25 Nov 2021
Unidentified Gas (UIG) Changes
UIG is undergoing a number of changes, and we will use this page to keep you up to date with the latest news and the work Corona Energy are doing to ensure that the impact to our Customers is mitigated as much as possible.
What is it?
Unidentified Gas (UIG) is the difference between the gas recording into the transportation system and that recorded as used by end users for any given day. The difference is attributed to shrinkage, leakage and theft. Every meter in the UK gets apportioned an amount of this missing gas each and every day. The way in which UIG is apportioned and the cost per unit is changing.
Why is it changing?
The cost of UIG is apportioned across the industry based on UIG factors determined by the Allocation of Unidentified Gas Expert (AUGE).
From June 2017 to June 2020, a company called DNV was appointed by Xoserve as the AUGE. As part of a tender process they were replaced by Engage Consulting Limited from June 2020, and in December 2020 they issued a first draft of the new UIG factors. These have been approved and went live on 1st October 2021.
- The newly calculated total UIG volume has increased by 42% under the new methodology. The key differences between the two methodologies are:
- Quantifying UIG for each identified contributor and adding these together, rather than estimating the overall UIG and apportioning it.
- Determined the amount of gas lost to theft has increased by 17% compared to the previous AUGE statement.
- Using theft figures from other industries (water, power & retail) and other assumptions.
How is it allocated?
Each day Xoserve declares an amount of UIG to shippers as a percentage of the day’s national demand. Over the following 12 months this value is adjusted daily as meter reads are submitted. It should always end up positive and typically ranges from 2.5% to 4%.
This total UIG is spread across all meters, regardless of meter type, industry or location and is based on allocation factors. Each meter will fall into a category defined by its EUC band and meter class.
The new UIG factors also utilise Modification 0711 which splits each of the first 2 EUC bands into 4 new categories:
- ND – Non-Prepayment Domestic
- PD – Prepayment Domestic
- NI – Non-Prepayment I&C
- PI – Prepayment I&C
The table below shows the % difference between the previous (pre Oct 2021) and new UIG factors:
Impact of current market conditions
UIG is declared within the gas day and needs to be purchased within day. The forward curve is the market’s best view of what it will cost within day, and as such the recent increase in the wholesale curve has led to a proportionally large increase in the expected UIG cost.
This Modification looked to rollover the 2019/2020 allocation tables to allow sufficient time for the AUGE to develop a robust Statement and allocation factors which was considered by the UNC panel in June but was unfortunately unsuccessful.
Our Regulation and Compliance Manager Dan Fittock attended AUGE sub-committee meetings to push back against the new allocation tables and as a member of the UNC Panel voted in favour of the Modification, however a majority of Panel members rejected the Modification and Ofgem decided not to implement.
As part of ICoSS our response and comments can be found here.
Corona Energy are working with ICoSS to sponsor a UNC Review into the Unidentified Gas process, which was raised on the 15th September 2021.
With the ongoing volatility in UIG since the implementation of Project Nexus, it is clear that the process is not working correctly. On this basis, we have requested a UNC Review group to look into how the process operates and whether it is fir for purpose.
Gareth Evans, the ICoSS Chair, and Dan Fittock presented the proposal to UNC Panel on the 21st October 2021, with the Panel approving the Modification for progression to the UNC Distribution Workgroup. The Review group continues to meet and review the UIG process at Workgroup, and with the complexity of the UIG process it is unlikely that any recommendations or consequential Modifications will be identified for at least 12 months.
We understand that this is a long time to review a potentially broken process, so we have also sponsored another Modification, UNC 0782 with an aim to address issues with the UIG process in the short term.
Corona Energy are working with ICoSS to sponsor a new Modification to introduce an
independent AUGE auditor role which was raised on the 15th September 2021.
At a UNC Committee meeting in March 2021 the UNCC indicated that there were no actions it could take regarding concerns raised about compliance with the AUGE Framework, which indicates that there is currently no clear governance process for the Framework document.
Gareth Evans, the ICoSS Chair, and Dan Fittock presented the Modification to the UNC Panel on the 21st October 2021, with the Panel approving the Modification for progression to the UNC Distribution Workgroup. The Modification continues to be developed at Workgroup and is likely to progress to Consultation stage in February 2022.
We will keep you updated with the progress of this Modification and please do not hesitate to contact your Key Account Manager if you have any questions.