Commercial and Regulatory change

For any background information an introduction to charging is available on our charging page.

The purpose of the Gas Charging Review is to better meet our customer and stakeholder provided objectives and to deliver EU Compliance. Further information on the background to this including the EU Tariff Network Code is available on the European Network of Transmission System Operators for Gas website.

The Charging Review proposed moving away from a Capacity and Commodity based structure of charging to a Capacity only regime. Following Ofgem’s decision on 28 May 2020 to approve UNC Modification 0678A, the existing Long Run Marginal Cost will be replaced with a Postage Stamp method to provide a more stable charging methodology from 01 October 2020. The details of the proposals which were considered are contained within the UNC modification 0678 and its alternates and are available here:

• 0678/A/B/C/D/E/F/G/H/I/J (Urgent) - Amendments to Gas Transmission Charging Regime 

The details behind Ofgem’s decision to implement 0678A over the other alternatives are available on the Ofgem website.

Changes driven by 0678 and Ofgem’s decision

Following approval of 0678A, additional changes have been proposed to introduce a Capacity based alternative to the existing Commodity based Shorthaul product (currently the NTS Optional Commodity Charge -NOCC) which will terminate upon implementation of 0678A:

• A cross-industry review group reviewed and assessed the potential for inefficient bypass of the NTS via Review Group 0670R – Review of the charging methodology to avoid the inefficient bypass of the NTS. This review ran each month as part of the NTS Charging Methodology Forum. Minutes and supporting information are available on the gas governance website.

• National Grid raised UNC Modification 0728 (Urgent) - Introduction of a Conditional Discount for Avoiding Inefficient Bypass of the NTS,to propose an enduring solution to the topics discussed at the review group. The modification proposes a new conditional discount to replace the outgoing NOCC. UNC 0728 has four alternates raised alongside the National Grid proposal, details of which are available on the gas governance website.

In addition to the changes to the short-haul regime, an urgent modification has been raised to amend the Storage Transmission Capacity Charge Discount. Modification 0678A, the new NTS Charging Methodology, includes a discount for Transmission Services charges incurred on capacity purchased at storage sites of 50%. UNC Modification 0727 (Urgent) - Increasing the Storage Transmission Capacity Charge Discount to 80%, proposes an increase in this discount to 80%. A second modification, UNC Modification 0729, which will proceed under a standard timetable, proposes that this enhanced 80% discount should also be applicable to the Revenue Recovery Charges, applied to the same capacity in the event of under or over recovery of revenue against target.

Details of UNC Modification 0727 and UNC Modification 0729 are available on the gas governance website.

Additional Links

• TPD

• Section Y

• National Grid Gas Charging

  • Transportation Statement

  • Long-term Revenue Forecast

  • Discussions

Contact us

For more information, please contact [email protected], [email protected], [email protected]

Moffat Nominations

We proposed an amendment to the Interconnection Agreements with GNI, GNI(UK) and PTL, which would give the adjacent TSOs increased ability to provide us with more accurate flow notifications earlier in the gas day. This will then allow us to provide a more accurate picture of the prevailing system balance to the industry, via the Predicted Closing Linepack figure we publish.

The governance for this change was completed via UNC modification proposal 720s and the governance for the adjacent TSOs is also nearing completion. Governance for all parties must be completed before the change can take effect and industry will be informed as soon as the final implementation date is confirmed. A link to further material relating to UNC modification proposal 720s is below.

UNC modification proposal 720s

Contact us

For more information please contact [email protected]

IGEM GS(M)R Review

IGEM consulted the industry last year, about whether to amend the UK gas quality specification and transfer it out of GS(M)R into an IGEM standard. No changes to the proposed amendments to the specification were made as a result. We expect HSE to publish a consultation and impact assessment later this year, with a subsequent legislative change being completed in 2022 if the assessment concludes in favour of making such a change.

We are currently assessing how how the revised standard – if approved – might be implemented on the NTS. We recently sought views from all NTS entry, storage and interconnector operators about whether they would want to expand their permitted gas quality range via an on-line questionnaire. We plan to engage with industry on the implementation issues later in 2021.

National Grid NTS, along with industry stakeholders, started a review of the Capacity Access Regime in October 2019. This review aims to make processes simpler and explore different ways to access the existing capability of the network, by reviewing the way capacity is made available. 

The current entry and exit capacity arrangements for users to access the NTS were built on the foundations of an expanding gas transmission network. Historically, incremental capacity signals from long-term auctions would trigger investment on the NTS. Today, this environment has changed and we’re not experiencing the capacity signals requiring expansion of the network that we were 10 years ago.

It’s likely that we will see further changes within the next 10 years, with the potential introduction of new technologies and new sources of gas to the network such as Hydrogen. With this change in NTS use, and the needs and behaviours of its users, there is requirement for a holistic review of the current capacity access regime, to ensure it can deliver on the needs of our customers and National Grid as TSO, both today and in the future. At the October 2019 UNC Modification Panel, it was unanimously decided to send Capacity Access Review UNC 0705R to Transmission Workgroup. 

Following an industry consultation we have been working through a list of short-term issues. These have been grouped in to work-streams and include:

Signalling and Allocation of Capacity

Changes developed through this workstream have been implemented through the review of the capacity methodology statements. Changes include:

• the reduction in User commitment for Exit capacity within baseline from 4 years to 2 years

• reduction of User commitment for Entry incremental capacity from 16 to 4 quarters of the capacity application amount, with those 4 quarters being the incremental amount (maintaining the NPV test requirements for funded incremental capacity)

• prioritisation of capacity at disconnected sites in our substitution analysis

• capacity indicated as required through the demand forecasts provided via Exit Capacity Planning processes is not to be considered Substitutable Capacity.

Further changes in this area are being discussed with the industry and include: 

• reduction of user commitment for incremental capacity where the signal is fulfilled by substitution 

• movement of capacity between offtakes – a process that would allow Users to transfer capacity between Exit points.

Capacity Products and Auctions

This workstream has been focusing on the development of the within day Entry and Exit products to enable Users greater access and flexibility to purchase NTS Capacity. This has resulted in raising UNC Modification 0759S ‘Enhancements to NTS Within-day Firm Entry and Exit Capacity Allocations’, which is awaiting implementation subject to system changes being completed.

Secondary Capacity Assignments

Following feedback from the Industry, through this work stream we have developed and raised UNC Modifications 0779 ‘Introduction of Entry Capacity Assignments’ and 0755 ‘Enhancement of Exit Capacity Assignments’ to enable Users to transfer entry and exit capacity, and the associated liabilities, in full or in part at an Entry/Exit point. UNC Modification 0755 is awaiting implementation subject to system changes being completed, while 0779 is being considered by the Workgroup.

Review of the Exit Regime

As part of RIIO2, a new Licence condition was introduced that requires Gas Transporters to comply with the Exit Capacity Planning Guidance (ECPG). The ECPG provides a framework for processes and activities, to ensure efficient capacity bookings are made that benefits the gas transportation network as a whole. In light of this, we are looking at various aspects of the Exit capacity regime, including User Commitment, substitution, PARCA process and ensuring the network as a whole can be accessed efficiently.

Overruns

Following the implementation of UNC Modification 0716 ‘Revision of the Overrun Charge Multiplier’ on 1st October 2020, we have been reporting monthly on the level of Entry and Exit overruns that are occurring. This information is available for each month’s Transmission Workgroup meetings and available on the Joint Office webpage.

2030 Access Regime

This workstream is working closely with the Gas Markets Plan (GMaP). We have been working with members of the GMaP Balancing and Capacity Working Group to develop a scenario that outlines the expected physical and commercial landscape for accessing the NTS by 2030. From this we are building a series of options for a future access regime, which will facilitate the expected changes identified in the scenario. Finally, we are developing a series of triggers to monitor the materialisation of these changes and identify the direction and speed of travel. This will result in a report being published that will outline our findings and seek views and input from the Industry in September 2021. 

The Capacity Access Review is discussed regularly at the UNC 0705R Workgroup. Further Industry engagement is regularly conducted via sector specific engagement, bilateral discussions, Gas Industry Forums, Gas Storage Operators Group, Future of Gas Forum and industry webinars, to ensure industry views are fully captured in the development of the future regime.

For full details of the progress made to date, please follow the link to the Joint Office website.

We organise webinars to keep wider industry informed of the progress. Please email us if you would like to be added to the list of participants. 

• CAR Webinar presentation 20 January 2020 

• CAR Webinar presentation 11 March 2020 

• CAR Webinar presentation 29 October 2020 

Contact us

If you would like to engage with us with regards to Capacity Access Review developments, please email us: 

Jennifer Randal, Commercial Code Change Manager
[email protected]

Anna Stankiewicz, Commercial Code Change Lead
[email protected]

Dan Hisgett, Commercial Code Change Lead
[email protected]

Laura Johnson, Commercial Code Change Lead
[email protected]

Ash Adams, Commercial Code Change Lead
[email protected]