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LDZ Shrinkage - a National Grid Overview. Chris Warner Mod 0194/RG 0208 June 2008. Topic areas. LDZ Shrinkage What is LDZ Shrinkage? Own Use Gas and Theft of Gas Leakage National Leakage Tests UNC Section N Timeline Shrinkage Forum 2007/08 Shrinkage Factors - PowerPoint PPT Presentation
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LDZ Shrinkage- a National Grid Overview
Chris Warner
Mod 0194/RG 0208
June 2008
Topic areas
LDZ Shrinkage What is LDZ Shrinkage? Own Use Gas and Theft of Gas Leakage National Leakage Tests UNC Section N Timeline Shrinkage Forum 2007/08 Shrinkage Factors Modification Proposal 0203V Gas Prices 2008-13 Shrinkage Allowances (E8) 2008-13 Environment Emissions Incentive (E9)
LDZ ShrinkageIntroduction
What is LDZ Shrinkage? “For the purposes of the Code shrinkage means gas in a System which is
used by the Transporter in connection with the operation of, or which is unaccounted for as offtaken from, a System”
For the purposes of UNC, LDZ Shrinkage comprises of own use gas: gas used in running compressors, and gas used for
preheating unaccounted for gas: gas lost or unaccounted for by reason of unidentified
theft, error in meter correction and leakage, including gas vented in its operation
2007/08 Procurement Context* 1,904 GWh 0.6% LDZ throughput £26.6m
* National Grid Networks only
Chart for illustration only,
not to scale
What is LDZ Shrinkage?Key Components
Total LDZ Shrinkage
Own Use Gas
2% of 2007/08
Shrinkage
Leakage
95% of 2007/08
Shrinkage
Theft of Gas
3% of 2007/08
Shrinkage
Holder Pre-heat
Pre-heat Gas
Transporter responsible
Theft
Supplier responsible
Theft
Distribution Mains and
Service Leakage
Low Pressure
Medium Pressure
Broken Mains
Above Ground
Installation Leakage
Purging Venting
Holder Stations
NTS / LTS / <7bar PRS
Service Governors
Equipment vented for
maintenance
Equipment that vents in
use
What is LDZ Shrinkage?UNC Definitions
Total LDZ Shrinkage
Own Use Gas
2% of 2007/08
Shrinkage
Leakage
95% of 2007/08
Shrinkage
Theft of Gas
3% of 2007/08
Shrinkage
Holder Pre-heat
Pre-heat Gas
Transporter responsible
Theft
Supplier responsible
Theft
Distribution Mains and
Service Leakage
Low Pressure
Medium Pressure
Broken Mains
Above Ground
Installation Leakage
Purging Venting
Holder Stations
NTS / LTS / <7bar PRS
Service Governors
Equipment vented for
maintenance
Equipment that vents in
use
“unaccounted for gas” “own use gas”
Own Use Gas and Theft of GasContributes to only 5% of LDZ Shrinkage Requirements
Own Use Gas Calculated via model as opposed to being measured
Historically no requirement to meter sites Complex model uses actual telemetered regulator throughput,
temperature & pressure data, where available New updated model first used in 2005/06
Theft of Gas Negotiated proportion of LDZ Throughput
Instances of Theft assumed to be 0.3% of LDZ throughput, of which 10% of the total theft was transporter responsibility (i.e. 0.03% of LDZ throughput)
Transporters however believe that only 3.1% is transporter responsibility (i.e. 0.01% of LDZ throughput) based on confirmed occurrences of theft from xoserve
Theft upstream of ECV proven to be difficult to identify so currently agreed to be 0.02% of LDZ throughput
LeakageContributes to 95% of LDZ Shrinkage Requirements
Majority of leakage relates to Low Pressure (81%) Predefined leakage rates:
11 mains leakage rates and 4 service leakage rates 2002/03 National Leakage Test
64.9%
16.2%
7.6%
10.9% 0.4%
LP Mains Leakage LP Service Leakage MP Mains Leakage
AGI Leakage Interference Damage
Low Pressure Leakage Components:
Mains Asset Statistics
Average System Pressure
Monoethyleneglycol (or MEG!)
Number of Services
National Leakage Tests2002/03 Advantica test programme
In 1992, British Gas commissioned a programme of leakage tests to quantify the leakage from its distribution system
Leakage rate data used to facilitate Shrinkage Factor Negotiations Shippers requested disallowance of proposed LDZ Shrinkage Factors in
2001/02 due to out-of-date leakage rate data Transco commissioned Advantica to carry out a new programme of
tests as a result of the disallowance 2002/03 National Leakage Test (NLT) programme A total of 862 tests were carried out in the period from February 2002 to
May 2003, providing 849 usable results The results of the NLT programme were presented to the Shrinkage
Forum in June 2003 Leakage Rates were lower than those determined in the previous 1992 test
programme Concluded to be as a result of Transco’s mains replacement programme,
which tended to target poor condition mains For the Low Pressure system, this resulted in an overall reduction of
approximately 31%. For the Medium Pressure system, the overall reduction came out at less than 1%
UNC Section N TimelineEstablishment of Gas Year LDZ Shrinkage Volume
April, May & early June
Analysis carried out to support
initial Shrinkage proposals
1 JulySubmit estimated LDZ Shrinkage / methodology to
Users“Initial Proposals”
Late June / early JulyOpportunity to present estimated Shrinkage to
Shrinkage Forum1 September
Submit final estimated LDZ Shrinkage /
methodology to Users“Final Proposals”
1 July – 1 AugustUsers may submit representations in
respect of the estimated Shrinkage
1 – 15 AugustDNs to consider User representations and
may convene meeting if deemed
appropriate
1 – 15 SeptemberUsers may request a
disallowance
OctJun Jul SepApr May Aug Nov Dec Jan
15 September – 1 OctoberPossible Ofgem
Determination Process
Late SeptemberIssue instructions to load new shrinkage requirements into
Gemini
Gas Year….
Shrinkage ForumIndustry Discussion Forum
Provides an opportunity for Transporters to meet interested parties in order to discuss LDZ Shrinkage issues such as:
Shrinkage Factor Proposals Assessment & Adjustment Report
Joint Office provides administrative support Chair: Tim Davis chairs the meeting Secretary: Lorna Dupont is the Secretary
2007/08 Shrinkage FactorsApril 2007 to March 2008
LDZ UNC Factors Licence Factors EA 0.593% / 0.620% 0.593% EM 0.519% / 0.510% 0.519% NT 0.622% / 0.550% 0.622% NW 0.656% / 0.630% 0.656% WM 0.729% / 0.730% 0.729%
N.B. UNC Factors – Gas Year Licence Factors – Formula Year
Modification Proposal 0203VAreas being addressed
For the 2008-13 Gas Distribution Networks Price Control, Ofgem fixed a volumetric allowance for Shrinkage for each LDZ, as opposed to ex ante target shrinkage factors (percentages of throughput).
Ofgem concluded that on the basis of evidence available, there is little correlation between shrinkage and throughput for the existing networks
As a result, changes to Section N have been progressed: to update references to LDZ Shrinkage Factors to reflect LDZ Shrinkage
Quantities make appropriate amendments to the content of industry notification
processes, namely current Initial and Final Proposals effect minor change to the classification of LDZ vented gas, consistent with
the operation of the approved Leakage model calculations (vented gas is not burnt and therefore should be classed as unaccounted for gas, not own use gas)
update the sources of information used in the assessment process to include all inputs to the leakage model
System amendments (Gemini / UK Link) being considered and progressed in parallel
Modification currently with Ofgem for determination Preferred implementation date 1 July 2008
Gas PricesDay-Ahead Price Trend
Day-Ahead Price Analysis (p/therm)
020406080
100120140160180200
Day-Ahead Price Summer Average Winter Average
?
2008-13 Shrinkage Allowances (E8)Revised Regulatory Regime Introduced
Shrinkage is gas lost from the system through leakage, theft and own use gas
Concluded there was no measurable correlation between shrinkage (leakage) and throughput
2007/08 allowances (volume & price) ‘rolled over’ for first six months to allow UNC modification proposals to be progressed
Revised regime reduces both (weather related) volume risk and price risk
2007/08 Shrinkage Allowance
Shrinkage Factors(predefined within licence)
multiplied by
actual throughput
multiplied by
Gas Reference Price(3 month ahead price * 3.5% uplift)
2008-13 Shrinkage Allowance
Shrinkage Quantities(predefined ‘reducing’ volumes within
licence, broadly reflective of BPQ submission)
multiplied by
Gas Reference Price(Day Ahead Price)
2008-13 Shrinkage Allowances (E8)Allowed Shrinkage Quantities
2008-13 Environment Emissions Incentive (E9)Dx mains leakage significant source of greenhouse gas emissions
Additional incentive, over and above mains replacement programme, to reduce leakage based on social cost of carbon
Average of £29.7 per MWh over the period Cap / Collar at 10% of baseline leakage volumes
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