Review of the Proposed Gas Exit Arrangements: A Report for the Gas Forum

Tue Jun 28 16:24:38 EDT 2005
By Graham Shuttleworth and former NERA Associate Director David Hough with TPA Solutions Ltd.

In this report commissioned by the UK Gas Forum, NERA Director Graham Shuttleworth and former Associate Director David Hough, with industry consultancy TPA Solutions Ltd, examine the proposed commercial framework for National Transmission System (NTS) exit capacity, proposed by Transco to fulfill a condition set by energy regulator Ofgem for its sale of four Regional Distribution Networks (RDNs). Interim arrangements have been in place since 1 May 2005, but Transco had envisaged the implementation of "enduring arrangements" in September 2005. This deadline was recently pushed back to September 2007 to allow for further debate. As the first major contribution to this debate since the postponement was announced, NERA's report finds that rather than offering substantial net benefits to the industry, as energy regulator Ofgem had intended, the proposed "enduring regime" is likely to offer modest benefits of less than £10m at a cost of £100m to implement. The proposed reform therefore offers a large negative net benefit. NERA's report examines Ofgem's concerns and finds that many of them are already met by the interim arrangements. The report also offers simpler, lower cost suggestions for those concerns that are not already addressed by the interim arrangements.

To learn more about this report, please visit the Gas Forum website.