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Shrinkage Forum

Shrinkage Forum. Tuesday 8 March 2011, 31 Homer Road. Agenda. 1.0 Introduction 2.0 Review of Minutes and Actions from previous meeting (08 March 2007) 3.0 Incentive Regimes – DN Presentation 4.0 Leakage Model – DN Presentation 5.0 Shrinkage Proposal Process – DN Presentation

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Shrinkage Forum

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  1. Shrinkage Forum Tuesday 8 March 2011, 31 Homer Road

  2. Agenda • 1.0 Introduction • 2.0 Review of Minutes and Actions from previous meeting (08 March 2007) • 3.0 Incentive Regimes – DN Presentation • 4.0 Leakage Model – DN Presentation • 5.0 Shrinkage Proposal Process – DN Presentation • 6.0 Theft of Gas – Open Discussion • 7.0 Any Other Business • 8.0 Diary Planning • Agree agenda items and actions for next meeting

  3. Incentive Regimes

  4. Incentive Regimes - Shrinkage • Shrinkage Incentive - Special Condition E8 • Target volume baselines by LDZ • Incentive – reduce shrinkage volumes • Performance ‘valued’ at day-ahead gas price • Incentive – procure gas cheaper than day-ahead price • No cap or collar • Performance has a direct impact on DN costs and leads to a better distribution of costs under RbD

  5. Incentive Regimes - Environment • Environmental Emissions Incentive – Special Condition E9 • Target volume baselines by LDZ • Incentive – reduce leakage volumes • Performance ‘valued’ at social cost of carbon • 10% cap and collar regime • Performance has a direct impact on DN revenue

  6. Leakage Model

  7. Leakage Model • Methodology developed in the early 1990s • Currently a spreadsheet model • ‘Controlled’ by Special Condition E9 in Gas Transporter Licences • Five main elements • LP Leakage • MP Leakage • AGI Leakage • AGI Venting • Interference Damage

  8. Leakage Model E9 Obligations • The Leakage Model shall facilitate the achievement of the following objectives – • The accurate calculation and reporting of gas leakage • Being consistent with, and where reasonably practicable, identical to Leakage Models used by other DN Operators. • Report the actual leakage volume (LVt,i) together with any new information obtained by the licensee regarding leakage rates, including data derived from leakage tests. • Annually review the Leakage Model to ensure that it continues to achieve the objectives and • Consult with shippers and other interested parties to seek their views • Propose such modifications (if any) as are necessary for the purpose of better achieving the objectives.

  9. Leakage Model E9 Modification Process • Propose revised baselines • Consult with the industry • Appoint an ‘Independent Expert’ to review and report on the proposal • Submit report on the consultation to Ofgem • Implement the modification if approved by Ofgem

  10. Leakage Model Elements & Main Input Parameters • LP Leakage • Pipe Asset • No. Services & Replacement • Average System Pressure • MEG Saturation • MP Leakage • Pipe Asset • AGI Leakage • Asset Numbers • AGI Venting • ‘Fixed’ • Interference • Number of incidents • Reportable incidents

  11. Low Pressure Leakage Model • Approximately 80% of all leakage • Leakage rates for 11 diameter/material bands, based on a national survey carried out in 2002/03 • > 2000 low pressure networks nationally • Average System Pressure - determined via recorded source pressure data and network analysis • MEG Saturation (where used) – determined from recorded data and network analysis • Pipe asset lengths (replacement of metallic mains has greatest impact) • No. of services

  12. Medium Pressure Leakage Model • Approximately 8% of all leakage • Calculated at LDZ level • Pipe asset lengths

  13. AGI Leakage Model • Approximately 7% of all leakage • Calculated at LDZ level • 5 leakage rates for AGI asset types, based on a national survey carried out in 2002/03: • Holders • NTS Offtakes • LTS Offtakes • District Governors • Service Governors

  14. AGI Venting Model • Approximately 5% of all leakage • Fixed values based on a national value from the 2002/03 AGI leakage test report apportioned by relative number of ‘venting’ AGI asset at time of Network Sales

  15. Interference Damage Model • Approximately <0.5% of all leakage • Based on: • >500kg release incidents • Actual release value where recorded/estimated • Number other recorded incidents • Split by LP/MP (95/5) • Split by Puncture/Fracture (50/50) • Assumed leakage rates and response/fix times

  16. Shrinkage Proposal Process

  17. Shrinkage Proposal Process

  18. Theft of Gas Open Discussion

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