Gas transmission charging review

A look at the current proposals surrounding this topic and the potential outcome for customers.

What is it?

As a result of changes in EU Legislation National Grid Transmission (NGT) are reviewing the way they calculate the transmission charging.

This has led to an unprecedented number of industry modifications being raised, seeking to protect individual commercial positions, to implement the proposals which are intended to come into effect from October 2019.

At a high level the proposal is to change how National Grid Transmissions allowed revenue (income) is determined from the existing use of long run marginal cost (LRMC) to either:

  • Capacity weighted distance (CWD - distance, revenue & capacity) or
  • Postage stamp (same cost for everyone wherever located)

Albeit that the outcome of any change will not change the overall level of National Grid Transmissions allowed revenue, (income) a change in the methodology will impact how the revenue is recovered i.e. who pays what.

What does it mean for our customers?

As a result of the changes which, as noted above, change the way National Grid recover their allowed revenue (income), some customers will win and some will lose. More specifically it appears that customers located in the North & Scotland will be more negatively impacted.

What are we doing?

We’ve responded to the consultation and have highlighted the material impact on customers. Furthermore, we’re asking the regulator (Ofgem) to require distribution network operators (DNO’s), who pass through National Grid transmission charges, to help soften the effect on those most adversely affected by the change. 

How can I find out more?

Details of all the proposals are available here: -

https://www.gasgovernance.co.uk/0621