AQ stands for Annual Quantity and is a term that most people will be familiar with.
But could they tell you what it is?
I don’t mean a short, vague description… I mean really tell you what it is.
The ins and the outs, how it is calculated, what it means for customers – could they provide a good description of AQ?
It’s unlikely, unless the person you have in mind is an energy expert in the industry itself…
What is AQ?
At the most basic level, AQ is the amount of gas that a site is expected to use on average over the duration of a year. The average is calculated based on a view of seasonal normal weather. AQ can also be used as a basis for gas allocation and charging.
There are also processes further downstream that utilise AQ – such as the Supply Offtake Quantity (SOQ). This is the max amount of gas that a customer/site is contractually able to use, further ensuring that usage is managed, invoiced, and planned to a high standard.
For any Class 3 or Class 4 Supply Meter Points the SOQ shows expected peak demand in a day during storms and poor weather. Although SOQ is not really needed for expected site usage, it is calculated ‘downstream’ of AQ, taking it into account.
SOQ strangely varies depending on the customer at hand. For industrial premises, SOQ will be much higher than for domestic customers. It varies based on Supply Meter Points too, for class 1 and 2 Supply Meter Points the SOQ represents the reserved daily capacity in the network for a particular site. While for class 3 and 3 Supply Meter Points, SOQ represents the forecasted daily usage for a site.
The variation of allocation
Miscalculating the amount of gas needed can cause hassle and unnecessary costs to suppliers. Because of this, great sums of time have been spent (from the industry as a whole) to try and quantify some of the factors that will affect allocation.
Gas usage will vary massively between seasons depending on how it is used by the customer. For customers who use their gas supply for manufacturing processes will likely retain similar usage month on month, while a customer who uses gas primarily for heating will show incredible variance between seasons.
Information like this has to be factored in when calculating AQ. You can begin to see the complexity of the task.
How is AQ calculated?
Step 1:
For classes 3 and 4, meter reads can be received from the 11th of the previous month to the 10th of the current month ahead of the AQ calculations being performed. The read window changes for classes 1 and 2, from the 7th of the previous month to the 6th of the current month.
In any situations arising where the value submitted is rejected, the previous valid value will be used to calculate AQ. A notification will be sent to the relevant shipper through the UK Link system.
In any situations where a read is not submitted within the relevant read window, no further attempts to calculate a new AQ will not be made.
All AQ notifications will be issued by five business days prior to the end of the month so that all parties are aware of what values will be used.
For the largest sites, known as daily metered, accurate meter readings are taken remotely every day and used within the AQ calculations. Domestic sites and smaller business sites have meters read much less frequently.
Step 2:
Because Annual Quantity is calculated on a rolling basis, it could be revised each month. For class 3 and 4 meters associated with smaller sites, the ‘formula year AQ’ is used. This help provide some form of invoicing stability.
The formula year AQ is considered to be a snapshot of the rolling AQ on 1st December. This is then used for invoicing, applied from the 1st of April unless a correction has been applied within that period.
Step 3:
Registered shippers are able to request a change to AQ through the AQ Correction Process. Situations where this may occur include when there is a change of business within a particular premise or a full-scale change of site activity.
Correction submissions must be received by 15 business days of the first of the next month, and can be cancelled by 8 business days.
These requests have to be made via the UK Link system where the user will receive a notification as to whether the request has been accepted or rejected. Requests are submitted by using a .AQ1 file through the Information Exchange (IX). Any changes to AQ will lead to a notification 5 days before invoicing., issued via the IX.
The new AQ applies from the first of the month if there is an acceptance of the new value. For any late correction acceptances past the 15-day window, then the new AQ/SOQ values will be applied in two months.
Step 4:
Whenever an AQ has been corrected a backstop date is created automatically.
This basically means that further corrections can still be made in regards to AQ, but the site itself is locked out of a new rolling AQ calculation for nine months with no consumption prior to this date to be considered for any future rolling AQ calculations.
Step 5:
When corrections have been requested but then need to be cancelled, the request for this must be submitted no later than 8 business days before the first of the next month. If not, the new AQ value will be adopted.
The effects of consumption on complexity
Up to 293,000 kWh:
- Read every six months/annually
Above 293,000 kWh:
- Read monthly
- Winter consumption calculation required
- Meter read tolerances
Above 732,000 kWh:
- Priority consumer status
- Emergency contact requirements to be met
- Correction factor required
- Meter read tolerances applied, Rolling AQ used to validate meter reading submissions
Above 58,600,000 kWh:
- Meter class one eligible
Further Impacts:
- Sites above 293,000 Rolling AQ should be read monthly.
- Priority consumer status requires a Rolling AQ of 732,000 kWh.
- Winter consumption calculations require a Rolling AQ of 293,000 kWh.
- Emergency contact requirements when rolling AQ is above 732,000 kWh.
- Site specific Correction Factor is needed when rolling AQ is above 732,000 kWh.
- If Rolling AQ is greater than 58.6 million, then the site should be changed to Meter Class 1.
Glossary of terms
| Term | Definition |
| UK Link | UK Link is the system which brings together key players in the gas industry. It acts as an information conduit between entities. |
| Supply Offtake Quantity (SOQ) | Maximum amount of gas a site is contractually able to use – ensuring that gas usage is managed, invoiced and planned correctly. For Class 3 and 4 Supply Meter Points the SOQ represents the expected peak consumption in a day during extreme cold weather. |
| Priority consumers | Any consumer whose name appears on the list established by the Transporter in accordance with Standard Special Condition A8(17) of the Transporter’s License. In the event of restricted gas availability consumers must be prioritised for supply. |
| Peak Load Factor (PLF) | Variable that helps to understand how consumers act in severe cold weather. The PLF is calculated for each End User Category (EUC) and in each Local Distribution Zone (LDZ). |
| Non-Daily Metered (NDM) | A NDM site is required to provide meter readings on a non-daily basis. |
| Meter classes | There are four services for Supply Meter Points known as classes (1-4) which determine how meter reads are submitted to suppliers. |
| Formula Year AQ | This sets a Supply Meter Point’s Transportation charges for the forthcoming gas year. The Formula Year runs for a 12-month period beginning 1st April to 31st March. |
| Back Stop Date | Whenever AQ has been corrected via the AQ Correction process, a ‘backstop date’ is automatically created. No further corrections can be made to the AQ of the site for at least 9 months following. |
| Annual Quantity (AQ) | AQ is the amount of gas that a site is expected to use on average over the duration of a year. The average is calculated based on a view of seasonal normal weather. AQ can also be used as a basis for gas allocation and charging. |
Complicated? Contact us
At Niccolo Gas we have the benefit of many years operating in the energy business, so we take knowledge like this for granted.
One thing we are committed to is creating a better, fairer way of supplying energy to our customers. What this means to us is to provide resources and knowledge for our customers so they are in complete control of their energy contracts.
If you would like to see any more of our online customer resources, you can head over to
niccolo.co.uk/blog
Or if you would like to get in touch with us, we can be reached during all normal office hours on 0131 610 8868 or by webform. If you would prefer to email us, you can do so at info@niccolo.co.uk
We look forward to hearing from you!
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Google Snippets
What is AQ?
At the most basic level, AQ is the amount of gas that a site is expected to use on average over the duration of a year. The average is calculated based on a view of seasonal normal weather. AQ can also be used as a basis for gas allocation and charging.
