annex 2 – responses to strawman assessment questionnaire · tadg working group page 1 working...

TADG Working Group Working Group Report Annex 2

Annex 2 – Responses to Strawman Assessment Questionnaire

List of Respondents Response Organisation

1 Airtricity 2 CE Electric UK 3 Centrica Energy 4 E.ON UK plc 5 National Grid 6 Renewable Energy Association 7 RWE 8 SPT&D 9 United Utilities

Response 2 CE Electric UK


TADG Working Group Strawman Assessment Questionnaire Name: R C Longden Organisation: Airtricity EXISTING ARRANGEMENTS Question 1: In the light of your views on the issues in relation to the treatment of DG in the existing transmission arrangements and associated consequences of continued growth of DG, as discussed by the group, set out your views on the impact on the TADG objectives of continuing with those arrangements on an enduring basis: (a): Minimising implementation costs Obviously continuing with the existing arrangements has zero implementation cost. However, the situation with regard to DG is developing and the present arrangements are not a suitable long term framework for DG. (b): Cost-reflectivity The situation is somewhat confused due to the actual or proposed charging/access methodologies used by both transmission and distribution system operators. There is the potential for inappropriate or non cost reflective charges to be levied on DG where overall network issues are not properly considered. Distributed generation de facto resides in a distribution network. Its primary access and charging relationship should therefore be with the distribution system operator/owner. Network to network issues should be dealt with by the distribution and transmission system operators and charging/access issues also addressed on a network to network basis. This will ensure a sound basis for cost reflective charging of services to ALL network users. The TADG process should carefully consider the anomalies in the current treatment between the charging of demand and generation. These anomalies can be rationalised to a degree where both demand and generation are directly connected to the transmission system. However, TADG needs to ensure that any proposals which seek to form a long term basis for the consideration of Distributed Generation are not based upon, or perpetuate or promote inconsistencies in treatment which are wholly inappropriate to generation located in a network other than the transmission system. (c): Efficient network development The current arrangement is unsuitable for efficient network development as it allows selective, arbitrary “reach down” by the transmission network operator into the distribution system with regard to some aspects of DG, but does not [and cannot] properly address all the issues involved with distribution system development. It risks an incomplete and non-aligned approach to the promotion of DG and has the potential to frustrate efficient distribution system development. Further, transmission system development should consider the totality of the impact that distribution system development will have, including the net impact of demand and generation on the power flows at its system boundary.



SP T&D MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES (b): Irrespective of your views on materiality, do you believe that the model would address these issues? TO AN EXTENT (c): Are there any other issues which you believe to be material but not addressed by the model? YES (d): Provide any detailed comments in the context of your answers to questions a), b) and c) We agree that the SP T&D model is a welcome improvement on the current situation. However, we believe that it needs to go further in order to ensure that both efficient network development [both transmission AND distribution] and the growth of DG is properly considered. Specifically, we believe that all DG should contribute towards the cost of DTEC, via appropriate tariff design – as it is a network to network interface issue and all DG in the distribution system is making use of DTEC. The proposal appears to confer a liability for National Grid to charge for DTEC, whilst at the same time conferring no rights on the users who are being charged for the product. SP T&D MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) Clear, but needs to expand in scope (b): the specification of the model (“what”) Clear, but appears to be limited to a charging mechanism for National Grid, no rights for those being charged and an inappropriate charging base [should be all DG] (c): the process and timescales for implementation (“how” and “when”) CUSC and Charging methodologies issues appear reasonable. Licence changes may be more complex or require longer timetable (d): model-specific interactions with developments in interrelated areas Simple changes appear to have no significant interactions SP T&D MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs As it involves relatively minor changes, costs should be minimal (b): Cost-reflectivity It appears to be a simple mechanism for National Grid to charge DG and as such is incomplete. Whilst DG should, rightly, be charged where its operation causes a net export from the distribution system to the transmission system, the charging methodology should start from the costs that DG imposes on the distribution system. By connecting DG, the costs incurred by the distribution system operator may be reduced, compared with its absence. These factors should be properly recognised in the charging methodology such that the totality of the charges arising from both generator DUoS and DTEC is both consistent and reflective of



the costs imposed on the distribution system. Consideration of GDUoS and DTEC in isolation carries a high risk that generators will be “double charged” and that sub-optimal investment and connection decisions will be made. (c): Efficient network development As above, the totality of the impact of distributed generation on the distribution system needs to be considered, rather than just “an export to the transmission system”. This involves, the distribution network itself, the interaction with and netting of demand, both local and system wide and finally the “system to system interaction with the transmission system AIRTRICITY MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES (b): Irrespective of your views on materiality, do you believe that the model would address these issues? YES (c): Are there any other issues which you believe to be material but not addressed by the model? NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) We support the model AIRTRICITY MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) (b): the specification of the model (“what”) (c): the process and timescales for implementation (“how” and “when”) (d): model-specific interactions with developments in interrelated areas AIRTRICITY MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs The model seeks to address the fundamental issues with regard to increasing growth of DG and the necessary radical changes in distribution network development that it will entail. We believe that the implementation costs are commensurate with the issues facing DG and will further facilitate its progress (b): Cost-reflectivity Generation should be charged for the costs that it imposes on the network that it is connected to. These are “direct” costs of connection and access to the D system together with any properly apportioned network to network costs that it is responsible for. It is only by analysing the D system as a whole and then considering third party interaction, that accurate cost reflectivity will be achieved,



rather than an arbitrary transmission charge. Investment to strengthen the network to network transfer capability will, by allowing greater transfer between T and D networks, benefit BOTH demand and generation connected in the distribution network. By considering only DG in isolation, there is a high probability that inappropriate cost apportionment will occur. Distributed generation will alter the power flows on the distribution network. It is highly unlikely that there will be a direct correlation between the output of DG and changes at any particular GSP, particularly where DG is “heavily” embedded. Thus, the need for [demand related] investment at particular GSPs may be reduced or avoided by the connection of DG and it is only by considering the network to network interactions as a whole that appropriate charging structures can be developed. Without this complete consideration, DG could effectively be charged for creating a “reduction in demand” which is clearly illogical and inconsistent with the treatment of demand, where the identical result [a reduction of X MW] has occurred, and demand benefits from reduced charges. (c): Efficient network development As above, networks should be developed with respect to the totality of the demand and generation within and across their system, together with integrated consideration of network to network transfer issues. CE ELECTRIC UK MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES (b): Irrespective of your views on materiality, do you believe that the model would address these issues? NO (c): Are there any other issues which you believe to be material but not addressed by the model? YES (d): Provide any detailed comments in the context of your answers to questions a), b) and c) The model is characterised as “Very Thin” and as such does not address the challenges which increased DG implementation will bring. It also perpetuates the undesirable situation where National Grid is arbitrarily and selectively interacting with individual distributed generators. This does not address the totality of the impact that DG will have either on the D system itself, or the network to network interaction with the transmission system. CE ELECTRIC UK MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) (b): the specification of the model (“what”) (c): the process and timescales for implementation (“how” and “when”)



(d): model-specific interactions with developments in interrelated areas CE ELECTRIC UK MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs Should be low, as virtually no change to existing arrangements (b): Cost-reflectivity We dot not believe that it is cost reflective. See Q3 Airtricity Model, above (c): Efficient network development As it involves little change from the status quo, which is inappropriate for efficient network development, it will not enhance the process. See Q3, Airtricity model, above



NGET MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES (b): Irrespective of your views on materiality, do you believe that the model would address these issues? TO AN EXTENT (c): Are there any other issues which you believe to be material but not addressed by the model? YES (d): Provide any detailed comments in the context of your answers to questions a), b) and c) The NGET model appears to be based on the premise that generation connected in networks other than its own should be charged as if it were connected directly to the NGET transmission system. Distributed generation is connected to networks OTHER than that of National Grid and it is the network to network interactions which are the determining factor driving transmission investment [or the avoidance of otherwise required investment], not the specific operation of DG. We specifically challenge the assertion that “Output from a directly connected and an embedded Power Station will lead to broadly similar levels of transmission infrastructure investment”. It is the net interaction between the networks which will drive investment. The output from DG will change the flows on the particular distribution network that it is connected to. The investment needs [or deferred investment] due to this will depend upon the changed flows at the network to network boundaries [individual GSPs]. Unlike directly connected generation, there is no direct “mapping” of the output of an embedded generator to a particular GSP and as such the net effect may be to reduce otherwise required network to network reinforcement. National Grid assert that seeking to avoid fundamental exit reform through developing the roles and processes under the existing framework is beneficial. Given the forecast growth in DG over the next decade, if the existing framework is inappropriate, then it should be reviewed. If a net model, which correctly recognises the network to network interactions between distribution and transmission is the solution, then it should be pursued, not dismissed due to the implications for more fundamental exit reform. National Grid is not currently charged with developing the networks of those parties connected to it, although this may change. In the extreme, where supply and demand were locally and dynamically balanced, the requirement for a transmission network of the size and cost that we currently have would significantly diminish. If connection of DG into distribution networks is correctly recognised by the Distribution generation charging framework and network interaction is correctly charged on a net basis, then transmission investment will correctly reflect the needs of the users of the transmission system, which may well diminish significantly in the future. The National Grid proposal appears to work from the opposite premise, that since DG is equivalent to directly connected generation [which it is NOT] then it must not only be exposed to comparable transmission costs, [plus any distribution costs] but that this additional revenue stream should flow to National Grid.



NGET MODEL This “transmission centric” model fails to recognise the benefits of DG and seeks to attribute costs which are both non-cost reflective and would act to deter legitimate investment in DG. NGET MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) The rationale is based on a flawed premise – that all DG is comparable with directly connected generation and should be treated as such. (b): the specification of the model (“what”) (c): the process and timescales for implementation (“how” and “when”) (d): model-specific interactions with developments in interrelated areas NGET MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs (b): Cost-reflectivity A gross charging approach for DG transmission access, levied by National Grid, is NOT cost reflective and would lead to unnecessary and inappropriate disincentives to the legitimate growth of DG (c): Efficient network development The model appears to consider only the transmission network. We have already stated that it is the net “system to system” interactions between distribution systems and the transmission system which drive planning and investment. This model appears either to disregard the development of the distribution systems, or seeks to direct their path using an inappropriate notion of the impact of DG on the transmission system



TADG Working Group Strawman Assessment Questionnaire Name: Dave Miller Organisation: CE Electric UK EXISTING ARRANGEMENTS Question 1: In the light of your views on the issues in relation to the treatment of DG in the existing transmission arrangements and associated consequences of continued growth of DG, as discussed by the group, set out your views on the impact on the TADG objectives of continuing with those arrangements on an enduring basis: (a): Minimising implementation costs By definition, this is the strongest contender in this aspect, with nil cost (b): Cost-reflectivity This retains all the existing distortions previously identified. Broadly speaking, transmission charges are cost-reflective. However, there is a minority customer group (embedded generation without a GBSO contract) whose impact on the system is similar to GBSO-contracted generation yet faces no transmission demand charges (c): Efficient network development Although there is a perverse incentive that (for example) encourages embedded generation without an NGET contract to locate in the North of England, it is far from clear that this leads to inefficient network expansion. There is an argument that more cost-reflective charges would encourage the better use of existing capacity; however, there are mixed messages within the group as to whether transmission charges form a material part of the business case for embedded generation SP T&D MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES / NO (b): Irrespective of your views on materiality, do you believe that the model would address these issues? YES / TO AN EXTENT / NO (c): Are there any other issues which you believe to be material but not addressed by the model? YES / NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) If we accept that cost reflectivity is an issue, then this model only partly addresses it. Only generators connected at 33 kV and above would be subject to any charges, and those charges might be significantly less, MW for MW, than GBSO-contracted generation There are other issues outlined below SP T&D MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”)



(b): the specification of the model (“what”) This uses a ‘soft’ TEC, i.e. with over-run being explicitly subject to charging rather than being treated as licence breach1. This would avoid the potential for inefficient transmission bypass and for inefficiently constraining generators: however, it may not suit GBSO planning processes The processes for constraining generator output at times of (transmission) system stress are unclear If this were to imply greater involvemtn by distributors in manging DG, it would run against the philosophy Ofgem were trying to introduce for microgenerators, where the relationship should be between the generator and the supplier (thereby avoiding the requirement for a microgenerator (eg domestic dwelling) having to enter into another separate agreement with a DNO. To avoid being non discriminatory against Users proposals need to be considered in the context of being applied equally to microgenerators as well as larger generators. (c): the process and timescales for implementation (“how” and “when”) The proposal needs to be worked up in more detail to carry out a full assessment, but a new charging process would be required, from (FMS) meter to GBSO invoice It is not clear how embedded generators with existing GBSO contracts and TEC will be treated The licence changes suggested are not required, as there are existing provisions to pass through TNUoS charges (d): model-specific interactions with developments in interrelated areas none SP T&D MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs Implementation costs are low, but would be higher than supplier agency models. At the least, a new meter-to-invoice charging process is needed. To make this more than a means to pass through charges, new DNO processes to manage generators for transmission ends would be required. This would include the associated costs of moving towards greater active management and data acquisition (b): Cost-reflectivity This is improved from the current state, but falls short of ‘gross’ charging models The paper implies that current commercial relationships between GBSO and supplier remain unchanged. In turn, this implies that embedded generators would be (indirectly) both credited for the contribution to reducing demand (even if this exacerbated transmission constraints) and charged for the proportion of that output that could be attributed to exporting GSPs. As the full Triad contribution would likely outweigh the smeared charge for exporting GSPs, the cost signals remain weak, and potentially perverse (c): Efficient network development With a ‘soft’ TEC, this adds nothing to GBSO planning processes. The expanded charging base will encourage more efficient use of existing capacity in the transmission system, but to a lesser degree than ‘gross’ charging models. The

1 This seems an extreme position, but was mooted at TADG 7



signals are particularly weak where Triad and smeared DTEC conflict AIRTRICITY MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES / NO (b): Irrespective of your views on materiality, do you believe that the model would address these issues? YES / TO AN EXTENT / NO (c): Are there any other issues which you believe to be material but not addressed by the model? YES / NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) The paper states that ‘A major drawback with Supplier Agent models is that it is difficult to see how they can incentivise a Supplier to dynamically manage a DNO network’. This is not the issue at hand. No amount of distribution network reconfiguration will resolve transmission system constraints2, which are not generally an issue related to individual GSPs. Rather, we need a process that allows generation to be constrained directly when so required by GBSO. There are existing supplier-centred processes to achieve this through bids and offers in the Balancing Mechanism As with the SP-TD approach, this model only partly addresses cost reflectivity. While the ultimate charging base might be as wide as for ‘gross’ models, charges would likely be significantly less, MW for MW, than GBSO-contracted generation AIRTRICITY MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) As above (b): the specification of the model (“what”) As noted earlier, the premise that distributors can resolve transmission constraints is flawed. This is clearer than the SP-TD model in terms of managing constraints: however, as with that approach, it introduces a new process that usurps existing Balancing Mechanism procedures Unlike the SP-TD model, this proposes a hard TEC. Particularly in those areas where TEC increases may be hard to come by, this introduces a number of distortions: • generators would have to be constrained if demand fell; • distributors would be encouraged to construct new distribution circuits to

bypass artificial constraints at GSPs. This would increase overall system costs without resolving transmission constraints;

• generators would be unduly constrained to suit artificial constraints at GSPs (c): the process and timescales for implementation (“how” and “when”) The paper states that ‘if the DNO charging arrangements recognise the benefits

2 Similarly, we dispute the accuracy and relevance of the statement that ‘Distribution interconnection beneath GSPs is a significant determinant of whether a particular GSP has a greater or lesser likelihood of exporting, for a given level of embedded generation, and can be used to manage GSP exports/imports at individual nodes’



(delayed load-related capex etc) of connecting a beneficial embedded generator, but NGC still demand a gross TEC charge in addition to DNO charges, then there will be double charging and generators will make wrong decisions based on the distorted economic signals to which they are exposed’. This is confusing. If DNOs charge according to the impact on their system, and GBSO charges according to the impact on TOs’ systems, then users will face the full costs they impose once and only once Indeed, as for the SP-TD proposal, this paper implies that current commercial relationships between GBSO and supplier remain unchanged. In turn, this implies that embedded generators would be (indirectly) both credited for the contribution to reducing demand (even if this exacerbated transmission constraints) and charged for the proportion of that output that could be attributed to exporting GSPs. As the full Triad contribution would likely outweigh the smeared charge for exporting GSPs, the cost signals remain weak, and potentially perverse It is not clear how embedded generators with existing GBSO contracts and TEC will be treated (d): model-specific interactions with developments in interrelated areas none AIRTRICITY MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs This raises the highest implementation costs of any option. A new meter-to-invoice charging process is needed, and (as for the SP-TD model) new DNO processes to manage generators for transmission ends would be required. Supplier’s risk profiles in the Balancing Mechanism would also be worsened, as generation output might be unexpectedly constrained by a third party (b): Cost-reflectivity This is improved from the current state, but falls short of ‘gross’ charging models. It is not a significant advance on the SP-TD model, as the initial liability (net export from GSPs) is the same and the conflicting signals of Triad benefit and smeared DTEC remain (c): Efficient network development A firm TEC will help GBSO planning purposes, but: • cost signals are weak, having minimal impact on efficient location; • a hard TEC may encourage inefficient development and use of distribution

systems



CE ELECTRIC UK MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES / NO (b): Irrespective of your views on materiality, do you believe that the model would address these issues? YES / TO AN EXTENT / NO (c): Are there any other issues which you believe to be material but not addressed by the model? YES / NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) The proposal we submitted addresses all of the present procedural issues, and provides a firm basis for efficient joint system development through enhanced information exchange. It does not address cost-reflectivity: we submit that this may, in practice, have a limited impact on efficient system development CE ELECTRIC UK MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) As laid out in the presentation: the key issue we see is a current inability for market participants to make sensible investment decisions (b): the specification of the model (“what”) As laid out in the presentation, save: • access ‘rights’ in respect of SVA BMUs might better be expressed as

permissions. The intent is to replicate the situation for demand, effectively allowing DG to spill in return for charges at GSPG level. It is essential to provide for flexibility to support wholesale market flux

• SVA processes already provide for ‘exporting BMUs’ to be identified, facilitating any such charges

(c): the process and timescales for implementation (“how” and “when”) As laid out in the presentation (d): model-specific interactions with developments in interrelated areas none CE ELECTRIC UK MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs Of any of the models proposed (other than business as usual), this requires the least change. No new billing systems are required, and only minor changes to codes and business practice are proposed (b): Cost-reflectivity This does not address cost-reflectivity but, we submit, only the NGET model does so effectively (c): Efficient network development This provides more real information to NGET to allow efficient development of the transmission system than any other proposals. Although cost signals remain weak, it is far from clear that this will materially affect the pattern of usage of the transmission system. This proposal certainly avoids the potential for inefficient development of the distribution system inherent in the Airtricity and SP-TD



models NGET MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES / NO (b): Irrespective of your views on materiality, do you believe that the model would address these issues? YES / TO AN EXTENT / NO (c): Are there any other issues which you believe to be material but not addressed by the model? YES / NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) Cost-reflectivity and undue discrimination are issues, and this model would certainly address them. What has not been proven is whether more cost-reflective charges would make the use and development of the transmission system more efficient. The benefit to customers is, therefore, uncertain NGET MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) As well as the points made above, it is not clear how many constraints are genuinely intra-zonal, and how many are inter-zonal: the case for nodal dispatch is therefore not proven In any case, a zonal process does not preclude the emergence of ‘nodal’ BMUs. If the need arises, and sufficient controllable generation exists, the market will provide (b): the specification of the model (“what”) none (c): the process and timescales for implementation (“how” and “when”) none (d): model-specific interactions with developments in interrelated areas none NGET MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs This is simpler to implement than the Airtricity or SP-TD models, as no new billing processes are required. (b): Cost-reflectivity This is the most (indeed, only truly) cost-reflective model proposed (c): Efficient network development If cost-reflective charges were the only requirement for efficient network development, this would be the strongest proposal. However, in practice, the administrative changes in the CE model may yield at least as much benefit. There is, of course, the option to combine the two

Response 3 Centrica Energy


Response 4 E.ON UK plc


TADG Working Group Strawman Assessment Questionnaire Name: Paul Jones Organisation: E.ON UK plc EXISTING ARRANGEMENTS Question 1: In the light of your views on the issues in relation to the treatment of DG in the existing transmission arrangements and associated consequences of continued growth of DG, as discussed by the group, set out your views on the impact on the TADG objectives of continuing with those arrangements on an enduring basis: (a): Minimising implementation costs The present arrangements by definition will minimise implementation costs as there is nothing to implement to maintain them. (b): Cost-reflectivity The TNUoS charging methodology has been designed around the present wider trading arrangements which provide for net treatment of embedded generation on a GSP Group (GSPG) basis. The transmission system has to be built on the basis of the net flows that NGET expects on the network. It would not make sense for the network to be built assuming that all distributed generation exports its full output to the transmission system. It is true that some individual GSP’s export. However, the market arrangements are not designed at the GSP level, just the GSP Group. Therefore, commercially this should not be an issue. (c): Efficient network development On a technical basis NGET clearly needs to know what is happening at an individual GSP level. However, this information is delivered by operational metering and by data provided by Distributors under the Grid Code and the provisions of CUSC Amendment CAP097.



SP T&D MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? NO (b): Irrespective of your views on materiality, do you believe that the model would address these issues? TO AN EXTENT (c): Are there any other issues which you believe to be material but not addressed by the model? NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) If it is deemed that a commercial product is required such as DTEC, then clearly the proposal meets this requirement by providing such a product. However, it is by no means clear that such a product is necessary. Clearly some individual GSPs do export. However, the market arrangements are not designed at the GSP level, just the GSP Group. Therefore, commercially this should not be an issue. Clearly NGET requires operational and planning data at the GSP level. However, you do not acquire such data by charging parties. This is already provided by Distributors under the Grid Code and CUSC Amendment CAP097. If further information is required then explicit information provisions should be drafted not charging provisions. SP T&D MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) These comments are made in 1(d) above. (b): the specification of the model (“what”) It is clear that under this proposal certain distributed generation would be allocated to individual GSPs for the purposes of DTEC. However, it is not clear how this would affect the demand TNUoS charges of those suppliers who are responsible for these exports for settlement purposes. Embedded generation metered data is aggregated by a Supplier’s agents on a GSP Group basis. This is true also for the Supplier’s demand data. Demand and generation data is netted off each other within the Supplier’s BMU for that GSP Group. This proposal requires specific generators allocated to an individual GSP to be charged on the basis of DTEC. These generators should therefore be removed from the metered data for the relevant suppliers concerned to avoid them being counted twice (once as generation with a DTEC and once as negative demand). This is likely to mean a reasonably large systems change to the settlement arrangements or an effort intensive workaround. This also means that suppliers as a whole will be charged for more demand than the net level of import onto the GSP Group. Assume that a GSP Group has 1,000MW of demand and 200MW of generation. NGET should be recovering 800MW of demand TNUoS charges. However, if 50MW of this generation is allocated to an exporting GSP, then only 150MW of generation should be offset against local demand. This means that 850MW of demand charges would be recovered. It is not clear how this would be cost reflective. Additionally, if the DTEC is set against the net export of the GSP, how much of



this would be subtracted from each affected generator. For example, if the 50MW of generation above resulted in a net maximum export of only 10MW, how much would each supplier BMU be reduced by at times of system peak? Would it mean that the ability of an embedded generator to reduce a supplier’s exposure to demand TNUoS would be reduced by the level of net DTEC allocated to it? If so, what if not all affected generators are operating at Triad? By mixing a GSP Group basis demand product with an occasional GSP based generation product, there appears to be scope for a great deal of confusion and double counting. (c): the process and timescales for implementation (“how” and “when”) On top of the implementation implications identified by the proposer, it is also likely that systems changes to the settlement arrangements as described in b) above would be necessary. (d): model-specific interactions with developments in interrelated areas Presumably as these generator metered volumes (and the increased supplier metered volumes) would be liable for TNUoS charges, by the same token they should be liable for BSUoS, transmission losses, RCRC and able to be explicitly traded in the wider open market. If not it needs to be clearly argued why different treatment is justified for one element of the commercial framework where it is not for others. SP T&D MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs This proposal could involve significant costs to implement as discussed above. (b): Cost-reflectivity It is argued above that this proposal is unlikely to be cost reflective as the level of demand being charged in total will be higher than the total net import on to the GSP Group. (c): Efficient network development This proposal as far as we are aware is not intended to address any issue in respect of efficient network development.



AIRTRICITY MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? NO (b): Irrespective of your views on materiality, do you believe that the model would address these issues? TO AN EXTENT (c): Are there any other issues which you believe to be material but not addressed by the model? NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) This model appears similar to the SPTL model with the provision for compensation if NGET requires the level of export to be constrained down. As such, our comments on this model are similar in nature to those made for the SPTL model. AIRTRICITY MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) Please see comments to the SPTL model. (b): the specification of the model (“what”) Please see comments to the SPTL model. (c): the process and timescales for implementation (“how” and “when”) Please see comments to the SPTL model. (d): model-specific interactions with developments in interrelated areas Please see comments to the SPTL model. AIRTRICITY MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs Please see comments to the SPTL model. (b): Cost-reflectivity Please see comments to the SPTL model. (c): Efficient network development Please see comments to the SPTL model.



CE ELECTRIC UK MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? NO (b): Irrespective of your views on materiality, do you believe that the model would address these issues? YES (c): Are there any other issues which you believe to be material but not addressed by the model? NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) The defect which this model appears to be addressing is the lack of TNUoS charging arrangements for an exporting SVA BMU. In fact the present arrangements pay exporting Supplier BMUs negative TNUoS. Therefore, this proposal by allowing for charges for exporting supplier BMUs would provide a solution to this if it were deemed a problem. We do not believe that it is. The proposal is also likely to result in a methodology which charges non cost reflectively. For instance, one supplier could have a significant amount of export from its Supplier BMU whereas another could have a significant amount of import to its Supplier BMU. This would result in a significant demand charge and a significant generation charge being levied, whereas the true net position for the GSP Group as a whole would be a far smaller level of export or import. CE ELECTRIC UK MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) Covered in 1d) above. (b): the specification of the model (“what”) The specification is fairly clear. The SVA processes probably do not need strengthening as suggested as they presently can cope with exporting supplier BMUs. (c): the process and timescales for implementation (“how” and “when”) The implementation of this option appears less onerous than the previous two proposals. (d): model-specific interactions with developments in interrelated areas This maintains the GSP Group element of the existing arrangements. Therefore, it is largely consistent with the remainder of the commercial framework. CE ELECTRIC UK MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs There will be implementation costs, albeit less than the previous two proposals. It is also not clear that there are real benefits to justify the costs. See the comment to b) below for further explanation of this. (b): Cost-reflectivity Although there is a lack of export charging for exporting supplier BMUs at present, it is not clear that this is necessarily a problem. Indeed, as described in 1d) above, removing the present charging arrangements whereby a negative demand charge is paid to exporting supplier BMUs could result in a double



counting of charges for the GSP Group as a whole. There should perhaps instead be an export charge for BMUs which export when the GSP Group as a whole exports, with negative export charges for those which import in such circumstances. (c): Efficient network development The strengthening of information provision suggested would appear to provide benefits in this respect.



NGET MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? NO (b): Irrespective of your views on materiality, do you believe that the model would address these issues? NO (c): Are there any other issues which you believe to be material but not addressed by the model? NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) Please see the answers to subsequent questions below. NGET MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) There are a number of issues raised which we would disagree with. Our comments are made in the order which NGET raises these issues in their paper. Discrimination The first rationale for this model is that the present methodology is discriminatory. Firstly, NGET believes that the fact that an embedded generator does not pay TNUoS and can offset local demand thereby reducing a supplier’s TNUoS, whereas a transmission generator cannot, is discriminatory. A situation whereby different parties in different situations are exposed to different charges does not necessarily amount to discrimination. The reason that these parties (the embedded generator and the supplier) avoid TNUoS charges is that they are trading between each other within the distribution system and are not using the transmission system for these trades. Taking NGET’s view to its logical extreme, transmission connected generation should be exposed to distribution charges too, so that embedded generators are not discriminated against. The reality is that these parties pay different charges because they are connected to different networks. NGET also states that an embedded generator can trade in the wider market or the local market whereas a transmission connected generator cannot. We are not certain of the point which is being made in this instance, in respect of discrimination. Firstly embedded generators who avoid TNUoS charges do not have the ability to trade nationally. Additionally, the transmission connected generator can trade to anyone at any point in the GB. Therefore, it’s not clear how it is being restricted in this sense. The next point states that owners of transmission connected power stations have to pre-book capacity rights whereas embedded ones do not. However, this is not strictly true. CAP097 means that embedded generators which are deemed to have a significant impact on the transmission system cannot energise until NGET has completed the necessary transmission reinforcements. Interestingly, NGET states that an embedded power station “uses the transmission system as negative demand”. Embedded power stations reduce the demand of the GSP



Group in which they are connected. This may have an effect of changing flows on the transmission system so that investment is required to maintain the access rights of existing transmission connected generators. However, it may also create spare capacity. The simple fact is that reductions of GSP Group demand can have a beneficial or detrimental effect on the transmission system. It does not mean that those generators embedded in the GSP Groups are using the system. The final point made on discrimination appears to relate to the threshold set for CAP097. We assume that this point is merely stating that NGET believes it was not set low enough. We believe that Ofgem is content with the level as it chose to implement the working group amendment which implemented it. Cost Reflectivity The second issue raised is cost reflectivity. The first point raised in this respect appears to be that all generators compete with each other as demand can choose to purchase from local embedded or national transmission connected generators. Therefore, NGET believes that they should all be exposed to the same charges. However, this does not make sense. For instance, say I live next door to a CD shop. I have the choice to go next door and purchase a CD or to go online and buy one from anywhere in the world. If I choose to go online I will have to pay postage for the CD to be sent to me. Does this mean that the online retailer is being discriminated against? Should the shop next door also pay the same postage and charge it to me so that they are competing on a level playing field? The second point raised on cost reflectivity appears to suggest that embedded generators sometimes cause local usage of transmission networks (eg by exporting to the transmission network at one GSP and importing at another within the same GSP Group) which they do not pay for. This is indeed an effect of charging on a GSP Group basis. However, NGET’s solution is for all embedded generators to pay on the basis of gross flows which clearly do not occur in reality. This would undeniably be a significantly larger distortion than occurs in the occasional circumstance under the existing arrangements. The third point raised on cost reflectivity relates to the apparent £17/kW difference that NGET believes exists between the charges for an embedded and a transmission connected generator. Firstly, the difference between an embedded and a transmission connected generator is a result of the TNUoS the embedded generator avoids and the Distribution charges that a transmission connected generator avoids. However, even if you look at the pure TNUoS effect this is not as a result of the location specific element of the charge, but is due to the residual tariff which is not location specific. The location specific signal is maintained. The residual tariff is cost reflective in that it ensures that the costs of the transmission network are recovered in the proportions of 27:73 from generators and suppliers respectively. This only fails to operate cost reflectively if a generator who is using the transmission system is not paying it. However, the embedded generator is not using the system. It is reducing the use of the system by local demand. As we have stated above, this reduction in demand may have the effect of increasing flows on the system. However, this does not mean that the embedded generator is using the system itself. Competition The third issue raised is that of competition. Firstly NGET states that as the local demand can choose to purchase from the local or a national generator these two generators are directly competing. This may be the case in respect of the local



demand but they are not competing fully. Transmission connected generation can compete GB wide whereas embedded generators can only compete within the local GSP Group. Therefore, their options to compete are significantly fewer than those of transmission connected generators. The second point made in respect of competition relates to the price at which an embedded generator will sell to a local supplier. The point made appears to be that as the local price will relate in some way to the wider market price the local generator must be benefiting from the transmission network and therefore should pay for it. The argument is that the local generator cannot charge a price which is higher than the wider market price or the demand will go to the wider market. It is true that the local generator’s price will be bounded in some manner by the prices of alternatives in the wider market. This does not mean though that by avoiding some costs that some other competitors pay it is gaining an unfair advantage. In the example of the CD shop next door, does the shop benefit from international postal companies, because it competes with online CD sellers who use them? Exporting GSPs The fourth issue which has been raised is that of exporting GSPs. As we have stated previously, the trading arrangements are concerned with GSP Groups not GSPs. Therefore, any finer granularity is commercially not relevant. It should be noted that this model is proposing a GSP Group solution so would not address this particular issue. It would simply assume that all embedded generators export and all demand imports as if there were no netting off. It is by far a less realistic solution than the current arrangements. Efficiency and security The fifth issue NGET raises is the efficient and secure operation of the system. The issue appears to be that NGET would like to be able to control certain embedded generators. It is not clear why distributed generators have to pay transmission charges to facilitate this. For instance, NGET could seek bids and offers from Supplier BMUs that contain embedded generation, which in effect would amount to controlling the level of that supplier’s net demand in the same way as a transmission connected generator’s generation could be controlled. (b): the specification of the model (“what”) Our comments on this aspect are essentially covered in a) above. In summary our main issues are:

• This proposal would be wholly inconsistent with other arrangements in the market such as BSUoS charging and energy trading which are based on net treatment of generation and demand within the same GSP Group.

• Basing charging on gross flows which do not exist, is not at all cost reflective.

• Embedded generators reduce use of the transmission system by demand within the same GSP Groups. They do not use the system themselves.

• This would produce a discriminatory charging situation whereby distribution connected generators would be required to pay transmission charges but transmission connected generators would not be required to pay distribution charges. Even if it were deemed appropriate for generators to pay charges for networks to which they are not connected, and arguably that they do not use, then this proposed different treatment would discriminated in favour of transmission connected generation. We believe that it is more appropriate to maintain the principle that generators should pay charges for the network they use.



• You do not need to charge generators to control them or to obtain information on them.

(c): the process and timescales for implementation (“how” and “when”) This is a major change. However, NGET appears to have correctly identified the correct areas of the arrangements which would need to be changed to implement this proposal. (d): model-specific interactions with developments in interrelated areas One of our main concerns is that this would leave the TNUoS arrangements significantly out of line with the rest of the trading arrangements. This in itself is likely to mean the creation of market distortions and perverse incentives. NGET MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs This will have significant implication costs. There will be centrally incurred costs to change systems, processes and legal text. Additionally, in the short to medium term a large number of market participants’ commercial agreements will have to be renegotiated to account for such a significant change in the commercial arrangements. Market participants’ costing and charge validation systems and processes will most likely have to be redesigned too. (b): Cost-reflectivity This is discussed in 2a) above. Charging participants on the basis of fictional gross flows on to the transmission system cannot be cost reflective. (c): Efficient network development NGET and the Scottish TOs plan their networks on the basis of information of expected generation and demand patterns. They do not do so on the basis of the number of parties they are able to charge. If the present level of information is insufficient, then these elements should be bolstered such as proposed in the CE Electric proposal.

Response 5 National Grid


TADG Working Group Strawman Assessment Questionnaire Name: Patrick Hynes Organisation: National Grid EXISTING ARRANGEMENTS Supplier agency model with embedded generation treated as negative demand Question 1: In the light of your views on the issues in relation to the treatment of DG in the existing transmission arrangements and associated consequences of continued growth of DG, as discussed by the group, set out your views on the impact on the TADG objectives of continuing with those arrangements on an enduring basis: (a): Minimising implementation costs Clearly the benefits of any new development must outweigh the cost of implementation and enduring administration. However, it does not naturally follow that the cheapest solution or “do nothing” is the optimal solution. (b): Cost-reflectivity Cost reflectivity is a relevant objective in National Grid’s Transmission licence. However cost reflectivity is not the only objective, and although the objectives all seek to achieve the most efficient outcome for end consumers, benefits in one area need to be weighed up against effects in others. For instance, the most cost reflective charging regime would be a nodal regime, however in order to facilitate effective competition the charging regime is zonal. As the GBSO we have an obligation to keep the charging arrangements under review at all times and bring forward changes that would make the methodology better meet the relevant objectives. The assessment as to whether a particular modification better meets the objectives is discussed and consulted on with the industry prior to submitting a formal change to the Authority. The current charging arrangements treat embedded generation below 100MW as negative demand, irrespective of the actual impact on the transmission system. Whilst the demand charge does include a locational element, the absolute difference between directly connected (and licensable embedded generation) and embedded generation is the sum of the residual elements (approximately £17/kW) within the charging model. This difference is a feature of the charging arrangements rather than reflecting the actual embedded benefit. (c): Efficient network development Network development is essentially governed through the Security and Quality of Supply Standard. Investment not justified under the SQSS is unlikely to be deemed efficient and therefore be at the transmission licensees own cost i.e. a stranded asset. The processes in the SQSS are split between a deterministic and economic assessment. Both of these assessments rely heavily data, most of which is driven by users. Where the data is inaccurate the system will either be over or under invested in. Underinvestment would increase operational costs and could lead to local or system wide security issues. Therefore it is essential that the forecast data used in the assessment of transmission capacity is the best information available. Cost reflective charging is the primary vehicle for indicating to Users the



consequences of their actions, a user accepting future liability to pay the charges is a clear signal that supports the case for efficient investment. Without the appropriate charge and commitment to pay that charge it is difficult to demonstrate efficient network development.



SP T&D MODEL Thin DNO model – DTEC for export Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES (b): Irrespective of your views on materiality, do you believe that the model would address these issues? NO (because it only seeks to resolve a minor fraction of the problem.) (c): Are there any other issues which you believe to be material but not addressed by the model? YES (d): Provide any detailed comments in the context of your answers to questions a), b) and c) Whilst how to handle exporting GSP is an issue it is only one symptom of the wider issue of how to treat embedded generation. It does not facilitate the pass through of cost reflective signals to embedded generation. A generator will be financially better off by ‘embedding’, thus contributing to the decision to embed regardless of the “real” embedded benefit. With a charge of ‘higher of DTEC or metered output’ a generator will logically choose metered to mange risk. Compensation for restricted output is not dealt with. Provides an incentive to site generation in GSPs with ‘spare capacity’ (not quite exporting yet) irrespective of the impact on transmission. SP T&D MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) This model does not recognise that all generators affect flows and thus investment. We fail to see how the continuation of the large benefit would not influence location and sizing decisions as indicated by the proposer. National Grid believes that Users do embed to avoid the obligations relating to transmission infrastructure. (b): the specification of the model (“what”) Providing different products and charging arrangements for generation based on point of connection will undoubtedly influence connection point decisions. Having a ‘spill’ charging arrangement will not encourage accurate planning information. GSP export alone is not a good proxy for network investment. New investment is driven by change i.e. a demand reduction of 100MW (from import of 200 to import of 100MW) will have the same impact as 100MW export. (c): the process and timescales for implementation (“how” and “when”) We would also need to establish how the SO restricts DNO export in a non-discriminatory manner i.e. for a constraint in the borders would the SO restrict SHEDL or SPD. Would the DNO also be responsible for BSUoS liability, if not how is this attributed to suppliers / generators? The proposal is unclear as to the affect on Supplier demand charges i.e. can the supplier still net off on a zonal basis.



(d): model-specific interactions with developments in interrelated areas SP T&D MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs Appears to be a relatively cheap part-solution but doesn’t fix the underlying issues. We also have reservations that there is devil in the detail such as those noted above that may expose additional costs. (b): Cost-reflectivity It would not result in more cost reflective charges for embedded generation that does not export but still initiates investment (c): Efficient network development The export from GSPs is small in relation to the overall growth in embedded generation. As network investment is principally driven by embedded generation as a whole and not just that proportion that causes GSPs to export, the proposed mechanism is highly unlikely to improve the current network investment arrangements.



AIRTRICITY MODEL Thin DNO net model (thin because supplier still pay demand charges) Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES (b): Irrespective of your views on materiality, do you believe that the model would address these issues? TO AN EXTENT (c): Are there any other issues which you believe to be material but not addressed by the model? YES (d): Provide any detailed comments in the context of your answers to questions a), b) and c) The model recognises that embedded generation causes transmission cost but fails to recognise the majority of these are caused by reducing demand rather than increasing export. Conceptually this is an interesting model, however the full implications of the model have not been flushed out. The model also fails to recognise settlement is performed on a zonal rather than nodal basis, or how suppliers’ demand charges are affected. Logically, the proposal leads to exit capacity reform and the development and integration of DNO balancing arrangements. AIRTRICITY MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) Each meter output is assigned to a DNO and a Supplier, indeed data collectors work for suppliers not DNOs, so we fail to see why the DNO must be responsible. Clear separation of D and T charging can never be achieved if T charges are to be passed through the D regime as proposed. Whilst both the regimes (T and D) could be different the important issue is that they are both cost reflective, facilitate competition and applied to the appropriate parties. The current methodology seeks to provide equity for all parties rather than all points on the transmission system, differentiation is based on a party’s impact on the system. It could be considered inappropriate to treat some generation as demand, in terms of cost reflectivity, discrimination and competition it does raise a number of issues. Charging, investment and operation are inextricability liked in a cost reflective and efficient methodology i.e. investment in response to signals aims to optimise operational and investment costs. It is implied the transmission system will not transmit bulk power, this is not supported by the fact that most renewables are sited on the periphery of the system where there is little or no demand. Embeddeding these in the local distribution does not negate the need to reinforce the transmission system. We do not believe the full implications and costs of the model have been identified e.g. the development of balancing and settlement on a GSP level, reform of the existing arrangement to deal with investment caused by ‘negative demand’. (b): the specification of the model (“what”) We would agree that charging suppliers on usage and DNOs on capacity would be difficult to justify when measured at the same boundary.



The development of short term local trading, balancing and settlement on a nodal (GSP) level has not been identified. The distribution charging regimes are different to transmission. However, each is intended to signal different investments. For example, if a generator connects in the south and provides a benefit NGET charges should reflect that benefit, however may have little to do with local investment. The proposal is not clear as to whether an embedded generator can trade outside of their GSP, it appears inconsistent to suggest GSPs are independent and that generation does not use the transmission system, but then allow trade at a zonal level. The proposal implies large embedded Power Stations should also be assessed at the net GSP level, this is a significant change from present arrangements. Transmission services are mentioned but the implications not explored. Any charge to the provision of services would have significant implications for roles, funding, industry codes and IS systems. We do not believe it would be efficient to allow DNOs to invest to avoid transmission charges. Creating a distribution system to avoid the transmission would be extremely inefficient and expensive. (c): the process and timescales for implementation (“how” and “when”) We believe the implications of the proposed model are far more wide ranging than identified. There would be significant code changes to reflect the changed roles and responsibilities. Changing the way large embedded generation is treated will have implications on the BSC. DNOs providing system services, such as response, would also have a significant impact on codes. The model implies active despatch by DNOs, this does not currently exist and would need to be developed, along with coordination arrangements with the GBSO. We fail to see how local GSP despatch would better facilitate competition and how it coexists with zonal and national trading without substantial changes to Settlement systems. It is accepted that a reduction in demand can cause investment in transmission. Where this reduction is caused by embedded generation we believe it should receive a signal to encourage the most efficient solution and the signal should be consistent with other generation to avoid inappropriate locating decisions. This implies the need to investigate full scale exit reform should signals for embedded generation be seen as important. Our experience in gas exit reform suggests this would be a very significant and complex task. (d): model-specific interactions with developments in interrelated areas AIRTRICITY MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs Given our understanding of the model we would expect very significant changes to industry structure which would include considerable cost. Out of the models discussed at TADG, although conceptually appealing, we believe this to be the most radical and most expensive to implement. (b): Cost-reflectivity If developed with a full reform of the exit arrangements (demand capacity product, overrun, under-run) it has the potential to be cost reflective. If implemented without wider changes it would be less cost reflective. However we are not proposing this model given the complexity of full scale exit reform. We do not believe local markets would facilitate improved competition.



(c): Efficient network development As originally scoped it would not improve investment. If implemented with the other changes highlighted above it would address many of the issues. However it would have a negative impact on competition if each market is largely isolated.



CE ELECTRIC UK MODEL Very thin Supplier net model Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES (b): Irrespective of your views on materiality, do you believe that the model would address these issues? NO (c): Are there any other issues which you believe to be material but not addressed by the model? NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) The net effect of the model is unlikely to result in any change in charges to Suppliers and therefore unlikely to influence behaviours. The model would allow the development of embedded generation at new and existing GSPs without providing a cost reflective signal that is comparable to that for directly connected generation, therefore providing inappropriate and inefficient incentives. CE ELECTRIC UK MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) CE Electric have captured the main issues, demonstrating efficient planning, managing control of embedded generation, clear rights and cost reflective equitable charging. (b): the specification of the model (“what”) Export from SVA BMUs (a BMU based on the whole of a DNO zone) is not a good proxy for transmission investment. In most cases, even with large volumes of generation, it is unlikely that a reasonably sized Supplier SVA BMUs will export. (c): the process and timescales for implementation (“how” and “when”) In order to despatch plant there is a requirement to know what it is currently doing (some visibility) and forecast of what it is expected to do in the future, some form of compensation would also be required to despatch efficiently (so the least efficient plant can be switched off first). This would suggest the generation would need to be set up in a separate BMU. The current week 24 process should already capture embedded generation (as negative demand and explicit of requested capacity), however these are not necessarily contracted values or backed up by any commitment. In order to invest efficiently in the transmission network parties who cause investment or tie up capacity on the system must be subject to the appropriate inventive. (d): model-specific interactions with developments in interrelated areas



CE ELECTRIC UK MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs Implementation cost would be low compared to other models. (b): Cost-reflectivity It would not be more cost reflective than the current model. The proposer recognises that charges to individual parties would not change and that there would still be an issue with plant below ‘cap97 level’ (c): Efficient network development It does not appear to improve over the current model and in certain circumstances, given the lack of cost reflective signals, investment would be more at risk of standing. If the proposal facilitated greater levels of connection without the approparite signal the risk of inefficient network development would be increased.

Response 6 Renewable Energy Association


TADG Working Group Strawman Assessment Questionnaire Name: Tim Russell Organisation: Renewable Energy Association . EXISTING ARRANGEMENTS Question 1: In the light of your views on the issues in relation to the treatment of DG in the existing transmission arrangements and associated consequences of continued growth of DG, as discussed by the group, set out your views on the impact on the TADG objectives of continuing with those arrangements on an enduring basis: (a): Minimising implementation costs Continuing with the current arrangements would have no implementation costs (b): Cost-reflectivity The current arrangements are cost reflective, except in the treatment of larger distributed generation which is charged for transmission on a gross basis. ©: Efficient network development If the current arrangements actually prevent export from a distribution system then this is not efficient. An agent acting for distribution connected entities is more efficient than having relationships between distribution connected generators and the TSO.



SP T&D MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES (b): Irrespective of your views on materiality, do you believe that the model would address these issues? YES (c): Are there any other issues which you believe to be material but not addressed by the model? YES (d): Provide any detailed comments in the context of your answers to questions a), b) and c) It is not clear why the export is non firm and therefore not subject to constraint payments. SP T&D MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) (b): the specification of the model (“what”) No reason given for DTEC to be different from TEC. (c): the process and timescales for implementation (“how” and “when”) (d): model-specific interactions with developments in interrelated areas SP T&D MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs Good (b): Cost-reflectivity Not clear that export charge should only be applied to certain generation as all sites that export to the distribution system regardless of size contribute to any export to the transmission system. (c): Efficient network development Good, allowing export to the transmission system and charging for such export.



AIRTRICITY MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES (b): Irrespective of your views on materiality, do you believe that the model would address these issues? YES (c): Are there any other issues which you believe to be material but not addressed by the model? NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) AIRTRICITY MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) (b): the specification of the model (“what”) It is not clear that there is any need for a Constraint and Compensation Agreement. Generators can still participate in the Balancing Mechanism through Supplier BMUs or have their own BMUs if desired without the need to have an individual TEC (the latter might require changes to the CUSC/BSC but this would be easier than developing a new agreement). (c): the process and timescales for implementation (“how” and “when”) (d): model-specific interactions with developments in interrelated areas AIRTRICITY MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs Relatively cheap (b): Cost-reflectivity Very good (c): Efficient network development Good



CE ELECTRIC UK MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES (b): Irrespective of your views on materiality, do you believe that the model would address these issues? YES (c): Are there any other issues which you believe to be material but not addressed by the model? NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) CE ELECTRIC UK MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) (b): the specification of the model (“what”) It is assumed that the contents of the last slide are not part of the model and as such, whilst disagreed with, will not be commented on. (c): the process and timescales for implementation (“how” and “when”) (d): model-specific interactions with developments in interrelated areas CE ELECTRIC UK MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs Good (b): Cost-reflectivity Good, assuming content of last slide are ignored. (c): Efficient network development Good. Remarks on CAP097 limit need to be amended in the light of them being settable as low as is necessary.



NGET MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? NO (actually some are and some are not but if forced into yes or no the answer is as given) (b): Irrespective of your views on materiality, do you believe that the model would address these issues? TO AN EXTENT (c): Are there any other issues which you believe to be material but not addressed by the model? NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) The fact that there is no transmission product for export from a distribution network is material. It is not believed that the other issues are material i.e. that current net charging is not cost reflective. There is an acknowledgement that demand charging is not done on the same basis as generation charging and it is implied that this is an issue but the model does not address this. NGET MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) The rationale for the model is spurious because charging for net flows onto or off te transmission network is reflective of the cost imposed on the transmission network. In addition the remarks on control of generation are spurious as in practice no generation (of any size and connected to any network) is forced to submit offers and bids into the balancing mechanism i.e. participation is voluntary for all generation. If distribution connected generation wants its output to be controllable by the TSO it can form part of an appropriate supplier BMU or alternatively enter into an ancillary services agreement with the TSO. (b): the specification of the model (“what”) There is an obvious contradiction between the DNO contracting for connection capacity and suppliers contracting for access to the wider system both f which are essentially matters that require a long term view of capacity requirements and may require investment by NGC. It is self evident that the DNO is the appropriate party to contract for (import and export) capacity requirements with the TSO as he already requires all the necessary information for specifying transmission capacity in order to plan the distribution system. (c): the process and timescales for implementation (“how” and “when”) (d): model-specific interactions with developments in interrelated areas NGET MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs No view (b): Cost-reflectivity Gross charging is not cost reflective as it would be levying transmission charges



for flows that do not take place on the transmission network. If there is an issue with demand being charged for capacity used rather than capacity requested then the way to deal with this is to change the way demand is charged for, not to impose economically irrational charges on both demand and generation. (c): Efficient network development Charging for flows that do not appear on a network does not promote efficient network development. Under the proposals all generation (and demand) would try to connect to the transmission system if feasible.

Response 7 RWE


TADG Working Group Strawman Assessment Questionnaire Name: Bill Reed Organisation: RWE EXISTING ARRANGEMENTS Question 1: In the light of your views on the issues in relation to the treatment of DG in the existing transmission arrangements and associated consequences of continued growth of DG, as discussed by the group, set out your views on the impact on the TADG objectives of continuing with those arrangements on an enduring basis: (a): Minimising implementation costs By definition the status quo will not require any implementation costs. (b): Cost-reflectivity The transmission system is designed to meet peak demand. The transmission charging arrangements treat distributed generation as “negative demand”. As a result there is a strong incentive for distributed generation to operate across the winter peak and thereby reduce overall demand. This demand reduction enables transmission owners to avoid investment in the transmission system. In essence the charging arrangements provide a strong signal to distributed generation that should be reflective of the avoided costs of incremental investment in the transmission infrastructure that would be required to meet peak demand. Reform of the transmission access arrangement for distributed generation should not weaken this important market signal. (c): Efficient network development As noted under (b) above the current incentive under the transmission charging arrangements enables transmission owners to avoid the costs associated with investment in transmission infrastructure for the winter peak. The arrangements are a trade off between investment in transmission infrastructure and the costs associated with the incentive on distributed generation to operate at the peak. No evidence has been presented at the TADG that demonstrates that this trade off results in inefficient network development. In addition, no evidence has been presented that an increase in distributed generation will undermine the trade off. The current arrangements under some interpretations may not allow exports of energy from DNO networks to the transmission system. The growth of distributed generation particularly in Scotland suggests that the current arrangements are not sustainable. Therefore incremental change is required to enable transmission access for exports of energy from DNO networks, recognising that such exports may be treated as a form of generation transmission access. This would enable appropriate market signals to be provided to distributed generation, DNOs and transmission owners that results in efficient investment in transmission infrastructure to accommodate exports from DNO networks. It should be noted that no convincing evidence has been presented that the growth in distributed generation would result in a significant impact on efficient

Response 7 RWE


network investment. The issue of constraint management and system operation for distributed generation had been raised and discussed at the TADG. We do not believe that this is an issue for transmission access. We recognise that increasing numbers of small generators connected to the total system create issues associated with system operation. Such issues should be addressed under existing arrangements such as the Grid Code, the SQSS, the charging arrangements and the BSC. In particular there may be a case for improving information flows from smaller generators with the possibility that the threshold for BMU definition could be lowered. Such changes could enable the GBSO to have more effective control of smaller generators. It should be noted that no convincing evidence has been presented that the growth in distributed generation would result in significant impacts on the operation of the transmission system.

Response 7 RWE


SP T&D MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES – In the context of formalising the arrangements that would enable exports to the transmission system from a DNO network. The SP T&D Model would result in efficient investment signals for the transmission system related to incremental capacity investment and would remove the current constraints on exporting GSP’s. (b): Irrespective of your views on materiality, do you believe that the model would address these issues? YES – The proposed model would enable exports from DNO networks to be treated in the same way as exports from existing transmission connected generation. The current transmission access arrangements are based on the party that is connected to the transmission system procuring access rights in relation to the point of connection. We believe that this means that the party responsible for exports from a DNO network is the DNO. (c): Are there any other issues which you believe to be material but not addressed by the model? YES – The issue of GSP or GSP group resolution for exports from a DNO network requires consideration. We believe that the arrangements should apply at the connection point between the DNO network and the transmission company under the current bilateral connection agreements. (d): Provide any detailed comments in the context of your answers to questions a), b) and c) The SP T&D model would enable distributed generation to enter into contracts for connection exclusively with the network to which they are connected. In addition the DNO charging arrangements would enable the costs associated with transmission exports from DNO networks to be reflected onto relevant users (both distributed generation and demand). SP T&D MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) The SP T&D Model would enable exports from DNO networks (i.e. transmission entry) to be treated in a non discriminatory manner consistent with the arrangements for exports from transmission connected power stations. In addition, the model would continue to treat distributed generation as negative demand and retain the incentive to operate at the peak thereby resulting in economic and efficient network investment.

Response 7 RWE


(b): the specification of the model (“what”) We believe that the key elements of the model are:

• the creation of a new “Distribution Transmission Entry Capacity” for exports from the DNO network (CUSC amendment required);

• recognising that a construction agreement (with Final Sums liabilities) is required where DNO exports result in transmission investment;

• treating the DTEC capacity as generation TEC for transmission charging purposes (change to transmission charging arrangements); and

• pass through of DTEC charges on a cost-reflective basis to distribution users under the DNO charging methodology (change to DNO charging required).

(c): the process and timescales for implementation (“how” and “when”) We believe that the model can be implemented through changes to licences, the existing industry codes and charging arrangements. Such changes could take 12-24 months to complete. (d): model-specific interactions with developments in interrelated areas No comment SP T&D MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs The model represents incremental change on the basis of current arrangements rather than wholesale reform. This should result in low costs of implementation primarily associated with changes to industry codes. (b): Cost-reflectivity The use of a DTEC would enable a signal that is cost reflective to be passed through from the transmission owners to the DNO and via the DNO charging arrangements to distributed generation (and demand). (c): Efficient network development By enabling exports from DNO networks under the basis of current connections arrangements DNOs will be able to provide a clear signal to the transmission owners regarding investment in transmission infrastructure for DNO exports. The DNO charging arrangements will enable cost–reflective signals to be passed through to distributed generation that wishes to connect to the distribution system.

Response 7 RWE


AIRTRICITY MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES - In the context of formalising the arrangements that would enable exports to the transmission system from a DNO network. The Airtricity Model appears to be similar in many respects to the SP T&D Model with some further development in the area of constraint management. However, we do not believe constraint management is an issue for defining transmission access and should be considered elsewhere. (b): Irrespective of your views on materiality, do you believe that the model would address these issues? YES – The proposed model would enable exports from DNO networks to be treated in the same way as exports from existing transmission connected generation. The current transmission access arrangements are based on the party that is connected to the transmission system procuring access rights in relation to the point of connection. We believe that this means that the party responsible for exports from a DNO network is the DNO. (c): Are there any other issues which you believe to be material but not addressed by the model? YES – The issue of GSP or GSP group resolution for exports from a DNO network requires resolution. We believe that the arrangements should apply at the connection point between the DNO network and the transmission company under the current bilateral connection agreements. In addition, the pass through arrangements under DNO charging also requires further detailed consideration. (d): Provide any detailed comments in the context of your answers to questions a), b) and c) The Airtricity and SP T&D model would enable distributed generation to enter into contracts for connection exclusively with the network to which they are connected. AIRTRICITY MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) See comments on the SP T&D Model (b): the specification of the model (“what”) See comments on the SP T&D Model (c): the process and timescales for implementation (“how” and “when”)

Response 7 RWE


See comments on the SP T&D Model (d): model-specific interactions with developments in interrelated areas See comments on the SP T&D Model AIRTRICITY MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs See comments on the SP T&D Model (b): Cost-reflectivity See comments on the SP T&D Model (c): Efficient network development See comments on the SP T&D Model

Response 7 RWE


CE ELECTRIC UK MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES - In the context of formalising the arrangements that would enable exports to the transmission system from a DNO network. (b): Irrespective of your views on materiality, do you believe that the model would address these issues? NO – We do not believe that the supplier should be the agent responsible for procuring transmission access for exports from DNO networks. The current transmission access arrangements are based on the party that is connected to the transmission system procuring access rights in relation to the point of connection. We believe that this means that the party responsible for exports from a DNO network is the DNO. We are also concerned about the administrative burden and associated access liabilities for both suppliers and distributed generation under a supplier agent model in relation to transmission access. We believe that the proposed arrangements could result in an inefficient outcome with suppliers and/or distributed generation seeking to procure more entry capacity at the point of connection than is actually physically required. This could result in inefficient investment in transmission infrastructure. (c): Are there any other issues which you believe to be material but not addressed by the model? YES – The model does not address the commercial arrangements that would prevail between distributed generation and suppliers. Changing the incentives on suppliers could have major implications for existing contracts and affect the commercial relationships between parties. (d): Provide any detailed comments in the context of your answers to questions a), b) and c) No comment CE ELECTRIC UK MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) It is not clear as to “why” the suppliers is best placed to manage transmission capacity on behalf of distributed generation that is connected to the DNO network. We continue to believe that the contractual arrangements for exports from DNO networks should recognise that the party responsible for the connection should manage transmission access rights. (b): the specification of the model (“what”) No comment

Response 7 RWE


(c): the process and timescales for implementation (“how” and “when”) It is probable that the model can be implemented through changes to licences, the existing industry codes and charging arrangements. Such changes could take 12-24 months to complete. In addition allowance must be made for the renegotiation for supplier contracts. (d): model-specific interactions with developments in interrelated areas No comment CE ELECTRIC UK MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs Implementation of the CE Electric model would require renegotiation of existing contracts between distributed generation and suppliers this would be difficult to manage and expensive to complete. (b): Cost-reflectivity We are not convinced that making the supplier responsible for DNO exports would result in cost reflective signals with regard to transmission investment. In particular it appears difficult for the supplier to respond to any signal that required transmission or DNO investment. In addition there are problems associated with free riding where one supplier could initiate a transmission investment and be liable for final sums (taking on board the risk on behalf of the network owner) and then subsequently lose the distributed generator to another supplier that was unwilling to take the risk. This could result in a “prisoner’s dilemma” in relation to large investments in transmission infrastructure and effectively result in distributed generation that is either unable to connect or faces considerable constraints (unable to export onto the transmission system). (c): Efficient network development We do not believe that the supplier agent model would result in efficient network development since the supplier is not responsible for the physical connections between the DNO network and transmission system and it not the party that is connecting to the total system.

Response 7 RWE


NGET MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES - In the context of formalising the arrangements that would enable exports to the transmission system from a DNO network. (b): Irrespective of your views on materiality, do you believe that the model would address these issues? NO – The NGET model represents a fundamental reform of transmission access arrangements and raises material issues associated with the connection of distributed generation to the total system. In particular:

• The approach appears to undermine the triad benefit associated with negative demand treatment of distributed generation;

• It is unclear as to liabilities for final sums where new transmission investment is required I order to connect distributed generation;

• Suppliers and distributed would be required to renegotiate commercial relationships in order to implement the model; and

• It is not clear how investment signals in relation to transmission or distribution reinforcement would be improved.

(c): Are there any other issues which you believe to be material but not addressed by the model? YES – We are concerned that the requirement for suppliers to procure access on behalf of distributed generation will not result in an economic or efficient outcome. In particular there is an incentive on suppliers to procure sufficient access to meet the needs of all existing and prospective customers. This could result in suppliers procuring capacity at GSPs that exceeds the total capacity of distributed generation currently connected. This could result in the transmission owner investing in transmission infrastructure that exceeds the maximum requirement at the GSP. It is also unclear as to which party is responsible for providing security for new investment on the transmission system (final sums). In addition, it is not clear what would happen if a distributed generation did not have a supplier as an agent as it was unable to enter into an appropriate commercial arrangement. In this context the proposal appears to provide suppliers with significant market power in relation to distributed generation. In addition there are problems associated with free riding where one supplier could initiate a transmission investment and be liable for final sums (taking on board the risk on behalf of the network owner) and then subsequently lose the distributed generator to another supplier that was unwilling to take the risk. This could result in a “prisoner’s dilemma” in relation to large investments in transmission infrastructure and effectively result in distributed generation that is either unable to connect or faces considerable constraints (unable to export onto the transmission system).

Response 7 RWE


NGET MODEL (d): Provide any detailed comments in the context of your answers to questions a), b) and c) No further comment NGET MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) No comment (b): the specification of the model (“what”) No comment (c): the process and timescales for implementation (“how” and “when”) The NGET model represents a fundamental reform of the current access arrangements In particular the removal of the Triad basis for charging requires discussion of the implications for price control. We believe therefore that if progressed such reform should be considered at the next transmission price control (for implementation in 5-years time). (d): model-specific interactions with developments in interrelated areas No comment NGET MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs We believe that of all the options outlined above the NGET model would represent the most fundamental reform and have significant implementation costs. In this context it is worth noting that the removal of the triad basis of charging has significant commercial implications for all distributed generation and may render some schemes uneconomic. (b): Cost-reflectivity We do not believe that the supplier agent model would result in enhanced cost reflectivity since the supplier is not responsible for the net exports at a GSP (the point of connection). (c): Efficient network development The supplier agent model would result in less efficient network development as each supplier would procure TEC in excess of the actual requirement and the removal of the triad incentive could result in greater investment in both transmission and distribution infrastructure to meet winter peak demand.

Response 8 SPT&D


TADG Working Group Strawman Assessment Questionnaire Name: Paul McGimpsey Organisation: SPT&D EXISTING ARRANGEMENTS Question 1: In the light of your views on the issues in relation to the treatment of DG in the existing transmission arrangements and associated consequences of continued growth of DG, as discussed by the group, set out your views on the impact on the TADG objectives of continuing with those arrangements on an enduring basis: (a): Minimising implementation costs Objective met. Costs would be zero. (b): Cost-reflectivity Objective not met. Certain distribution-connected users of the transmission system currently avoid the requirement to pay transmission use of system charges. (c): Efficient network development Objective met. Efficient network development is not restricted by the current arrangements. CAP 97 ensures that ‘D’ connections, likely to have a significant system effect on the GB transmission system, are highlighted to NGET with NGET given the opportunity to ensure appropriate restrictions/obligations are placed on their connection, where applicable.

Response 8 SPT&D


SP T&D MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES / NO (b): Irrespective of your views on materiality, do you believe that the model would address these issues? YES / TO AN EXTENT / NO (c): Are there any other issues which you believe to be material but not addressed by the model? YES / NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) SP T&D MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) As per paper (b): the specification of the model (“what”) As per paper (c): the process and timescales for implementation (“how” and “when”) As per paper (d): model-specific interactions with developments in interrelated areas As per paper SP T&D MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs Objective met. Implementation costs minimal. (b): Cost-reflectivity Objective met. Ensures distribution connections that make use of the transmission system pay appropriate transmission charges. Distribution charging methodologies will require to be developed to enable the pass through of transmission charges levied on the DNO at a particular GSP. (c): Efficient network development Objective met. Works in conjunction with existing arrangements and CAP 97 regime.

Response 8 SPT&D


AIRTRICITY MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES / NO (b): Irrespective of your views on materiality, do you believe that the model would address these issues? YES / TO AN EXTENT / NO (c): Are there any other issues which you believe to be material but not addressed by the model? YES / NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) The Airtricity model is similar in many respects to that proposed by SPT&D. AIRTRICITY MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) Similar to SPT&D model. (b): the specification of the model (“what”) Similar to SPT&D model. (c): the process and timescales for implementation (“how” and “when”) Similar to SPT&D model. (d): model-specific interactions with developments in interrelated areas Similar to SPT&D model. AIRTRICITY MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs Implementation costs would be greater than those envisaged under the SPT&D model, specifically in relation to the development of a new constraint mechanism to be managed by the DNO and the removal of existing BEGA arrangements. (b): Cost-reflectivity Improved over existing arrangements in that DTEC charges would be levied against all distribution connections where export is authorised at the system node where an export occurs. (c): Efficient network development Objective met. Works in conjunction with existing arrangements and CAP 97 regime.

Response 8 SPT&D


CE ELECTRIC UK MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES / NO (b): Irrespective of your views on materiality, do you believe that the model would address these issues? YES / TO AN EXTENT / NO (c): Are there any other issues which you believe to be material but not addressed by the model? YES / NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) CE ELECTRIC UK MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) We share the concern relating to the DNO’s inability to make sensible connection offers to generators. We believe, however, that CAP 97 coupled with the introduction of the proposed DTEC arrangement for exporting GSPs will alleviate many of these concerns. Clarity will be greatly improved. (b): the specification of the model (“what”) Whilst we are not vehemently opposed to the CE Electric Model, we believe the DNO is best placed to manage interface issues with NGET in relation to its network, connections to, and flows to and from, the distribution network. In addition, we believe the DNO is best placed to pass through transmission charges associated with GSP exports via its Distribution Charging Methodologies. (c): the process and timescales for implementation (“how” and “when”) The implementation of this model would not represent a significant change to existing arrangements. We anticipate, therefore, that its implementation would not be unduly resource or time intensive. (d): model-specific interactions with developments in interrelated areas CE ELECTRIC UK MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs Objective met. Implementation costs are likely to be low. (b): Cost-reflectivity There is no real improvement over the existing regime. (c): Efficient network development The implementation of the CE Electric Model would not hinder efficient network development.

Response 8 SPT&D


NGET MODEL Question 1: The strawman proposer has identified the issues which the model seeks to address. In the context of the given model and the issues identified: (a): Do you agree that the issues identified are material? YES / NO (b): Irrespective of your views on materiality, do you believe that the model would address these issues? YES / TO AN EXTENT / NO (c): Are there any other issues which you believe to be material but not addressed by the model? YES / NO (d): Provide any detailed comments in the context of your answers to questions a), b) and c) The implementation of the NGET model would actively discourage the premise that generation should be located close to demand. This being a fundamental government initiative. Furthermore, transmission charges would be levied on those that do not make use of the transmission system. NGET MODEL Question 2: Provide any detailed comments on: (a): the rationale for the model (“why”) The NGET model has been developed on the basis of two key assumptions: 1.the location of the connection, whether it be to the transmission system or the distribution system, will have an equal impact on the level of required transmission system investment, and 2.embedded generation competes with directly connected transmission generators. We discount these arguments. The rationale for the model is flawed in that it seeks to prevent all generation where an existing North to South transmission flow exists. The availability of a more economical distribution connection is not in itself a reason to implement radical industry changes that would extend the remit of TNUoS charges and tighten NGET’s controls on embedded parties. In the majority of cases, embedded generation meets the needs of local demand via the distribution system. Such generation should not be subject to transmission charges or restrictions. A consequence of NGET’s approach is to restrict competition to its core service. (b): the specification of the model (“what”) The DNO, and not the Supplier, is best placed to manage distribution network planning, the connection of embedded generation and the interactions between activity on the distribution network and the transmission system. The key contractual interface between the network operator and the embedded generator should remain, as at present, with the DNO. The overhaul of the existing arrangements proposed prevents rather than facilitates the efficient growth of distributed generation. The alleged “issues” associated with smaller parties are already addressed by CAP 97. (c): the process and timescales for implementation (“how” and “when”) The NGET model would represent a significant change to existing arrangements. Its implementation would be complicated, in process terms, and would be costly and time intensive. (d): model-specific interactions with developments in interrelated areas

Response 8 SPT&D


NGET MODEL Question 3: Set out your views on the model, relative to the existing arrangements, in terms of its impact on the TADG objectives: (a): Minimising implementation costs Objective not met. Implementation costs would be significant. (b): Cost-reflectivity Objective not met. Transmission charges would be levied on all distributed generation connections, irrespective of whether they used the transmission system or not. (c): Efficient network development Objective not met. Efficient network development would be hindered, as the incentive to locate generation close to sources of demand would be removed.

Response 9 United Utilities


annex 2 – responses to strawman assessment questionnaire · tadg working group page 1 working...

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