Access Charging Issues

1. Access Charging Issues October 2008

2. Network Planning for renewables • Impossible to draw a clean line between system infrastructure development and connection assets • Assets which are for the sole use of a User may become shared and later general use assets over a period. • Renewables connection applications drive infrastucture planning and development

3. Network Planning Objectives • Deliver a development plan in a timely fashion for Users • Deliver a non-wasteful plan • Correct assumptions important • As far as possible shared use of assets by users

4. Utility License Transparent Equitable between Users and classes of User Cost recovery User perspective Transparent Minimum cost to User First cost Life time cost Timely access to network Connection Access Objectives

5. Overview of renewable connections Access Charging • Most large scale renewables in NI are metered at 33kV and therefore are deemed distribution • Distribution access charging rules apply (deep charging) but if a transmission connection was cheaper under SEM rules for the User, that charge would be applied • Clustering is considered where a group of windfarms should be served by common infrastructure

6. Issues • Charging issues remain complex, especially as NIE, SONI and NIAUR develop and agree long term network plans and structures: • At what point in the process is the wind farm paying to create agreed infrastructure? • What happens if infrastructure is later agreed and incorporates the wind farm connection asset? • If that infrastructure is only built to facilitate the connection of a number of wind farms, is it fair that customers-in-general should make a significant up-front contribution to it and not at least get the money back as the access is taken up?

7. Generic Approaches for Renewables • Plan, invest and sell capacity later • Planning and development can proceed ahead of applications • (renewable power zones) • Assumes planning permission will be granted to wind farms • Access to the zone might be charged at a flat rate per MW • There are winners and losers comparing with actual cost recoverable approaches. • Develop the system “on demand” • Early applicants pay for their connection asset as in SEM or NI distribution charging models; • Refunds policy complex; • Planning and development awaits application • Maximise infrastructure • Shallow connection policy (does not fit with SEM approach) • Hybrids • Need careful crafting around interaction between access costs, UoS, system O&M costs (what do Users and so on.

8. Complexity • Access refunds management • Use of System calculation where customers own part of the capacity on a circuit and the Regulated asset Base owns the rest, especially if the ownership proportions are dynamic

9. Plan of action • Get some views from the industry • Examine how is access charging developing in other places • Compare any approaches with ESB distribution approaches • Prepare one or more thought-out approaches for industry sound-boarding

10. Views invited