1. Development Modification Proposal 0337: Introduction of a Inter-day Linepack Product – User Pays Options
Review Group August 2010
14th November 2010

2. Proposed User Pays Proposal meets the User Pays classification
Charges to Gemini system
Introduces new User Pays service
Implementation of the proposed service may demonstrate a benefit to Shipper Users as it seeks to:
facilitate the utilisation of Linepack as an additional balancing tool for Users.
reduce the potential for cross-subsidy between end of day Linepack utilisation and system balancing costs.
100% Shipper User Pays

3. User Pays Arrangements
User Pays strawman for consideration :
two approaches for development and implementation costs recovery
two approaches for recovery of annual ongoing system support costs

4. User Pays Proposal – Recovery of Development and Implementation Costs
Option 1
Recover costs as one off charge to all Users based on their proportion of the previous 365 days throughput.
Subsequent Linepack Auction revenue apportion to Users through the Neutrality Adjustment mechanism.
Note; does not recover build costs from Users with no throughput.
Option 2
Costs recovered from revenue from Linepack auction
NG/xoserve retain all revenue from Linepack auction until implementation costs are fully recovered.
Any cost not met over a set recovery period will be recovered from all system Users based on their proportion of throughput over recovery period.

5. Projected Recovery Period
Based on conservative projections of service take up and price bid estimated that development and implementation costs may be recovered in [3 to 4 years].
assumptions based on;
average Linepack quantity release of 2 mcm per day
predicted price spread based on 2009/10 SAP to Day ahead SAP.

6. Recovery of ongoing annual system support costs
Option 1
costs recovered from Users of the service
small transaction charge p/per/kWh x accepted bid quantity on the day
Transaction charge applied each day of the relevant year.
Any over-recovery smeared back to those who have utilised the service within the year, as a one off invoice adjustment at end of year
Any under recovery billed to all Users based on their % of throughput in that year.
Option 2
costs recovered from utilisation of the service
recovered from Linepack auction revenue
recovery apportioned over the relevant year
under/over recovery at year end smeared back through neutrality