06/Mar/2008

Energy Industry IT experts Contigo’s implementation of an integrated Auction Management System is positioned to deliver Scotia Gas Networks significant benefits.

Delivered to time and budget, simulation testing has shown the system will deliver a positive return in investment in the first year of operation.  Over the five year mock auction, the optimiser’s results saved £595,000 compared to the manual process.

Background

Interruption Reform changes the way the UK gas industry regulates demand on days where there is more gas needed than can be supplied. Previously, large commercial sites with the capability to interrupt their gas supply received a discount on their Transportation fees by nominating the supply point as Interruptible. The new regime, which starts on 1st October 2011 with the first auction in June 2008, introduces a yearly auction process, allowing sites to bid for interruption rights for up to five years.

Scotia Gas Networks (SGN), the UK’s second largest gas transporter, are at the forefront of the changes. As a transporter, they are responsible for delivering the gas to the customers supply point, and they must manage their networks to ensure all firm (non-Interruptible) customers are supplied, even during the coldest weather. SGN were faced with the complex task of having to analyze their forecast demands for the next eight years. They needed to select the right combination of bids to meet the required demand, in the most economic and cost effective manner. The numerous file interfaces with xoserve, the gas industry sites and meters administrator, had to be managed, and there was also a need to maintain an audit of actions taken.

The approach

SGN engaged Contigo to write the software to manage the whole auction process. Contigo used their combined expertise of energy industry knowledge, rapid software application development approach, proven Jazz Framework libraries, and mathematical optimisation capability, to develop a solution to handle the entire process in a single, integrated Auction Management System (AMS). The team at Contigo understood that the business optimisation process was the key component that had to tackled early in the development process. The Contigo and SGN teams worked closely to define the business rules, and Contigo developed an auction model using specialist optimisation software.

As part of the initial work, SGN created a mock auction covering a fictional 5 year auction process, and generated a series of bids which were then manually assessed . “We thought we had picked a good combination of bids to meet our needs, the challenge was to see if the AMS optimiser could do any better”, said David Simpson, LTS Commercial Officer at SGN. The first optimised run, covering the first year of the auction, produced a saving of 28% against the best manual profile. Years 2 and 3 produced savings in excess of 37% each. Over the five year mock auction, the optimiser’s results saved £595,000 compared to the manual process.

The implementation

With the foundations laid, Contigo’s agile development approach ensured  the application and interfaces were developed and tested in less than four months; this was crucial to meet industry testing deadlines. Simon Piercy, Project Manager at Contigo, explained how the system was developed so quickly: “Our software is web browser based. This brings a lot of benefits; it is easy to use, and it is simple and quick to deploy. It also allowed us to make our development builds available to SGN over the internet. We can talk through changes in the morning, and the users can see the changes in the afternoon, just by opening a browser from their desktop.” With users dispersed as far apart as Hampshire and Edinburgh, this approach has paid dividends.

Steven Sherwood, Project Manager for Interruption Reform at SGN, was delighted with the results. “This has been an excellent project, and the Contigo team have exceeded our expectations. The system was installed on site in record time, and the quality of the delivered software has been excellent. We look forward to working with Contigo in the future.”

Going Forward

Thanks to the joint efforts of both teams, SGN are now well positioned going in to the first auction; there are already plans for the next phase of the project to manage the “on-the-day” control room activities for gas interruption.