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RIIO-T1 Gas Price Control



On this page we have composed an example breakdown of the RIIO-T1 price control model for gas transmission. If you have arrived on this page without without knowing about Ofgem's RIIO Model, you can click here to read more.

This example has been made based on tariff information provided by EDF Energy's 'Blue: Price Protection' for the Yorkshire region.

Breakdown


Tariff: EDF Energy's 'Blue: Price Protection'
Example dates: March 1st 2016 - March 31st 2016
Amount of days: 31
Amount of gas units used: 1046 kWh
RIIO-T1 gas rate: 2%

Unit rate: 3.062p per kWh
Standing charge: 26.25p per day


Usage price: 3.062p x 1046 kWh = £32.02852
Standing charge price: 26.25p x 31 days = £8.1375


Subtotal = £40.16602 per month (rounded to two decimal points)


VAT (5%) = £2.008


Total = £42.168 per month (rounded to two decimal points)


At this point we can work out the amount of money that goes to the gas transmission company by taking 2% of the money from the subtotal.

Gas distribution cost: £0.8032

Although this doesn't sound like much, if we take National Grid, who provide gas to just over 28 million homes across the UK, we can see that if each of the 28 million customers consumed equal to this example, the company would receive £22,489,600 per month.



On this page you will find a breakdown of the pricing structure used to implement Ofgem's RIIO-GD1 price control model for gas distribution. If you have made it to this page without any knowledge of the RIIO Model you can click here to find out more.

This example has been made based on tariff information provided by SSE's 'SSE 1 Year Fixed v9' for the North East Region.

Breakdown


Tariff: 'SSE 1 Year Fixed v9'
Example dates: November 1st 2016 - November 30th 2016
Amount of days: 30
Amount of gas units used: 1051 kWh
RIIO-GD1 gas rate: 16%

Unit rate: 3.28p kWh
Standing charge: 23.02p per day


Usage price: 3.28p x 1051 kWh = £34.4728
Standing charge price: 23.02p x 30 days = £6.906


Subtotal = £41.3788 per month (rounded to two decimal points)


VAT (5%) = £2.0685


Total = £43.4473 per month (rounded to two decimal points)


From here we can work out the amount of money that goes to the gas distribution companies by taking 16% from the subtotal.

Gas distribution cost: £6.6192

Although this does not sound like enough to maintain and operate a distribution network, the amount of consumers that this is taken from makes it a rather sizeable figure. If we take Northern Gas Networks as an example, who distribute gas to 2.7 millions homes, we can see that if all of these customers consumed equal to this example, the company would receive £17,871,840 per month.