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Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. RG 0291 – Cumulative Linepack Option 11 August 2010
Outline Linepack Product Strawman Cumulative Linepack – example Next Steps
Linepack Product C27 Licence obligation to consult and if appropriate, introduce a Linepack Product; Primary objective is to establish a market value for the use of Linepack flexibility Cashout “Default System Marginal Prices (SMPs)” can be a proxy for User’s access to Linepack flexibility System Operator (SO) Incentive to keep daily NTS Linepack change within 2.8 mcm – this restriction might be deemed an inefficient use of Linepack flexibility Does the Linepack incentive preclude Users from accessing, and placing a market value on their of use of Linepack?
Summary Cashout “Default SMPs”; Are a proxy for User’s use of Linepack flexibility Default SMPs are outdated and require updating Is original Default SMP calculation still relevant today? Linepack; Users have access to Linepack flexibility but it is valued through the Default SMPs rather than conditions on the day Is it still appropriate to incentivise National Grid NTS to minimise Linepack flexibility in this manner
Strawman SO Incentive for Linepack (LP) Measure is removed National Grid NTS continues to manage LP within set boundaries (calculated daily based on competing LP uses) Re-introduction of Users’ cumulative imbalance quantity but modified: Cleardown of Users’ cumulative imbalance by either rolling  Day period or, a day when National Grid NTS takes a Market Balancing Action Cumulative imbalance charge might be fixed diff (SMP – SAP) based on operational cost (compressor fuel + pipe space)
Users’ cumulative imbalance – Rolling  Day example Day 1Day 2Day 3Day 4Day 5Net S1 Daily imbalance10-10 200 cumulative100-10-200 S2 Daily imbalance20 -10 40 cumulative 2040605040 S3 Daily imbalance20-1020-101030 cumulative 2010302030 Total cumulative50030-302070 Users’ rolling cumulative imbalance (CI) ‘cleared’ every  days or when National Grid NTS takes a Market Balancing Action CI charged at SMP differential dependent on direction of imbalance Revenue into Balancing (or Capacity?) Neutrality
Questions How do we deal with seasonal Linepack build i.e. the value we see in LP? Create an LP account as per Residual Balancer Role to trade gas to increase LP in winter and sell in summer? Could there be an incentive around this? Are there any unintended consequences? Should this option be considered in conjunction with a Linepack Product e.g. Inter-day Park & Loan?
Next Steps National Grid (through Joint Office) to facilitate additional Workshops to discuss / develop business rules Raise draft proposal Others….