Gas Act Schedule 2B “Gas Code” Simon Trivella –15th June 2009 Review Group 0245 – Ofgem, Millbank

Background Gas Act Schedule 2B “Gas Code” includes Rights of entry Rights to disconnect Rights to recover cost of gas illegally taken

Sch 2B Para 9 - Supplies of gas illegally taken 9(1) “Where any person takes a supply of which is in the course of being conveyed by a gas transporter, the transporter shall be entitled to recover from that person the value of the gas so taken” Covers ‘upstream’ Theft of Gas Consistent view from DNs and Ofgem Point of discussion is “in the course of being conveyed” Does conveyance (transportation) cease at the ECV ? Current view (WWU) is that it does cease at the ECV

Sch 2B Para 9 - Supplies of gas illegally taken 9(2) Where- any person at premises which have been reconnected in contravention of paragraph 11(1) below takes a supply of gas which has been conveyed to those premises by the gas transporter; and the supply is taken otherwise than in pursuance of a contract made with a gas supplier, or deemed to have been made with such a supplier by virtue of paragraph 8 above or paragraph 19 of Schedule 5 to the Gas Act 1995, the transporter shall be entitled to recover from that person the value of the gas so taken

Sch 2B Para 9 - Supplies of gas illegally taken Initial view that this only applies if the premise has been reconnected without authorisation following a disconnection (under any provision of the Gas Code) and there is no supply contract in place (deemed or otherwise) If this is the case, and assuming 9(1) can not apply, then no one has the ability to recover the value (under the Gas Code) of illegally taken gas, from a person without a supply contract unless they made an illegal reconnection…. This does not seem appropriate and could never have been the intention when drafting the Gas Code Is this the correct interpretation ? Possibly not…..

Sch 2B Para 9 - Supplies of gas illegally taken If we take a mathematical approach to this it becomes slightly more clear Section 9(2) = (x + y) X z   where: x = (2)(a) y = (2)(b) z = "the transporter... ....gas so taken“ The formula (paragraphs) can be expanded to read: Section 9(2) = xz + xy

Sch 2B Para 9 - Supplies of gas illegally taken Schedule 2B Paragraph 9(2) could therefore have been written as: 9(2) (a) Where any person at premises which have been reconnected in contravention of paragraph 11(1) below takes a supply of gas which has been conveyed to those premises by the gas transporter, the transporter shall be entitled to recover from that person the value of the gas so taken; and (b) where the supply is taken otherwise than in pursuance of a contract made with a gas supplier, or deemed to have been made with such a supplier by virtue of paragraph 8 above or paragraph 19 of Schedule 5 of the Gas Act 1995, the transporter shall be entitled to recover from that person the value of the gas so taken. The existing drafting just negates the need to repeat the final sentence (z). In this case it is reasonable to read the “and” as “or”

Sch 2B Para 9 – Independent view “Go down deep enough into anything and you will find mathematics” ~ Dean Schlicter “Mathematics is the supreme judge; from its decisions there is no appeal”  ~ Tobias Dantzig “The essence of mathematics is not to make simple things complicated, but to make complicated things simple” ~ Stan Gudder “Pure mathematics is, in its way, the poetry of logical ideas" ~ Albert Einstein So many great minds can not be wrong ?

“Unfortunately Ofgem aren’t very good at mathematics” ~ Unknown Ofgem disagree with the WWU interpretation

Sch 2B Para 18 – Improper Use of Gas WWU initial view that ‘improper use’ does cover Theft of Gas Potential issue on whether ToG has knowingly occurred Rectification period required Potential limitation on amount recoverable Interpretation of Paragraph 9 Recovery from when ToG knowingly occurred ( or D + [30] ) Potential high administrative / operational costs

Summary Different interpretations of Gas Code Inability to fully utilise Standard Condition 7(3) (GT Licence) Solution ? Gas Code amendment (not likely) Licence /UNC changes (can’t give rights to recover from end user) Agree upon application of Gas Code / Licence Still open to legal challenge

Gas Act Schedule 2B “Gas Code” Simon Trivella –15th June 2009 Review Group 0245 – Ofgem, Millbank