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Gas Industry Update – Nexus

The gas industry is currently going through a period of significant change, this update is commonly being referred to as ‘Project Nexus’.

Gas Industry Update – Nexus

The gas industry is currently going through a period of significant change, this update is commonly being referred to as ‘Project Nexus’.

Project Nexus is an updated central gas system, operated by Xoserve which will be implemented across the UK. This system supports gas settlement and supply point administration on behalf of gas transporters which will allow suppliers to replace ageing systems, implement process improvements and also support the roll out of advanced and smart meters.

What is Xoserve?

Xoserve is an integral part of the restructured gas distribution market in the UK and provides one consistent service point for the gas Shipper companies. Xoserve currently manages all of the information relating to the 22 million gas supply points in Britain, domestic, industrial and commercial.

Project Nexus is being managed by Ofgem and PwC and is currently on track for implementation on 01 June 2017. The upgrade process will take place across the entire gas industry over a number of ‘non effective days’ from 23 – 31 May. The first normal business day will be 06 June 2017 to allow for backlogs to be cleared.

Impact on gas customers is expected to be minimal, however given the extent of changes some customers may experience a slight delay in switching to a different supplier, although measures will be put into place to ensure that any disruption is kept to an absolute minimum.

How will this benefit me?

Project Nexus will bring the following high level benefits to industry participants and consumers:

  • More accurate Annual Quantities (AQs) allowing for more competitive prices offered by suppliers leading to improved market competition.
  • Accurate customer AQs will allow for more accurate customer billing
  • Accurate AQs will allow Xoserve to invoice and reconcile all suppliers against their Small Supply Points as well as Large Supply Points, improving supplier cost allocation and pricing competitiveness.
  • Supporting Smart Meter Rollout – the ability to receive and store more meter reads as there is a regulatory requirement for more Smart and Advanced Meter Reading (AMR) devices to be installed.
  • Integration of Independent Gas Transporter (iGT) networks.

What is changing?

Independent gas transporters will be able to data share with Xoserve

A number of gas transporters (GTs) share data with Xoserve and the relevant suppliers when a meter exchange or change of supplier is arranged. Some of our smaller transporters known as independent gas transporters (IGTs) are unable to transfer information using the Xoserve system, which causes delays. They will be able to do this once the new system and processes are in place. This will allow suppliers to see the relevant IGT data and speed up the process.

Rolling annual quantity and rolling supply offtake quantity

The calculation of metered annual consumption, often referred to as annual quantity (AQ) is currently calculated by Xoserve in time for October. Following system changes, Xoserve will be able to provide a more accurate consumption figure for this every month after a meter reading is provided, because a consumer’s AQ will be calculated on a rolling month by month basis. This is subject to a meter read being provided every month and dependent on the Settlement Class that is set.

The supply offtake quantity (SOQ) is the meter’s maximum daily usage which is determined by Xoserve. It will also be possible for these to change on a monthly basis for non-daily read sites. Capacity SOQ and SHQ for large daily metered sites will not change unless requested.

Formula year annual quantity and supply offtake quantity

It will be difficult for gas transporters to calculate the rates required to cover their charges over the course of a year if this data changes every month. To address this scenario a second AQ and SOQ have been introduced, these are known as the formula year AQ/SOQ, but you may also hear them referred to as static, fixed or held AQ/SOQ. The formula year AQ/SOQ will be fixed from 01 April to 31 March each year to fall in line with the gas transporter’s charging statements. These will be used to calculate transportation charges which will continue to be changed on 01 April and 01 October each year.

The formula year is set from the active rolling AQ 01 December and becomes effective as the formula AQ from the following 01 April. This removes the need for the annual AQ review process. There will be no AQ review in 2017.

Introduction of new settlement classes

A new settlement class structure has been created so that all meter points with a non-daily metered (NDM) and daily metered (DM) supply type are settled in a more accurate and effective way. Four new classes will be introduced:

Class 1 is a mandatory settlement for all meter points with a rolling AQ of over 58,600,000 kWh – meter reads must be provided daily to Xoserve by 11am of the day following the day gas is consumed.

Classes 2, 3 and 4 are for any meter points with a rolling AQ below 58,600,000 kWh:

Class 2 meter reads must be provided daily to Xoserve within 24 hours following the day that the gas is consumed.

Class 3 meter reads must be provided to Xoserve for each day but can be batched up and issued weekly, fortnightly or monthly.

Class 4 meter reads must be provided to Xoserve either monthly or annually depending on the size of the rolling AQ. When a meter read is obtained it will be submitted to Xoserve, but we cannot send more than two meter reads in any rolling 24 day period.

If you have meter points nominated on either class 1 or 2 you’ll need to submit an AQ/SOQ as well as a supply hourly quantity as per the current daily metered process. This means that the rolling AQ/SOQ for these supply points will not be automatically changed, but it is still possible for these to be changed following a re-nomination of daily metered information. The meter points on these classes will also be subject to ratchet charges for breaching the SOQ limit for daily metered supply types.

These classes have been introduced for settlement purposes and will, in most cases, be selected by us as it is our responsibility to provide these meter reads. If your rolling AQ is above 58,600,000 kWh, Class 1 will be selected.

Allocation of unidentified gas charge removal

The allocation of unidentified gas (AUG) charge has been removed and replaced with the similarly named Unidentified Gas (UIG) charge. The reason for the subtle name change is due to a fundamental change in the calculation of unidentified gas once all of the meter points are individually settled. This gives a more accurate view of unidentified gas.

Meter points on class 1 will not be charged for unidentified gas as per the current charging methodology for daily metered supply types; however customers with meter classes 1 and 2 may be liable for ratchet charges if they do not comply with the SOQ level set.

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