1. Consideration of issues raised by UNC Modification Proposal 0244
RG September 2009

2. Background Reduced demand at DM Supply Points as a consequence of
economic downturn
Mothballed plant
Reduced / curtailed production
Current UNC rules limit opportunities for the reduction of
Registered DM Capacity
Concerns raised by Consumers at Gas Customer Forum
UNC Modification Proposal 0244 (and 2 alternates) raised in
March 2009 sought changes to UNC regime governing
reduction of the Registered DM Capacity
All three proposals rejected by Ofgem in May 2009
‘Rules and options’ analysis commissioned with xoserve

3. Ofgem Decision Key points within decision letter
None of the 3 proposals recommended for implementation by the UNC Modification Panel
Applicability of undue discrimination rules (EU Gas Directive 2003/55/EC)
ability of NDM and DM SPs to vary ‘level of charges’ - BTU form
Limited evidence and analysis
appropriateness of differential treatment of NDM / DM
level of demand for reduction of DM SOQ below BSSOQ
level of reduction of DN revenue (NDM incur costs / cross subsidy)
Analysis also required
impact on Consumers of any proposed solution
impact on other Consumers of any proposed solution (no inappropriate socialisation of costs)
suitability of proposed arrangements in respect of prevention of gaming
Relief
rules to prevent gaming
temporary
transitional (i.e. value of relief subsequently recovered)
Ofgem noted that there is no link between DN revenue and usage
Ofgem questioned whether implementation could lead to inefficient investment / stranded assets
Ofgem questioned whether detrimental to
efficient operation of systems
efficient discharge of licence obligations (charging methodology)
effective competition between shippers

4. BTU Form UNC TPD G1.6.13(a)(ii)
Appeal between 1 September and 31 July only
Enables change (increase or reduction) to AQ (and therefore
to the NDM SOQ subsequently derived)
Requires a change to consumers plant that changes the
basis in which gas is consumed
Unless there is a change to the plant (and consequently a
change to the basis on which gas is consumed) the BTU
form cannot be utilised to vary the AQ