TADG Working Group Responses to Issues Questionnaire TADG 7 th - - PowerPoint PPT Presentation

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TADG Working Group – Responses to Issues Questionnaire

TADG 7th Meeting - February 2007 Millbank, London

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Background to Questionnaire

• Views expressed on need to assess issues with existing arrangements
• Ofgem presentation at Meeting 6:

– summarised issues with existing arrangements and associated consequences raised by at least one party at meetings to date – sought views on extent parties agree with each issue & on its materiality

• Working group discussion at Meeting 6:

– Some additional issues noted – Range of views on issues and materiality – View that issues should not be perceived as agreed by all or equal weighting – Strawmen focus on addressing issues proposer considers to be material

• Agreed way forward:

– Ofgem to seek group’s written views on issues & materiality via questionnaire

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Issues identified in questionnaire

• 1. Impact on GB queue
• 2. Information available to NGET
• 3. Rights/obligations of non-BEGA DG
• 4. Impact on constraint management
• 5. Perverse incentives from differential treatment in charging
• 6. Cost-reflectivity of differential treatment in charging
• 7. GSP vs. GSP group treatment
• 8. Evolution of transmission system
• 9. Competitiveness

10.Contractual burden

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Questions and responses

• For each issue, 3 questions were asked:
• 1. Do you consider this to be an issue?
• YES / NO
• 2. How big an issue do you consider this to be?
• NOT AN ISSUE / IMMATERIAL ISSUE / MATERIAL ISSUE
• 3. Set out your views on the issue in the context of your answers to

questions 1 and 2.

• 15 responses received, of which 2 confidential
• Range of views on issues and materiality
• This presentation seeks to give a flavour of the range of

respondents’ comments, fuller discussion to be set out in working group report

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Issue 1: Impact on GB queue

4 respondents consider this to be an issue 1 respondent considers it to be material Range of views:

– Criteria for identifying relevant small power stations – Cumulative impact of many small DG – Capacity gaps in GB queue absorbed by small DG – Existing means for any issues to be addressed (CUSC amendment) – Connection of small DG an issue for DNOs to manage – Materiality of issue not demonstrated

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Issue 2: Information available to NGET

3 respondents consider this to be an issue 1 respondent considers it to be material Range of views:

– Adequate existing arrangements for information provision by DNOs – Existing means for any issues to be addressed (Grid Code mod) – Need contractual arrangements to provide cost-reflective investment signals

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Issue 3: Rights/obligations of non-BEGA DG

9 respondents consider this to be an issue 8 respondents consider it to be material Range of views:

– Contractual gap should be addressed – Treat all exporting nodes equally in charging / contractual framework – Lack of export product – Only an issue if DG leads to exports or is prevented connecting - materiality unclear – Consider issue in terms of export from distribution system as a whole – Arrangements for non-BEGA DG based on not using transmission system and netting off GSP group demand

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Issue 4: Impact on constraint management

6 respondents consider this to be an issue 3 respondents consider it to be material Range of views:

– NGET bilateral trading with individual DG not a long term solution – Introduce access product with compensation rights – Existing means to address issues, e.g. Grid Code mod to enhance existing emergency control provisions, changes to BM – Active BM participation is voluntary, non-participants should not be constrained unless for system reasons – NGET should not directly constrain or control users of the distribution system

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Issue 5: Perverse incentives

10 respondents consider this to be an issue 7 respondents consider it to be material Range of views:

– Capacity-based thresholds lead to incentives – Combined impact of multiple DG charged as negative demand same as

• ne charged as generation

– Need consistent arrangements for all DG – Charge for exports – Thresholds always a compromise, existing arrangements strike suitable balance

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Issue 6: Cost-reflectivity

7 respondents consider this to be an issue 5 respondents consider it to be material Range of views:

– Generally similar to issue 5 – Current embedded benefit not related to actual benefit – DG has same impact as transmission connected generation and should be charged the same – Charge for exports – DG not using the transmission system should not be charged for doing so – Locational signal provided through TNUoS charge to supplier

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Issue 7: GSP vs. GSP group treatment

11 respondents consider this to be an issue 4 respondents consider it to be material Range of views:

– Issue in some GSP groups – Cross-subsidy from transmission connected generation to DG – Charge for exports on a GSP basis – Existing distortions an unavoidable consequence of GSP group based settlement arrangements which are costly to change

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Issue 8: Evolution of transmission system

9 respondents consider this to be an issue 6 respondents consider it to be material Range of views:

– Role of transmission system naturally evolves over time – Access & charging arrangements should evolve as appropriate – Review structure of charges – Change now to be robust to evolving role – Evolution slow, issue insufficiently material for fundamental change now

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Issue 9: Competitiveness

6 respondents consider this to be an issue 3 respondents consider it to be material Range of views:

– Only an issue if transmission charges are not cost-reflective – Existing embedded benefit (~£17/kW) is material – Cross-subsidy from transmission-connected generation to DG – Charge for exports – DG deemed not to use transmission system and pay distribution charges – Connection voltage decisions often determined by other factors

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Issue 10: Contractual burden

11 respondents consider this to be an issue 10 respondents consider it to be material Range of views:

– Requirement for multiple interfaces a burden, and barrier to small DG – Users should contract only with operator of network connected to – Uncertainty as to enduring arrangements a greater barrier than complexity – Agency model would maximise efficiency of interfaces – Recent reforms remove need for DG-NGET interfaces in some cases – Existing requirements not overly onerous

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Summary of responses

Responses to I ssues Questionnaire

3 6 9 12 15 1 2 3 4 5 6 7 8 9 10 I ssue Respondents Yes Mat erial

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