1. Capacity/Commodity Split Impact on Suppressed reconciliations
Distribution Workstream
24th April 2008
Linda Whitcroft

2. Capacity/Commodity Split & Suppressed Reconciliations
Distribution Network Pricing Consultations
Distribution Networks proposed change to current regime
Increase the capacity element of the Local Distribution Zone (LDZ) system charges
Move to 95% capacity and 5% commodity
Effective 1 October 2008
Final decision published during December 2007 by Ofgem

3. Capacity/Commodity Split/Suppressed Reconciliations
Introducing a capacity/commodity 95:5 split will distort the results of the filter failure mechanism if not redesigned.
Erroneous charges would be released
Risk to all Shippers
Analysis was carried out xoserve to ascertain changes required to keep the same population of filter failures following the price changes
NB. Currently 89% of suppressed reconciliations are adjusted with 11% being approved
Analysis included changes to TRE (NRE and ZRE) charges – as per current process and ZRE only

4. Recommended Option Move to a ZRE Filter
Shown to provide the best MPRN selection match to the current filter
Less subject to change due to NRE not being used
Therefore parameter values not expected to be modified on regular basis, hence fewer consultations and changes to Suppression Guidelines required
Reduces risk of non ability to amend the parameter values in line with price changes
Date specific filters – TRE used until 30/9/08 and ZRE used from 1/10/08

5. Current Filter Values and Current Charge TRE Calculation
EUC BAND
SPAQ BAND NAME
BAND NO
TRE FILTER (£)
(debit or credit)
ZRE FILTER 2 3 4 5 6 7 8 9
73,200 to 292,999
293,000 to 731,999
732,000 to 2,195,999
2,196,000 to 5,859,999
5,860,000 to 14,649,999
14,650,000 to 29,299,999
29,300,000 to 58,599,999
58,600,000+ 1 10 15 20
£0.47
£0.91
£1.32
£1.75

6. Capacity/Commodity Split/Suppressed Reconciliations
Example
Pre 1/10/08
Post 1/10/08
AQ (kwh)
100,000
Start date
End date
No. days 30
EUC Band 2
Filter Tolerance
£5/day
Rec (kwh)
Charges
pre October
post October
GRE
£800
ZRE
£300
£30
NRE
TRE (ZRE + NRE)
£330
£60
Average TRE per day
£11 £2
RESULT
FAIL
PASS
New Filter - £0.47 p/day, therefore FAIL