000 0 3200

QH excess units 0 100 200 0 500 200 QH Money * 3 0 300 600 0 1500 600 0 3000 Commission’s View

The proposal results in a simple and transparent application of the MIC. Equally, the administration has minimal effect on the overall charge that will be allocated to the customer.

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3.2 Low Power Factor Surcharges

The Power Factor is a method of determining what percentage of the supplied power is used in watts, and what percentage is returned to the source as wattles power (reactive). The low power factor surcharge is a penalty for the amount of reactive power that is imported. Reactive power is the type of power that is found in a purely inductive circuit or purely capacitive circuit.

3.2.1 Existing Rule for LPF Surcharge for DG5 As per the ‘Schedule of Distribution Use of System Charges 2003’ as published on CER website.

• The low power factor surcharge applies to all kVArh recorded in

any two monthly period if the following criteria are exceeded

(a) more then 2,800 kVArh are recorded

and

(b) the kVArh recorded exceeds 50% of the total kWh recorded in the same period.

• In the case of billing for a part period, the surcharge is applied in

exactly the same way, based on the metered kWh and kVArh in the measured period.

3.2.2 Proposed Rule for LPF Surcharges for DG5 & DG6 (NQH)

• The low power factor surcharge applies when the metered kVArh

is more than one third of the metered kWh (in any 2 monthly billing period).

• The charge is applicable to the excess of one third of the kWh. • In the case of billing for a part period, the surcharge to apply in

exactly the same way, based on the metered kWh and kVArh in the measured period.

Examples of NQH LPF surcharges are in the Table C below (see next page)

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Table C (NQH)

JAN FEB MAR APR MAY JUN Totals kWh kVArh

10,000 3,800

10,000 5,000

10,000 5,500

Existing Rule (kVArh excess)

0 0 5,500 5,500

Proposed Rule (kVArh excess)

1/3 Rule

467 1,667 2,167 4,300

JAN FEB MAR APR MAY JUN Totals kWh kVArh

10,000 4,000

12,000 4,000

15,000 4,500

Existing Rule (kVArh excess)

0 0 0 0

Proposed Rule (kVArh excess)

1/3 Rule

667 0 0 667

JAN FEB MAR APR MAY JUN Totals kWh kVArh

10,000 5,500

12,000 6,000

15,000 5,000

Existing Rule (kVArh excess)

5,500 0 0 5,500

Proposed Rule (kVArh excess)

1/3 Rule

2,167 2,000 0 4,167

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3.2.2 Existing Rule for LPF Surcharge for QH

• The low power factor surcharge applies when the metered kVArh is

more than one third of the metered kWh (in any two monthly billing period).

• The charge is applicable to the kVArh in excess of one third of the kWh.

• In the case of billing for a part period, the surcharge is applied in exactly the same way, based on the metered kWh and kVArh in the measured period.

3.2.3 Proposed Rule for LPF Surcharges for QH

• Move from bi-mensal to monthly • The low power factor surcharge will apply when the metered kVArh is

more than one third of the metered kWh (in any monthly billing period).

• The charge is applicable to the kVArh in excess of one third of the kWh.

• In the case of billing for a part period, the surcharge to apply in exactly the same way, based on the metered kWh and kVArh in the measured period.

Examples of QH LPF surcharges are in Table D below.

Table D (QH)

JAN FEB MAR APR MAY JUN

Total

kWh kVArh

1,000 1,500 500 500

1,100 1,200 500 500

1,500 1,000 500 500

Existing (kVArh)

167 233 167

567

Proposed kVArh)

167 0 133 100 0 567 ( 167 JAN FEB MAR APR MAY

JUN Total

kWh kVArh

1,000 1,500 400 500

1,100 1,000 300 500

1,500 1,000 500 500

Existing (kVArh)

67 100 167 333

Proposed (kVArh)

67 0 0 167 0 167 400

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Commission’s View The Commission has analysed a sample of customers to show the effect of the re-calculation of this surcharge on customers, categorised as Low Voltage Non-Domestic, who are charged on a Maximum Demand basis. From the customer impact analysis undertaken it was found that 77% of the cases show a zero or negative adjustment to the LPF surcharge. The remainder display an average increase of 18%, however, in nominal terms the change was relatively small. The Commission has also examined a sample of customers who are not charged on a maximum demand basis. The results showed that 40% of customers were showing a decrease in their charge. For 37% of customers the new proposal would result in an increase of between 8 and 15%. Again the actual difference was relatively small and in general, the changes proposed will have a minimal overall effect to the end-user bill. The proposal results in a material change to the application of the surcharge and a non-significant change to the end charge.

4.0 Proration

Prices for Standing and Capacity Charges will be specified per annum and prorated on a daily basis. See Tables below for example of application of formula.

Table E

Standing Charge €12/Annum Bill from Date: 01/06/2003 Bill to Date: 28/07/2003 Bill Period Length 58 Days Standing Charge: 12/365 (or 366 leap year) *58 =

€1.906 (Rounded billing value €1.91)

Table F Standing Charge €12/Annum Move in Date: 11/06/2003 Bill to Date: 28/07/2003 Bill Period Length 48 Days Standing Charge: 12/365 (or 366 leap year) *48 =

€1.578 (Rounded billing value €1.58)

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Table G Standing Charge Till 30/06/03:

€12/annum From 01/07/2003: €24/annum

Bill from Date: 01/06/2003 Bill to Date: 28/07/2003 Bill Period Length A = 30 days

B = 28 days Standing Charge: (12/365(or 366 leap year) *30) +

(24/365(or 366 leap year) *28) = (€0.986 + €1.841) (Rounded billing value €2.83 i.e.€0.99+€1.84)

Normal rounding conventions will be applied to the output values – billing value will be displayed to two places of decimal with the second digit value after the decimal rounded downwards (<.5) and upwards (>.5). Where multiple billing periods are employed, rounding will be effected to the output value for each time period – see Table G.

Commission’s View

The proposal to annualise these charges will reflect the actual charge that accrues to a customer in a particular billing period.

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5.0 Change of Legal Entity (CoLE)

When a Change of Legal Entity occurs the following are the proposals;

• A meter reading may be obtained by the Data Collector or provided

by the Supplier/Customer for a CoLE to take place. • For DG1, DG2 and DG5 (<30kVa) the CoLE is effected on the date

of the meter reading once it does not go back past the date of the last DUoS billing for the given MPRN. If the meter reading date does go past the last DUoS billing date, an estimate will be carried out with the date of receipt of the message (016) being used as the effective date.

• For DG5 (>=30kVa) and DG6, DG7, DG8, DG9 and DG10, the effective date will be the date requested by the Supplier.

• A CoLE will result in the termination of one ‘contract’ and the creation of a new ‘contract’.

• Surcharge violation will be evaluated when the existing ‘contract’ is terminated for the old customer and again at the end of the scheduled billing period for the new end customer.

• Processes that result in a ‘contract’ termination (such as Change of Legal Entity) will always result in a usage factor update irrespective of the meter reading type, actual or estimate.

Commission’s View

By effecting the changes outlined above, when a change of legal entity occurs the supplier will be billed correctly for the associated customer.

6.0 Change of Supplier (CoS)

When a Change of Supplier occurs the following are the proposals;

• A CoS will result in the termination of one ‘contract’ and the creation of a new ‘contract’.

• Surcharge violation will be evaluated when the existing ‘contract’ is terminated for the old supplier.

• Surcharge violation will also be evaluated at the end of the scheduled billing period for the new supplier.

• Processes that result in a ‘contract’ termination (such as Change of Supplier) will always result in a usage factor update irrespective of the meter reading type, actual or estimate.

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7.0 Change of MIC

A change of MIC requested on its own for an existing customer will be effected for DUoS billing from the 1st day of the next billing period, subject to a new connection agreement being signed where necessary. This will apply to both QH and NQH customers. An MIC change must be effected for the full billing period to allow for calculation of MIC violations.

Changes of MIC which are requested in conjunction with a change of ‘contract’ (e.g. CoS, CoLE) will be effective from the start date of the new ‘contract’.

Where a change of MIC is associated with a CoS or CoLE (>=30kVa), the effective date for change of MIC will be the requested date from the Supplier as per the market rules.

8.0 Change of DUoS Group

NQH (<30kVa) : A change of DUoS Group for DG1, DG2 and DG5 (<30kVa) will be effective from the 1st day of the current billing period for changes within this grouping. DUoS group changes within this grouping are permitted without a new connection agreement and there is therefore no ‘contract’ termination.

• Change of DUoS Group will be effective from the 1st day of the current billing period.

QH & NQH (>= 30kVa): A change of DUoS Group for QH /NQH customers in the grouping DG5 (>=30kVa), DG5A, DG6, DG6A, DG7, DG7A, DG8, DG8A, DG9, DG9A and DG10 require a new ‘contract’ for the new DUoS Group, the old ‘contract’ is terminated for the old DUoS Group.

• Change of DUoS Group will be effective from the start date of the

new ‘contract’.

Where a registered customer is moving from NQH (<30kVa) to QH or NQH (>=30kVa), the change of DUoS Group will be effective from the start date of the new ‘contract’

9.0 Public Service Obligation (PSO)

The PSO is currently administered and collected on a monthly basis. The PSO levy will continue to be billed and invoiced on a calendar month basis. The MIC for use in the calculation of the PSO levy will be the MIC effective on the last day of the month.