Seasonal Normal Weather Base Sallyann Blackett Gas Forecasting Manager

Seasonal Normal Weather - Contents Background Why Normal Weather Matters Traditional method Met Office project Mod Proposal Allow Met Office study output as a potential input to normal weather definition

Why do we need a seasonal normal? Historic demand Need to distinguish between demand change due to changes in consumer behaviour and connected load from short term changes due to weather To enable budget comparison To support pricing assumptions – both for Shippers and Transporters On the day demand Need an appropriate basis to measure weather impact from for allocation – included in SNET and CWV and allocation formula through AQ impact Future demand Need a basis to correct AQ to represent the future despite being based on historic demand Need to be able to forecast future demand while the future climate is unknown, supporting investment decisions Transporter 10 year statements Supplier purchasing

What does code say? The Network Code requires Tranporters to review, and if necessary revise all composite weather variables (CWVs) used for Network Code demand estimation purposes, at least every 5 years Concurrent with the comprehensive review of CWVs is the Network Code requirement to update the basis used for seasonal normal weather The Network Code requires that the basis (ie. the number and duration of years over which seasonal normal conditions are defined) is always such that the current year is never more than 6 years after the most recent year comprising the period used as the basis for seasonal normal conditions The basis for seasonal normal weather is intended to meet Network Code obligations in respect of gas demand modelling along with improved weather correction of gas demand and more realistic assessments of annual quantities, which are more in line with recent weather experience

Background to Review of Normal Weather What is the best “Normal Weather”? Traditionally based on historic averages Do not capture climate trends Very long periods needed to smooth natural variability Last major review was in 2005 Moved from 71yr to 17yr (Oct87-Sep04) basis No global warming adjustment What has happened since ? Most months have been warmer than gas industry 17yr normal (22 out of the last 30 months) Met Office/Energy Industry Global Warming Project (workstream 8 on Normal Weather)

Met Office/Energy Industry Project (EP2) Looking at impact of Global Warming on Energy Industry Energy Demand Lines, Cables & Transformers Urban Heat Island Wind & Sea Level Making use of UKCIP08 Work Package 8 on Normal Weather

Aims of WP8 Premise: observed climatological temperature averages are now unrepresentative as baselines for medium-term energy-demand planning Core aim of WP8: improve the UK planning baseline by predicting climate averages out to 2018 (using Met Office decadal prediction model*) for temperature, windspeed, solar radiation *Smith et al., Science, 2007 © Crown copyright Met Office

Method Generate observed hourly station climatology from most recent data (1971-2006) for 21 UK sites Use DePreSys (combined with observed UK district data) to predict future monthly climatological averages for each UK district Test for benefit of predicted climatologies over historical climatologies Use predicted district monthly climatologies to adjust the observed station hourly climatologies © Crown copyright Met Office

Predicted district climatology: mix of observations and predictions decadal prediction UK district temperature predicted climatology: 31-year centred averages Calibration adjustment at ‘join’ observations Past climate past now future © Crown copyright Met Office

Output of Met Office Study Hourly “Normal” Temperatures for 2008 to 2018 based on mix of actuals and decadal model forecasts For all current gas weather stations Warming is variable over the year Validation of method over the historic period 3yr ahead prediction much better than 30yr climate or 15yr rolling average Conclusion that modelling has insufficient skill for predicting Windspeed Advice to use base climate data when defining CWV

New Normal – Annual Averages Gas industry “normal”

Allow use of Met Office forecasts to provide a normal base in line with expected climate Review in 5 years time Alternative of continuously shifting “normal” would cause too much confusion

What does the Modification propose? Code requirements oblige a review of seasonal normal ready for 1/10/2010 Current rules obligate the use of historic data The Met office/Hadley Centre EP2 study provides data that could be used to produce a more representative base Code would not currently allow use of this information The modification proposes a small amendment to code to allow the use of forecast data in line with historic actual data to produce the seasonal normal There is no obligation envisaged about how much to use