Alex Brennan - National Grid

Lewis Dale
National Grid Company plc
NGT House
Warwick Technology Park
Gallows Hill
Warwick
CV34 6DA
Dear Lewis,
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4 June 2004
0141 568 2983
National Grid Company Consultation on Options for Allocating GB Transmission Access
Rights under BETTA
May 2004
Thank you for the opportunity to respond to this consultation. This response is submitted on behalf
of ScottishPower UK Division, which includes the UK energy businesses of ScottishPower,
namely ScottishPower Energy Management Ltd, ScottishPower Generation Ltd and ScottishPower
Energy Retail Ltd.
I hope that you find these comments useful. Should you have any queries on the points raised,
please feel free to contact us.
Yours sincerely,
Alex Brennan
Commercial & Regulation Director
ScottishPower Energy Management Limited

National Grid Company Consultation on Options for Allocating GB Transmission Access
Rights under BETTA
Response by ScottishPower UK Division
1 Executive Summary
ScottishPower UK Division (SP) has made clear to National Grid, Ofgem and the Government the
urgent need to remove the current uncertainties in relation to grid access faced by SP and other
investors and potential investors in generation plant in Scotland in the run up to BETTA until
enduring arrangements can be put in place. We welcome this consultation paper setting out a
number of options as an important step in the process to remove the uncertainty and urge National
Grid and Ofgem to work together to complete the process as soon as possible.
SP supports Option IV as the means of removing the uncertainty with parties who have been
offered immediate or future access to networks in GB prior to the BETTA access transition date,
being allocated firm GB access rights. The uncertainty for parties in Scotland who had applied
for access but had not been connected was introduced on 26 January 2004 when Ofgem/DTI
published the statement on access to the GB transmission system, and we therefore believe that this
is the appropriate BETTA access transition date.
We support a transitional category up to the BETTA access start date with parties offered firm
access if reinforcements are not necessary and offered less firm access if reinforcements are
necessary. It is important to recognise that less firm rights should only be necessary when there is
a system constraint affecting the particular connection and that if the plant being connected can
operate unconstrained then it should not be required to wait for other system reinforcements to be
completed before access is made firm. We believe that the BETTA access start date should be
the same as BETTA Go-live, currently planned as 1 April 2005.
We support the enduring process category with parties being offered firm rights contingent on the
availability of sufficient physical network capacity such that the Transmission Licensees will
continue to meet the requirements of their transmission security standards. It is important that
sufficient transmission capacity is available to facilitate full access to the GB-wide electricity
market and in particular that the reinforcements identified under the RETS programme are put in
place as soon as possible to ensure the Government can meet its renewables targets. It is important
that in the period from BETTA Go-live until the RETS programme is completed that access can be
granted to new renewable generators in Scotland and therefore it will be necessary to continue with
some aspects of the transitional arrangements during this period with less firm rights being granted
to some parties.
It is necessary to recognise the link between transmission access and transmission charges and to
ensure that the granting of less firm access rights does not result in more extreme locational
charges for existing and new generators. We believe that any locational differentials should be
calculated on the basis of firm rights only and should not be affected by the granting of additional
non-firm access rights. National Grid’s proposals for GB access protect the rights of existing
connected generators and similar protection of rights of existing connected generators should also
apply to charges for connection to and use of the network.
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2 Response to Specific Views sought by National Grid
a) The various approaches identified for providing users with existing access to the
Scottish and England & Wales networks with a transition to the access to the GB
transmission system. In particular, identifying the most appropriate option and why.
ScottishPower UK Division (SP) believes that Option IV is the most appropriate means of
removing the uncertainty introduced by Ofgem/DTI for SP’s current and potential
investments in renewable generation in Scotland. This will restore firm access to projects
which have been offered network access but are not yet connected to the system, including
in particular any windfarm projects on which construction has already commenced. This
will also apply to windfarms which, although connection will be to the distribution system,
have received offers on the basis that access to the transmission system will also be
required.
An important feature of Option IV is the transitional category where parties will be offered
firm access if no reinforcements are necessary and will also be offered less firm access if
reinforcements are necessary. We believe that it will be necessary to extend these
transitional arrangements from BETTA Go-live until the full reinforcements are in place
which will ensure full access to the GB-wide electricity market for the generation mix
required to meet the Government’s environmental targets.
b) If an auction were to be conducted, views on the most appropriate design of auction.
We do not believe that any form of auction would be an appropriate means of removing or
reducing the current uncertainty in relation to network access. We believe auctions would
in fact increase the uncertainty and would be a disincentive to current and potential
investors in renewable generation in Scotland and as such would work against achievement
of the Government’s environmental targets.
c) If firm GB access rights were to be provided to all users with existing agreements to
use the Scottish and England & Wales network and those users accepting agreements
prior to a BETTA access start date, the appropriate date at which access rights can
be distinguished and subsequent applications for access should be processed by the
GBSO in accordance with the proposed enduring BETTA access arrangements.
We believe that the most appropriate BETTA access start date is BETTA Go-live,
currently planned as 1 April 2005.
Our concern with Option II, however, is that firm access may be given to a particular
generator where it is clear that reinforcement of the network would be necessary. This
would discriminate against generators who can be connected to the system without the
need of reinforcement. The transitional arrangements in Option IV pragmatically
recognise that offering less firm access would ensure maximum use of the physical
network without discriminating against network users.
d) If firm GB access rights were to be provided only to users with existing agreements to
use the Scottish and England & Wales network offered before a suitable BETTA
access transition date, the appropriate choice of such a date.
We believe that the most appropriate BETTA access transition date is 26 January 2004
since this was the date of the first indication given by Ofgem/DTI that there could be a
shortage of GB access rights from BETTA Go-live. Prior to the publication of this
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statement Ofgem/DTI had given no indication that existing access rights/agreements would
not necessarily be migrated directly over to the BETTA arrangements. In Ofgem’s
December 2001 consultation paper on BETTA it stated, Page 88, ‘As part of their role in
the SO workstream the three transmission licensees undertook a piece of work to model
the impact of constraints on the Scotland-England interconnector. In the process of this
work the parties concluded that at a capacity of 2,200MW, following the completion of the
North Yorkshire line, constraint volumes and thus constraint costs would be non-material.’
e) If users within a transitional category were to be offered the choice of non-firm/lessfirm
access arrangements, the appropriate approach for determining such
arrangements and setting transmission charges.
It is important to recognise that less firm rights should only be necessary when there is a
system constraint affecting the particular connection and that if the plant being connected
can operate unconstrained then it should not be required to wait for other system
reinforcements to be completed before access is made firm.
The most appropriate option for non-firm/less-firm access rights will vary depending on
the particular user and network requirements and could include any of the options set out
in the paper.
It is not clear how the introduction of non-firm access rights would impact on the
calculation of TNUoS tariffs. NGC’s currently proposed GB TNUoS methodology
calculates TNUoS tariffs on the presumption of all users being granted firm access rights
to a network built to accommodate their requirements according to the relevant security
standards, and being eligible for compensation payments at times when this access is not
delivered. It is therefore inappropriate to treat users with non-firm access in the same way
as those with firm access in the calculation of those tariffs, as well as in their application.
We do not support the proposals outlined in paragraph 65 of the consultation, namely that
users with non-firm access should pay TNUoS charges on that access and receive preagreed
refunds as appropriate. This implies that non-firm access capacity is treated in the
same way as firm access capacity within the DCLF and tariff model used in that
methodology. This would overstate the locational signals on users with firm access, and
take no account of the reduced network infrastructure required to provide non-firm access
compared to firm access. The uncertainty associated with non-firm access means that a
special, lower charge should be derived for application to non-firm access.
Specifically, we believe that if NGC’s currently proposed GB TNUoS methodology is
adopted for BETTA then users with non-firm access should be excluded from the DCLF
model used to calculate the TNUoS tariffs, i.e. the network model should only include
users with firm access. In this way the locational differentials would be calculated on the
basis of firm rights only, and would not be affected by the granting of additional non-firm
access rights.
Further, while we do not support the use of a locational security charge in general, we
believe that it is particularly inappropriate that any user with non-firm access rights should
be required to pay a locational security charge, given that the network infrastructure
capacity necessary to grant them firm access to the relevant security standards has not been
built.
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In addition, respondents may wish to provide views on the proposed enduring regime for
allocating access to the GB transmission system and any alternative approaches to the
allocation of transmission access capacity for BETTA.
We support the enduring process category with parties being offered firm rights contingent on the
availability of sufficient physical network capacity such that the Transmission Licensees will
continue to meet the requirements of their transmission security standards. It is important that
sufficient transmission capacity is available to facilitate full access to the GB-wide electricity
market and in particular that the reinforcements identified under the RETS programme are put in
place as soon as possible to ensure the Government can meet its renewables targets. It is important
that in the period from BETTA Go-live until the RETS programme is completed that access can be
granted to new renewable generators in Scotland and therefore it will be necessary to continue with
some aspects of the transitional arrangements during this period with less firm rights being granted
to some parties.
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