Unidentified gas (UIG) charges explained

22 August 2018

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Unidentified gas (UIG) charges explained

Some sources of unidentified gas include consumption through unregistered supply points or theft of gas. It’s an unavoidable industry cost that can soon mount up.

Recent developments have resulted in changes to how unidentified gas (UIG) is calculated. Here, we’ll guide you through the changes, why they have come into effect and what we’re doing to deal with them.

unidentified gas charges causes

The cause of UIG charges

As noted above, a number of causes of unidentified gas are known, however what is more difficult to determine is the amount of energy ‘lost’ due to particular issue, for example the amount of undetected theft vs unregistered supply points.

Project Nexus and UIG reforms 

Implemented in June 2017, Project Nexus was a large UK Gas industry project that revised the former central IT system, heralding the arrival of new read and settlement processes. Crucially, it also led to the introduction of a different approach to determining the amount of unidentified gas. Following Nexus, the process aims to provide a more accurate overview of the volume of unidentified gas. Prior to its implementation, the volume of unidentified gas within the market was calculated as a specific value by an independent expert.

business owner reading about uig charges

The new approach derives the quantity of unidentified gas utilising a formula that deducts shrinkage, daily-metered allocations and non-daily-metered estimates from the total gas input into the system. The amount of gas that is then left is the unidentified gas. The independent expert determines the way this energy is allocated to Shippers who are then notified on a daily basis their share of the unidentified gas. Subsequently, as actual meter reads come in, the allocation of unidentified gas is recalculated.

measures to resolve uig

Since this change, the levels and volatility of unidentified gas have noticeably increased. As a result, risk premiums have increased which inevitably means that customer’s charges increase. The unpredictable and volatile nature of unidentified gas only serves to complicate the issue.

Did you know our gas contracts offer fixed rates for up to five years?

Find out more about our Shield gas product

Proposals to combat UIG

Perhaps somewhat unsurprisingly, there have been significant concerns over the issue of unidentified gas. On 7 November 2017, gas shippers met with the industry regulator Ofgem to suggest that a charge was set at a certain level and scaled across the industry. This initiative was ultimately rejected by Ofgem, in preference for an alternative proposal to put in place a representing team from across the industry (known as the ‘task force’) to reduce the scale and volatility of unidentified gas. 

To find out more and to keep up to date with UIG task force developments, you can visit the Xoserve website

We hope that you found this guide useful. To find out about SEFE Energy's range of business energy services, visit the homepage or call us today on 0161 837 3390.

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