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Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. Operating Margins Lorraine Weir, Project Manager, Strategy and Support, Gas Operations, National Grid Darren Lond, Senior Commercial Analyst, Transmission Network Service, National Grid
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2 Operating Margins Is required to fulfil the requirements of the Primary Gas Transporter’s Safety Case and is facilitated by Section K of the Uniform Network Code It is gas which can be supplied to the system, or demand which can be reduced, in times of distress It will primarily be used in the immediate period following operational stresses before other balancing measures become effective. Currently booked annually
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3 Operating Margins What is it for? Emergency prevention. Unforeseen events cause NTS to be out of balance Market Balancing Actions insufficient (eg not timely) Short term response Emergency management. During emergency, to safely manage the run-down of the NTS.
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4 Operating Margins What are the categories of OM (as defined in the Safety Case? Group 1: Supply failure or forecast demand change Calculated from failure of infrastructure at terminals (could be whole terminal or largest sub-terminal) Network analysis used to determine the OM required to maintain system integrity for up to 24 hours
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5 Operating Margins Group 2: Pipe or compressor failures Network analysis used to determine the OM required to maintain system integrity for 24 hours This can be a local requirement (locational) or general (non- locational)
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6 Operating Margins Group 3: Orderly Rundown – isolation of consumers due to reduction of supply over forecast demand To manage the unpredictability of curtailing demand
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7 Operating Margins – Providers Who provides OM?
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8 Future of OM What is the future for OM? Still required Volumes may increase due to demand volatility (rapid changes over a short time period when the market may not react) due to; Wind intermittency CCGT ramping Reduction in Distribution Network storage leading to diurnal swing being transferred onto the NTS
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9 Future for OM Need to review contract types: Longer term for locational? Shorter term for supply shock? Other types? Interaction between Mod 435 and OM? Dependant on: response timescales period covered for anything else?
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10 OM Deliverability Contracts Option Price for OM deliverability contract Annual Service Fee Exercise price for utilising the contract Current calculation principles are shown in the 2012/13 OM Statement http://www.gasgovernance.co.uk/sites/default/files/Operati ng%20Margins%20Statement%202012-13.pdf http://www.gasgovernance.co.uk/sites/default/files/Operati ng%20Margins%20Statement%202012-13.pdf New calculation principles can be developed in advance of OM tender periods
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11 Example OM Deliverability Contract 2012-1 The exercise price in respect of Deliverability Contract 2012-1 is as follows (in p/kWh): Exercise Price = SMPB * 1.40 Where SMPB represents the System Marginal Buy Price (in p/kWh) for gas for the Gas Day in which the service has been delivered
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12 Example OM Deliverability Contract 2012-2 The exercise price in respect of Deliverability Contract 2012-2 is as follows (in p/kWh): Exercise Price = Max (SMPB + 0.1706, 2.559) Where: SMPB represents the System Marginal Buy Price (in p/kWh) for gas for the Gas Day in which the service has been delivered
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