technical advisory group tuesday 6 october 2009 tony pearson network planning manager
TRANSCRIPT
Technical Advisory GroupTuesday 6 October 2009
Tony PearsonNetwork Planning Manager
Agenda
• Introduction to NGN• Structure of the Gas Industry• Capital Investment Principles• Interaction with Local Authorities• Questions
Scotland
Northern
Eastern
Southern
North
East
East
Midlands
North
West
Wales
North
Wales
South
South
West
London
South East
West
Midlands
Northern Gas Networks Limited (NGN) bought the North of England gas distribution network from National Grid in June 2005.
The DN is primarily rural but has several significant urban areas — Leeds, Bradford, Hull, Newcastle and Middlesbrough. Population is 6.7m.
NGN owns and manages a gas distribution system of 37,000km supplying gas to 2.6m users.
Governed by the Gas Act 1986 (as amended), NGN’s licence is regulated by Ofgem, the gas and electricity regulator.
NGN is responsible to the Health & Safety Executive for health and safety matters.
Ownership
• NGN is owned by a consortium of six partners with each shareholder having Board representation
• Partnership has extensive utility experience
(40%) (19.9%) (15.2%)
(15%) (5.8%)
(4.1%)
Northern Gas Networks Holdings Limited
Northern Gas Networks Limited
Asset Service Operator
United Utilities Operations Limited (UUOL)
Ownership vehicle.
“ Controlling mind” responsible for strategy. Accountable for licence & safety case.
Responsible for delivery of asset operational activity. Provides services only to NGN.
~ 90 staff
~1,100 staff
Structure of the Gas Industry
• The industry has become increasingly fragmented since privatisation. The key groups of organisations as it stands now are:-• Producers – Provide gas at Terminals around the country• Gas Transporters – Own, operate and maintain the physical assets (pipes, plant
and equipment) used to transport gas from the terminal to the consumer• Shippers – purchase gas from producers, pay Transporters to move it to
consumers, and sell gas to consumers• Metering Organisations – own the meters
• NGN is a Gas Transporter. We are strictly regulated by our GT Licence (Ofgem) and Safety Case (HSE)
• As part of our Licence requirements we are required to operate• Efficiently and economically• In a way that facilitates competition, particularly for new connections• In a way that does not abuse our position
Capital Investment Principles
• Total allowance for the 5-year formula period (2008 – 2013) approximately £1.3 billion. Forecast net Capex spend of £225 million.
• Estimated average of 20km of mains reinforcements, 40km of new mains and 14,000 new connections per year installed by NGN.
• Obliged to invest “efficiently and economically”• High-level principle – if the investment is to benefit a specific customer(s),
that customer pays. If benefit is for customers in general, NGN finances and recovers through Transportation Charge
• General reinforcement (generic / organic load growth) – NGN installs and funds (costs recovered through our transportation charges)
• Specific reinforcement to the existing network driven by new load – subject to an Economic Test
• System extensions and new infrastructures – customer funds (competitive market)
Capital Investment Principles (cont …)
• Other players may become involved for extensions and infrastructures• Independent Gas transporters (iGTs)
• Connect to NGN’s system• Install, own and operate the downstream infrastructure supplying consumers• Charge their own transportation tariff• Typically (but not exclusively) for new-build developments and estates
• Utility Infrastructure Providers (UIPs)• Install infrastructure assets• Transfer ownership to a Gas transporter (ourselves or an iGT)
• Rules don’t allow for speculative investments (system extensions / infrastructure) funded by NGN
• Revisions have been developed for gas expansion to fuel-poor communities / areas of multiple deprivation, increasing the level of allowances available
Interaction with Local Authorities• Keen to work with LAs• Active participant in the Yorkshire Forward Utilities Group• Short / medium term plans (development areas, land use
planning, urban regeneration, etc.) – useful for us as they provide awareness for our 5 / 10 year planning horizons and models
• Although we cannot invest speculatively, if we are carrying out other work such as replacement or reinforcement, we can invest to take account of reasonable future potential if this can be done efficiently
• We are able to provide some information to assist with your development plans – e.g. is there gas in the area, is spare capacity available (although this can be very dependent on precise locations), indicative costs, etc.
• Developments near hazardous installations (high pressure pipelines, gas storage facilities) – welcome early consultation
