Liaison Group 18 June 2014 Shirley Kilcullen Charging for - - PowerPoint PPT Presentation

Liaison Group – 18 June 2014 Shirley Kilcullen

Charging for Harmonics

What is Connection Charging

• Recovery of “shallow” connection asset capital

costs associated with customer connections.

• Focuses on transmission assets required up to

the meshed system.

• Governed by a number of policy documents

which set out high level principles for the assigning of costs.

Connection Charging: Basics

• Focus on determining causation and drivers of

specific works.

• Charging applied on an LCC basis.
• Assets which are not driven exclusively by a given

customer/subgroup are considered “deep” and recovered via TUoS tariffs.

• Assets which are driven exclusively by a given

customer/subgroup even if considered “deep”, should be paid for by the customer/subgroup.

• Rebates - payable where customers connect to

assets which were funded by pre-connected parties.

Harmonics issues in a charging context

• Per policy, customers should be charged for

deeps required to mitigate against harmonic issues arising due to CP UGC.

• If harmonic solutions are optimised on a

geographic basis, are deep in the system and mitigate harmonics for a number of applicants, assigning causation and apportioning the cost of these solutions within SG’s is v difficult.

Considerations

• The charging approach needs to:

– Be fair and proportional. – Send a signal about the cost that cable requests impose on the system and inform customer decision making on that basis. – Be relatively simple to apply - not requiring a suite of “charging” power quality studies. – Be robust and enduring - not just solve issues with current Offer Process modifications. – Protect the interests of the TUoS customer.

Options being considered

Option 1: Charge for the actual solution implemented

• Actual solution implemented charged in its entirety
• n the basis of out-turn cost.

Pro:

• Entirely cost reflective – TUoS fully protected.

Pro/Con:

• Potential for optimisation but could impose undue

inflexibility & cause delays. Cons:

• Extremely complex - v difficult to assign causation.
• Rebating issues.
• In SG, if a party “falls away” – TUoS wouldn’t cover

their share of charges for harmonics.

Option 2: Apply a Least Cost approach

• Apply an LCC type approach – e.g. std charge for a filter

bank at the point of connection to the meshed system where the connection exceeds harmonics limits. Pros:

• Consistent with the LCC principle, pay for the lowest cost

solution to the problem, regardless of what is ultimately installed.

• Charge more predictable.

Pro/Con:

• Same optimisation considerations as Option 1.

Cons:

• Same issues as for Option 1.
• Potential TUoS exposure.

Option 3: Apply a harmonics levy

• Apply a levy on all customer requests for cable on a per

km UGC basis. Pros:

• Reflects that harmonics issues are cumulative.
• Clear & transparent - avoids rebating and SG cost

allocation issues. Cons:

• Customers that request cable in an area of low

underlying harmonics would pay the same as in high areas, unless a “postcode” approach was applied.

• € per km levy = a function of a number of variables each
• f which has potential for inaccuracy.
• V difficult to derive an accurate € per km levy without

time limits for customer requests for UGC.

Option 4: Recover via TUoS

Pros:

• Ease of implementation.
• Recognises cumulative nature of harmonics issues.
• No rebating required or issues with assigning

causation. Cons:

• Shields customers requesting UGC from full

incremental cost.

• Totally misaligned with principle of Clause 5.4 of the

CMS.

Proposed scope

• Apply charging decision –

– To all customers who have already been put on notice re this issue via holding statements in their connection agreements and – To all customers who request UGC after the date of publication

• f the harmonics consultation paper (13/06/14)

Next steps

Comments welcome re 4 charging

• ptions and any alternatives by

18/07/14