Cadent's Future Billing Methodology project

What was the Future Billing Methodology project?

Cadent (formerly National Grid Gas Distribution) initiated the Future Billing Methodology project to understand how billing standards and processes need to adapt to the network integration of low-carbon gases. 

Gas industry stakeholders collaborated to develop a new billing framework. This would allow alternatives to be introduced into distribution networks without pre-processing. 

These findings would help homes and businesses transition to green alternatives such as hydrogen, biomethane and natural gas with carbon capture utilisation and storage (CCUS) in a cost-efficient way. This is key to reaching the UK Government's ambitious target of net zero emissions by 2050.

The challenge: fair billing during the energy transition

The current gas billing methodology operates on the principle of an average calorific value (CV) across a Local Distribution Zone (LDZ). 

However, low-carbon gases have a lower CV than natural gas. This means customers need to use a higher quantity to get the same results (such as heating their homes or powering their manufacturing plants). Without a change to the existing billing framework, consumers of these lower CV gases would pay more for the same energy output. 

Adding to this, existing gas regulations limit the lowest source CV gas to 1 MJ/m3 below the charging area’s Flow-Weighted Average Calorific Value (FWACV). Injecting alternative gases with lower CV can disrupt this measurement, which is essential for accurate billing and quality monitoring. For example, biomethane producers currently mix in propane to meet this value, which is both costly and adds greenhouse gas emissions. 

Also, depending on production and proximity to injection sites, each LDZ may be supplied with a mix of low-carbon gases, each with different CVs. The Future Billing Methodology project sought to examine and resolve these challenges.

Project timeline and actions

To support Cadent and the Future Billing Methodology project, Xoserve consulted with customers to generate engagement and gather feedback.

The objectives of the consultation were to:

1. Open the debate around how billing should be adapted when hydrogen and biomethane are introduced at a larger scale into the gas network.
2. Identify the impacts across industry parties of a variable CV.
3. Discover solutions to manage data flows and deliver clear, effective and fair consumer billing during the green transition.
4. Estimate costs and implementation timescales of billing options to feed into recommendations
5. Explore billing options that are not recommended because of costs, compliance, implementation timescales or a combination of all.

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The next step in fair billing for the future of gas is Real Time Settlement Methodology.

Consultation documents

Below are documents supporting the Future Billing Methodology consultation.

Please note: This consultation closed on 1 March 2022.

Get in touch

If you want to know more about the project, please email us at decarbonisation@xoserve.com.

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