Proposals to align ESB Customer Supply Billing with Distribution Use of System (DUoS) charges and introduction of a new tariff in 2006.

Transcription

1 11 th November 2005 Proposals to align ESB Customer Supply Billing with Distribution Use of System (DUoS) charges and introduction of a new tariff in Summary Document Introduction: ESB Customer Supply (CS) is proposing changes to its existing tariffs and the introduction of a new tariff. This document explains the rationale for these changes and provides summary details on each proposal. Additional to this document, analysis has been carried out on each of these proposals and submitted to the Commission for Energy Regulation. Background: With the introduction of a new billing system for Distribution Use of System (DUoS) in January 2005 and the introduction of modern Quarter Hour (QH) metering for former Non Quarter Hour (NQH) customers, some mismatches between DUoS billing and ESB Customer Supply billing in respect of charges and energy metering times have emerged. ESB Customer Supply charges to customers should be reflective of the DUoS charges it incurs and ESB Customer Supply energy metering times should match the DUoS metering times to ensure that DUoS costs can be reflected properly in the respective ESB Customer Supply tariffs. In principle it is important that the final tariffs seen by customers are as cost reflective as possible to ensure that o there is no cross-subsidisation and o economic signals are effectively passed on to the customer the charges should be based on the most accurate data available. o the introduction of our new billing system and the installation of QH metering for more customers now makes this possible. As the practical application of the above principles, CS proposes the following cost-reflective changes: Proposal 1: Introduce Calendar-month billing for QH customers. Proposal 2: Introduce a new tariff for Low Load Factor Non-Domestic customers. Proposal 3: Extend Maximum Import Capacity ( MIC ) monitoring times. Proposal 4: Pro-rate Maximum Demand charges on all bills. 1 of 1

2 Proposal 1: Introduce Calendar-month billing for QH customers. With the introduction of a new billing system for DUoS in January 2005, ESB Networks are now billing and invoicing suppliers (including CS) on a calendar month basis for QH metered customers. Initially this had been done on a 2-monthly basis. CS currently issues bills to its QH customers monthly but, every second month it is just an interim bill based on 50% of the previous 2-month charges. A bill based on meter reads is only issued on a 2-calendar month basis. Monthly billing is the electricity industry norm for QH customers. With the new billing system, CS now has the capability to provide full monthly billing. CS calendar-month billing will: 1. Result in monthly bills based on actual consumption data and obviate the seasonal variations associated with the present interim month bill that is based on 50% of the previous 2-month charges. 2. Mean that changes to Maximum Import Capacity (MIC) will be taken into account in the bill in line with ESB Networks, avoiding potential overcharging to the customer of MIC surcharges. Changes to MIC values are taken into account in the DUoS bill from the start of the next billing period. Because ESB Networks bills monthly and CS currently bills 2-monthly, the potential one month lag can result in overcharging where the customer is using demand in line with the new MIC value but CS is using the old MIC as the calculation reference point. 3. Result in savings to the customer on MD and energy amounts. At present CS picks the highest MD in a two-month period. Monthly billing will pick the highest MD in each respective month. Hence, if there is a high MD in one month, it will only be reflected in that month s bill whereas it currently affects both months in our 2-monthly billing period and hence attracts a higher charge. CS proposes that all customers on QH metering will be billed on a calendar-month basis. It is proposed that this change be implemented from 1 st Jan Advantages Monthly billing will lead to a better customer service, more accurate and lower bills and will be in line with best International practice and current monthly billing by other suppliers. 2 of 2

3 Proposal 2: Introduce a new tariff for Low Load Factor Non-Domestic customers. Due to DUoS rule changes, new customers who have a Maximum Import Capacity (MIC) > 50KVA are designated as DUoS Group 6 (Maximum Demand LV tariff). Many new customers at LV and with MIC > 50kVA have a low load factor and consequently the LV MD tariff comprising DUoS Group 6 is not economical for them (because the MIC and MD charges are spread over a relatively small number of units). There is also a group of approximately 3,000 customers, currently on DUoS Group 5 (General Purpose tariff) with an MIC > 50 KVA. Because the DUoS rule has not been applied retrospectively, these customers have not been changed to DUoS Group 6 (Maximum Demand LV tariff). Again some of these customers have a low load factor relative to their MD and consequently the LV MD tariff will not be economical for them if the rule is applied retrospectively. CS proposes to introduce an LV tariff with an MIC component but no MD component for customers for whom CS is charged the DG6-DUoS cost. This tariff will be available to both groups of customers above who have a Maximum Import Capacity 50kVA and have metering with an MD measurement capability (QH or otherwise). It is proposed that this change be implemented from 1 st Mar This new optional tariff will mitigate the impact on customers whose load factor is not appropriate to the MD LV tariff. Although it would have an MIC charge (to reflect the MIC charge in DUoS Group 6), it would have no MD charge and hence would have a lower fixed cost component which makes it more suitable for customers with low load factors. This would facilitate the application of DUoS Group 6 to all customers 50kVA, both new customers and those currently on the DUoS Group 5 (General Purpose tariff) This proposed new tariff for low load factor Non-Domestic customers 50kVA would replace the General Purpose Tariff which has always been the alternative tariff to the LVMD for these customers. 3 of 3

4 Proposal 3 : Extend Maximum Import Capacity ( MIC ) monitoring times. CS monitors MIC based on the Maximum Demand recording periods of to 21.00, Monday to Friday and for the winter months where customers opt for the Winter Peak Reduction Incentive (WDRI) from to 19.00, Monday to Friday. ESB Networks monitors MIC for Low Voltage customers from to 21.00, Monday to Friday and for Medium Voltage customers and above on a daily 24-hour basis (24/7). In addition CS bills the surcharge based on an equivalent two-monthly price multiplied by a factor of 2. The DUoS surcharge is based on the monthly MIC price multiplied by a factor of 3. This means that the correct charges incurred by CS are not being passed on to the customer and therefore the correct price signal to carry out corrective action (i.e. reduce Demand / Increase level of MIC) is absent from CS invoices. CS wishes to address these anomalies by coming in line with the DUoS MIC monitoring periods and amending the MIC surcharge factor for calendar-month based billing see proposal 1. Two monthly billed accounts will not be affected by the proposed change to the MIC surcharge. For Maximum Demand Low Voltage (DUoS Group 6) the monitoring times will be to Monday to Friday including customers who opt for Winter Peak Demand Reduction Incentive (WDRI). For Maximum Demand Medium Voltage and above (DUoS Group 7 and above) the monitoring times will be on a 24hour daily basis including customers who opt for Winter Peak Demand Reduction Incentive (WDRI). The surcharges for calendar-month bills will be based on the monthly MIC price multiplied by a factor of 3 see proposal 1. It is proposed that these changes be implemented from 1 st Mar The correct charges incurred CS will be passed on to the customer and therefore the correct price signal to carry out corrective action will be correctly passed on. 4 of 4

5 Proposal 4: Pro-rate Maximum Demand charges on all bills. CS currently pro-rates the MD for initial and final bills on the basis of annual price divided by 365. Other bill component charges (Standing Charge, MIC) are pro-rated on the same basis as well. Issue For periodic bills, CS applies the Annual Price divided by 6 (6 periodic bills in a year). This therefore takes no account of the variable 2-month periodic-day range which is: Jan/Feb: 59 Days. Mar/Apr, May/Jun, Sep/Oct and Nov/Dec: 61 days. Jul/Aug: 62 days. CS has done an impact analysis based on constant quantity values but appropriate winter and summer prices. This showed a slight reduction in price overall for the customer due to the shorter Jan/Feb 05 period, coupled to higher winter prices. Where quantity and price values are constant over the year, MD pro-ration is revenue neutral. CS proposes that MD prices are pro-rated for MD periodic bills (in addition to the existing initial and final bills). It is proposed that this change be implemented from 1 st Jan This will achieve consistency with initial and final bill calculation and the other pro-rated components of Standing Charge and MIC and is in line with best international practice.. 5 of 5