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Review Group 177

Review Group 177. Overview of RbD Risk Modelling 31 March 2008. RbD Risk Modelling – Background. Purpose Risk Modelling supported the introduction of RbD (Reconciliation by Difference) in 1998 Designed to be one of the operational “monitors” of RbD How

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Review Group 177

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  1. Review Group 177 Overview of RbD Risk Modelling 31 March 2008

  2. RbD Risk Modelling – Background • Purpose • Risk Modelling supported the introduction of RbD (Reconciliation by Difference) in 1998 • Designed to be one of the operational “monitors” of RbD • How • Defined “Risk” as the difference between actual gas bills and those estimated by RbD • Estimated month on month variability of RbD Charges based on assessment of inherent risk factors • Periodic updates were shared with the RbD Sub-Group

  3. Risk Model - Results • Risk Model showed that RbD was less variable than Meter Point Reconciliation • Base model showed variability of +/- 1.3% of allocation • Indicated variation with errors/timing differences included: +/- 2.5% • Predicted variation increased/decreased between updates • Actual variation can be up to 5% of allocation • Last update provided 2002 • Risk Model superseded by RbD Feeder Model and RbD Forecasting

  4. Review Group 177 Variability of SOQs 31 March 2008

  5. Variability of SOQs • SOQ = AQ PLF * 365 • PLF = Peak Load Factor • Measure of peakiness of annual demand in an EUC – what proportion of AQ would be used on a 1 in 20 peak day • Set each year for each EUC as part of NDM Capacity Algorithms • Determination of PLF • EUCs 1 to 4: determined directly from the NDM Modelling – extrapolating modelled demand to the 78 year 1 in 20 CWV • EUCs 5 to 9: determined from the NDM Modelling using a Weather Correction Factor derived from the DNs forecast 1 in 20 Peak

  6. Variability of PLFs Gas Year 05 to 06 “B” band EUCs only – excludes WAR bands

  7. Variability of PLFs Gas Year 06 to 07 “B” band EUCs only – excludes WAR bands

  8. Variability of PLFs 2006/07 to 2007/08 • WAR Band variability • Gas year 05 to 06 – 100% of WAR Band PLFs changes in range -3% to +3% • Gas year 06 to 07 – 96% of WAR Band PLFs changes in range -3% to +3%

  9. SOQ Amendment Options • PLFs are available by end of August (latest) for coming Gas Year, following industry consultation • Under rolling AQ rules, AQ may have recently updated • Options for NDM SOQs: • Restate all SOQs on 1 October, regardless of recent AQ changes • Leave SOQ unchanged, will update at next AQ change • Update SOQs based on read frequency – only amend Annually Read sites – Monthly Read will get reads and update soon • Update SOQs based on read history – if reads are frequent and AQ updates regularly, don’t update SOQ • Considerations: • Shipper comparability, differing read performance, Transportation revenue/costs, system processing, system capacity requirements

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