NIE to introduce site-specific distribution loss adjustment factors

DLAFs are allocated to distribution network connected generators by the system operator to account for the small percentage lost while electricity is being transferred through the power network. They are used by the system operator to adjust their charges to suppliers.

NIE Networks currently publishes three annual average DLAFs each year: for connection to the 33kV, 11kV and LV networks. It has now proposed introducing site-specific DLAFs for 33kV generators, rather than imposing a flat rate on all generators. Currently, 33kV generators receive a positive DLAF of 1.014. It is also proposing the introduction of seasonal 'time of day' DLAFs for generators of all sizes, instead of the current annual average.

The changes are expected to reduce DLAFs by around 3%, to an average of 0.985 and a range of 0.956 to 1.0. This will have a knock-on impact on generators' energy revenue, once any power purchase agreements (PPAs) have been taken into account, according to energy law experts at Pinsent Masons, the law firm behind Out-Law.com.

However, Belfast-based Matthew McMurray of Pinsent Masons said that the proposals should "come as no surprise" to generators based in Northern Ireland. System operators in GB and the Republic of Ireland already impose site-specific DLAFs, he said.

"It will be interesting to hear the views across industry on these proposals, particularly with the likely revenue impacts on projects," he said.

The proposed changes come against a backdrop of increased connections to the distribution network and increased export volumes. In response to this growth, NIE Networks commissioned a study of the impact of distributed generation on network losses. This study showed that the majority of generators connected to the 33kV network increased electrical losses on that voltage; but that generators connected to the 11kV and LV networks actually reduced upstream distribution losses while having little impact on losses associated with their voltage.

Switching to a site-specific system of DLAFs would "better reflect the influence of generation and demand customers on losses in the distribution network", and ultimately "result in a fairer recovery of losses by the respective customers", according to NIE Networks. Additionally, 'time of day' DLAFs could be used to encourage changes to customer behaviour, for example by incentivising demand customers to move a higher proportion of their consumption to night time, when demand is reduced.

NIE Networks is proposing to apply its new methodology from 2018/19. Its consultation (18-page / 458KB PDF) closes on 27 March 2018.