Proposed modification of PTL licence to allow deferral of capex allowances
Published:
Consultation opened on
. Closing date
at
18:00.
Summary
These proposed modifications arose as a result of discussions between the Utility Regulator and PTL to explore ways to reduce the volatility of the year-end reconciliation amounts.
These will operate by adding defined unspent capital allowances to the actual expenditure in the year and then subtracting it in the following year.
If the deferred allowance is not subsequently spent, it will be treated as underspend one year later than it would otherwise have been.
These will operate by adding defined unspent capital allowances to the actual expenditure in the year and then subtracting it in the following year.
If the deferred allowance is not subsequently spent, it will be treated as underspend one year later than it would otherwise have been.
This is a consultation on proposed modifications to the Premier Transmission Limited (PTL) licence to allow the deferral of defined capex allowances.
Transmission charges, which comprise around 10% of a domestic gas bill, are calculated using a postalised regime, which is fully reconciled every year to facilitate the lower financing costs available for mutualised pipelines. Currently, certain cost allowances which need to be deferred into the following Gas Year cannot be carried forward and are treated as underspend in the current Gas Year and as overspend in the following year. These amounts comprise part of the year-end reconciliation which is either collected from, or paid back to, suppliers. The proposed licence modifications will allow relevant deferred capital allowances to be carried forward into the following Gas Year without going through the year-end reconciliation.
This proposed remedy has been developed with Premier Transmission Limited (PTL) taking into consideration the requirements of the PTL financiers and seeking to maintain the principle of reconciling postalisation revenue every year.
This is expected to reduce the volatility of the year–end reconciliation amounts by up to £1m or 2% of the total required revenue and is likely to be of interest to gas shippers, suppliers and network operators.
As the reconciliation amounts in the transmission charges comprise a small proportion of the final price charged by suppliers, this modification is not expected to have any impact on consumer prices.
A decision will be made following consideration of the responses to this consultation. It is intended that the licence modifications will become effective ahead of the new Gas Year, 1 October 2021.
Please send responses to
Jillian.ferris@uregni.gov.uk and copy to Gas_Networks_Responses@uregni.gov.uk
Copies of all documents will be made available in large print, Braille, audio cassette and a variety of relevant minority languages if required.