Distribution Loss Adjustment Factors (DLAFs)
The amount of energy delivered to the distribution network to supply electricity to customers is greater than the amount of energy metered at the customers’ premises. The difference between these volumes is called ‘distribution losses’.
Distribution losses can be classified as either technical or non-technical losses. Technical losses, also known as system electrical losses, are an inherent characteristic of electricity networks and are a product of the load on the network, the distance the electricity has to travel across the network and the number of transformation levels the electricity has to pass through. Non-technical losses are associated with unidentified and uncollected revenue, for example, arising from illegal connections, meter tampering, metering errors and estimations.
Our Electricity Distribution Licence requires NIE Networks to produce adjustment factors each year to apportion the distribution losses to customer-metered demand and generation. These adjustment factors are called DLAFs and are published in the NIE Networks’ “Statement of Charges for use of the NIE Networks Electricity Distribution System by Authorised Persons”. The all-island system operator that manages the Single Electricity Market on the island of Ireland, SEMO, uses DLAFs to recover the cost of the energy consumed through network losses.
NIE Networks currently publishes three DLAFs, one for each distribution voltage. The same DLAF currently applies to both demand and generator customers connected at each voltage. Under the current methodology, all published DLAFs are greater than unity which assumes: (1) demand customers connected to the distribution network will increase the losses; and (2) generators connected to the distribution networks will reduce the losses.
However NIE Networks consulted in February 2018 on the introduction of site specific DLAFs for 33kV generators, and day and night DLAFs. The benefits of the proposed methodology are –
- the DLAFs will better reflect the influence of generation and demand customers on losses in the distribution network and will result in a fairer recovery of losses by the respective customers;
- the proportion of losses attributed to demand customers will decrease due to the recognition, through the site specific DLAFs, that most 33kV connected generators increase distribution losses; and
- with the introduction of Day and Night DLAFs, demand customers could influence the amount of energy they pay for without reducing their total consumption, by moving a higher proportion of their consumption to night time.
Following the closure of this consultation, in June 2018 NIE Networks proposed to introduce day/night DLAFs from 1 October 2018 and site specific DLAFs for 33kV generators from 1 October 2019.