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FUNDING ARRANGEMENTS

FUNDING ARRANGEMENTS. Stefan Leedham 03 June 2009. FUNDING ISSUES. It is not clear what the costs for a service will be upfront – so hard to identify incremental costs Different views as to what is meant by Like for Like: Additional requirements funded through User Pays?

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FUNDING ARRANGEMENTS

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  1. FUNDING ARRANGEMENTS Stefan Leedham 03 June 2009

  2. FUNDING ISSUES • It is not clear what the costs for a service will be upfront – so hard to identify incremental costs • Different views as to what is meant by Like for Like: • Additional requirements funded through User Pays? • Only services that meet clear criteria are User Pays? • Broadly the same function but no system limitations? • We’re actually building the bionic man! • Haven’t scoped services but need to agree funding arrangements • The price control does not dictate how much the GDNs have to spend

  3. POTENTIAL WAY FORWARD • Agree criteria for classification of services as Core or User Pays • Once scope of service is defined Users agree classification of service using agreed criteria. 3 potential outcomes • Clearly User Pays Service – follow mod 213V rules for allocation • Clearly core service • Could be either – reach consensus in workgroup, seek Authority view • Once classification agreed – mod rules support both routes • Requirement to review arrangements/scope if synergy savings

  4. HIGHLEVEL CLASSIFICATION MATRIX • Can Shippers choose whether to take the service or not? • Are there clear commercial implications/advantage from taking the service which limits choice? • Can Shippers actively reduce their exposure to costs? • Is the service a voluntary or elective service? • Does charging for the service incentivise appropriate Shipper actions? • Are Shippers prepared to pay for the service as User Pays? • Is it clearly User Pays – i.e. a no brainer?

  5. POTENTIAL ISSUES • Single Service Provision for iGTs • Outside of scope of Project Nexus Workstream – currently • Funding arrangements will need to be in scope of group looking at this • PNAG have recognised that this is an issue that needs to be resolved • Could be funded via a User Pays approach • Smart Metering • Currently being considered by DECC – not in workstream scope • Potential to avoid costs depending on solution • Need to define what model will be implemented first and then ensure Project Nexus is compatible. • Potential to duplicate • Wait and see?

  6. WAY FORWARD • Agree key criteria of User Pays and Core services • Shippers and Transporters and Ofgem to provide feedback to … • Agree classification format – matrix, flow chart, another option? • Shippers and Transporters and Ofgem to provide feedback • Produce final classification and format for agreement at next Workstream • Need for formal approval by worktsream?

  7. QUESTIONS? • Stefan.leedham@edfenergy.com 020 3126 2312 07875 118024

  8. THANK YOU

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