What Are Gas Distribution Networks (GDN)?
The UK gas distribution network (GDN) consists of the companies that run the regional gas distribution networks that connect the national gas transmission system operated by the National Grid to homes, businesses, and industrial gas users.
What Role Does the Gas Distribution Network Play?
The UK gas distribution network (GDN) is comprised of the companies that run the regional gas distribution networks that connect the national gas transmission system operated by the National Grid to homes, businesses, and industrial gas users. Local networks are responsible for the pipes and equipment that distribute the gas to the end users, while GDNs respond to any reports of damaged pipes and gas cuts and rectify the problem.
They are responsible for:
- Maintaining the pipes within their network
- Connecting properties to the gas network
- Moving the gas supply pipes
- New biogas entry point connections
- Network upgrades and extensions for new developments
- Network extensions to areas that are currently off the gas network
They are not responsible for the following:
- Producing gas
- Selling gas
- National gas transmission system
How Do I Find Out Who My GDN is?
If you do not know who your GDN is, you can either:
- Call the Meter Point Administration Service on 0870 608 1524 (run by Xoserve)
- Search by postcode on the Energy Networks Association website
Who Are the GDNs?
In Great Britain there are eight distribution regions operated by four companies:
- SGN (formerly Scotia Gas Networks)
- Cadent (formerly National Grid plc/ National Grid Gas Distribution)
- Wales and West Utilities
There are also several Independent Gas Transporters (IGTs) who operate on the gas distribution network.
What Are IGTs?
IGTs are similar to GDNs but they operate in much smaller networks within the GDN areas and are often an extension to the existing GDN network where new developments have or are being built like new housing estates or commercial development sites.
IGTs must connect their networks to the local GDN so that gas can flow to their network, they cannot connect to the national gas transmission system directly.
The IGTs have to obtain a licence to operate and are subject to the same regulations as the GDNs except their licence has fewer conditions on it. Ofgem regulates the IGTs and monitors the amount that they can charge customers in line with the GDN charge level.
How Does the National Gas Transmission System Differ to the GDNs?
The national gas transmission system is a network that operates at high pressure to distribute gas around the country from the gas shippers and transporters to the GDNs. The national gas transmission system is a network of pipes that connect the national system with local GDNs and gas-fired power stations.
The gas delivered through the national gas transmission system is highly pressurised and is not suitable for general use. The gas is distributed at high pressure and is also stored in gas storage facilities. Gas compressor stations pressurise the gas in the national gas transmission system, but it must be depressurised before it can be distributed into the GDN pipelines through a pressure reduction station as the GDN pipes are only designed for lower pressurised gas.
The GDN's role is to take gas from the national gas transmission system when needed and distribute it through their local networks to homes, businesses, and industrial users.
Background of the UK GDNs
Before 1948 the UK energy market was made up of over a thousand small companies and local authorities undertakings who operate small networked gas systems.
In 1948, the Gas Act was passed to nationalise all these gas businesses and to form a countrywide network of government-owned gas production, distribution, and supply. As part of the nationalisation, these gas businesses were merged into 12 regional gas boards which operated under separate governance. Nationalisation enabled the government to regulate and manage the growth of the gas market and ensure fair access to gas.
In 1972, the gas industry was restructured by the Gas Act 1972 where all 12 regional gas boards were merged into one as the British Gas Corporation.
In 1986, the gas industry was privatised as part of the Gas Act 1986 and shares of British Gas were floated on the London stock market. The gas distribution business was separated from British Gas and named Transco in 1997 and then sold by British Gas in 2000. The gas distribution network at this point was divided into eight regions.
In 2002, Transco merged with National Grid Group which operates the national gas transmission system and the electricity transmission system. In 2005 National Grid plc sold four of the eight gas distribution network areas and renamed their remaining gas distribution business as National Grid plc. The four businesses that currently operate the local gas distribution network were formed in 2005, including:
- SGN (formerly Scotia Gas Networks)
- Cadent (formerly National Grid plc/ National Grid Gas Distribution)
- Wales and West Utilities
How Are GDNs Funded?
GDNs receive their income from the energy suppliers who recharge this cost to their gas customers. The GDN charging structure is subject to price control regulations by Ofgem as they operate in a monopoly.
Price reviews are conducted and these stipulate how much investment the GDNs can make in their network and the income they can collect. These prices are then fixed for eight years.
Currently, the GDNs are operating under a price control called RIIO (revenues, incentives, innovations, outputs) which focuses GDNs on innovations and outputs that aim to deliver a sustainable energy network that offers value for money. RIIO also reflects on how much they can charge for their services.
The reason why energy suppliers have regional variations of their energy tariff rates is due to the local cost associated with distributing the gas through the GDNs.
Who Regulates The GDNs?
The use of distribution regions means that GDNs operate as monopolies. When new connections are created, consumers and businesses can choose an IGT instead, but the IGT must still connect their gas distribution to a GDN.
Ofgem regulates the GDN through licences and ensures that these monopolies do not abuse their powers and that they operate within their licence agreements. These licences contain conditions including the amount of revenue they can generate from their customers. IGTs are also licenced by Ofgem and have similar requirements.
The GDNs must comply with the Gas Act and must adhere to gas safety regulations.
Is There An Association Representing The GDNs
There is an association for all the GDNs which is called the Energy Networks Association, which represents the gas and electricity transmission networks, as well as the electricity and gas distribution network interests in the wider industry.
The Energy Networks Association also assists customers about how the energy networks operate, how to find your local GDN and what to do in the event of a gas or electricity power cut, or gas leak.
The Energy Network Association’s main aim is to ensure that the UK’s energy networks are safe, reliable, efficient and sustainable. They play an important role in influencing decision-makers on key issues including:
- Regulation
- Representation in the UK and European energy spheres
- Cost-efficient engineering services
- Health and safety and environmental concerns across the wider energy industry
- Smart technology development and deployment
The Energy Networks Association also has a role to play in planning the country’s future energy plan and tackling the challenges that the UK faces with its ageing distribution network and changing energy generation mix.
What To Do In The Event Of A Gas Leak
If you smell gas or suspect that you have a gas leak you should call the National Gas Emergency Service on 0800 111 999 immediately to report it. You should also do the following:
- Open all doors and windows
- Turn the gas off at the meter
- Do not use electric switches or flames
The Future And Challenges Ahead
There are significant shifts and changes in the energy market in the foreseeable future that will impact on the GDNs:
- Smart metering deployment programmes by energy suppliers
- Infrastructure issues of an ageing network
- The drive for low-carbon energy to replace fossil fuels in the UK’s energy mix not just as an electricity generation fuel but to replace gas heating in homes
- Price competitiveness of gas as a heating fuel
- Regulatory changes and price controls such as RIIO (revenues, incentives, innovations, outputs) focus GDNs on innovations and outputs that reflect on how much they are allowed to charge for their services