CHAPTER II U.K. REFERENCE PRICE METHODOLOGIES

Article 8 U.K. Capacity weighted distance reference price methodology

1. The parameters for the capacity weighted distance reference price methodology shall be as follows:

(a) the part of the transmission services revenue to be recovered from capacity-based transmission tariffs;

(b) the forecasted contracted capacity at each entry point or a cluster of entry points and at each exit point or a cluster of exit points;

(c) where entry points and exit points can be combined in a relevant flow scenario, the shortest distance of the pipeline routes between an entry point or a cluster of entry points and an exit point or a cluster of exit points;

(d) the combinations of entry points and exit points, where some entry points and some exit points can be combined in a relevant flow scenario;

(e) the entry-exit split referred to in Article 30(1)(b)(v)(2) shall be 50/50.

Where entry points and exit points cannot be combined in a flow scenario, this combination of entry and exit points shall not be taken into account.

2. The reference prices shall be derived in the following sequential steps:

(a) the weighted average distance for each entry point or each cluster of entry points and for each exit point or each cluster of exit points shall be calculated, taking into account, where relevant, the combinations referred to in paragraph 1(d), in accordance with the following respective formulas:

(i)

for an entry point or cluster of entry points, as the sum of the products of capacity at each exit point or cluster of exit points and the distance from this entry point or cluster of entry points to each exit point or cluster of exit points, divided by the sum of capacities at each exit point or cluster of exit points:

Where:

• AD_En is the weighted average distance for an entry point or a cluster of entry points;

• CAP_Ex is the forecasted contracted capacity at an exit point or a cluster of exit points;

• D_En,Ex is the distance between a given entry point or a cluster of entry points and a given exit point or a cluster of exit points referred to in paragraph 1(c).

(ii)

for an exit point or cluster of exit points, as the sum of the products of capacity at each entry point or cluster of entry points and the distance to this exit point or cluster of exit points from each entry point or cluster of entry points, divided by the sum of capacities at each entry point or cluster of entry points:

Where:

• AD_Ex is the weighted average distance for an exit point or a cluster of exit points;

• CAP_En is the forecasted contracted capacity at an entry point or a cluster of entry points;

• D_En,Ex is the distance between a given entry point or a cluster of entry points and a given exit point or a cluster of exit points referred to in paragraph 1(c).

(b) the weight of cost for each entry point or each cluster of entry points and for each exit point or each cluster of exit points shall be calculated in accordance with the following respective formulas:

• 
• 

Where:

• (b) W_c,En is the weight of cost for a given entry point or a cluster of entry points;

• W_c,Ex is the weight of cost for a given exit point or a cluster of exit points;

• AD_En is the weighted average distance for an entry point or a cluster of entry points;

• AD_Ex is the weighted average distance for an exit point or a cluster of exit points;

• CAP_En is the forecasted contracted capacity at an entry point or a cluster of entry points;

• CAP_Ex is the forecasted contracted capacity at an exit point or a cluster of exit points.

(c) the part of the transmission services revenue to be recovered from capacity-based transmission tariffs at all entry points and the part of the transmission services revenue to be recovered from capacity-based transmission tariffs at all exit points shall be identified by applying the entry-exit split;

(d) the part of the transmission services revenue to be recovered from capacity-based transmission tariffs at each entry point or each cluster of entry points and for each exit point or each cluster of exit points shall be calculated in accordance with the following respective formulas:

• (d) R_En = W_c,En × R_ΣEn

• R_Ex = W_c,Ex × R_ΣEx

Where:

• (d) W_c,En is the weight of cost for a given entry point or a cluster of entry points;

• W_c,Ex is the weight of cost for a given exit point or a cluster of exit points;

• R_En is the part of the transmission services revenue to be recovered from capacity-based transmission tariffs at an entry point or a cluster of entry points;

• R_Ex is the part of the transmission services revenue to be recovered from capacity-based transmission tariffs at an exit point or a cluster of exit points;

• R_ΣEn is the part of the transmission services revenue to be recovered from capacity-based transmission tariffs at all entry points;

• R_ΣEx is the part of the transmission services revenue to be recovered from capacity-based transmission tariffs at all exit points.

(e) the resulting values referred to in point (d) shall be divided by the forecasted contracted capacity at each entry point or each cluster of entry points and at each exit point or each cluster of exit points in accordance with the following respective formulas:

• 
• 

Where:

• (e) T_En is the reference price at an entry point or each entry point within a cluster of entry points;

• T_Ex is the reference price at an exit point or each exit point within a cluster of exit points;

• CAP_En is the forecasted contracted capacity at an entry point or a cluster of entry points;

• CAP_Ex is the forecasted contracted capacity at an exit point or a cluster of exit points.