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UNC Modification 0335 – Offtake Metering Error Payment Timescales

Jon Wisdom

21st October 2010

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Offtake Metering Error> Occurs when the metering at the LDZ/NTS boundary or LDZ/LDZ

boundary is in error and either produces an over-read or an under-read.

> Majority of these have been under reads when analysed. The gas that has been unallocated is debited to RbD and all Shippers within that area are invoiced.

> This can be for a period of a few months or several years.

> Within 2010 around 4500 GWh of error has been reported. The majority of this error was caused by a single error in Aberdeen

> Within 2009 around 1000 GWh of error was reported. The majority of this was a National Grid Distribution error caused by faulty orifice plate metering spread across several offtakes

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Significant Recent Events

Various – National Grid Distribution 2009

> Large number of offtake meter points - 800GWh under recorded

BRAISHFIELD – Scotia Gas Networks 2010

> 3 month period of error -1200 GWh under recorded

ABERDEEN – Scotia Gas Networks 2010

> 12 month period of error – 3200 GWh under recorded

TOTAL in last 2 years: 5200 GWh

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Current Process

> Unallocated gas reported regularly by National Grid Transmission

> Offtake Metering Errors identified by Downstream Trasnporter and quantified. If over 50GWh are assessed by an Independent Technial Expert (ITE).

> Following the quantification by an ITE invoicing is carried out in which Shippers are debited in a single invoice regardless of size of error and time across which it occurs.

> This is inequitable and impacts Shipper cashflow and presents a barrier to competition.

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Proposed Change

> RWE npower propose that to rectify this the Downstream Transporter in whose area the network occurred will:

– Follow the current Significant Measurement Error Process as currently documented.

– Appoint an ITE as necessary and quantify the amount of gas

– Be accountable for all energy and transportation costs for this error initially

– Invoice Shippers in equal installments across an identical period to that of the error

– In the case of Aberdeen 12 invoices as the error was over 12 months.

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Advantages

> Places Commercial consequences of metering error on correct Code parties

> Will allow Shippers to manage cashflow more appropriately and reduces need for risk premia to be applied to customers

> Removes a barrier to competition as will allow small Shippers and new market participants to operate without fear of large unexpected hit to cashflow

> Reduces risk of unexpected Shipper cash call in peak consumption periods

> Encourages investment in and development of LDZ offtake meters.