Future Billing Methodology project

Here you’ll find documents, videos and information on the consultation for the Future Billing Methodology project, which closed on 1 March 2022.

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    Background

    The UK Government is committed to achieving net zero by 2050 and is expected to commit to achieving 78% of this by 2035.

    These are challenging ambitions, which will demand significant changes across all sections of society.

    An important change will be the way we heat our homes and businesses

    Today, the bulk of our heating and hot water demand in buildings is met by natural gas. To ensure that the UK can meet its net zero target, we’ll need to find greener alternatives. We believe a multi-faceted approach is required to meet the energy demands of the UK.

    For this reason, Xoserve is supporting Cadent in focusing on optimising the use of renewable-source gases such as biomethane and hydrogen-methane blends. Both have a lower carbon content than natural gas and can begin the decarbonisation journey, with the ultimate aim of converting to 100% hydrogen.

     

    The challenge: fair billing during the transition

    One of the first challenges we need to overcome is that current regulations and billing methodology don’t allow for different calorific values (CVs) within a given Local Distribution Zone (LDZ).

    Today, our entire gas supply has a CV of around 39 MJ/m3, while biomethane has a CV of around 37 MJ/m3 and hydrogen has a CV of just 12 MJ/m3 (a 20% hydrogen blend has a CV of c. 34MJ/ m3).

    Different calorific values cause a disparity in billing

    Customers using lower-CV gases would need to use a proportionately greater volume to meet the same energy requirement.

    In addition, current gas regulations cap variance in CV to no more than 1MJ/m3 over the lowest value within an LDZ.

    We need to ensure customer bills remain fair and equitable

    Below, you’ll find resources which explain the challenge in more detail. They also explore the options available to transition to a greener gas mix, whilst protecting consumer costs.

    For more information on the Future Billing Methodology project, please visit www.futurebillingmethodology.co.uk.

     

    FBM Decarbonising gas - the challenge

    Watch this video to learn more about the challenge ahead.


    Consultation

    Earlier this year, we shared a consultation to provide you with the opportunity to engage with us about this project.

    The objectives of the consultation were to:

    • open the debate around how billing could be approached when hydrogen and biomethane are introduced at a larger scale into the gas network
    • identify the impacts across industry parties of a variable calorific value
    • discover solutions to managing data flows to deliver clear, effective and fair consumer billing during the green transition
    • estimate costs and implementation timescales of options to feed into recommendations
    • explore options that are not recommended because of costs, compliance, implementation timescales or a combination of all

    The five options we asked you to feed back on are:

    • Option A: Working within existing framework
    • Option B: Embedded Zone Charging
    • Option C: Online CV Modelling
    • Option D: Zonal CV Measurement
    • Option E: Local CV Measurement

     

    FBM Decarbonising gas - the options

    Watch this video for an explanation of the five options.


    Consultation documents

    Below are documents supporting the Future Billing Methodology consultation.


    Thank you for your feedback – this consultation closed on 1 March 2022

    Thank you for taking the time to submit your feedback.

    If you have any questions about this consultation, please contact Victoria Mustard, Decarbonisation Lead.

    What is FBM?

    If you have any questions about the Future Billing Methodology, please contact Victoria Mustard, Decarbonisation Lead.

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