1. Overview of RbD Risk Modelling 31 March 2008
Review Group 177
Overview of RbD Risk Modelling
31 March 2008

2. RbD Risk Modelling – Background
Purpose
Risk Modelling supported the introduction of RbD (Reconciliation by Difference) in 1998
Designed to be one of the operational “monitors” of RbD
How
Defined “Risk” as the difference between actual gas bills and those estimated by RbD
Estimated month on month variability of RbD Charges based on assessment of inherent risk factors
Periodic updates were shared with the RbD Sub-Group

3. Risk Model - Results
Risk Model showed that RbD was less variable than Meter Point Reconciliation
Base model showed variability of +/- 1.3% of allocation
Indicated variation with errors/timing differences included: +/- 2.5%
Predicted variation increased/decreased between updates
Actual variation can be up to 5% of allocation
Last update provided 2002
Risk Model superseded by RbD Feeder Model and RbD Forecasting

4. Variability of SOQs 31 March 2008
Review Group 177
Variability of SOQs
31 March 2008

5. Variability of SOQs SOQ = AQ PLF * 365 PLF = Peak Load Factor
Measure of peakiness of annual demand in an EUC – what proportion of AQ would be used on a 1 in 20 peak day
Set each year for each EUC as part of NDM Capacity Algorithms
Determination of PLF
EUCs 1 to 4: determined directly from the NDM Modelling – extrapolating modelled demand to the 78 year 1 in 20 CWV
EUCs 5 to 9: determined from the NDM Modelling using a Weather Correction Factor derived from the DNs forecast 1 in 20 Peak

6. Variability of PLFs Gas Year 05 to 06
“B” band EUCs only – excludes WAR bands

7. Variability of PLFs Gas Year 06 to 07
“B” band EUCs only – excludes WAR bands

8. Variability of PLFs 2006/07 to 2007/08
WAR Band variability
Gas year 05 to 06 – 100% of WAR Band PLFs changes in range -3% to +3%
Gas year 06 to 07 – 96% of WAR Band PLFs changes in range -3% to +3%

9. SOQ Amendment Options
PLFs are available by end of August (latest) for coming Gas Year, following industry consultation
Under rolling AQ rules, AQ may have recently updated
Options for NDM SOQs:
Restate all SOQs on 1 October, regardless of recent AQ changes
Leave SOQ unchanged, will update at next AQ change
Update SOQs based on read frequency – only amend Annually Read sites – Monthly Read will get reads and update soon
Update SOQs based on read history – if reads are frequent and AQ updates regularly, don’t update SOQ
Considerations:
Shipper comparability, differing read performance, Transportation revenue/costs, system processing, system capacity requirements