1. Cashout actions and further considerations
RG 0291 – July 2010 Workshop
Cashout actions and further considerations

2. Actions RG0291 006 and 007: ‘Linepack Build’
2009/10: 675MCM or 7,400GWh in Residual Balancing Actions
Gross trade value of £74M (Sell £42M, Buy £31M), net £12M
202 Trade days (Buys on 94, Sells 108), hence potential for build up of Linepack on 163 days
Total ‘build up’ on these non trade days = -12MCM
If ‘build up’ was bought / sold at SAP then ‘cost’ = ~£774k
i.e. £774k cost would be recovered via neutrality
However, NG is unlikely to trade SAP thus there is a perceived inefficiency associated with NG’s balancing actions
If we assume “inefficiency” is difference between SMPs & SAP then potential inefficiency for market = ~£854k
Total potential net misallocation (when applying SMPs) = -£1.63M
Gross trade value if days balanced to 0 = £76+M
SMPs inefficiency if applied to gross trade value = £-2,786,607(5% of total)

3. Actions RG0291 008 – ‘Refinement of Operational Costs’
Last review group we presented that ~95% of compressor fuel is used to transport gas from the main entry points around NTS
Therefore operational cost of managing daily shipper imbalance within Linepack is somewhere within the remaining 5%
In 2009/10 2,437GWh used as Compressor Fuel
Cost of Compressor Fuel used = £33M
Total system throughput = 1,127,355GWh
Gross system imbalance = 28,738GWh (3% of total)
Using the assumption that NG has had to use 3% of compressor fuel to manage this imbalance gas, an SMP can potentially be derived;
(Total compressor fuel cost x % of imbalance vs throughput) / annual system imbalance
(£33M x 3%) / GWh
p/kWh
Pros – Uses operational costs as the basis for a default value
Cons – contains a number of fundamental assumptions e.g. 0.02% fuel use on LP gas

4. Actions RG0291 010 – ‘System Length vs SAP’

5. Actions RG continued