What is UIG… Unidentified Gas?
Unidentified Gas, also known as UIG, is gas supplied to the network that cannot be directly attributed to a gas shipper. It is the shortfall between the volume of gas that enters the National Grid and that which is measured as consumed by customer meters. End user theft, unregistered meters, leakages, or measurement errors are the main suspects for the cause of UIG.
It is believed that UIG accounts for more than 3% of gas entering the grid, gas that costs more than £100 million each year!
We all pay for UIG, in that, the costs for UIG are recovered from all gas users in the UK. The way each customers ‘share’ UIG costs is calculated underwent a massive change in June, 2017 as part of OFGEM’s Project Nexus. This UIG cost calculation change caused UIG costs to be far higher and more volatile than originally expected. This explains why some customers are now receiving UIG reconciliation invoices.
Pre- June 2017 households and small gas users bore the brunt of UIG charges. The new UIG calculation formula lightens the UIG costs for smaller users, whilst burdening the larger user more. As a result of this change, where permitted by contract terms and condidtions, many suppliers are passing through the increases in UIG in order to recover these costs.
Short term pain, long term gain. Project Nexus is a gas industry programme to implement changes to the gas settlement arrangements and replace Xoserve’s ageing UK Link IT system. Whilst no one likes receiving these UIG reconciliation invoices, Project Nexus implementation is part of OFGEM’s strategy to support the transition to a smarter energy system by putting in place central systems, and governance, fit for the future. Project Nexus will enable the processing of meter reads from smart meters and remove distortions in the current gas settlement arrangements, which are hindering competition. It will improve the reliability of gas switching arrangements by bringing the systems operated by independent gas transporters into a single centralised system.
The article from Citizen’s Advice explains the UIG reconciliation scenario in more detail.
If you have any questions regarding UIG charges please get in touch with Direct Power, we can assist you to get a grip on UIG costs. Ideally have your bill and contract to hand when you reach out to us.
