Ofgem's Final Impact Assessment of Mod 116: A Review for the Gas Forum
5 March 2007
By Graham Shuttleworth
In this report for the Gas Forum, which comprises significant shippers and suppliers of gas in the UK, NERA Director Graham Shuttleworth reviews Ofgem's Final Impact Assessment (FIA) on a proposed modification to capacity booking arrangements on the gas grid in Britain, which would change the way in which gas shippers book "exit capacity" on the National Transmission System. Instead of booking annual peak day capacity, shippers would have to book "flat capacity" (average peak day usage) and "flexibility capacity" (diurnal storage) up to seven years in advance.
In his report, Mr. Shuttleworth concludes that Ofgem's FIA does not provide a reliable indication as to whether or not the proposed modifications meet the relevant appraisal criteria, and argues that a more detailed investigation of benefits and costs would be needed to justify the choice of any proposed modification. His work follows up on Reform of NTS Gas Offtake Arrangements -- a December 2006 report Mr. Shuttleworth produced for the Gas Forum in which he reviews the proposal (and several near-alternatives) from the point of view of pipeline economics and compiles the results of an industry survey on the costs and benefits of implementation.
