UIG Update

We look at the actions being taken to protect customers from additional UIG costs.

What is it?

Unidentified Gas (UIG) is the energy left after allocating energy to shippers. This allocation uses actual daily metered (DM) data and because no such data exists for non-daily metered (NDM) it relies on models to determine the NDM energy.

This means that UIG has both a permanent e.g. theft, shrinkage etc. and temporary e.g. model error element. Temporary UIG should be corrected when actual (NDM) reads are received and therefore correct for model error, although this can take some time.

Impact

  • Pre 1 June 2017 UIG was fixed in advance at around 1% (permanent UIG)
  • Post 1 June 2017 with a new methodology, we have significant increase in scale & volatility (see diagram below) leading to very high costs being incurred

UIG percentages since 1 June 2017

  • The actual proportion of temporary vs actual UIG is unknown
  • Recovery period for temporary UIG is uncertain as it relies on reads being submitted

What does it mean for our customers?

The extra costs that we’re facing are difficult to predict and it’s currently unclear to what extent we’ll  recover any charges. This may inevitably result in: -

  • Increased risk premiums being applied to take into account this increased risk
  • Increased costs for customers as this new risk gets priced into contracts

 

What are we doing?

We’ve been proactively rolling out advanced metering which allows us to obtain meter reads remotely. In addition, all sites with advanced or smart metering installed must now provide monthly reads from April 2018, therefore reducing the period for which we are relying on estimates.

Through our trade association we’ve developed a number of modifications to uniform network code (UNC) to address specific areas of concern.

Strategic urgent modifications (642 & 643) were raised to address the levels and volatility of UIG.

Following Ofgem’s proposal to reject the modifications above we’ve developed a further urgent proposal (658) which puts in place a task force to address UIG. On a positive note, Ofgem approved this modification on Monday 6 July 2018 and Xoserve have already started engaging independent experts to work on the problem (see below).

UIG - Advanced Analytics

How can I find out more?

Xoserve will be providing updates as the project develops and more information on various initiatives can be found here: https://www.gasgovernance.co.uk/UIG