Shrinkage Forum 04 June 2013 Roy Malin

2 Best Practice - Areas of Inconsistency AreaBackgroundAction Definition of All-PE systems Used to identify networks that are to be classified as ‘All-PE’; the primary use for this is for excluding these networks to report an average system pressure in mixed material networks. It was agreed that an All-PE network should be defined as a network that contains >95% PE pipe by length. To be updated with next version of leakage model. MEG SamplingThe sampling frequency of MEG concentrations varied between DNs. NGGD and NGN samples monthly, SGN quarterly and WWU do not use MEG. There are no specific guidelines recommending MEG sampling frequency. No change to current practice. Customers on NONET Networks Some DNs allocate un-noded meter points to their NONET Networks, whilst others do not. It was agreed that the DNs would review the numbers of such customers to determine significance. Mains Data Extraction Date NGGD take an extract of mains data on 1 April each year. The other DNs take a later extract, allowing time for the systems to be updated with work completed during the previous year. It is considered that the leakage extract should reflect the actual mains position at the end of the year. NGGD will adopt an approach consistent with this. Calorific ValueEach element of leakage is estimated in cubic metres of natural gas and it is necessary to convert this into energy. NGGD uses CV data published by National Grid Gas Transmission, whereas the other DNs use data provided by their gas quality team NGGD will look at adopting a similar approach to the other DNs.

3 Licence Obligations – Shrinkage and Leakage Model  DNs have a Licence obligation to maintain a Shrinkage and Leakage Model  The inclusion of Shrinkage is a new addition for the RIIO price control period  Need to expand current model to include Theft of Gas (ToG) and Own Use Gas (OUG)  Propose that the current ToG and OUG processes are adopted into the Shrinkage and Leakage Model  Propose that this be done alongside the proposed Low Pressure Service Model changes

4 Low Pressure Service Model Modification  In February 2012, National Grid published a consultation on a proposed revision to the Leakage Model in respect of the calculation of leakage from low pressure services  For leakage estimation purposes, services are split into four categories: Steel Service to Metallic Main, PE Service to Metallic Main, Steel Service to PE Main and PE service to PE main.  2002/03 National Leakage Tests established that only service connections to metallic mains leak  Establish a new ‘baseline’ estimate of the number of services in each of the categories (using mains replacement data)  Update model to capture the impact on leakage of service transfers (model previously updated to capture the impact of service relays)

5 Impact of LP Service Model Change  Impact is consistent with that already published for 2013/14 Initial Shrinkage Proposals  Establish a new ‘baseline’ estimate of the number of services  The RIIO Shrinkage and Leakage Baselines based on v1.3 Model  Impact determined by comparing the 2010/11 v1.3 Model output with that from the revised model for the same year  Impact will be the same for each year of the RIIO Price Control Period  Inclusion of Service Transfers  Average no transfers/km x anticipated mains replacement length x leakage rate  Impact will be cumulative from 2011/12 and over the RIIO Period  Change has no significant impact on incentives for DNs:  Re-baseline to 2010/11 - Baselines and Actual quantities will adjust by the same amount  Service Transfers – Baseline will be adjusted by an amount based on average transfer workload, whereas Actual quantity will be based actual transfer workload

6 Impact of Model Change – Re-baseline 2010/ /142014/152015/162016/172017/182018/192019/202020/21 EAEoE-12.0 EMEoE-24.4 NTLN-31.4 NW WM -3.6 NENGN1.4 NONGN-3.5 SC To Follow SESO SWWWU-3.0 WNWWU-1.7 WSWWU-3.2

7 Impact of Model Change – Service Transfers 2011/122013/142014/152015/162016/172017/182018/192019/202020/21 EAEoE EMEoE NTLN NW WM NENGN NONGN SC To Follow SESO SWWWU WNWWU WSWWU

8 Impact of Model Change – Combined (GWh) 2013/142014/152015/162016/172017/182018/192019/202020/21 EoE LN NW WM NGN SC SO WWU

9 AGI Venting - Current Model  Current Methodology  ‘Fixed’ values based on a 1994 Watt Committee report  National estimate  Derivation unknown  National value apportioned across LDZs at time of Network Sale  Approximately 5% of over all emissions

10 AGI Venting - Background  Two routinely venting components  Positioners  Controllers  Venting occurs both in steady state and during control actions  Each AGI usually has a number of Positioners and Controllers  Positioners and Controllers originally designed to work with compressed air but modified to work with gas, as readily available on site.

11 AGI Venting - Proposal  Proposed Methodology  ‘Activity’ based estimation  Based on number of Positioners and Controllers  Estimate of Steady-state Venting  Manufacturers Data  Estimate of Operational Venting

12 AGI Venting – IFI Project  Key deliverables Verify Manufacturers Data Establish relationship between venting rate and control system operating pressure for steady-state venting  Identify levels of venting in operation  Investigate the potential to relate operational venting to telemetered flow and pressure data  The viability of this will be assessed when data is available

13 AGI Venting – Verification Manufacturers Data  Bristol Babcock Controller  20 PSI  Verified by lab tests  Linear relationship between control pressure and venting  Fisher Positioner  100 PSI  Verified by lab tests  Linear relationship between control pressure and venting

14 AGI Venting – Next Steps  End of July – Complete IFI Work  August – Complete inventory of existing equipment  September – Issue Consultation on AGI Venting  October – Report on Consultation issued to Ofgem  December – Ofgem decision (in time for 2014/15 Shrinkage Proposals)