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

TADG Working Group – Responses to Issues Questionnaire TADG 7 th Meeting - February 2007 Millbank, London TADG

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 TADG

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 TADG

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 TADG

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 TADG

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 TADG

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 TADG

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 TADG

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 one charged as generation – Need consistent arrangements for all DG – Charge for exports – Thresholds always a compromise, existing arrangements strike suitable balance TADG

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 TADG

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 TADG

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 TADG

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 TADG

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 TADG

Summary of responses Responses to I ssues Questionnaire 15 12 Respondents 9 Yes Mat erial 6 3 0 1 2 3 4 5 6 7 8 9 10 I ssue TADG

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