PARCA: Contractual Overview
TX Workgroup
27th February 2013
Steve Pownall
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
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…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
Establish and Document the Project Need Case for physical works
Identification potential strategic options
Apply technical filter
Up to 6
Months
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 2
Develop Strategic Options Report (SOR)
Schedule A
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
Up to 6
Months
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 8
PARCA Phase 2 Works:
Schedule B – Outline Routing and Siting works
Phase 2
OUTLINE ROUTING AND SITING
Schedule B Identify Preferred Route Corridor / Siting Studies
Develop SOCC (Statement of Community Consultation)
Undertake RCIS (Route Corridor Investigation Study)
Undertake Options Appraisal Level 2
Up to 15
Months
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
DETAILED ROUTING / SITING
Phase 2
Undertake EIA (Environmental Impact Assessment) & Design
Schedule C
Pipeline
Identification of route alignments, involving thematic groups,
community forums & routeing / siting workshops
Undertake Options Appraisal (Level 3) and EIA (Environmental
Impact Assessment)
Up to 24
Months
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 2
Schedule D
PROPOSED DEVELOPMENT CONSENT ORDER (DCO) APPLICATION
Formal consultation, finalising project, preparation of application
documentation
Formal consultation on project, in accordance with agreed SOCC
Up to 6
Months
Phase 2
Schedules
E&F
Review feedback & adjust / finalise project
Finalise:
- land rights offers
- DCO documentation, including legal counsel review
DCO APPLICATION AND HEARINGS
Planning Act Submission, Examination and Approval Process
Submit Application to NID (National Infrastructure Directorate) within the
Planning Inspectorate, NID validates application, register and publish
Up to 15
Months
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)
Effective Date (ED)
Reservation Date
(RsD)
Allocation Date (AD)
Registration Date
(RgD)
ED
RsD
AD
RgD
PARCA:
Phase 1 Works
Date PARCA signed by the
customer and National Grid
Nominate user up to
1 month before AD
 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.
• Capacity allocated to the User
• NPV (entry only)
Date from which
the User holds the
capacity
Default Allocation Date is
between 24 and 35 months prior
to the RgD
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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
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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)
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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)
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PARCA Phase
PARCA Funding (revised for ‘Phases’)
Proposal for a Planning Act 2008 project
Phase 1
Phase 2 Works
Works
NTS Reinforcement (or other commercial method) required
NTS Investment:
Project Needs
Case / Technical
Options
Strategic Options
Schedule A
X
Pre-Capacity Allocation
Revenue Driver
calculated by end of Phase 1
Outline
Routing & siting
Schedule B
Detailed EIA
Routing & siting
Schedule C
Proposed
DCO Application
Schedule D
DCO Application
and hearings
Schedule E
DCO submission
& SoS decision
Schedule F
Pre-Capacity Allocation Revenue Driver triggered and profiled over 4 years
X
Post-Capacity Allocation
Revenue Driver calc’d
during Phase 2 Appendix 3
Post-Capacity
Allocation RD
triggered &
profiled over 3 yrs
X
Funding / Charging
X
All costs charged
to PARCA
Signatory
Pre Capacity
Allocation Revenue
Driver triggered
Classified as
100% Excluded
Services – no
impact on
Allowed Revenue
RD* added to
Allowed Revenue
and charged to
industry via
Transportation
Charges.
Invoiced up front
and reconciled
Post Capacity
Allocation RD
triggered
Pre Capacity Revenue Driver runs up to DCO
RD* added to
Allowed
Revenue and
charged to
industry via
Transportation
Charges
PARCA Signatory
securitises value of
RD
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*Value of RD’s are reconciled with actual costs, reconciliations through Transportation charges.
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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?
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