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Common Methodology Group Work Workstream 2 (Development of the distribution reinforcement model) Progress since the last DCMF 05 February 2009 PRESENTED BY ANDY JENKINS, CE ELECTRIC UK, ON BEHALF OF WORKSTREAM 2 05 February 2009 energynetworks.org •1 Agenda • Progress since the last DCMF The primary focus has been to support Reckon LLP (ENA appointed consultant) who is developing the new distribution reinforcement (DRM) charging model. • Development of the common DNO model • Issues escalated Ofgem • Other areas of consideration • Next steps 05 February 2009 energynetworks.org 2 Common DNO charging model • Developed by Reckon in conjunction with the distribution network operators (DNOs) and interested industry parties • Focuses on charges for HV & LV connected customers (but also models EHV) • Aims to reflect Ofgem’s October 2008 decision document and includes • Charges for independent distribution network operators (IDNOs) • HV and LV generator charges which recognise the potential benefit that generation can bring to the network by offsetting demand • Reactive power charges • Supports common tariff structures and common application processes • The design philosophy of the model emphasises transparency over compactness. • The model is still under development, but the latest version can be found on the ENA website at http://2009.energynetworks.org/structure-of-charges/ 05 February 2009 energynetworks.org 3 Issues escalated to Ofgem • • Briefing papers were produced on the issues encountered so far Focused on areas where: • the current modeling approach differed from appendix 2 of decision document • we believed the document was ambiguous in certain areas. • The purpose of the briefs was to try and get early resolution of the issues and ensure that the project remained on track. Issue Description WS2 - 1 Revenue reconciliation if demand and generation incentives are merged WS2 - 2 DRM network Assets • Issue 2a - Method for excluding customer contributed assets from the DRM • Issue 2b - Clarity on replacement of sole use network assets WS2 - 3 Clarity on the final step in the derivation of the reactive power charge WS2 – 4 Network levels for which generation benefits are to be paid WS2 - 5 Consistency in the application of P2/6 across voltage levels WS2 - 6 Use of reduction factors to calculate availability charges and fixed charges 05 February 2009 energynetworks.org 4 Other areas of consideration • Time of day and time of year cost signals • Is it appropriate to simplify the tariff offering in order to facilitate more commonality across DNO? • 500 MW network model • What assets should be included in the 500MW model • How best to incorporate the customer connections contributions paid by the various customer types • Some networks may be a variant, depending on local configuration (e.g. northern Scotland) • Generation yardsticks • DG yardsticks have been included in the model based on F-factors • Two responses were received to the consultation 05 February 2009 energynetworks.org 5 Future areas of work • Clarify Ofgems “minded to” decisions, before building them into the charging model • Finalise the model and associated user manual • Identify the source of the data required to populate the charging model • Start to populate the charging models • Undertake detailed impact and sensitivity analysis 05 February 2009 energynetworks.org 6