Transcript First (title) slide - Energy Networks Association

CDCM Training Session
Introduction to producing DUoS Tariffs using
CDCM Models
Julia Haughey (EDF Energy)
Binoy Dharsi (IPM Energy Retail Ltd)
1 | Energy Networks Association
20 December 2010
Agenda
Brief explanation of CDCM
Information now available to suppliers
Assumptions to consider
Overview of CDCM model
Annual review pack
EDCM what’s happening
How to get involved
2 | Energy Networks Association
20 December 2010
CDCM
o Common Distribution charging methodology (CDCM)
o In October 2008 Ofgem published proposals for common
distribution charging methodology
o Long Run Incremental Charge(LRIC) for EHV customers
o Distribution reinforcement model (DRM) for LV/HV customers
o Objections were raised by the two Scottish companies
o Ofgem decided not to go the competition commission but
instead the two models became separate CDCM and
EDCM
o DNOs published proposals for CDCM in August 2009
with a few amendments these were accepted and CDCM
went live on 1st April 2010
CDCM objectives
o Cost reflective model
o Common model to calculate the charges but with DNO
specific inputs rather than 7 different methodologies that
were already in place
o Common structure to the charges so all tariffs have the
identical components whatever DNO they are in
o Common Licence condition 14 statements same
structure tables called the same
o Consistent and simplified information for customers and
suppliers
CDCM issues
o Main issues of the CDCM
o Some customers saw huge changes in April 2010
increases of over 200%
o
Mainly in the HH market
o The trade off for cost reflective tariffs means that more
updates are likely
o For suppliers offering fixed term contracts this can prove to be
even more challenging
CDCM change to charges April 2010
Percentage increases
from April 09 Published
rates to April 10 final
charges
Domestic
Domestic
Off Peak
Unrestrict Domestic (related
ed
Two Rate MPAN)
1
2
Eastern (GSP A )
0%
0%
-74%
East Midlands (GSP B )
9%
-2%
79%
London (GSP C )
6%
1%
-39%
Manweb (GSP D )
23%
4%
-72%
Midlands (GSP E )
17%
2%
-51%
Northern (GSP F )
0%
-3%
-11%
Norweb (GSP G )
31%
29%
18%
Southern (GSP H )
6%
3%
-22%
Seeboard (GSP J )
17%
-4%
-32%
Swalec (GSP K )
11%
-3%
-55%
Sweb (GSP L )
11%
-1%
-66%
Yorkshire (GSP M )
-4%
-10%
98%
Scottish Power (GSP N )
6%
-7%
-84%
SSE (GSP P )
11%
31%
43%
Small
Small
Non
Small
Non
Domestic
Domestic Non
Off Peak
Unrestrict Domestic (related
ed
Two Rate MPAN)
3
4
-11%
1%
-74%
-20%
-32%
-18%
-30%
-47%
-48%
1%
-12%
-63%
-13%
-24%
-28%
-1%
2%
-25%
1%
41%
18%
-11%
-14%
-26%
-10%
-14%
-50%
2%
-6%
-61%
18%
-13%
-58%
-16%
-20%
83%
-26%
-39%
-56%
-34%
-14%
26%
LV
Medium
NonDomestic
5-8
-38%
-30%
-38%
6%
-24%
11%
101%
35%
-49%
-44%
-40%
-5%
-35%
120%
LV Sub
Medium
NonDomestic
5-8
-56%
-52%
-69%
3%
-51%
-9%
88%
-9%
-57%
HV
Medium
LV HH
NonDomestic Metered
5-8
0
-49%
7%
-21%
31%
-67%
31%
20%
41%
-21%
74%
110%
104%
-49%
31%
-2%
48%
-54%
18%
-63%
23%
-42%
-64%
13%
-28%
103%
138%
-60%
23%
42%
264%
28%
LV UMS
LV Sub
HV Sub
(Pseudo
HV HH HH
HH
HH
Metered Metered Metered NHH UMS Metered)
0
0
0
53%
51%
24%
24%
-53%
9%
26%
6%
2%
7%
25%
37%
12%
-26%
-60%
41%
9%
30%
-4%
-15%
40%
76%
81%
17%
24%
43%
160%
99%
94%
75%
90%
75%
13%
185%
166%
29%
41%
-1%
45%
29%
13%
98%
65%
-18%
-47%
2%
75%
60%
120%
203%
38%
46%
-8%
74%
146%
131%
174%
168%
21%
10%
2%
36%
5%
4%
-29%
13%
49%
12%
83%
-32%
CDCM changes
Domestic Unrestricted
Domestic Two Rate
Domestic Off Peak (related MPAN)
Small Non Domestic Unrestricted
Small Non Domestic Two Rate
Small Non Domestic Off Peak (related MPAN)
LV Medium Non-Domestic
LV Sub Medium Non-Domestic
HV Medium Non-Domestic
LV HH Metered
LV Sub HH Metered
HV HH Metered
HV Sub HH Metered
NHH UMS
LV UMS (Pseudo HH Metered)
Open LLFCs
PCs
1
2
12
203
204
205
257
265
304
251
293
301
294
504 & 505
554 & 555
1
2
2
3
4
4
5-8
5-8
5-8
0
0
0
0
1&8
0
Unit rate 1
p/kWh
1.746
1.973
0.390
2.042
2.498
0.409
1.941
1.309
1.244
5.320
3.519
3.753
2.816
1.688
9.184
Unit rate 2
p/kWh
.
0.303
.
.
0.624
.
0.364
0.227
0.130
1.240
0.712
0.662
0.362
.
2.355
Unit rate 3
p/kWh
.
.
.
.
.
.
.
.
.
0.227
0.115
0.091
0.024
.
0.463
Fixed charge
p/MPAN/day
2.80
2.80
.
4.50
4.50
.
26.49
64.16
197.81
15.54
45.74
103.59
155.39
.
.
Capacity
Reactive power
charge
charge p/kVArh
p/kVA/day
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
1.34
0.270
1.97
0.216
1.77
0.156
2.49
0.111
.
.
.
.
CDCM timebands
London
(GSP C )
Manweb
(GSP D )
Midlands
(GSP E )
Northern
(GSP F )
Norweb
(GSP G )
Southern
(GSP H )
Seeboard
(GSP J )
Swalec
(GSP K )
Sweb
(GSP L )
Yorkshire
(GSP M )
Scottish
Power
(GSP N )
16.00-19.00
Monday to
Friday inc
BH
10.00-13.00
16.00-19.00
Monday to
Fridays inc
BH
16.30-19.30
Monday to
Friday inc
BH
16.00-19.00
Monday to
Friday inc
BH
16.00-19.30
Monday to
Friday inc
BH
16.30-18.30
Monday to
Friday inc
BH
16.30-19.00
Monday to
Friday inc
BH
16.00-19.00
Monday to
Friday inc
BH
17.00-19.30
Monday to
Friday inc
BH
17.00-19.00
Monday to
Friday inc
BH
16.00-19.30
Monday to
Friday inc
BH
16.30-19.30
Monday to
Friday inc
BH
12.30-14.30
16.30-21.00
Monday to
Friday inc
BH
07.00-16.00
19.00-23.00
Monday to
Friday inc
BH
07.30-16.00
19.00-21.00
Monday to
Friday inc
BH
07.00-10.00
13.00-16.00
19.00-23.00
Monday to
Friday inc
BH
08.00-16.30
19.30-22.30
Monday to
Friday inc
BH 16.0020.00
Saturday
and Sunday
07.30-16.00
19.00-21.00
Monday to
Friday inc
BH
08.00-16.00
19.30-22.00
Monday to
Friday inc
BH
09.00-16.30
18.30-20.30
Monday to
Friday inc
BH 16.3018.30
Saturday
and Sunday
09.00-16.30
19.00-20.30
Monday to
Friday inc
BH
07.00-16.00
19.00-23.00
Monday to
Friday inc
BH
07.30-17.00 07.30-17.00
19.30-22.00 19.00-21.30
Monday to Monday to
Friday inc
Friday inc
BH 12.00- BH 16.30 13.00 16.00 - 19.30
Saturday
21.00
and Sunday
Saturday
and Sunday
08.00-16.00
19.30-22.00
Monday to
Friday inc
BH
08.00-16.30
19.30-22.30
Monday to
Friday inc
BH 16.0020.00
Saturday
and Sunday
07.00-12.30
14.30-16.30
Monday to
Friday inc
BH 12.3014.00 17.30 20.30
Saturday
and Sunday
Green
All other
times
00.00-07.30 All other
21.00-24.00 times
Monday to
Friday inc
BH and all
day Sat and
Sun
0.00-08.00
22.30-00.00
Monday to
Friday inc
BH 00.0016.00 20.0000.00
Saturday
and Sunday
00.00-07.30 All other
21.00-24.00 times
Monday to
Friday inc
BH and all
day Sat and
Sun
00.00-09.00
20.30-24.00
Monday to
Friday inc
BH 00.0016.30 18.3024.00
Saturday
and Sunday
00.00-09.00 All other
20.30-24.00 times
Monday to
Friday inc
BH 00.0024.00
Saturday
and Sunday
00.00-08.00
22.30-00.00
Monday to
Friday inc
BH 00.0016.00 20.0000.00
Saturday
and Sunday
00.00-07.00
21.00-24.00
Monday to
Friday inc
BH 00.0012.30 14.0017.30 20.3024.00
Saturday
and Sunday
Notes
Currently in All times
are in Clock
GMT
derogation time
in place
until 27th
March 2011
New Time
period
Eastern
(GSP A )
East
Midlands
(GSP B )
Red
16.00-19.00
Monday to
Friday inc
BH
Amber
All times
All times
All times
All times
Currently in All times
are in Clock are in Clock are in Clock are in Clock are in Clock
GMT
time
time
time
time
derogation time
in place
until 27th
March 2011
00.00-07.30
22.00-24.00
Monday to
Friday inc
BH 00.0012.00 13.0016.00 21.0024.00
Saturday
and Sunday
00.00-07.30 All other
21.30-24.00 times
Monday to
Friday inc
BH 00.0016.30 19.3024.00
Saturday
and Sunday
SSE
(GSP P )
All times
All times
All times
All times
Currently in All times
are in Clock are in Clock are in Clock are in Clock are in Clock
GMT
time
time
time
time
derogation time
in place
until 27th
March 2011
Process involved in creating tariffs
Price Control Review (DCPR5)
RPI, Low Carbon Networks,
Under/Over -Recovery
Revenue derived for each DNO for five years
Possible parameter changes in the
future (e.g. time bands)
Revenue entered into CDCM model
DUoS tariffs produced
Repeat for each year
9 | Energy Networks Association
20 December 2010
Price Control Review
Allowed Revenue as
published by Ofgem in
February 2010
The allowed revenue
does not account for
inflation, so this (at the
very least) would need to
be accounted for
http://www.ofgem.gov.uk/Networks/ElecDist/PriceCntrls/DPCR5/Documents1/A
ppendix%201%20Feb%2023%20signed.pdf (page 24)
10 | Energy Networks Association
20 December 2010
Updated Revenue Information
The most up-to-date view of DNO’s revenue can be gained from the
quarterly DCP 030 teleconference calls
11 | Energy Networks Association
20 December 2010
The CDCM Model
o The CDCM model is a standardised methodology that
apportions allowed revenue (set by Ofgem) and translates
this into tariffs for HH, HH and Unmetered supply points
o The model has been developed to represent a more unit
driven tariff to firstly provide a cost signal to customers to
reduce usage and also replicate the system peaks by
loading costs into the day unit and/or red/peak for HH tariffs
o Each DNO essentially has the same CDCM model with
variations to represent regional differences
o To use the model at its most basic level it requires the
input of only 1-5 data fields
o The model also have several other more sensitive elements
which can be changed as part of a DCUSA change and this will
not be covered in this training session
12 | Energy Networks Association
20 December 2010
Assumptions
o The revenue that feeds into the CDCM model for April each year needs
to be scaled by RPI
o RPI for Distribution Revenue is set as the average of the last six months of
the year (July to December)
o DNO’s have incentives in place to ensure that they do not Under/Over
Recovery revenue by a set percentage in any given year. If they are close
to breaching these limits they will consider a mid-year tariff release
o The sensitivity of the model, through demand usage and the weighting of
revenue collection through unit rates means that forecasting tariffs become
harder
o Low Carbon Network (LCN) Schemes and other re-openers are not
always accounted for by DNO’s so it is worthwhile understanding the big
drivers that need to be factored in
o Some DNO’s account for LCN funding however some only apply a small
proportion of this
13 | Energy Networks Association
20 December 2010
Inputs required to create tariffs
Direct, Indirect
and Network
costs can be
inflated by RPI
although DNO’s
will update this
for the next tariffs
for 2011/12.
Transmission Exit
charges are
supplied to each
DNO by National
Grid
14 | Energy Networks Association
20 December 2010
Inputs required to create tariffs
This is the main driver
in terms of setting
tariffs
This input is the
amount of revenue
that is collected
through EHV / Site
Specific customers
There is uncertainty of
what this figure is
likely to be so taking a
10-20% variance can
make £1mn difference
15 | Energy Networks Association
20 December 2010
Tariffs Produced
16 | Energy Networks Association
20 December 2010
Inputs required to create tariffs
Increasing the
revenue figure by
£20mn
17 | Energy Networks Association
20 December 2010
Tariffs Produced – Revenue increase
Unit rate have
increased
through the
£20mn revenue
increase
although Fixed
and Capacity
Charges have
remained the
same
18 | Energy Networks Association
20 December 2010
Worked Examples of Tariffs
Unresticted Rate
Revenue
Allowed Revenue
Allowed Revenue + £20mn
Difference
% Change
1.84
2.013
0.173
9.4%
£
238,200,000 £
258,000,000 £ 19,800,000
8.3%
The NEDL CDCM Model
increases the Unrestricted
NHH unit rate by 9.4% for a
£20mn revenue increase
LV HH
Red
Amber
Green
Revenue
Allowed
Allowed Revenue Revenue+£20mn Difference
% Change
5.731
6.726
0.995
17.4%
1.281
1.323
0.042
3.3%
0.233
0.233
0
0.0%
£
238,200,000 £
258,000,000 £ 19,800,000
8.3%
For a LV HH customer you
will note that the Red rate
increases by 17.4% with
little change for the Amber
and Green rates
It is worth noting that the Red (Peak) rate for HH tariffs are significantly higher
than the other (Amber and Green) rates:
The Maximum Peak value is in SWEB at approximately 21p/kWh
The Lowest Peak value is in London at approximately 2p/kWh
Annual review pack
o CDCM Annual Review Pack
o Produce 5 year of CDCM inputs
o DNOs to provide commentary and assumptions
behind the CDCM inputs
o To highlight any changes timebands
o Suppliers to produce tariffs
o To be issued in December 2010
Annual review pack contents
Sheet 1 - Commentary
This sheet contains the DNO's commentary on the forecast input CDCM data for the base forecast over the 5 year
period and the high and low scenarios.
Sheet 2 - CDCM Inputs
Forecast Data
This sheet contains historical and forecast data for all CDCM inputs except for volume data (table 1053).
The RPI forecast is seperated out and listed as a standalone assumption. Any forecasts that relate to RPI will be
linked to this row.
Comments are provided alongside each forecast explaining any assumptions made by the DNO.
Sheet 3 - CDCM
Volume Forecasts
This sheet contains forecast CDCM volume data (table 1053). The matrix at the top can be used to apply different
growth rates to groups of customers.
Sheet 4 - CDCM Input
Sheet (Y)
This sheet contains the CDCM input sheet for base year 0 (Y) in a format that can be copy and pasted (paste-value)
into the CDCM spreadsheet model.
Sheet 5 - CDCM Input
Sheet (Y + 1)
This sheet contains the CDCM input sheet for base year +1 (Y+1) in a format that can be copy and pasted (pastevalue) into the CDCM spreadsheet model.
Sheet 6 - CDCM Input
Sheet (Y + 2)
This sheet contains the CDCM input sheet for base year +2 (Y+2) in a format that can be copy and pasted (pastevalue) into the CDCM spreadsheet model.
Sheet 7 - CDCM Input
Sheet (Y + 3)
This sheet contains the CDCM input sheet for base year +3 (Y+3) in a format that can be copy and pasted (pastevalue) into the CDCM spreadsheet model.
Sheet 8 - CDCM Input
Sheet (Y + 4)
This sheet contains the CDCM input sheet for base year +4 (Y+4) in a format that can be copy and pasted (pastevalue) into the CDCM spreadsheet model.
Sheet 9 - Tariffs
This sheet contains the CDCM tariffs that are produced from the CDCM input data, after the Macro on this sheet has
been run. It contains the tariffs for each of the 5 years.
Sheet 10 (CDCM
Timebands)
Contains the time bands that the DNO plans to use for the coming year and advance warning of any changes.
Annual review pack contents
His toric al C DC M Input Data
(Ac tuals )
Y-2
Y-1
Year R ef
Indic ative C DC M
Values
Y
F orec as t C DC M Values
Y+1
Y+2
Y+3
Y+4
1000 C ompany name, c harging year and model vers ion
C om pan y
Year
Vers ion
1010 F inanc ial and general as s umptions
R ate of retu rn
An n u alis ation period (years )
P ower fac tor
D ays in th e c h argin g period
1017 Divers ity allowanc e between top and bottom of network level
GS P s
132kV
E HV
HV
1018 P roportion of relevant load going through 132kV/HV direc t trans formation
1019 Network model GS P demand (MW )
1020 Gros s as s et c os t by n etwork level (£)
132kV
132kV/E H V
E HV
E H V/H V
132kV/H V
HV
H V/L V
L V c irc u its
2013/14
2014/15
2015/16
R P I F orec as t:
2012/13
2011/12
.
2010/11
C DC M Input data table:
2009/10
C harging Year
3%
3%
3%
3%
E NWL
2009/10
v1
E NWL
2010/11
v1
E NWL
2011/12
v1
E NWL
2012/13
v1
E NWL
2013/14
v1
E NWL
2014/15
v1
E NWL
2015/16
v1
6.90%
40.00
0.95
365.00
6.90%
40.00
0.95
365.00
6.90%
40.00
0.95
366.00
5.70%
40.00
0.95
365.00
5.70%
40.00
0.95
365.00
5.70%
40.00
0.95
365.00
5.70%
40.00
0.95
365.00
500.00
0.03
0.08
0.14
0.38
0.00
500.00
0.03
0.08
0.14
0.38
0.00
500.00
0.03
0.08
0.14
0.38
0.00
500.00
0.03
0.08
0.14
0.38
0.00
500.00
0.03
0.08
0.14
0.38
0.00
500.00
0.03
0.08
0.14
0.38
0.00
500.00
38,287,511
32,477,662
52,292,106
56,048,156
39,436,136.33
33,451,991.86
53,860,869.18
57,729,600.68
40,619,220.42
34,455,551.62
55,476,695.26
59,461,488.70
41,837,797.03
35,489,218.16
57,140,996.11
61,245,333.36
43,092,930.94
36,553,894.71
58,855,226.00
63,082,693.36
44,385,718.87
37,650,511.55
60,620,882.78
64,975,174.16
95,088,790
85,194,032
68,524,016
97,941,453.70
87,749,852.96
70,579,736.48
100,879,697.31
90,382,348.55
72,697,128.57
103,906,088.23
93,093,819.01
74,878,042.43
107,023,270.88
95,886,633.58
77,124,383.70
110,233,969.00
98,763,232.58
79,438,115.22
EDCM what’s happening
o EDCM was due to be implemented 1st April 2011
o Ofgem decision to delay until 1st April 2012
o wanted more justification
o More stakeholder involvement
o Impacts all customers on site specific tariffs
o Plus with the boundary change all HVS customers will
move onto the EDCM model- more change
o All customers will see a change
o Allowed revenue to be split between CDCM and EDCM
final decision will impact CDCM customers as well
o Consultation due out imminently
How to get involved
o DCMF- ENA offices every two months next one 6th
January 2011
o EDCM Consultation responses due 1st February 2011
o Workstream C main suppliers participate
o CDCM governance 28 changes to the current model
proposed
o DCP030 tele-conference
calls quarterly
Thank you