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Local Distribution Zone

What is a Local Distribution Zone (LDZ)?

A Local Distribution Zone, almost always shortened to LDZ, is one of the 13 geographic areas the UK gas market is divided into for distribution through the Gas Distribution Networks (GDNs). Each LDZ is operated by a single GDN and covers a defined territory — broadly aligned with the historic regional gas boards from before privatisation. LDZ is the unit used for transportation charging, daily demand balancing, and gas volume allocation. If your gas bill references an LDZ code, it is identifying which of the 13 zones your meter sits in, which feeds into the network costs that flow through to your unit rate.

LDZ is the geographical scaffolding behind every business gas supply in Great Britain. Your site sits inside one, and that affects how transportation costs are loaded onto your bill.

For most customers the LDZ is invisible: transportation costs are bundled into the supplier's unit rate without the LDZ being mentioned. For larger industrial gas users — particularly daily metered sites — the LDZ shows up explicitly in the network charging breakdown and affects how the bill is calculated.

What an LDZ is

An LDZ is the smallest geographic unit in the UK gas distribution framework that has its own transportation charges, daily balancing arrangements, and demand profile. The UK is divided into 13 LDZs, each operated by one of the four Gas Distribution Networks (GDNs). Every UK gas meter belongs to exactly one LDZ — assigned at connection based on geography — and stays with that LDZ unless the network is materially restructured.

LDZs sit between the National Transmission System (NTS), which moves gas at high pressure across the country, and the individual customer meter. Gas enters the LDZ at an offtake from the NTS, is reduced in pressure, and flows out through the local network to homes and businesses.

The 13 UK LDZs

The 13 LDZs, with the GDN operating each:

LDZs and GDNs

The four GDNs each operate one or more LDZs:

• Cadent. Operates the largest network with five LDZs: North West, West Midlands, East Midlands, East Anglia, and North Thames.
• Northern Gas Networks. Two LDZs: North (North East England) and North East (Yorkshire and Humberside).
• SGN. Three LDZs: South East, Southern, and Scotland.
• Wales & West Utilities. Three LDZs: Wales North, Wales South, and South West England.

The GDN is the entity Ofgem regulates and that signs the transportation contracts; the LDZ is the geographic unit those contracts are priced and operated against.

LDZ transportation charges

Each LDZ has its own set of transportation charges, set under Ofgem's RIIO-GD price control framework. The charges differ between LDZs because the cost of running each network differs — driven by geography, population density, rural mix, asset age, and the network operator's historic investment programme.

For an industrial gas customer, the differences between LDZs can be material. A site in a rural LDZ pays more per kWh in transportation than an equivalent site in a dense urban LDZ. For the average small business this is hidden in the bundled unit rate; for a daily metered site it is itemised.

How gas is allocated to LDZ

The UK gas industry allocates daily gas volumes to LDZs through the Demand Estimation and Allocation process operated by Xoserve:

1. Each meter is registered against a specific LDZ.
2. Daily gas demand is estimated for each LDZ from historic patterns, weather, and known events.
3. Suppliers nominate the volumes they intend to deliver to each LDZ.
4. Physical flow at the LDZ entry (offtake from the NTS) is measured.
5. Any imbalance between nominations and actual flows is settled financially at the imbalance price.

The system means each LDZ runs as its own little market, balanced daily. Errors and imbalances in one LDZ do not directly affect the others.

LDZ on the gas bill

How prominently the LDZ appears on a bill depends on the customer type:

• NDM (non-daily metered) small business. The LDZ is referenced in the small print but transportation charges are bundled into the unit rate. The customer rarely sees it.
• NDM mid-size and larger. The LDZ is identified explicitly, with transportation charges either bundled or shown separately depending on the contract.
• DM (daily metered) large industrial. The LDZ is identified, and transportation, capacity, and commodity charges are itemised separately.

Differences between LDZs

Material differences across the 13 LDZs:

• Transportation charges. Vary by up to 30 to 50 per cent between the cheapest and most expensive LDZs.
• Demand profile. Northern LDZs have higher winter peaks because of colder weather and more demand for space heating.
• Rural mix. LDZs with more rural areas (e.g., Wales North, North) have higher per-unit costs because pipes serve fewer customers per kilometre.
• Network age. LDZs with older asset bases require more ongoing replacement investment, which feeds through to charges.

Practical implications

For most UK businesses the LDZ is a background fact. For larger gas users it matters in three practical ways:

• Site comparisons. Two otherwise identical sites in different LDZs can have noticeably different gas costs because of transportation charge differences.
• New connections. Connection charges and timelines vary by LDZ depending on the local GDN's capacity and policy.
• Contract structures. Pass-through and indexed gas contracts itemise the LDZ-specific components, giving the customer visibility but also direct exposure to LDZ charge movements.

Related concepts: what a GDN is, the National Transmission System, your MPRN, and the role of Xoserve in gas data.

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