Post on 03-Jan-2016
UNC Modification 0213 – User Pays Governance Arrangements
Simon Trivella – 19th June 2008
Governance Workstream
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
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
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
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
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
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.)
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
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
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)
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?