2015 DTS Indicative Charges – further price cut

October 8, 2014
ElectraLink is delighted to announce an indicative 5.5% reduction to Data Transfer Service (DTS) supplier and traffic charges effective from 01 January 2015.

This price cut reflects ElectraLink’s continued commitment to reducing the cost of the DTS year on year. This price cut is in addition to the 10% reduction in DTS charges implemented on 01 January 2014.

This indicative price reduction is being communicated to facilitate your business planning and budgeting processes for 2015 in accordance with our obligations under the DTSA. The 2015 DTS Budget will be distributed to all DTS Users in November for comment.

This price reduction reflects the combined impact of:

Savings secured from our renegotiation of service provider contracts;
A reduced level of exceptional and other operating costs incurred in 2014 in support of DTS activities; and
The downgrading of key uncertainties and their associated cost provisions included when determining 2014 DTS charges.

ElectraLink recovers the cost of the DTS through a combination of fixed (Gateway) and volume (Supplier and Traffic) related charges.  Although the underlying cost of the DTS is now broadly fixed in relation to traffic volume for historical reasons an element of DTS charges are related to traffic volumes. The DTS Governance Review Working Group, as part of its review of the DTS governance arrangements, have recommended to the DTS User Group that the current cost recovery and charging mechanism should continue for the foreseeable future.

As part of determining future DTS charges, ElectraLink models a number of volume scenarios reflecting historic growth trends and the expected impact of a number of industry changes. Our indicative pricing reflects the introduction of EMR in 2015 as well as continuing underlying growth of DTS traffic over the period to 2018. We have excluded from our forecast the impact of the extension of Half Hourly Settlement, given that this change is still in early stage development, but it is likely that a move to Half Hourly Settlement for profile classes 5-8 will significantly increase the volume of DTS traffic.

Any increase in traffic volumes will generate additional DTS revenues (through DTS traffic charges) with little incremental cost being incurred. If the traffic volume growth is above forecast the DTS Charging Principles dictate that the subsequent over recovery of cost must be returned to DTS Users through a reduction in DTS charges. If such reductions in DTS Charges are applied equally across supplier and per unit volume traffic charges, as is currently the case, the balance between the components of DTS charging will change, with traffic charges representing a greater proportion of the cost of DTS. Therefore for future reductions in DTS charges ElectraLink will consider applying these on a differential basis between supplier and traffic charges to bring the percentage split between these two cost recovery mechanisms back to historic levels.

This indicative 5.5% reduction for 2015 ensures continued compliance with the DTS Charging Principles. All other DTS Charges, including gateway rentals are expected to remain unchanged for 2015. However, as part of the DTS Transformation Programme ElectraLink is rolling out new virtual gateway options for the DTS which provide Users with an opportunityto reduce their gateway costs by up to 60% (depending on gateway option chosen) and associated data centre expense.

ElectraLink is committed to delivering a value for money DTS and will continue to manage the DTS costs to identify efficiency savings wherever possible and return any realised savings to DTS Users through further reductions in DTS Charges.

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