FCC Baseline Analysis Obligated vs Peak vs Enduring Scenario Place - - PowerPoint PPT Presentation

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FCC Baseline Analysis Obligated vs Peak vs Enduring Scenario

UNC Mod 0621 Analysis 12/04/2018

FCC Baseline Analysis – Background / Assumptions

• Analysis List #1
• To look at whether using Historic Peak Flow FCC scenario is a better alternative to
• ur previously suggested “Enduring Baseline Scenario” (where FCC is flows for all

entry and exit points, except DN offtakes where FCC is equal to the previous years bookings)

• “Historic Peak Flow” refers to the peak day flows from the previous gas year
• Assumptions

Used the 2019/20 Transitional parameters from CWD model (i.e. Model reset to transitional period) for each scenario Historic Flows and Historic bookings are from 2019/20 FCC sheet Peak Flows from 2016/17 Gas Year have been used

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FCC Baseline Analysis – Entry Firm Prices

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0.0000 0.0100 0.0200 0.0300 0.0400 0.0500 0.0600 0.0700 0.0800 0.0900 0.1000

Firm Price (p/kWh/d) Entry Point

Obligated Firm Price Peak Flow Firm Price Enduring Firm Price

FCC Baseline Analysis – Entry Revenue Recovery

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• £300,000,000
• £200,000,000
• £100,000,000

£- £100,000,000 £200,000,000 £300,000,000 £400,000,000 £500,000,000 Obligated FCC Scenario Peak Flow FCC Scenario Enduring FCC Scenario

Revenue (£)

Target Revenue Revenue Recovered Over/Under Recovery

FCC Baseline Analysis – Exit Firm Prices

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0.0000 0.0050 0.0100 0.0150 0.0200 0.0250 0.0300

Firm Price (p/kWh/d) Exit Category

Obligated Firm Price Peak Flow Firm Price Enduring Firm Price

FCC Baseline Analysis – Exit Revenue Recovery

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• £300,000,000
• £200,000,000
• £100,000,000

£- £100,000,000 £200,000,000 £300,000,000 £400,000,000 £500,000,000 Obligated FCC Scenario Peak Flow FCC Scenario Enduring FCC Scenario

Firm Price (p/kWh/d)

Target Revenue Revenue Recovered Over/Under Recovery

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Future Impact of Existing Contracts on Enduring Firm Price

UNC Mod 0621 Analysis 10/04/2018

Existing Contracts – Background / Assumptions

• Analysis List #5
• Look at the existing contracts values past the 2021/22 period and determine the

impact this has on entry firm prices during the enduring period

• Assumptions

Used the 2021/22 Enduring parameters from the CWD models (i.e. reset model to the enduring period) For each scenario the model has been reset (to the above), existing contracts for 2021/22 have been replaced by the 2025/26 and 2029/30 (for respective scenarios) existing contract amounts, which includes;

Individual entry point bookings Total capacity bookings Total revenue values 8

Existing Contracts – Total Capacity and Revenue through from 2016/17 to 2029/30

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£- £10,000,000 £20,000,000 £30,000,000 £40,000,000 £50,000,000 £60,000,000 £70,000,000 £80,000,000 £90,000,000

• 500,000,000

1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 3,000,000,000 3,500,000,000 4,000,000,000 4,500,000,000 5,000,000,000

Total Revenue (£/annum) Total Capacity (kWh/d) Gas Year

Total Capacity Total Revenue

Existing Contracts – Impact on Firm Prices

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0.0000 0.0100 0.0200 0.0300 0.0400 0.0500 0.0600 0.0700 0.0800 0.0900

Firm Price (p/kWh/d) Entry Point

2021/22 2025/26 2029/30

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Impact of the Optional Charge on Revenue Recovery Rates

UNC Mod 0621 Analysis 10/04/2018

Optional Charge Impacts – Background / Assumptions

• Analysis List #8
• Assess the impact of the Optional Charge on revenue recovery rates for both Entry

and Exit

• Assumptions

Used the revenue recovery rates out of the CWD model to identify which current OCC rates would be valid for the new OC rate We have combined the Entry and Exit Non-IP commodity charge to generate a combined rate in the Optional Charge comparison The OCC forecast flows and revenues have been used from the October 2017 charging process RPI has been applied to the Optional Charge Formula, and it is only applicable to routes under 60km distance, in line with the 0621 proposal

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Optional Charge Impacts – Optional Charge Inputs

Non-IP Flows (GWh/annum) Non-IP Revenues (£) IP Flows (GWh/annum) IP Revenues (£) Entry 150,673 £7,351,819 3,832 £189,062 Exit 102,698 £7,253,764 51,807 £285,017

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• Due to the different revenue recovery mechanisms at Non-IP and IP the Optional

Charge forecast revenues and flows has to be splits into Entry and Exit as well as Non-IP and IP. This allows;

Non-IP commodity charge (entry and exit) target revenue and denominator to be reduced by the necessary values IP capacity revenue recovery charge target revenue and denominator to be reduced by the necessary values

The inputs for the relevant charge are in the table below

Optional Charge Impacts – Entry Revenue Recovery Rates

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0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 0.0000 0.0050 0.0100 0.0150 0.0200 0.0250 0.0300 0.0350 0.0400 0.0450 2019 2020 2019 2020 IP Non-IP

Percentage Change (%) Revenue Recovery Rate (p/kWh) Point Categorisation and Applicable Year

Optional Charge Included - No Optional Charge Included - Yes % Difference - Yes

Optional Charge Impacts – Exit Revenue Recovery Rates

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0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 0.0000 0.0050 0.0100 0.0150 0.0200 0.0250 0.0300 0.0350 2019 2020 2019 2020 IP Non-IP

Percentage Change (%) Revenue Recovery Rate (p/kWh) Point Categorisation and Applicable Year

Optional Charge Included - No Optional Charge Included - Yes % Difference - Yes

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Difference between the Transitional and Enduring Periods

UNC Mod 0621 Analysis 10/04/2018

Transitional vs Enduring – Background / Assumptions

• Analysis List #6
• Assess the impact of the FCC change between Transition and Enduring period by

keeping all other variables the same

• Graphs show the Firm and Combined (Firm + Revenue Recovery) rates for

transitional and enduring period Assumptions

Used the 2019/20 Transitional parameters from CWD model (i.e. Model reset to transitional period) for both scenarios Obligated levels have been used for the transitional FCC The revenue recovery rates for the transitional period have been taken from the anticipated revenue recovery sheets using the anticipated booking scenario and excluding Optional Charge Enduring Capacity Scenarios have been used for the Enduring FCC The under-recovery (from Storage and Interruptible discounts) has been “re-run” through the model using the “Calculate Adjustment” button, to calculate a revenue Adjustment Figure

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Transition vs Enduring – Entry Prices

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0.0000 0.0200 0.0400 0.0600 0.0800 0.1000 0.1200

Price (p/kWh) Entry Point

Transitional Firm Transition Combined Enduring Firm Enduring Combined

Transition vs Enduring – Exit Prices

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0.0000 0.0050 0.0100 0.0150 0.0200 0.0250 0.0300 0.0350 0.0400

Average Price (p/kWh) Exit Category

Transition Firm Transitional Combined Enduring Firm Enduring Combined