RIIO-T1 and GD1: Draft licence conditions – First informal ... - Ofgem

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RIIO-T1 and GD1: Draft licence conditions – First informal licence drafting
consultation
with the conditions impacting allowed revenue through the annual
iteration of the PCFM 70 and via the TOMOD term.
(b) If entry or exit capacity is triggered, the revenue driver gives rise to
additional allowed Totex expenditure – the PCFM variable value would
be revised to reflect this
(c) The additional allowed Totex would be modelled (including Totex
Incentive Mechanism effects going forward) on the TO side and would
adjust allowed revenue through the TOMOD term
(d) Separately, the SO side of the business would charge the customers
concerned in accordance with its current charging methodology –
meaning there would be no direct link between customers charges
and allowed revenue on the TO side in any particular year in respect of
these revenue drivers
(e) NGGT would report the income under point d) as part of its actual TO
income (rather than SO income as it does presently).
� This preserves the existing charging structure whilst implementing the RIIO
approach.
� We propose that permit provisions currently provided in C8D, 3(g) to (j) and
C8E, 5 are also treated under the TO revenue restriction rather than the SO
(as at present) and will be part of a specific licence condition. In this case we
propose that revenues would be recovered through TO rather than SO
charges. See GTC 131:Delivery Incentive ,below for further details.
� We propose that costs and revenues associated with Constrained LNG and
long-run contracting incentive, currently found in SpC C8E 1(c) and 1(e), will
be captured through a new specific licence condition, see GTC132
(Transmission Support Services). For the avoidance of doubt these revenues
will continue to be funded through TO charges.
3.38. Appendix 4 71 provides more detailed information on how the new proposed
licence conditions are updating or replacing existing arrangements under the current
condition.
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For further details, please see chapter 6: The Annual Iteration Process for the Price Control Financial
Model and updating of base revenue allowances
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Appendix 4: Special Condition C8D: NTS gas entry incentives, costs and revenues and Special Condition
C8E: NTS gas exit incentives, costs and revenues