(1) Introduction(4) Use of System Charges
Given the present stage of development of the electricity market in Guernsey, with GE as the sole supply licensee (see Section 2) conveyance network usage charges have not been segregated from other elements of GE's supply tariff (available from GE's website).
The following sections are intended to illustrate the relationship between connection and usage charges and outline the issues that will be taken into account should separate usage charges be deemed appropriate.
The cost of constructing and operating the conveyance network is significantly affected by the power transfer that the network is designed to service, and hence by the aggregation of the individual power transfer requirements of network users. The Guernsey electrical network is designed on the basis of being able to satisfy such maximum demands rather than mean energy volumes.
The power transferred through the system is not constant, but varies with the time of day and season. In general terms, for Guernsey, the system is required to meet maximum demand on a winter, weekday evening and minimum demand on a summer night. Peak related charges are levied on each user, based on the contribution to system maximum demand made by that user. This provides an economic signal as to the cost of providing sufficient network to meet peak demands.
It is recognised that certain users have power requirements that make major contributions to system peak power transfer, whilst others make no contribution at all. Over many years, GE has maintained tariffs which encourage customers to use electricity at off-peak periods thereby managing demand. GE believes that off peak tariffs, which typically encourage users to consume energy overnight and during the early afternoon, and discourage consumption at early evening peak times, enhance network efficiency and reduce total network costs for a given level of energy delivery. In summary, usage profiles are related to the tariff on which the customer is charged.
Given the relationship between user load profiles and tariffs discussed above, it is reasonable to classify users by tariff and seek to establish the contribution to network peak demand made by each tariff group.
GE believes that variations in tariffs in this way is fair and intends to vary tariffs (including UoS tariffs) based on peak - off peak usage based on mathematical modelling. GE has already commissioned mathematical research to underpin this exercise.
A further issue to be considered in use of system charging is whether any account should be taken of the location of users. Given that the costs of constructing and operating the network vary with the distance of users from sources of energy, in principle it is economically efficient to charge network users according to their location.
However, GE does not believe that location dependant Use of System charging is appropriate for the Island of Guernsey for the following reasons:
- GE estimates that less than 15% of the conveyance costs (to be recovered via UoS) could be allocated to each of the individual conveyance network sectors;
- Only a limited amount of location specific expenditure data is routinely captured within GE's financial information system, therefore recording and subsequent charging by sector would increase billing complexity, leading to significant additional operational costs for GE; and
- It would be socially divisive for GE since users with only modest demands located in outlying parts of the network such as Torteval could find themselves being required to meet much larger costs than those favourably located major users for instance in the Vale.
4.4 GENERATORS, SELF-GENERATORS AND SUPPLIERS
Network users can be classified under three headings:
- Generators - whose express purpose is to provide energy to the network.
- Suppliers - who will be responsible for supplying energy to end users.
- Self-generators - who have an ability to generate some of their own energy but require the network to support their demand when their own generation is inadequate or shut down.
Generators deliver energy at their point of connection to the conveyance network i.e. station gate, where metering will be installed normally (3). Consequently generators will not be using the conveyance system when generating and therefore will not be liable for usage charges. Generators who also require a supply of energy from the network will be charged for energy on an appropriate supply tariff which contains an element for conveyance UoS. For generators of sufficient size to require conveyance network connection, examples of appropriate tariffs would be the high voltage maximum demand or industrial economy tariffs. Generator import/export plant and metering will be arranged to record net energy exported to the network and, separately, energy imported.
Suppliers will be purchasing energy from the network and reselling it to end-users. Clearly UoS charges will be applied to suppliers, including GE's own supply business.
Self generators who connect to the conveyance network, but balance their own generation against their load, will normally not transfer any energy through the network, and will, therefore, not make any payment to the network operator through energy transfer UoS charges.
To compensate the network operator for the need to maintain network availability, on standby, for the self-generator's use when his generator is unavailable, GE believes it is equitable to levy an availability charge. This would be levied on a monthly basis according to the capacity held available for the self-generator. This charge could be considered to be analogous to an insurance premium covering failure of the user's own generator.
Where a self-generator requires a supply of energy through the network then he will be charged for energy on an appropriate supply tariff, incorporating UoS charges. Examples of such tariffs would be the Industrial HV maximum demand tariff or the Industrial Economy tariff.
3 The point of connection to the conveyance system is usually defined as the position of the metering equipment. This position also usually forms the boundary of ownership of network assets, such that plant and cables between the generator and the meter belong to the generator operator and plant and cables between the meter and the body of the network belong to the network operator. This position will also be considered to be the "commercial; boundary" through which energy will pass between generator and network operator.
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