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TAR NC Implementation Document – Second Edition September 2017 |
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General Requirements
VARIABILITY OF MULTIPLIERS,
SEASONAL FACTORS AND DISCOUNTS
Responsibility: subject to consultation per Article 28(1) by NRA; subject to
decision by NRA
The CAM NC foresees five standard capacity products: yearly, quarterly, monthly,
daily and within-day. Article 11 of the CAM NC covers the ‘runtime’ or start and end
date of each product. Chapter III of the TAR NC addresses the calculation of reserve
prices for non-yearly standard capacity products, and also discounts for all interrupt-
ible products.
Table 7 shows how non-yearly prices can vary following the TAR NC rules on multi-
pliers, seasonal factors and interruptible discounts. The example involves only a
quarterly standard capacity product, at one IP.
MULTIPLIERS, SEASONAL FACTORS AND INTERRUPTIBLE DISCOUNTS FOR QUARTERLY
PRODUCTS AT AN IP
Multiplier
Multiplier and seasonal factor
Multiplier and interruptible discount
Multiplier describes the pricing
relationship between the short-term
product and the yearly product
Seasonal factor allows for variations in the
seasonal value of the same standard capacity prod-
ucts
Although the firm price is the same price for a given
‘category’ of products, there can be different inter-
ruptible prices – depending on factors Pro and A
Quarterly – the same multiplier for
all four products
\\
Q1 firm 1.5
\\
Q2 firm 1.5
\\
Q3 firm 1.5
\\
Q4 firm 1.5
Quarterly – the same multiplier for all four
products but different seasonal factors
Assumptions:
\\
Q1 and Q4 have 92 days, Q2 has 90 days,
Q3 has 91 days
\\
Multiplier is 1.5
Initial values:
\\
Q1 firm 1.5×1.5
\\
Q2 firm 1.5×1.7
\\
Q3 firm 1.5×0.8
\\
Q4 firm 1.5×0.7
Average product:
(1.5×1.5×92+1.5×1.7×90+1.5×0.8×91+
1.5×0.7×92) / (92+90+91+92) = [1.5(1.5×92+1
.7×90+0.8×91+0.7×92)] / 365 ≈ 1.760
Correction factor: 1.5/1.760
Corrected values:
\\
Q1 firm 1.5×1.5×(1.5/1.760) = 1.5×1.28
\\
Q2 firm 1.5×1.7×(1.5/1.760) = 1.5×1.45
\\
Q3 firm 1.5×0.8×(1.5/1.760) = 1.5×0.68
\\
Q4 firm 1.5×0.7×(1.5/1.760) = 1.5×0.60
After correction, average products falls within multi-
plier range:
[1.5(1.28×92+1.45×90+0.68×91+0.60×
92)] /365 = 1.5
Quarterly – the same multiplier for all four products
but different probability of interruption/factor ‘A’.
Assumptions:
\\
2 products P1 and P2 with ‘Pro’ of 0.1 and
0.25 in Q1
\\
2 products P3 and P4 with ‘Pro’ of 0.15 and
0.2 in Q2
\\
‘A’ factor is 1 in Q1 and 2 in Q2, no seasonal
factor at all
\\
Q1 has 92 days (d), Q2 has 90days
\\
Reserve price (RP) for annual product is 365
\\
Multiplier is 1.5
Calculation of discount:
Di = Pro×A×100×RP×(d / 365)×1.5
\\
Discount for P1 in Q1 = 10%×1×100%×
365×(92/365)×1.5 = 13.80
\\
Discount for P2 in Q1 = 25%×1×100%×
365×(92/365)×1.5 = 34.50
\\
Discount for P3 in Q2 = 15%×2×100%×
365×(90/365)×1.5 = 40.50
\\
Discount for P4 in Q2 = 20%×2×100%×
365×(90/365)×1.5 = 54.00
Table 7:
Multipliers, seasonal factors and interruptible discounts for quarterly products at an IP
The TAR NC calls for the same multiplier at a given IP for the same standard capac-
ity products. This is based on the formulas for calculating the non-yearly reserve
prices foreseen in Article 14. Such formulas do not allow for different multipliers at
a given IP for the same standard capacity products. Also, the TAR NC envisages that
multipliers, seasonal factors and interruptible discounts may be: (1) the same at all
the IPs; or (2) the same at each group of the IPs; or (3) different at all the IPs.
ARTICLE 12(1)