Billing Operations Forum 24 July 2007 RbD Overview Billing Operations Forum 24 July 2007 RbD Overview Fiona Cottam

1 Agenda  Background  Principles  Inputs  Sources  Shares  Sectors  Calculations

2 The RbD Concept  Meter point reconciliation would not be cost effective for 20 million SSPs  Larger Supply Points (AQ>73,200 kWh) are reconciled on actual meter reads  Smaller Supply Points (AQ<73,200 kWh) are subject to Reconciliation by Difference  Britain’s distribution Network is divided into 18 LDZs  Total daily energy consumption in each of the LDZs is known  Any reconciliation charge in one sector must have an equal and opposite effect on other sectors, so that total LDZ consumption is unchanged  Reconciliation consists of a gas charge/credit and transportation charge/credit to User for both NTS and LDZ transportation

3 RbD Basic Concepts - 1  If you know the RQ (Reconciliation Quantity) for Segments 1 to 4, from reading all the meters in them, then…  The RQ for Segment 5 must be equal and opposite to the Sum of the RQs for Segments 1 to 4.  Therefore, you don't need to read any meters in Segment 5 to calculate the total RQ for the Segment. Just apply the equal and opposite rule: Source Charges

4 Energy Allocation - Summarised LDZ Input Energy Allocation of Measured Energy input into LDZ, after deducting Shrinkage and DM measurements, to all NDM Supply Points in the LDZ DM NDM Large NDM Small Shrinkage The allocation process drives the shippers’ energy balancing imbalance and transportation commodity quantities

5 Reconciliation by Difference (Smaller Supply Points) LDZ Input Energy DM NDM Large NDM Small Shrinkage  DM   NDM Small + NDM Large = -

6 RbD Basic Concepts -2  As all SSPs have:  AQs calculated on the same basis  Energy deemed to them on the same basis  Comparable actual consumption patterns  Then:  They will have comparable RQs  And:  CSEP sites are no different to Directly Connected, they are affected by the same weather/social/economic factors, so their behaviour is comparable to directly connected

7 RbD Basic Concepts - 3  If:  All SSPs in an LDZ are comparable, and  Their RQ is directly related to their AQ  Then:  Shipper's total SSP RQ is proportional to their total AQ in an LDZ  Thus:  We can allocate RQ on the basis of each Shipper's Share of the total AQs for an LDZ  For this purpose, CSEP AQ ranks equally with Directly Connected

8 The Matching Concept  Group LSP RQs by Meter Read Frequency  RbD Sectors  Give each Sector an Incurred Period of same length as Meter Read Frequency (specifically: Monthly, 6 Monthly, Annual)  Slice RQ into equal amounts for each incurred month in the incurred period  Apply appropriate shipper share to the RQ slice for each incurred month

9 RbD Sectors and Sources  1 Month Sector (M)  Sources:  DM Estimate to Actual  NDM Monthly read meters  Adjustments to Monthly read meters  Reconciliation of LSPs on CSEPs  Adjustments to LSPs on CSEPs  Adjustments to SSPs of <1 month duration  LDZ Measurement Sector (L) (Special case 1 month sector)  Sources:  LDZ Measurement Errors  6 Month Sector (6)  Sources:  NDM Non-Monthly read meters  Adjustments to Non-Monthly read meters  Adjustments to SSPs of 1-4 months duration  12 Month Sector (A)  Sources:  DM Annual Resynchronisations  Adjustments to SSPs of >4 months duration

10 Monthly and LDZ errors sectors 6 monthly sector Apportion over last month Apportion over last 6 months 12 monthly sector Apportion over last 12 months Apportionment of RbD sectors - 1

11 Apportionment of RbD sectors - 2  Matching of RQ to Shipper Shares Current Month Month -11 Sector A Sector 6 Sector M Sector L

12 RbD Charges – Which prices?  Energy – daily System Average Price – no calculation required – inherit from “primary” reconciliation  Transportation – applicable daily rates of:  NTS Exit Commodity  LDZ Commodity  Customer Commodity (for applicable periods)  CSEP sites  Same energy prices  Same NTS commodity prices  LDZ commodity prices reduced to reflect average scheme SOQ in the LDZ  No Customer Commodity charges  Primary Reconciliation energy is broken down into periods of consistent transportation prices, and prices are applied to a single figure for each source

13 Calculation of Market Shares - Principles  Market share is based on share of all the days in a particular month  Live AQ on the day  Isolated/isolated & withdrawn excluded (same as for allocation)  CSEP sites count equally with Directly Connected sites for energy apportionment

14 Calculation of Market Shares - Example DayShipper AQ - KWhLDZ Total AQ – kWh Day 120,00032,000 Day 219,95032,000 Day 320,05032,200 Etc. Day 3120,15032,500 Total for month600,0001,000,000 Shipper market share for the month: 600,000 ÷ 1,000,000 = 60%

15  Let's Assume:  Reconciliation on a non-Monthly-Read meter, from 15/03/2006 to 15/10/2006  Initially suppressed, approved in December 2006, to be included on December 2006 invoice (issued January 2007)  Imaginary 3-Month Sector Applies  Reconciliation values  RQ: 120,000 kWh  GRE: £9,000  NRE:£200  ZRE:£600 RbD Apportionment – Worked example

16 Monthly Cumulative Daily Aggregate AQs For an imaginary LDZ with four Shippers RbD Calculations - Cum AQs ShipperMonth 1Month 2Month 3 ONE600,000700,000800,000 TWO250,000200,000150,000 THREE050,000 FOUR150,00050,0000 LDZ Total AQ1,000,000

17 RbD Calculations – UARQ (User Aggregate RQ) Sector Q RQ (kWh) ARQ (kWh) Shipper Share(AQ): One Two Three Four LDZ Total AQ RbD UARQ: One Two Three Four Total RbD UARQ Sources Incurred TotalMonth 1Month 2Month 3 120,00040, ,000-40, ,000700,000800, ,000200,000150, , ,00050,000 1,000,000 Total -84,000-24,000-28,000-32, ,000-10,000-8,000-6,000 -4,0000-2,000 -8,000-6,000-2, ,000-40,000

18 RbD Calculations - UARCV/RBG Sector Q Sources Incurred TotalMonth 1Month 2Month 3 GRE9,0003,000 ARCV-9,000-3,000 Shipper Share (AQ): One 600,000700,000800,000 Two 250,000200,000150,000 Three 050,000 Four 150,00050,000 LDZ Total AQ 1,000,000 RBG Charges: Total One-6,300-1,800-2,100-2,400 Two-1, Three Four Total RBG Charges-9,000-3,000

19 RbD Calculations – contd.  Identical process calculates:  UARCV: User Aggregate Reconciliation Clearing Value  Energy cost of Reconciliation Energy (“RBG”)  UATCA: User Aggregate Transportation Charge Adjustments  Commodity Transportation costs  Since Sale of Networks, split between NTS, LDZ and Customer Commodity Reconciliation

20 RbD Supporting Information  Breakout of Charges by:  LDZ – Directly connected  Energy – RBG  Transportation – RBN/RBZ/RBC  - Sector  LDZ – CSEP  Energy - RCG  Transportation – RCN/RCZ  - Sector  Breakout of Shares by:  LDZ  Incurred Month  - Calendar Day

21 Worked example for Shipper One for Dummy Sector Q  Shipper One’s RBG records for Month 1,2 and 3:  J13, , RBG, AB, 10, 2006, Q, , , , , , ,  J13, , RBG, AB, 11, 2006, Q, , , , , , ,  J13, , RBG, AB, 12, 2006, Q, , , , , ,  [record type, record no, chg type, LDZ, billing month, billing year, sector code, total LDZ AQ, Shipper total AQ, % market share, energy, financial value, invoice no]  J14, AB, Q, RBG, ,  [record type, LDZ, sector code, total energy, total financial value]

22 Role of the RbD Audit  Calculations are performed within mainframe systems  Large volume of data  500,000 LSPs  20,000,000 SSPs  Confidentiality of each Shipper’s LSP Reconciliation values  SSP Shippers can’t check the whole calculation process  RbD Audit checks the following:  Aggregation of Primary Reconciliation sources and allocation into sectors  Extraction of SSP aggregate AQs  Allocation of RbD energy and charges to Shippers