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

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

Moffat Nominations

National Grid receives daily physical flow notifications (called OPNs) from the Irish system operator GNI. The physical flow nomination is an aggregate of the individual shipper nominations taking gas at the Moffat Interconnection point. An issue has been identified with these OPNs being understated early in the day before gradually becoming more accurate as the day progresses. We are evaluating how to improve the quality of the accuracy of the OPNs earlier in the day.

Thereforewe are considering an amendment to the Interconnection Agreement which would allow GNI to provide us with an OPN using a different methodology. This will allow more accurate flow notifications for National Grid, allowing us to provide a more accurate picture of the prevailing system balance to the industry via the Predicted Closing Linepack figure we publish.

Transmission Workgroup material.

For more information please contact [email protected]

At present, operators that deliver gas to the National Transmission System (NTS) are required to meet the legal specification for gas quality at the point at which their pipeline enters National Grid’s terminal. Under Gas Safety Management Regulations (GS(M)R), National Grid Gas (NGG) is obliged to not convey any gas on its network that does not comply with the gas quality specification described in Schedule 3 of the Regulations. 

Several parties that deliver gas have expressed interest in National Grid developing gas quality blending services, enabling an operator to deliver off-spec gas provided that National Grid could achieve a compliant blend before the gas exits its terminal onto the NTS pipelines.

The proposal explores terminals with multiple sources of supply that co-mingle within the National Grid terminal before exiting onto NTS pipelines – where the ‘network begins for GS(M)R purposes -   potentially making them suitable locations at which NGG could offer gas quality blending services. 

We have engaged an external consultant, DNV-GL, to model the Bacton and St Fergus terminals and assess their ability to blend the volumes and quality that we expect to see over the next 3 years. We are also considering how the service could work commercially, what regulatory changes would be needed and what mitigation's may be required to ensure that our ability to convey GS(M)R compliant gas away from the terminals would not be compromised. UNC Modification 0714 ‘Amendment to Network Entry Provision at Bacton Perenco terminal’ seeks to facilitate a time-limited blend arrangement in Spring 2021 which is providing us with valuable learning for this project. We are aiming to consult the industry on the key principles and issues associated with an enduring blending service in Q3 2020.

For more information please contact Phil Hobbins.

National Grid NTS along with industry stakeholders has 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, we are not experiencing the capacity signals requiring expansion of the network we were 10 years ago. It is 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.

At the beginning of the year National Grid launched an industry consultation which concluded in February 2020. The consultation aim was to seek the industry feedback on:

• Scope of the Capacity Access Review
• Approach taken to ensure that the long-term goals as well as solutions to short term problems are achievable (it includes Ambition Statement, Functions and Principles of the future regime)
• List of short-term issues which the review should aim to address

Please see the document for further details:Capacity Access Review (CAR) – Strategy Consultation.

We have received 14 responses to the consultation: Capacity Access Review (CAR)– Summary of responses. Our response to feedback received can be found in the CAR Webinar presentation 11 March 2020 pack below.

Guided by the industry, we have developed a list of short-term issues which the review will aim to address. These have been grouped in to work-streams and include:

• Overruns – review of the Overrun charge multiplier
• Signalling and Allocation of Capacity – review of User Commitment, PARCA, Substitution and development of Zonal capacity arrangements
• Capacity Products and Auctions – review of new products required and/or making products redundant
• Trading – development of transferable capacity product and/or review of liability of traded capacity

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

We organize regular webinars  to keep wider industry informed of the progress. The next webinar will take place in July (date TBC). 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

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]

Jonathan Baggot, Commercial Code Change Lead, [email protected]