Delivery Group – 27 June 19 Ofgem
Delivery Group m eeting agenda Agenda topic Tim e W elcom e and introductions 10: 00 – 10: 05 Actions update 10: 05 – 10: 20 Project update and forw ard w ork plan 10: 20 – 11: 50 • Working paper update • FCA open letter • Analytical fram ework • Charge design • Subgroup updates – connection boundary and sm all users set up DNO access to disaggregated consumption data 11: 50 – 12: 20 Lunch 12: 20 – 13: 00 Pros/ cons of different flexibility options 13: 00 – 13: 30 Cost Models update 13: 30 – 15: 00 Access subgroup update 15: 00 – 15: 45 Close and AOB 15: 45 – 16: 00 2
Actions update 3
Project update and Forw ard W ork Plan 4
Project update – W orking paper 1 st w orking paper – Sum m er 2 0 1 9 • The work of DG and CG • The links between access, charging and flexibility. • Cost models framework options • Network charging options • Access rights options • Combined charging, access rights and cost model options 5
Project update – Open letter to update on tim ing and next steps on Future Charging and Access reform s In May we published an open letter where we announced: • The creation of our “Future Charging and Access ( FCA) ” program m e – which is our new umbrella term to cover the Access, TCR and BSUoS projects • Two implementation date changes: • Other embedded benefits reform to now occur in April 2021, and • Transmission charging reform in the Access project to now occur in 2023 • We are also considering 2023 implementation for TCR residuals reform (to align with Access reform) In the Access project : • We intend to target implementation of all changes, across transmission and distribution, and across access and forward-looking charges, on 1 April 2023. This is the start of the RIIO-ED2 price control period • We plan to publish the first working paper this Summer and the second paper later this year • We intend to consult on our draft Access SCR conclusions in mid-2020, with a decision on final SCR conclusions (including a final impact assessment) in early 2021. 6
Project update – tim efram es 7
Project update – Analytical fram ew ork W e have continued to progress our analytica l framew ork: • As not ed on an earlier slide, we have been developing our first working paper t o be published over t he summer. This includes a qualit at ive assessment of our longlist of opt ions against t he guiding principles (for t hose areas in scope of t he paper). • We’ve furt her developed our modelling requirement s, including: • Defining t he segment at ion of our requirement s int o t hree segment s (i) Reference Net work Model development ; (ii) Modelling t he impact of opt ions on t he t ariff met hodologies; and (iii) impact assessment including dist ribut ional, behavioural and syst em analysis • We’ve commenced discussions wit h DNOs on work t hat has been done on dist ribut ion reference net work models previously, and dat a available. We are t aking t his forward t hrough a planned discussion wit h t he ENA on t he work done t o dat e by WSP . • The DCUSA panel have signed off a first phase of work t o scope out t he t ariff met hodology scoping requirement s and t o ident ify t he opt ions t o be included for modelling purposes. • We will be t aking forward t ransmission level t ariff modelling wit h t he ESO, as discussed at t he previous DG. • We’ve cont inued development of our modelling specificat ion for (iii) and we int end commence a t ender process for t his in July • As we cover in furt her det ail in t he following discussion, we have carried out eleven int erviews wit h supplier members of t he Challenge Group, focused on t he impact of changes t o net work charges on t heir syst ems and t ariffs. A number of t hemes have emerged from t his process. We’re also current ly developing our plans for furt her engagement t hrough a survey of all suppliers and subsequent int erviews, commencing over t he summer. This will consider t ariff design for small consumers. Testing our developing approach: We t ook our analyt ical framework approach t o t he Challenge Group on 14 th May. We received a range of feedback which we are • t aking int o account in t he furt her development of t he framework and in t he shaping and delivery of modelling requirement s. • We held anot her analyt ical panel session wit h senior policy and analyt ical leads wit hin Ofgem t o t est and furt her refine our modelling requirement s 8
Project update – Charge design DNO surveys Supplier interview s Key findings from the surveys are: • We carried out eleven supplier interviews, focused on the im pact of changes to network charges on their system s and tariffs. • Most DNOs indicated m ore clarity is needed I nitial em erging them es include: before they can provide estim ates for costs and • All agreed that technology and autom ation solutions are im plem entation tim eframes for dynam ic charging needed, but significant differences in views on tim eframes options. Those DNOs who provided estim ates and custom er take up indicated they were very uncertain. • Responses differed significantly between sm all users • I ndicative tim eframe for im plem enting static (several suppliers noted SME also fall into this group charging options was proposed as 2-5 years. behaviour wise) and I &C custom ers • Several technical solutions for curtailm ent were • Most suppliers have seen no (or very little) interest in suggested, including use of fuses and circuit com plex tariffs in the dom estic group and would continue to breakers and use of load shedding schem es. socialise costs for a large part of the m arket Concerns raised about this being an option for • Suppliers noted challenges with agreeing initial capacities for dem and custom ers and dom estic custom ers in all custom ers and m onitoring changes over tim e particular. • No support for curtailm ent of sm all users, although several • All DNOs do som e short term forecasting, noted ability of suppliers to m anage loads rem otely. although generally for network m anagement • We will assess the findings in further detail and consider the purposes, and the m ajority of DNOs are doing im plications for our charge design workstream . trials looking at im proving forecasting in the future. Although DNOs recognise links between • We are going to be undertaking further engagem ent with this and DSO transition, lim ited views on future suppliers through surveys and workshops in the second half of accuracy of forecasting. the year, with a focus on sm all user im pacts. 9
Project update – Charge design: seasonality Season of peak dem and occurs for prim ary substations in NPg’s Yorkshire region The m ap suggest that: • A significant num ber of prim aries in towns peak in other seasons • I t m ay not be cost reflective to only have winter peaks • Not all regions have a clearly dom inate season Further work will need to be carried out to determ ine whether there are sim ilar findings in other DNO regions 1 . I s this consistent w ith the evidence across other DNOs? 2 . Do all DNOs have data to carry out sim ilar analysis? 10
Project update – Charge design: tim e of day Count of UKPN substations peaking at different tim es ( HHly) * Som e key points illustrated in the graphs include: • The m ajority of substations peak during the ‘tea tim e’ peak (4-7pm ) • However, in London there is a significant second peak period between 2-3pm , suggesting it m ay not be cost reflective to have a single peak period in a region • We have seen analysis from other DNO regions that indicates they also have secondary peak periods • The analysis does not identify different locations to determ ine if there are specific characteristics driving the second peak 1 . I s this consistent w ith the evidence across other DNOs? 2 . Do all DNOs have data to carry out sim ilar analysis? * Not e, t he graphs used act ual t im e-of-day dat a and so t he t im e periods are not exact ly t he sam e. 11
Project update – Distribution connection boundary subgroup Mem bership and initial m eetings • We have had a good response to the request with all DNOs, an IDNO, NGESO and NGET represented • The group has met twice to agree the Product Descriptions and start considering options for change • NGESO also hosted a session on transmission user commitment I nitial options under consideration • Grouped into three categories • Variations on the existing distribution arrangements (High Cost Cap, Voltage Rule, Cost Apportionment Factor) • Variations on the existing transmission arrangements (shallow boundary, User Commitment) • Other (standard connection charges, delayed payment) • Compatibility of different combinations also being considered • We are developing the options for change first before assessing the potential value 12
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