modification 501 slides for workgroup

Modification 501 slides for Workgroup

Lesley Ramsey

Matthew Hatch

22

Background

Currently, commercial arrangements for gas flows at Bacton ASEP, (both interconnectors and off shore production) are covered by the provisions of the UNC.

EU Codes introduce rules to apply to IPs

To ensure CAM/CMP procedures are only applied at Interconnection Points (IPs), the existing BACTON ASEP will need to be split into two new ASEPS

Bacton UKCS ASEP

Bacton IP ASEP

Existing UNC processes would continue to apply at the new Bacton UKCS ASEP

CAM/CMP process will apply at Bacton IP ASEP

EU Regulation -requires changes to capacity arrangements

Bacton Terminal

UKCSSub Terminals

BBLST

IUKST

Continues to be covered by GB UNC

To be covered byEU Regulation

FIELDProduction

FIELDProduction

FIELDProduction

FIELDProduction

44

Requests are aggregated and compared

to obligated levels

Are aggregate level below obligated levels

Shippers indicate where existing Bacton holdingsare required

[June 2015]NGG issue Invitation Letter

Requirement to split existing holdings between the two new ASEPs

Further invitation letter to again indicate where

existing holdings requiredAre aggregate level below

obligated levels

Requests allocated in accordance with Shipper requests

Requests pro rated

YES

NO

NO

YES

55

Main principle

Following the reallocation of existing capacity between the 2 Bacton ASEPs Users will :

hold the same amount of NTS Entry Capacity in aggregate (at the two new Bacton ASEPs) as they currently hold at the existing Bacton ASEP

be liable for the same costs at the 2 new Bacton ASEPs as they currently are at the existing Bacton ASEP (under the current charging methodology)

Proposed timeline for the Bacton Reallocation process

Feb 2015 AMSEC

auction held

Feb Mar Apr May Jun Jul Aug Sep NovOct2015

Mar 2015 QSEC

auction held Mar 2015 QSEC

auction allocated

Ex

isti

ng

UN

C p

roc

es

se

sN

ew

pro

ce

ss

es 10 days after

QSEC auction is allocated

Invite Users

RMT&TSEC and Daily auctions

continue for each month Need to

suspend RMT&TSEC and Daily

auction for Nov at Bacton

ASEP

First Capacity

Reallocation

Final Capacity

Reallocation if necessary

Write out with

reallocations from final process if necessary

Write out with

reallocations (where

determined) hold second

process if necessary

CA

M im

ple

me

nte

d

Need to stop Capacity

Transfers at Bacton once new process

begins

6

Inform Users of any new

charge types or changes to invoices

Inform Users of new ASEPs

following Ofgem direction of GT

Licence changes

Once Bacton Reallocation process is

complete, re-instate

relevant UNC processes

Jan

77

Obligated levels at Bacton Entry Point

Obligated level of capacity at the existing Bacton ASEP (Table 6 of Special Condition 5F of GT Licence) is :

1783.4 GWh/d

The creation of 2 new points and obligated levels will require Ofgem to issue a Section 23 notice. The October 2013 Ofgem Open letter suggested the following:

Bacton UKCS 481.4 GWh/d and

Bacton IP 1302.0 GWh/d

The final values in the GT licence could be different, but the Ofgem Open letter values have been used in the following examples

7

8

UNC processes to be suspended

From [June – October 2015], whilst the reallocation process is taking place, the following processes will be suspended

Transfers of NTS Entry Capacity (TPD B5) for the period 01 November 2015 onwards

New Capacity Constraint Management agreements (TPD B2.8) for the period 01 November 2015 onwards

There will be no October 2015 RMT&TSEC auction for November 2015 NTS Entry Capacity at Bacton ASEP

There will be no relevant daily auctions held in October 2015 for November 2015 NTS Entry Capacity

99

Invitation Letter

Invitation letter issued requesting that Users signal how they want their existing registered NTS capacity at Bacton to be reallocated between the two new ASEPs

Issued following Feb 2015 AMSEC and Mar 2015 QSEC

Invitation letter will contain

User’s current capacity holdings at existing Bacton ASEP

A proforma for the User to indicate quantity of capacity to be allocated at each new ASEP

NTS Entry Capacity requested at the two new ASEPs should be equal to the existing holdings held at the Bacton ASEP for each relevant period

Completed profoma to be faxed back to NGG by [26 June 2014]

1010

Existing holdings

10

kWh/day 01/10/2016 01/01/2017 01/04/2017 01/07/2017 01/10/2017 01/01/2018 01/04/2018 01/07/2018

User A 400,000,000 400,000,000 10,000,000 10,000,000 400,000,000 400,000,000 10,000,000 10,000,000

User B 200,000,000 200,000,000 10,000,000 10,000,000 200,000,000 200,000,000 10,000,000 10,000,000

User C 300,000,000 400,000,000 10,000,000 10,000,000 300,000,000 300,000,000 10,000,000 10,000,000

User D 100,000,000 300,000,000 10,000,000 10,000,000 100,000,000 100,000,000 0 0

TOTAL 1,000,000,000 1,300,000,000 40,000,000 40,000,000 1,000,000,000 1,000,000,000 30,000,000 30,000,000

Example of Users holdings over all the QSEC auctions over the quarters 1 October 2016 until 30 September 2018 are as per the table below:

11

Reallocation

If the Initial Capacity Reallocation fully reallocates all the existing Registered NTS Entry Capacity to the two new ASEPs then

NGG will reallocate on Users behalf as per Users request

User will not be required to undertake any actions

If Users do not respond by the required date then

the default will be reallocation between the Bacton UKCS ASEP and the Bacton IP ASEP in the same proportion as the Obligated levels at the two ASEPs.

121212

Eg -Requests aggregated and compared to baselines

The aggregate requested level at the UKCS ASEP are above the Obligated level of 481.4Gwh

Initial Capacity ReallocationIP kWh/day 01/10/2016 01/01/2017 01/04/2017 01/07/2017 01/10/2017 01/01/2018 01/04/2018 01/07/2018

User A 200,000,000 200,000,000 5,000,000 5,000,000 200,000,000 200,000,000 5,000,000 5,000,000User B 40,000,000 40,000,000 2,000,000 2,000,000 40,000,000 40,000,000 2,000,000 2,000,000User C 120,000,000 160,000,000 4,000,000 4,000,000 120,000,000 120,000,000 4,000,000 4,000,000User D 60,000,000 180,000,000 6,000,000 6,000,000 60,000,000 60,000,000 0 0

Total 420,000,000 580,000,000 17,000,000 17,000,000 420,000,000 420,000,000 11,000,000 11,000,000

UKCS kWh/day 01/10/2016 01/01/2017 01/04/2017 01/07/2017 01/10/2017 01/01/2018 01/04/2018 01/07/2018User A 200,000,000 200,000,000 5,000,000 5,000,000 200,000,000 200,000,000 5,000,000 5,000,000User B 160,000,000 160,000,000 8,000,000 8,000,000 160,000,000 160,000,000 8,000,000 8,000,000User C 180,000,000 240,000,000 6,000,000 6,000,000 180,000,000 180,000,000 6,000,000 6,000,000User D 40,000,000 120,000,000 4,000,000 4,000,000 40,000,000 40,000,000 0 0

Total 580,000,000 720,000,000 23,000,000 23,000,000 580,000,000 580,000,000 19,000,000 19,000,000

TOTAL 1,000,000,000 1,300,000,000 40,000,000 40,000,000 1,000,000,000 1,000,000,000 30,000,000 30,000,000

Above Obligated level

For the other four quarters, the User requests will be allocated as requested as the aggregate requests are below the Obligated levels

Obligatd level 1302Gwh

Obligatd level 481.4Gwh

13

Final Capacity Reallocation

Where Users have signalled an aggregate level of capacity > obligated level for any Months/Quarters to the two new ASEPs

NGG will issue on [3rd August 2015] another Bacton capacity reallocation invitation for relevant months/quarters to give Users another opportunity to indicate where they would wish their Registered NTS Entry Capacity rights to be held in future

This final capacity reallocation will take place by [14th September 2015]

The whole process is anticipated to be completed by [28th September 2015].

141414

Final Capacity Reallocation

After the Final Capacity Reallocation, there are still three quarters where the Users aggregate requested level of capacity at the UKCS ASEP is above the Obligated level (481.4Gwh), so pro-ration will take place for those quarters

Example User requests

Final Capacity ReallocationIP kWh/day 01/10/2016 01/01/2017 01/04/2017 01/07/2017 01/10/2017 01/01/2018 01/04/2018 01/07/2018


Total 460,000,000 620,000,000 19,000,000 19,000,000 460,000,000 520,000,000 13,000,000 13,000,000


Total 540,000,000 680,000,000 21,000,000 21,000,000 540,000,000 480,000,000 17,000,000 17,000,000

TOTAL 1,000,000,000 1,300,000,000 40,000,000 40,000,000 1,000,000,000 1,000,000,000 30,000,000 30,000,000

Above Obligated level

The requests in the quarter beginning 1 January 2018 will now be allocated in full as they are below the two Obligated levels

Obligatd level 1302Gwh

Obligatd level 481.4Gwh

15

Pro-ration Example

Previous slide shows UKCSoversubscribed, compared to new baseline of 481,400,000kwh(for period 1.10.16)

User A 200,000,000

User B 120,000,000

User C 180,000,000

User D 40,000,000

Total 540,000,000

Pro-ration is applied (User Bids/ Total User Bids x Baseline = Prorated allocation)

User A 178,296,296

User B 106,977,778

User C 160,466,667

User D 35,659,259

Total 481,400,000

161616

Pro-ration

User requests are pro-rated back to the Obligated level at the UKCS ASEP in the three quarters highlighted and the remaining amount of requested NTS Entry Capacity is reallocated to the IP ASEP

Example User requests through Bacton Reallocation Process - Pro-ration Process

Need to pro-rate in 3 QuartersIP kWh/day 01/10/2016 01/01/2017 01/04/2017 01/07/2017 01/10/2017 01/01/2018 01/04/2018 01/07/2018


Total 518,600,000 818,600,000 19,000,000 19,000,000 518,600,000 520,000,000 13,000,000 13,000,000


Total 481,400,000 481,400,000 21,000,000 21,000,000 481,400,000 480,000,000 17,000,000 17,000,000

TOTAL 1,000,000,000 1,300,000,000 40,000,000 40,000,000 1,000,000,000 1,000,000,000 30,000,000 30,000,000

Original Bacton ASEP holding re-allocated to other pointRemember bids need to end up >= Minimum Eligible Amount of 100,000

Pro-rate as above Obligated level

17

Charges

Users will be liable for the same charges (at the two new Bacton ASEPs) as they currently are at the existing Bacton ASEP under the current charging methodology

A weighted average price for the capacity for the relevant periods will be used (calculated for each User)

Note: original clearing price of relevant auction

181818

Assumed QSEC clearing prices to calculate WAP

QSEC Clearing prices

p/kWh/d 01/10/2016 01/01/2017 01/04/2017 01/07/2017 01/10/2017 01/01/2018 01/04/2018 01/07/2018

QSEC1 0.0008 0.0012 0.0001 0.0001 0.0008 0.0008 0.0001 0.0001

QSEC2 0.0007 0.0007 0.0007 0.0007 0.0007 0.0007 0.0007 0.0007

QSEC3 0.0012 0.0010 0.0005 0.0005 0.0010 0.0010 0.0005 0.0005

Consider the quarters from 1 October 2016 until end of September 2018

The following table shows example clearing prices which were set in the three different QSEC auctions:

191919

Assumed User holdings at Bacton ASEP

Example User detailed holdings at existing Bacton ASEP

kWh/day 01/10/2016 01/01/2017 01/04/2017 01/07/2017 01/10/2017 01/01/2018 01/04/2018 01/07/2018User A QSEC1 100,000,000 100,000,000 5,000,000 5,000,000 100,000,000 100,000,000 5,000,000 5,000,000

QSEC2 200,000,000 200,000,000 5,000,000 5,000,000 200,000,000 200,000,000 5,000,000 5,000,000QSEC3 100,000,000 100,000,000 0 0 100,000,000 100,000,000 0 0Total 400,000,000 400,000,000 10,000,000 10,000,000 400,000,000 400,000,000 10,000,000 10,000,000

User B QSEC1 100,000,000 100,000,000 5,000,000 5,000,000 100,000,000 100,000,000 5,000,000 5,000,000QSEC2 0 0 0 0 0 0 0 0QSEC3 100,000,000 100,000,000 5,000,000 5,000,000 100,000,000 100,000,000 5,000,000 5,000,000Total 200,000,000 200,000,000 10,000,000 10,000,000 200,000,000 200,000,000 10,000,000 10,000,000

User C QSEC1 50,000,000 100,000,000 5,000,000 5,000,000 50,000,000 50,000,000 5,000,000 5,000,000QSEC2 100,000,000 100,000,000 0 0 100,000,000 100,000,000 0 0QSEC3 150,000,000 200,000,000 5,000,000 5,000,000 150,000,000 150,000,000 5,000,000 5,000,000Total 300,000,000 400,000,000 10,000,000 10,000,000 300,000,000 300,000,000 10,000,000 10,000,000

User D QSEC1 0 0 0 0 0 0 0 0QSEC2 45,000,000 150,000,000 5,000,000 5,000,000 45,000,000 45,000,000 0 0QSEC3 55,000,000 150,000,000 5,000,000 5,000,000 55,000,000 55,000,000 0 0Total 100,000,000 300,000,000 10,000,000 10,000,000 100,000,000 100,000,000 0 0

TOTAL 1,000,000,000 1,300,000,000 40,000,000 40,000,000 1,000,000,000 1,000,000,000 30,000,000 30,000,000

The User holdings in the three QSEC auctions over that period are shown in the table below:

202020

Assumed User holdings at Bacton ASEP - £s


£s 01/10/2016 01/01/2017 01/04/2017 01/07/2017 01/10/2017 01/01/2018 01/04/2018 01/07/2018User A QSEC1 73,600 108,000 455 460 73,600 72,000 455 460

QSEC2 128,800 126,000 3,185 3,220 128,800 126,000 3,185 3,220QSEC3 110,400 90,000 0 0 92,000 90,000 0 0Total 312,800 324,000 3,640 3,680 294,400 288,000 3,640 3,680

User B QSEC1 73,600 108,000 455 460 73,600 72,000 455 460QSEC2 0 0 0 0 0 0 0 0QSEC3 110,400 90,000 2,275 2,300 92,000 90,000 2,275 2,300Total 184,000 198,000 2,730 2,760 165,600 162,000 2,730 2,760

User C QSEC1 36,800 108,000 455 460 36,800 36,000 455 460QSEC2 64,400 63,000 0 0 64,400 63,000 0 0QSEC3 165,600 180,000 2,275 2,300 138,000 135,000 2,275 2,300Total 266,800 351,000 2,730 2,760 239,200 234,000 2,730 2,760

User D QSEC1 0 0 0 0 0 0 0 0QSEC2 28,980 94,500 3,185 3,220 28,980 28,350 0 0QSEC3 60,720 135,000 2,275 2,300 50,600 49,500 0 0Total 89,700 229,500 5,460 5,520 79,580 77,850 0 0

TOTAL 853,300 1,102,500 14,560 14,720 778,780 761,850 9,100 9,200

The following table shows the charges which the Users are liable for from each of the QSEC auctions:

212121

Assumed User holdings at Bacton – User WAPs

So the individual User weighted average prices can be calculated from the original QSEC auction clearing prices for the relevant periods

And these WAPs will be used during the Bacton Reallocation process

at both the Bacton UKCS and Bacton IP ASEPs


p/kWh/d 01/10/2016 01/01/2017 01/04/2017 01/07/2017 01/10/2017 01/01/2018 01/04/2018 01/07/2018

WAP User A 0.0009 0.0009 0.0004 0.0004 0.0008 0.0008 0.0004 0.0004

User B 0.0010 0.0011 0.0003 0.0003 0.0009 0.0009 0.0003 0.0003

User C 0.0010 0.0010 0.0003 0.0003 0.0009 0.0009 0.0003 0.0003

User D 0.0010 0.0009 0.0006 0.0006 0.0009 0.0009 0.0000 0.0000

222222

Results of the Reallocation Process £s

Users are therefore liable for the same financial commitment for their NTS Entry Capacity rights at the two new ASEPs as they were at the original Bacton ASEP

Original User holdings at existing Bacton ASEP

£s 01/10/2016 01/01/2017 01/04/2017 01/07/2017 01/10/2017 01/01/2018 01/04/2018 01/07/2018User A 312,800 324,000 3,640 3,680 294,400 288,000 3,640 3,680User B 184,000 198,000 2,730 2,760 165,600 162,000 2,730 2,760User C 266,800 351,000 2,730 2,760 239,200 234,000 2,730 2,760User D 89,700 229,500 5,460 5,520 79,580 77,850 0 0

Total 853,300 1,102,500 14,560 14,720 778,780 761,850 9,100 9,200

Reallocated User holdings

£s 01/10/2016 01/01/2017 01/04/2017 01/07/2017 01/10/2017 01/01/2018 01/04/2018 01/07/2018User A IP 173,372 209,314 1,820 1,840 163,174 172,800 1,820 1,840

UKCS 139,428 114,686 1,820 1,840 131,226 115,200 1,820 1,840Total 312,800 324,000 3,640 3,680 294,400 288,000 3,640 3,680

User B IP 85,580 113,897 1,092 1,104 77,022 81,000 1,092 1,104UKCS 98,420 84,103 1,638 1,656 88,578 81,000 1,638 1,656

Total 184,000 198,000 2,730 2,760 165,600 162,000 2,730 2,760

User C IP 124,092 201,908 1,092 1,104 111,255 93,600 1,092 1,104UKCS 142,708 149,092 1,638 1,656 127,945 140,400 1,638 1,656Total 266,800 351,000 2,730 2,760 239,200 234,000 2,730 2,760

User D IP 57,714 164,511 3,276 3,312 51,202 46,710 0 0UKCS 31,986 64,989 2,184 2,208 28,378 31,140 0 0Total 89,700 229,500 5,460 5,520 79,580 77,850 0 0

TOTAL 853,300 1,102,500 14,560 14,720 778,780 761,850 9,100 9,200

modification 501 slides for workgroup

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