27th May 2020
Impacts of the UK Government’s COVID-19 Pandemic measures on Gas Settlement and Transportation charges
Xoserve is helping the GB gas industry to understand the impacts of the current lockdown on Gas Settlement and Transportation Charges.
The impacts are wide-ranging and vary between market sectors and between different settlement types.
Daily Gas Allocations (and Day-Ahead Gas Nominations)
At a high-level we are seeing unexpected demand changes which are not built into the current predictive algorithms and which are causing:
- Under-allocation of gas at many Non-Daily Metered sites, due to increased usage (e.g. Domestic properties where the residents are working from home or are no longer in work, and businesses that have increased their output to meet temporary needs, such as PPE production)
- Over-allocation of gas at many Non-Daily Metered business premises, due to a complete closure or significant drop in business, or empty holiday lets and second homes
- Wider fluctuations in the daily levels of Unidentified Gas (UIG) which is the balancing figure each day in each of the 13 Local Distribution Zones (LDZs)
- We are currently seeing UIG trending negative, especially on weekdays due to the lockdown affecting many businesses.
If the reading and communications equipment at Daily Metered sites is working and Xoserve receive the meter readings, their daily allocations should still be accurate.
Meter Point Reconciliation
Meter Point Reconciliation will correct the individual allocations, when Xoserve receives a valid meter reading. We could see greater volumes of energy flowing through Reconciliation as a result of the unexpected usage changes. Reconciliation will also correct UIG – again we could see bigger swings of energy positions. We would eventually expect UIG to be a positive number for those days, when most meters have been read and reconciled. However, that is likely to take many months to happen.
Rolling Annual Quantities
Annual Quantities (AQs) are updated every month if a new meter reading has been received. Because the AQ calculation looks for a twelve-month read period, where possible, AQs will only move slowly upwards or downwards in line with a change in usage. As we move through spring and summer, and usage would be dropping anyway at many sites, those movements could be even smaller.
Estimated Meter Readings
When Xoserve needs to estimate a meter reading for a Non-Daily Metered site for use in Settlement, we have to use the same algorithm as for daily allocation. If a site has unexpectedly changed its usage, this will mean that our estimate will be too low (after a usage increase) or too high (after a decrease).
This will mean that the Shipper’s charges will be inaccurate until we receive the next actual reading.
Transportation Capacity Charges
For Non-Daily Metered sites, there is no immediate impact. Charges are set for a year from 1 April (based on the Rolling AQ on the previous 1 December). We levy the Capacity Charge on behalf the Network Operator to pay for a share of pipeline space on a theoretical peak day, and we use the same daily price throughout the year, regardless of actual usage. Larger Daily Metered sites that see a drop in their AQ (down below 732,000 kWh) could fall into a different pricing band and could attract much higher unit rates of Capacity Charges, despite having a lower usage.
How has Xoserve been affected?
We have robust Business Continuity plans in place, which we test regularly. All our staff are now working remotely, but we are still able to run all our critical processes. You should still be able to reach our employees on their normal office telephone numbers and via email.
What is Xoserve doing to support the industry?
Xoserve is the Central Data Services Provider to the Gas Industry and has to work to the current Industry rules.
We have supported detailed discussions at Distribution Workgroup about the impacts of the lockdown and possible short-term mitigations. As a result, four Urgent UNC Modifications were raised, and three have now been approved and implemented. You can find details about the modifications here, along with links to training material on the three approved Modifications.
Information on UNC Modifications can be found on the Joint Office website.
What information is available to help Shippers understand UIG and Gas Allocation during and after lockdown?
We have added extra reports and increased the frequency of others, to help Shippers understand current trends, including:
- Increasing the publication of daily UIG quantities and percentages on our secure area to three times a week
- Increasing the publication of the 'Additional_National_Data' report on our secure area to weekly for closed out Gas Days
- Increasing the frequency of the Interim UIG Reporting graph of UIG levels on our public UIG pages to weekly
- Adding a monthly snapshot of Isolated sites (count and total AQ) to our secure area
What will happen to Settlement and Allocation after the lockdown ends?
We don’t expect everything to return to normal overnight or at the same pace. Where AQs have changed and are now out-of-date again, they will have an impact on daily Non-Daily Allocation until they return to normal. That could take twelve months or more, but we only expect AQs to move in small steps due to usage changes, so the impacts should be lower. AQs will return to normal in small steps, as we receive actual meter readings.
If Shippers have taken advantage of Modifications 0722 or 723, e.g. submitted additional Isolations or used the estimated meter readings facility, they need to ensure that they follow the 'After Lockdown' guidance in the training material.
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