BSC Panel 205

8 November 2012

Report on Progress of Modification

Proposals

Adam Lattimore

8 November 2012

3

Modifications Overview

New

Definition -

Assessment P272, P283, Standing Issue 45

Report P274, P282, P285, P286

With Authority

-

Authority Determined

P280

Self-Gov Determined

-

205/04

P272 ‘Mandatory Half Hourly Settlement for

Profile Classes 5-8’

David Kemp

8 November 2012

5

• Current arrangements: SVA Metering Systems below 100kW can be settled HH or NHH• Usually settled NHH, but Suppliers can elect to settle HH• Measurement Class used to reflect how a Metering System is

settled

• Profiled data used for NHH-settled sites• Consumption for each Settlement Period estimated using

profiles• More accurate estimations once Meter reading obtained

P272: Issue (1 of 2)

6

• Changes to Supply Licence requirements• All new Meters for PC 5-8 customers must be advanced

Meters• Capable of recording HH consumption and being accessed

remotely

• All PC 5-8 customers must have advanced Meters by 6 April 2014

• No mandate to settle these Meters HH• Can elect to continue to settle NHH

• Proposer contends that settling such sites NHH is less accurate • Prudent to make better use of the HH data available

P272: Issue (2 of 2)

7

• All PC 5-8 sites required to be settled HH from 1 April 2014• Five days before mandate goes live• More appropriate date as aligns with start of BSC Year, the

April contract round and annual processes (e.g. DUoS charging)

• Transition plans submitted to PAB by 31 May 2013• Allows for issues with transferring customers to be

managed/mitigated (e.g. bulk CoMC)

P272: Proposed Solution

8

• All PC 5-8 sites required to be settled HH from 1 April 2015• One year later – allows more time to manage issues• Transition plans submitted to PAB by 31 May 2014

• All other aspects/requirements unchanged from proposed solution• Implementation Date is the only difference

P272: Alternative Solution

9

• Costs:• Central Costs: Approx. £19k (either solution)

• Participant Impacts:• Suppliers• Distributors• HH & NHH Data Aggregators• Meter Operators & Meter Operator Agents

• Document Impacts:• BSC Sections L, S, S-1 & X-1• BSCP533 & Appendix A• Profile Administrator SD• PARMS URS

P272: Impacts and Costs

10

• Workgroup recommends Implementation Date for Proposed Modification of:• 1 April 2014 if approved on or before 14 February 2013

• Workgroup recommends Implementation Date for Alternative Modification of:• 1 April 2015 if approved on or before 13 February 2014

P272: Implementation Date

11

• Assessment Report was presented to Panel in January 2012

• By majority, Workgroup believed:• Neither Proposed nor Alternative was better than baseline• Alternative was better than Proposed

• Workgroup recommended that both P272 Proposed and P272 Alternative were Rejected

• Panel instructed Workgroup to undertake a cost-benefit analysis

P272: Workgroup’s Previous Conclusions

12

• Defined Cost Categories and potential Benefits for P272• Data sought from Suppliers & Distributors through two

consultations

• Costs and benefits calculated up to 2020

• Defined range of estimates for costs and benefits• Due to range of costs provided and sensitivity of some

benefits

• Also considered scenarios where P272 was not implemented• Different levels of voluntary transition to HH elective by 2020

P272: Cost-Benefit Analysis (1 of 2)

13

• Proposed Modification:• Total Costs: £112m (range from £46m to £199m)• Total Benefits: £144m (range from £71m to £198m)• Gives net outcome of +£32m (range from –£129m to +

£152m)

• Alternative Modification:• Total Costs: £103m (range from £41m to £182m)• Total Benefits: £128m (range from £63m to £176m)• Gives net outcome of +£25m (range from –£120m to +

£134m)

P272: Cost-Benefit Analysis (2 of 2)

14

• Workgroup majority view: believe costs would outweigh benefits• Different views on whether costs outweigh benefits or vice

versa• View that not all benefits would be realised, and that costs

may be exceeded

• Focusses on small segment of market• Significant impact• Better to do as part of a wider change?

P272: Workgroup’s Discussions (1 of 2)

15

• Consider DUoS pricing differential to be significant obstacle• Obstacle to moving to HH elective now• Dis-incentivise early migration under P272• Current climate – avoid increasing customer bills• But view that P272 would encourage other changes in this

area

• HH Settlement good in principle, but not at any cost

• Workgroup’s views largely unchanged following CBA

P272: Workgroup’s Discussions (2 of 2)

16

• Workgroup consulted Industry as part of original assessment

• Majority supported P272• Disagreed with Workgroup’s majority view

• Views for/against were broadly in line with those of the Workgroup

• Workgroup were unable to consult again following CBA

P272: Responses to Original Consultation

Does P272 Better Facilitate Applicable BSC Objectives?

Yes No Neutral

11 6 1

17

P272: Applicable BSC Objectives

ABO

Yes (both solutions) No (both solutions)

(c) Minority• Increase competition – smaller

Suppliers work better in HH market

• Better use of available data• HH Settlement better in principle

Majority• Significant costs for small

segment of market• Unlikely to realise all the benefits• Potentially increases customer

costs• If HH Settlement good, more

would be doing it now• Differential in DUoS charges• Not convinced PCs 5-8 should be

treated differently to PCs 1-4

(d) Minority• Benefits outweigh costs• HH market works well, issues in

NHH• HH more efficient, more accurate

data• No longer need to profile PCs 5-8

Majority• Costs outweigh benefits• Change cannot come at any cost• More efficient to do a market-

wide solution – this is wrong solution at wrong time

• HH Settlement better in principle, but not conclusive benefits outweigh costs

18

• Workgroup has discharged its Terms of Reference

• By majority, Workgroup believes:• Neither Proposed nor Alternative is better than baseline• Alternative is better than Proposed

• Workgroup recommends that both P272 Proposed and P272 Alternative are Rejected

P272: Conclusions

19

The P272 Workgroup invites the Panel to:

• AGREE an initial recommendation that the P272 Proposed Modification should not be made;

• AGREE an initial recommendation that the P272 Alternative Modification should not be made;

• AGREE an initial recommendation that the Alternative Modification is better than the Proposed Modification;

[Continues]

P272: Recommendations (1 of 3)

20

• AGREE an initial Implementation Date for the P272 Proposed Modification (if approved) of:• 1 April 2014 if an Authority decision is received on or before

14 February 2013;

• AGREE an initial Implementation Date for the P272 Alternative Modification (if approved) of:• 1 April 2015 if an Authority decision is received on or before

13 February 2014;

[Continues]

P272: Recommendations (2 of 3)

21

• AGREE the draft legal text for the P272 Proposed Modification;

• AGREE the draft legal text for the P272 Alternative Modification;

• AGREE that P272 is submitted to the Report Phase; and

• AGREE that ELEXON will issue the P272 draft Modification Report (including the draft BSC legal text) for a 15 Working Day consultation and will present the results to the Panel at its meeting on 13 December 2012.

P272: Recommendations (3 of 3)

205/05

‘Aligning Supplier Charge SP08a

calculation with current practice’

David Barber

8 November 2012

23

• What are Supplier Charges?• Remedial technique, part of the Performance Assurance

Framework overseen by PAB

• Suppliers incur a charge on failing to meet certain performance standards

• Compensates Parties disadvantaged by those not meeting those standards

• 11 PARMS Serials that monitor Suppliers, of which 4 have associated Supplier Charges

• Recommended Modification from the PAB concerns PARMS Serial SP08

• In particular SP08a ‘Percentage of Non-Half Hourly (NHH) Energy Settled on Annual Advances’

Background

24

• The Issue: • Supplier Charges applicable to PARMS Serial SP08a are and

have always been calculated using underperformance values rounded to 1 d.p. The Code requires this to be calculated to 2 d.p.

• Proposed Solution:• PAB recommends that Modification is raise to amend Code

Section S-1 to reflect that SP08a is calculated to 1 d.p. to reflect existing practice

• How did the PAB get to its recommendation?• Error between PARMS and Code was identified• Two options: amend system (CP) or amend the Code

(Modification)• Analysis carried out revealed cost of changing the systems

outweighed the benefit of doing so• PAB considered both options, recommended a Modification

should be raised

Modification Proposal

25

• Modification Proposal better facilitates the achievement of BSC Objective (d):• Removes potentially confusing inconsistency from the Code• Ensures that the alternative potentially costly PARMS changes

and the resultant cost impact on parties is not needed

Applicable BSC Objectives

26

• Recommend: Report Phase – approve

• Merits of Proposal are self-evident:• Believe it is self-evident that an inconsistency exists between

the Code and PARMS. Most efficient method to address issue is to amend the Code

• Recommend Implementation Date of:• One working day after Self-Governance appeal window closes

(8 January 2012)

• No links with any current SCRs

Proposed Progression (1 of 2)

27

• We are requesting Self-Governance

• We believe Proposal meets Self-Governance Criteria:• No material impact on consumers, competition, the

Transmission System or BSC governance• Corrects a known inconsistency• No impacts on Parties, no change to how Supplier Charges

are calculated

• Will issue Self-Governance Statement to Authority and seek views of Report Phase Consultation respondents

Proposed Progression (2 of 2)

28

We invite the Panel to: • RAISE the Modification Proposal in Attachment A;

• SUBMIT the Modification Proposal directly to the Report Phase;

• AGREE a provisional view that the Modification should be made;

• AGREE a provisional Implementation Date of 08 January 2013;

• AGREE the draft legal text in Attachment B;• AGREE a provisional view that the Modification meets the

Self-Governance Criteria; and• AGREE that the Draft Modification Report should be issued

for consultation and submitted to the Panel at its meeting on 13 December 2012.

Recommendations

Minutes of Meeting 204 & Actions Arising

Adam Richardson

8 November 2012

Chairman’s ReportBSC Panel

Andrew Pinder

8 November 2012

205/01

ELEXON Report: Smart Update

Peter Haigh/Chris Rowell

8 November 2012

Distribution Report

David Lane

11 October 2012

National Grid Update

Ian Pashley

8 November 2012

European Update: Ofgem Report

Dora Ianora

8 November 2012

205/01a

Report from the ISG

8 November 2012

205/01b

Report from the SVG

8 November 2012

205/01c

Report from the PAB

8 November 2012

205/01d

Report from the TDC

8 November 2012

205/02

Trading Operations Report

8 November 2012

205/03

Change Report

8 November 2012

205/06

REMIT: Reporting Inside Information

David Osborne

8 November 2012

42

1. Information paper to the Panel. Why’s it come back to the Panel?• Revised ACER guidelines published• Discussion with a number of Parties indicate it is timely and appropriate for

this topic to be raised with the Panel

2. January – BSC Panel requests ELEXON not to develop a REMIT inside information platform for GB electricity due to liability issues

3. September – ACER publishes revised REMIT Guidance:• Platforms should be used where available• Specified requirements for what should be published (wherever published)• Temporary failure of third party transparency platforms should not be seen as

a breach of the disclosure obligation• Platforms should conform with “Regulated Information Service” requirements• Platforms should be able to send data to ACER/regulators and store it for at

least 2 years

4. October – National Grid launches REMIT transparency platform for GB gas with liability disclaimers

REMIT transparency platforms: current GB situation

43

5. Development of a central service platform for REMIT information disclosure under the BSC may have several advantages

• The ability to define precise requirements with industry and regulatory approval under the BSC Modification process

• The ability to define a system capable of meeting the RIS requirements, including the ability to operate and maintain administrative arrangements designed to prevent conflicts of interest with market participants; data storage for at least 2 years and the ability to onward report

• If there is interest in this, a BSC Modification would be required

6. The BSC Panel is invited to NOTE paper 205/06

Suggested approach for GB electricityand Recommendation

Creation of a New BSC Agent Service

Description Update

Adam Richardson

8 November 2012

BSCCo Business Plan 2013/14:

Process and Timetable

Victoria Moxham

8 November 2012

46

Timetable

Nov Dec Jan Feb Mar Apr

Board

Parties

Panel

Note Process& Key Themes

Review draft Strategy

Considercomments

&revisions

Review Budget & Strategy

Consider comments &

revisions

Issue for comment

Workshop

Strategy approval

ConsiderPanel

comments

1

5

108

97

3

2

4

Request to vary

timetable

6

11

Approve Budget

47

BSCCo Strategy will continue to develop from the mission and vision

Maintain and build upon BSCCo’s

previous achievements whilst

readying the BSC for future market

developments

“To deliver the BSC effectively, efficiently and economically, to the

benefit of our customers”

BSCCo’s focus will be on delivering the core and ensuring that the BSC

arrangements support future market developments.

“To be a leader in the efficient transformation of energy markets by providing shared solutions to

address common industry problems”

48

BSCCo’s 5 Strategic Priorities

Actively manage, and continually improve, BSC services to ensure that we deliver in an

efficient, effective and economic way

Drive efficiencies and savings in the operation of the BSC

Improve the customer experience and develop richer customer relationships

Develop BSC Services to address industry challenges

Invest in our people for the benefit of the industry

1

2

3

4

5

49

• Regardless of the outcome of the governance work, this Business Plan is fit for purpose• This is a BSCCo strategy• No change in the focus on efficient, effective and economic

provision of BSC Services

• We’ve considered comments on the 2012/13 Business Plan, and also feedback from the 2012 customer survey

• Build upon successes and improvements bedded down over the past 2 years

• Continue to enhance the experience for BSC Parties• Recognise the need to galvanise the BSC for the impacts

of market developments (EMR, EU activities, Smart, Smarter Markets etc.)

Key Themes and Considerations

2012 Customer Survey Results: Presentation

for BSCCo Board and BSC Panel

Victoria Moxham

8 November 2012

51

• ELEXON believes this is an excellent set of results.

• The value for money score has increased by 11% from 2011.

• The high standard of 2011 has been maintained – the overall satisfaction score of 8+ (out of 10) has reached 65% for the second year running.

• Some indication of areas for improvement have arisen, but customers have not highlighted anything unexpected or raised any major causes for concern.

• ELEXON has asked a lot of its customers this year in the Governance and Vires work. We believe this feeling is evident in some responses and comments.

Highlights

52

Overall satisfaction & value for money

SCORE 8+ (Out of 10)1/ 10 = Not At All Satisfied/ Extremely Satisfied1/ 10 = Poor/ Excellent Value For Money

Satisfaction has remained stable overall. Value for money ratings are three times higher than they were at the start of the study.

2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

20

40

60

80

44

28

38 38

54

6862

66 65 65

12 10 11 13

2226 26

3127

38

Overall Satisfaction Value For Money

An 11% improved score of perceived value for money score of 8+ out of 10.

53

Scores continue high in key service areas

SCORE 8+ (Out of 10)1= Poor/ 10= Excellent

2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

20

40

60

80

29 29 31

46

5459 60

63 63

36

26 2732

38

5055

61 6158

2524

17

23

30

4348 49

43

52

Providing Right Level Of Support Providing Relevant Services

Understanding Your Business

These measures have been fairly stable over the past four years.

54

Comparisons with competitors are strong

SCORE 8+ (Out of 10)1= Poor/ 10= Excellent

2008 2009 2010 2011 201210

20

30

40

50

60

70

80

ELEXON (BSC) ElectraLink/ DCUSASPAA Ltd/ SPAA Gemserv/ MRANational Grid/ Grid Code National Grid/ CUSCGas Transporters/ UNC

ELEXON/ BSC (79)

Electralink/ DCUSA (36)

SPAA Ltd/ SPAA (17)Gemserv/ MRA (48)National Grid/ Grid Code (20) National Grid/ CUSC (21)Gas Transporters/ UNC (21)

Because the survey was for ELEXON, the position is likely to be somewhat exaggerated. However, ELEXON’s position is currently stable at present while Gemserv seems to be suffering a long-term decline.

55

• The quality of ELEXON’s people is universally recognised

Other areas where we’re doing well

95%

95%

94%

94%

They genuinely want to talk to me

They know what they are talking about

They always follow up on my queries

Meeting them is always worthwhile

• Increased usefulness of Newscast, Circulars and particularly information sheets/process guides

• 85% of respondents have read them• 43% found them very useful (compared to 34% last year)

• Big improvement in perception of how well we facilitate industry debate (up 13% from last year to 63% satisfaction of 8+ out of 10).

56

Key areas for improvement and planned actions

• ELEXON to focus efforts on senior engagement with the Big 6 companiesOverall satisfaction had declined

by 15% amongst Big 6 companies

• A case for dropping the Quarterly Report due to low readership and reporting of the information elsewhere is being prepared.

Perceived usefulness of quarterly reports has reduced

• A piece of work to address web navigation and structure issues is underway.

• Key stakeholders will be heavily involved in developing the solution.

Website still prompts negative feedback (ease of navigation: 26% 8+ score; ease of finding info: 25%

8+ score)

• New templates are being developed to ensure ease of use and consistency of presentation.

• Write for the Reader refresher sessions are planned for 2012/13.

Quality of documentation (presentation and content) raises

some concerns

• Consideration is to be given to setting appropriate expectations for Panel and committee work and ensuring appropriate timetables of work are maintained.

Lower satisfaction about the support we provide to committees

and timeliness of Mod process

• ELEXON plans to focus on how ELEXON can share and maintain expertise and develop new starters’ knowledge.

Some negative perceptions about loss of expertise (expertise

resource has fallen 5% to 68% 8+ score)

Smarter MarketsSettlement Reform

Work Update

David Jones

8 November 2012

Any Other Business

Next Meeting: 13 December 2012