Decision paper on modifications to Phoenix Conveyance Licence 2009

Published date05 June 2009
Energy SectorGas
Northern Ireland Authority for Utilit y Regulation
Phoenix Natural Gas Licenc e Further Restructuring; Licence
Modifications to Re place the Volume Revenue Driver with a Part Fixed,
Part Connections Revenue Driver
June 2009
1. Introductio n and
2. Decisio n
3. Backgro und & Context
4. Connec tions Incentive
5. Scheme Design
6. Incentive Values
7. Appendix 1 Consultatio n Responses and Utility Regulator Com ment
8. Appendix 2 Modified Condition 2.3
1. The Northern Ireland Authority for Utility Regulation (The Authority) issued a
consultation paper on the 3rd April 2009 on proposed modifications to the license
granted to Phoenix Natural Gas Ltd (The Licensee,) namely Part 2 Condition
2.3: Conveyance Charges, Other Terms for the Conveyance of Gas and the
provision of Conveyance Services.
2. The proposals set out a change from the inherent incentive on the licencee to
maximise volume of gas consumed to an incentive to maximise connections to the
network. Two responses were received (CCNI and Airtricity) both of which
supported the proposals. The responses are included at Appendix 1 together with
Utility Regulator comment issues raised in the responses.
3. In pursuance of its powers under Paragraph 1 of Article 14 of the Gas (Northern
Ireland) Order 1996 (the Order), and having complied with the provisions of
Article 14 (3) and 14 (4) of the Order, the Authority, with the consent of the
Licensee, hereby modifies the licence for the conveyance of gas in Northern
Ireland granted in 1996 to the Licensee under Article 8 (1) (a) of the Order.
4. The modification comes into effect on Friday 5th June 2009. The modified
Condition 2.3 is included at Appendix 2.
Background and Context
5. The Belfast gas market has grown to over 122,000 connections in a 12 year
period. Although the penetration rate in the domestic owner-occupied sector
currently sits at approximately 30% and at 50% in the small I&C sector, further
significant levels of connections are required in future years in order to reach the
ultimate penetration levels.
6. The Authority is keen to ensure Phoenix Natural Gas Ltd. (PNG) is adequately
incentivised to maximise connections to its network in future. This has long term
benefits for all customers in reducing average network costs and furthers our
objective to promote development of the gas industry.
7. In April 2007 the Authority consulted on proposed modifications to the price
control conditions to give effect to the fundamentals of the licence restructuring
agreement between the Authority and PNG reached in November 2006 as it
applies to the distribution network;

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