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PARCA: Contractual Overview
TX Workgroup
27th February 2013
Steve Pownall
2
Purpose of today…
Is to provide an overview of PARCA contract as follows:
Pre-PARCA Assessment (proforma)
PARCA Phased ‘Works’
Provision of capacity inc ‘fine tuning’
Customer fees and financial commitment
Information provision
Demonstration Data
Milestone Information
3
…but before we commence..
Going forward, for the purposes of the proposed ‘PARCA’ contract /arrangements ONLY, we intend to use a simplified naming convention:
Was Will become Works
Stage 1a Phase 1 Needs Case/Technical Options
Stage 1b Phase 2, Schedule A Strategic Options
Stage 2 Phase 2, Schedule B Outline routing & siting
Stage 3 Phase 2, Schedule C Detailed routing & siting / EIA
Stage 4 Phase 2, Schedule D Proposed DCO Application
Stage 5 Phase 2, Schedule E Submit DCO Application / hearings
Stage 6 Phase 2, Schedule F Secretary of State decision
Note: ‘Local Planning’ Works will be under Phase 2, Schedule G (to be defined)
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Pre-PARCA Assessment
Customer to provide the following information to National Grid:
Details of customer
Proposed project location including facility site and NTS connection site
Indicative capacity requirement (profiled if appropriate)
Indicative capacity upper/lower range – for ‘fine tuning’ purposes only
For DNO Users; Pressure and Flex requirements Used to populate the PARCA data items prior to signature by both
parties
We anticipate dialogue between the customer and National Grid prior to the submission of this information
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PARCA Phased Works - Overview (1)
The PARCA Works will be contained within two Phases
Phase 1 - Needs Case & Technical Options
Where no NTS reinforcement is required the PARCA becomes primarily a customer ‘Demonstration Data’ contract up to point of capacity allocation
Phase 2 - Statutory Planning Works either:
National planning (Planning Act 2008) for Development Consent Order
Schedules A - F (please see below)
Or:
Local planning
Schedule G [to be defined]
Note: Where we identify NTS reinforcement that requires planning, this could be met through either build or through non-build alternatives e.g. commercial contract or a combination of both. We anticipate that a proportion of the Phase 2 Statutory Planning Works will still need to be carried out under an alternative to a full-build option.
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PARCA Phased Works - Overview (2)
Two natural ‘customer’ breakpoints
Following output from Phase 1
Customer to indicate whether it wishes to progress to Phase 2 - if NG indicates a Needs Case for NTS reinforcement
Where no NTS reinforcement is identified the customer will be required to pay a reservation fee; or the customer may bid through the capacity auction process
Phase 2 - following Secretary of State (or local authority) decision on our planning application
Customer may terminate PARCA Works at any time but liable for costs incurred (and committed) up to the point of termination
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PARCA Phase 1 Works: Establish Needs Case and Technical Options
Phase 1 Establish the Need Case and Identify Technical Options
Up to 6 Months
Establish and Document the Project Need Case for physical works
Identification potential strategic options
Apply technical filter
Apply benefits filter
Prepare Technical Options Report (& customer summary)- internal challenge & review, including legal counsel
Milestone Information: Provide the customer with a ‘Phase 1 Works Report’ based on Needs Case outcome/Technical Options (if relevant)
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PARCA Phase 2 Works: Schedule A – Strategic Options works
Phase 2Schedule A
Develop Strategic Options Report (SOR)
Up to 6 Months
Engage external resource (Environmental Consultants, Engineering consultants, Communications) to assist with Options Appraisal and SOR
Engage with external stakeholders:- seek comments on strategic options being considered, including reasons for options discounted at technical and benefit filter.- agreement for OA topics scoped in and out
Prepare Draft Strategic Options Report (SOR):- undertake Level 1 Options Appraisal using environmental consultants- internal challenge & review, including legal counsel
Consult on Draft Strategic Options Report (SOR):- engage and consult with key stakeholders (workshops & presentations)- review & incorporate stakeholder comments
Compile Final Revision of SOR - Including Recommendation
Milestone Information: Provide the customer with an Project Update including SOR (recommendation), reconfirm NG project plan timescales
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PARCA Phase 2 Works: Schedule B – Outline Routing and Siting works
Phase 2Schedule B
OUTLINE ROUTING AND SITINGIdentify Preferred Route Corridor / Siting Studies
Up to 15 Months
Develop SOCC (Statement of Community Consultation)
Undertake RCIS (Route Corridor Investigation Study)
Undertake Options Appraisal Level 2
Public Consultation on Route Corridors and Options Appraisal Level 2
Review of Public Consultation
Identify Preferred Route Corridor:- prepare final Route Corridor Study and Level 2 Options Appraisal & Route Corridor Feedback Report
Milestone Information: Provide the customer with an Project Update including Preferred Route Corridor/Siting Study report; reconfirm NG project plan timescales
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PARCA Phase 2 Works: Schedule C – Detailed Routing & Siting works
Phase 2Schedule C
DETAILED ROUTING / SITINGUndertake EIA (Environmental Impact Assessment) & Design Pipeline
Up to 24 Months
Identification of route alignments, involving thematic groups, community forums & routeing / siting workshops
Undertake Options Appraisal (Level 3) and EIA (Environmental Impact Assessment)
Undertake Pipeline Detailed Design to support:- Options Appraisal Level 3- EIA on preferred pipeline alignment and AGI site
Compile ES & Documents for Submission to NID (National Infrastructure Directorate) within the Planning Inspectorate
Milestone Information: Provide the customer with an Project Update including Detailed Routing/Siting report, EIA outcome; reconfirm NG project plan timescales
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PARCA Phase 2 Works:Schedules D, E and F
Phase 2Schedule D
PROPOSED DEVELOPMENT CONSENT ORDER (DCO) APPLICATIONFormal consultation, finalising project, preparation of application documentation
Up to 6 Months
Formal consultation on project, in accordance with agreed SOCC
Review feedback & adjust / finalise project
Finalise: - land rights offers- DCO documentation, including legal counsel review
Phase 2Schedules
E & F
DCO APPLICATION AND HEARINGSPlanning Act Submission, Examination and Approval Process
Up to 15 Months
Submit Application to NID (National Infrastructure Directorate) within the Planning Inspectorate, NID validates application, register and publish
Consideration of application by Commissioners (written representations or public hearing)
NID report and recommendation to Secretary of State
Decision from the Secretary of State for Energy and Climate Change
Milestone Information: Provide customer with update ‘report’, reconfirm NG Project Plan timescales, as necessary for each schedule
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Provision of Capacity timeline (1)
Effective Date (ED):
At which the customer and National Grid sign the PARCA
From which National Grid agrees to undertake Phase 1 Works – will require the customer to pay the fee prior to commencement of the Works
Reservation Date (RsD):
The customer will have its capacity requirement reserved
Allocation Date (AD):
The customer (where not a User) must have nominated one (or more) User(s) up to 1 month prior to this date
The default date that is between 24 and 35 months prior to the Registration Date
Registration Date (RgD):
Date from which the User holds the capacity
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Provision of Capacity timeline (2)
RsD
• Capacity allocated to the User• NPV (entry only)
RgD AD
PARCA: Phase 1 Works
Price NPV (entry only) Quantity (& range) reservation fee or security due Capacity ‘tagged’ in Gemini from this date and no longer forms part of unsold.
Date PARCA signed by the customer and National Grid
Default Allocation Date is between 24 and 35 months prior to the RgD
Nominate user up to 1 month before AD
Reservation Date (RsD)
Allocation Date (AD) Registration Date (RgD)
Date from which the User holds the capacity
Effective Date (ED)
ED
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Provision of Capacity & ‘fine tuning’
Fine tuning of customer’s capacity requirement:
Customers have requested the flexibility to ‘fine tune’ their capacity requirement prior to the capacity Allocation Date
As a project progresses, a customer will have more certainty as to its ‘final’ capacity requirement: linked to a number of factors e.g. chosen turbine manufacturer
We understand that capacity fine-tuning is an important customer consideration
Fine tuning will be allowed within an agreed upper and lower range
Pre-PARCA Assessment proforma
We will require the customer to provide demonstration data to support its request to fine tune its capacity requirement
15
Customer fees and financial commitment (1)
PARCA Phase 1 (Needs Case and Technical Options) Fee
Customer will fully fund the PARCA Phase 1 Works: fee approx £120,000 ~ £150,000 – similar principles to 0373 NTS Connection (excluded service, cost pass through)
Fee reconciled against outturn costs with ££ difference refunded to, or recovered from, the customer
PARCA Phase 2 (Statutory Planning Works) - securitisation
Where Phase 1 Works identifies either:
Requirement for physical NTS reinforcement and, Local or National planning consent is required or;
Use of a commercial contract can be utilised to meet the customer’s capacity requirement then:
The customer will securitise 100% of the proposed Pre-Capacity Allocation Revenue Driver (see last TX Workgroup PARCA Funding presentation for details)
16
Customer fees and financial commitment (2)
Capacity Reservation Fee
This could be applied following the completion of PARCA Phase 1 Works, where the customer’s capacity requirement will be met entirely through existing system capability
In this scenario, the customer may secure its capacity requirement either by bidding in the capacity auction or by reserving through the PARCA
The Capacity Reservation Fee could be calculated:
Following PARCA Phase 1 Works and customer agreeing that it wishes to progress its project
The Capacity Reservation Fee will be calculated based on (to be discussed in March TX Workgroup)
17
17
Post Capacity Allocation RD
triggered
RD* added to Allowed
Revenue and charged to industry via
Transportation Charges
Pre-Capacity Allocation Revenue Driver triggered and profiled over 4 years
PARCA Funding (revised for ‘Phases’) Proposal for a Planning Act 2008 project
Phase 1Works
Phase 2 Works
NTS Investment: Project Needs
Case / Technical Options
NTS Reinforcement (or other commercial method) required
All costs charged to PARCA Signatory
Classified as 100% Excluded Services – no
impact on Allowed Revenue
Invoiced up front and reconciled
Pre Capacity Allocation Revenue
Driver triggered
RD* added to Allowed Revenue and charged to
industry via Transportation
Charges.
PARCA Signatory securitises value of
RD
*Value of RD’s are reconciled with actual costs, reconciliations through Transportation charges.
Strategic OptionsSchedule A
X
X
Post-Capacity Allocation RD triggered & profiled over 3 yrs
Pre Capacity Revenue Driver runs up to DCO
X
XPost-Capacity Allocation Revenue Driver calc’d
during Phase 2 Appendix 3
Fu
nd
ing
/ C
har
gin
gP
AR
CA
Ph
as
e
Pre-Capacity Allocation Revenue Driver
calculated by end of Phase 1
Outline Routing & siting
Schedule B
Detailed EIARouting & siting
Schedule C
Proposed DCO Application
Schedule D
DCO Application and hearingsSchedule E
DCO submission & SoS decision
Schedule F
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Information Provision
Demonstration Data (from customer)
Please see overview…
Most categories seem to be required towards the end of the PARCA process e.g. Phase 2, Schedules E, F
We would appreciate views (please!) from all categories of our customers e.g. entry, storage and exit as to whether there might be additional items
PARCA Phased Works – Milestone Information (from National Grid)
Please see overview…
The proposed categories of information that customers will receive from National Grid are aligned to the PARCA Phased Works and associated milestones
Is there any other additional information that customers might wish to see from National Grid?
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And finally…
Do you have any further questions, comments?