Presentation on behalf of all DNs Lorraine Goodall - SGN

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Presentation transcript:

Pricing Consultation Paper DNPC 01 Customer Charge Structure for the 0-73MWh Load Band Presentation on behalf of all DNs Lorraine Goodall - SGN Paper written in agreement with all DNs

The Proposal Change customer charge for 0-73MWh load band to capacity based Target Implementation date 1 April 07

Reasons for Proposal Improve cost reflectivity Facilitate competition Improve consistency

Improve Cost Reflectivity Costs reflected in the customer charges are: - Service pipe costs - Supply point emergency service costs These costs do not vary with throughput

Facilitate Competition Remove source of instability - Revenue sensitivity to volume - Change equalises sensitivity - No longer k variations due to weather

Pricing The impact of volume variation on K £ revenue Collectable 65% gradient 35% gradient K over-recovery Allowed Income gained Income lost K under-recovery Warm/reduction Cold/increase (Budgeted demand)

Price Control Review Core Allowed Revenue fixed Greater k variability

Price Control Review The impact of volume variation on K 65% gradient £ revenue Collectable 0% gradient K over-recovery Proposed Collected Allowed K under-recovery Warm/reduction Cold/increase (Budgeted demand)

Description of change Remove existing 0-73MWh customer charge New charge based on supply point SOQ Ensure forecast revenue recovery neutral

Implementation Target date 1 April 2007 - Stable revenue flow from capacity charges - Seasonal revenue flow from commodity charges - Change required for formula year

Summary - Reasons for Proposal Improve cost reflectivity Facilitate competition Improve consistency

Responses Responses required by 30 October 2006