Energy Suppliers Forum CDCM/EDCM - CMG Update Mo Sukumaran – CMG 10 November 2010 1 | Energy...

Energy Suppliers Forum

CDCM/EDCM - CMG Update

Mo Sukumaran – CMG

10 November 20101 | Energy Networks Association

Introduction

CDCM:• Covers HV and LV DUoS charges• Common Methodology implemented on 1 April 2010• Subject to DCUSA• DCMF – Annual Review and opportunity to raise

issues• CMG WSC undertaking volatility analysis

2 | Energy Networks Association 10 November 2010

Introduction

EDCM:

Covers EHV and HV Substation DUoS charges

Following Ofgem consultation:• Submission of proposals - 1 April 2011• Implementation (including pre-April 2005 DG and

CDCM/EDCM boundary change) - 1 April 2012• CMG timeline has changed in response• CMG has written to stakeholders about changes


EDCM Update

WSA – Development of LRIC and FCP Powerflow based ‘forward looking’ costs:

• Common FCP and LRIC methodology identifies future demand led and generation led network reinforcements

• Both methods produce £/kVA ‘marginal charges’ on nodal (LRIC) or network group (FCP) basis

• Provides network ‘congestion’ cost signals to customers


EDCM Update

WSB – Development of common charging model:• Allocate costs on notional network basis• Scaling - required to match target revenue• Final Demand tariffs:

• Fixed charges p/day (sole user assets)• p/kVA/day capacity charges • Unit rate being considered

Final Generation tariffs:• Fixed charges p/day (sole user assets)• p/kVA/day capacity charges• p/kWh generation credits


EDCM Update

WSB – Development of common charging model:• Numerous Allocation and scaling methods considered• Significant price impacts for customers in all DNO

areas• Option 30 uses a notional path method for allocation

of costs • ‘Justification’ of level of charges


EDCM Update

WSC – CDCM / EDCM Volatility Analysis:• CDCM

• Improving transparency & predictability of CDCM• Production of 5 year tariffs• More detail and standardisation of CDCM inputs• Review of methodology statement/user guide• Volatility of inputs and solutions for mitigation• Potential DCUSA changes

• EDCM • Undertake volatility analysis and provide scenarios over a 5

year period• Standardise EDCM inputs once methodology agreed


Boundary change

Current Boundary for applying site specific charges:• All customers connected at 22kV or above• Any customers connected at less than 22kV but on site

specific charges prior to 1st April 2010, will continue to be charged site specific charges.

• Any new connectee lower than 22kV will receive CDCM tariffs;


Boundary change

New Boundary for applying site specific charges:(effective from 1st April 2012)

• All customers at 22kV or above• All customers metered at a HV substation

• Note: Customers who are currently on site specific charges who do not meet the above criteria will migrate to CDCM on 1st April 2012.


Ofgem decision

• Ofgem have decided to move the boundary for “site-specific” customers down to C1 and C2 – i.e. customers connected between 1kV and 22kV directly to the substation

• This decision will be implemented in April 2012 alongside the pre-2005 connected generation arrangements and the EDCM.


Treatment of pre 2005 generation

• DPCR5 removed the exemption on pre April 2005 DG from paying use of system charges

• Some DNOs made modification applications earlier this year to integrate pre and post 2005 DG

• Ofgem requested that these were withdrawn to facilitate an Ofgem consultation on these issues

• Ofgem consulted on these issues between 21/07/2010 and 01/09/2010

• Ofgem and DNOs are continuing discussions on treatment of pre and post 2005 DG for EDCM



• There are three key issues that need decisions/guidance:– Principles that should be followed in deciding whether compensation is

due and if so how it should be calculated– If compensation is due, whether this should be an unbundled ‘one-off’

payment to the generator or whether it should be a bundled discount to a use of system charge

– From what date should charges apply to pre April 2005 EHV generators • Ofgem issued a decision on the second of these on 23rd August

requiring an unbundled solution• The third issue was referred to in the decision letter on EDCM

timelines issued on 22nd September which stated • ‘Distributed generators (DG) connected at EHV who connected on pre-April

2005 terms will be subject to the arrangements for DG customers that will come into effect on the revised implementation date of 1 April 2012.‘



Proposed DNO position on compensation is as follows:

• Operations and maintenance uplift– We believe that arrangements are needed to refund

the unexpired proportion of capitalised O&M charges

• Connection and reinforcement cost– There is no discrimination that needs to be addressed

for these one-off costs of connection



• We await Ofgems decisions on what, if anything should be compensated for

• We also require Ofgem to consider and decide on:– a practicable compensation scheme (e.g. if reinforcement is to

be compensated for, how to retro-apply apportionment rules; missing records, etc)

– a uniform national basis for compensation (many DG parties are national operators, so should not face widely varying local interpretations)

– Clear, definite and secure arrangements for DNOs to recover all compensation paid (in DPCR6 or otherwise)

• Ofgem are currently seeking further information from DNOs on the detailed arrangements concerning each pre 2005 generator

• Some DNOs have, where necessary, started to seek changes to contractual arrangements between DNOs and generators to facilitate charging once decisions has been made


Outline timeline

DCMF meeting 2 December 2010

Consultation published 10 December

Consultation workshop 13 January 2011

Consultation closes 31 January

DCMF meeting 3 February

EDCM submission deadline 1 April

See ENA web site for details of timeline:

http://energynetworks.squarespace.com/edcm-file-storage/05-edcm-meeting-dates-project-plan-and-project-risks/


Revised plan

16 | Energy Networks Association

Model Lockdown

End of December

April 2011 Submission

Sept

Oct

Nov

Dec

Jan

Feb

Mar

Apr

Option 27 24/9

Opinion 30/9

Option 30 28/9

Opinion 7/10 DCMF 7/10

Trial Justification

Workshop 18/11

Further Development

Consultation Testing

Industry Briefing

Industry Briefing

DCMF 2/12

Workshop 13/1

DCMF 3/2

Prepare Consultation

DCMF TBC

Justification Criteria

10 November 2010

DCMF Open governance

Summary

• Modifications process managed under DCUSA, like any other DCUSA change

• Ofgem has asked for issues and modification ideas to be raised first at DCMF

• DNOs are planning their own resources under the auspices of ENA (Commercial Operations Group)


DCMF Open governance

18 | Energy Networks Association

•Establish a secretariat for the DCMF change management process – how is this funded? (ENA)•How is the DMCF SIG constituted ? (Chair elected from the DCMF)•Covers EDCM and CDCM•No proposed limitations on the working group numbers

10 November 2010

CDCM issue raised

CDCM issue raised

Recommendation received

Recommendation received

Issue assessed and developed

Issue assessed and developed

Min 15 WD Consultation for standard changes

DNO modeling carried out(note: possibly coordinated by the COG Charging Group)

Min 15 WD Consultation for standard changes

DNO modeling carried out(note: possibly coordinated by the COG Charging Group)

Review and challenge

Review and challenge

Consultation presented to SIG

Consultation presented to SIG

Initial assessment Report presented to the DCUSA Panel

Initial assessment Report presented to the DCUSA Panel

Response to consultation reviewed & published

Response to consultation reviewed & published

ProgressCP?

ProgressCP?

Added to next SIG

Added to next SIG

Progression route and timetable confirmed

Progression route and timetable confirmed

Working Group Invitations sent and assessment carried out

Working Group Invitations sent and assessment carried out

Authority decision

letter issued

Authority decision

letter issued

Change declaration issued to Ofgem

Change declaration issued to Ofgem

YesYes

Potential resource provision from COG

Potential resource provision from COG

Parties vote and issue DCUSA recommendation

Parties vote and issue DCUSA recommendation


Energy Suppliers Forum CDCM/EDCM - CMG Update Mo Sukumaran – CMG 10 November 2010 1 | Energy...

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