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Capacity/Commodity Split Impact on Suppressed reconciliations

Capacity/Commodity Split Impact on Suppressed reconciliations. Distribution Workstream 24th April 2008 Linda Whitcroft. Capacity/Commodity Split & Suppressed Reconciliations. Distribution Network Pricing Consultations Distribution Networks proposed change to current regime

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Capacity/Commodity Split Impact on Suppressed reconciliations

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  1. Capacity/Commodity SplitImpact on Suppressed reconciliations Distribution Workstream 24th April 2008 Linda Whitcroft

  2. Capacity/Commodity Split & Suppressed Reconciliations • Distribution Network Pricing Consultations • Distribution Networks proposed change to current regime • Increase the capacity element of the Local Distribution Zone (LDZ) system charges • Move to 95% capacity and 5% commodity • Effective 1 October 2008 • Final decision published during December 2007 by Ofgem

  3. Capacity/Commodity Split/Suppressed Reconciliations • Suppressed Reconciliations • Introducing a capacity/commodity 95:5 split will distort the results of the filter failure mechanism if not redesigned. • Erroneous charges would be released • Risk to all Shippers • Analysis was carried out xoserve to ascertain changes required to keep the same population of filter failures following the price changes NB. Currently 89% of suppressed reconciliations are adjusted with 11% being approved Analysis included changes to TRE (NRE and ZRE) charges – as per current process and ZRE only

  4. Recommended Option • Move to a ZRE Filter • Shown to provide the best MPRN selection match to the current filter • Less subject to change due to NRE not being used • Therefore parameter values not expected to be modified on regular basis, hence fewer consultations and changes to Suppression Guidelines required • Reduces risk of non ability to amend the parameter values in line with price changes • Date specific filters – TRE used until 30/9/08 and ZRE used from 1/10/08

  5. Current Filter Values and Current Charge TRE Calculation

  6. Capacity/Commodity Split/Suppressed Reconciliations Example New Filter - £0.47 p/day, therefore FAIL

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