Presentation on theme: "LTSEC summer auction Transmission Workstream 6 th April 2006 Dave Adlam, National Grid NTS."— Presentation transcript:
LTSEC summer auction Transmission Workstream 6 th April 2006 Dave Adlam, National Grid NTS
LTSEC Auction timetable Currently runs in September (UNC obligation) An earlier timetable may be beneficial because: Greater notice of requirements for incremental capacity Potential to reduce the requirement for the request for extension to lead times under the IECR Align with TBE process Greater information to formulate supply and demand position Annual auction would potentially be better in May Can’t achieve it this year Uncertainty for 2007 onwards
Requirements to enable an early 2006 LTSEC auction Amendments required to allow an early 2006 LTSEC auction Approval of UNC Mod Proposal IECR review and consultation Extension to investment lead times consultation
UNC Modification Proposal UNC Modification Proposal To include transitional legal text to enable an early auction this summer [July] Workstream comments on draft proposal? Support for a 10 day consultation
Requirements to enable an early 2006 LTSEC auction IECR Commence IECR review in early April (draft issued to workstream) Introduction of a methodology describing how the incremental costs will be generated each year. Submit to the Authority by beginning of May The proposed changes for the IECR are Introduction of a methodology to determine the future cost of investment Amendment from Transco to National Grid
IECR Proposals Introduce a Methodology to determine the future cost of investment Currently the IECR contains a table which indicates the cost (in £m per km) of future investments National Grid undertakes work to establish these values each year and are affected by:- Steel Prices Construction costs Inflation The proposal is to replace the existing formula with a methodology that demonstrates how these values are derived.
Investment Cost Methodology National Grid would utilise projects that have been undertaken in the last 4 years and are planned and projected to complete in the next four years as a basis for deriving the cost of the release of any incremental capacity Produces an average cost for each project per metre, dependent on pipeline diameter This data is normalised, by use of the Structural Steelworks Labour Price costs index according to the construction year to take account of changes in Steel Prices Construction Costs Inflation
Investment Cost Methodology Once the costs have been normalised the values are plotted onto a scatter graph and a trend line is drawn between the data to establish the values that will populate the pipeline cost formula.
Investment Cost Methodology Cost per metre £ Pipeline Diameter (mm) £/m range of existing schemes Linear regression Values for Trancost formula
Pipeline Cost Formula Pipeline cost £m per km = 0.0012507 * diameter (mm) – 0.01507 / km Revised Formula Pipeline cost £m per km = 0.000407 * diameter (mm) + 0.38561 / km Current Formula
Requirements to enable an early 2006 LTSEC auction Request to adjust investment lead times consultation Requirement to amend lead time to ensure efficient delivery of incremental capacity Finalising our requirements
Next Steps UNC Mod Proposal Submitted to April Mod Panel IECR annual review & Consultation to extend investment lead times Released for consultation shortly 28 day consultation