ebcc meeting 30 th april 2014. agenda 1.0introduction 2.0minutes and actions 3.0operational update...
TRANSCRIPT
EBCC MEETING
30th April 2014
AGENDA
1.0 Introduction2.0 Minutes and Actions3.0 Operational Update4.0 Modification Proposals5.0 Significant Code Review Update6.0 Bank Ratings7.0 Review since October 20138.0 Focus for 20149.0 AOB
- EU Update - Review of Winter 2013/14 - Risk Register - Voluntary Discontinuances
10.0 Date of Next Meeting
Operational Update
March 2014
Operational Update
• March 2014– 1 Cash Call issued and paid on due date.– Cash Collection 100%– Rolling 12 Months 99.98%
99.82%100.00% 100.00% 99.92% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
97%
98%
98%
99%
99%
100%
100%
% O
f Cas
h C
olle
cted
Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14
Monthly Breakdown Of Cash Collected At Payment Due Date
Target PDD Collected PDD
Modifications
Modifications
• Mod 0429 Customer Settlement Error Claims Process– Implemented on 1st April 2014– Xoserve developed UNC framework guidelines for managing
claims. – Xoserve will provide Transparency of quantity of claims received
to EBCC Members. – Link to Modification 474S Inclusion of the guidelines relating to
the “Customer Settlement Error Claims Process” within UNC governance and introduction of the User Pays charges associated with such claims – Consultation closes 7th May 2014.
Market Operator Security Provisions
• Prepayment Agreement was concluded with an expiry date of June 2019 – awaiting signed document.
• Deposit Deed is now in place.
Significant Code Review Update
Security of Supply Significant Code Review
• OFGEM published their final proposal on 12th February 2014.
• EBCC response provided to Ofgem on 11th April 2014.
• Xoserve are currently working through the Business Rules to address the process through various internal workshops.
• Work is currently underway to put in place operational procedures as per the mind maps previously discussed on the following slides.
Mind Maps - SCR
• The following mind maps were put together to address areas which it was identified that additional work is required to operate a working through items highlighted as red.– Operating Process– Priority of Scoring for EBCC meetings– EBCC Operation– Relaxing Current arrangements EBCC
Operating Process
Delegation of Authority
Shipper information
System access
Suspension of all services
Emergency MOD
Resource Cost Banking Services
Review sign off of credit payments
Reporting to ofgem/EBCC special arrangements
Review current rules
Succession + capability
MOD 233?
Skill set Exclude EBI availability
Availability
Suspension of holidays WLB of key staff
Daylight Limit
NGD Daily limits
Operating limits
Availability of CEO due to increased values
Contact list
Temporary shared area
Box account for communication
Delegated Authority levels
Operating Process
• Suspension of all Services
– As a committee we need to address the areas currently within the powers of the EBCC
– Review existing timescales and conclude what would be reasonable to suspend / relax?
• System Access
– existing rules for access require 5 day SLA need to agree special arrangements for identified resource – (On hold)
• Cost
– increase cost of resource consider how budget affected / may need to agree recovery via neutrality possible modification?
Powers and Duties of EBCC
Adobe Acrobat Document
Relaxing current arrangements Business rules
Security
Cash collectionMarket Operator
EBCC Meetings
Cash calls
No changes proposed.
Existing rules apply- due to arrangements drafting + under UK termination process S.1.7.
timing for convention of meeting
Appeal ProcessResource issues
Extend time?
Reduce or suspend appeal notice
No appeal criteria
Still issue
Payment terms extend ?
Timing extend?- 4pm – end of gas day
Agree with EBCC members no validation
FSR
Consider suspension for a period beyond invoices issued and paid
Validate cash call suite
System solution for manual adjustment
Manually update letters/notices as we do currently
Cost of funding change
Communication of delivery
Faxes? Scan, email or file interface
Aggregate exposure
Accepting LOC from lower rated organisations
% of exposure underwriting
Process going forward
Suspending/ excluding peak SAP calc
Operating System continued
• Modification 233v – Discussions with National Grid through the SCR workshops on redrafting modification.
• Banking Services – We have discussed possibilities of increasing current overdraft facilities to establish if feasible and to what maximum limit.
• Shipper Information:- We will be writing out to all Users to confirm contact details with an ongoing 12 month review.
Priority of Scoring EBCC meetings
• Risk Categorising all parties to establish how to manage volumes of potential EBCC meetings in the event of an Emergency taking into account various sources of information.
• Example on following slide provides a suggested template to identify High, Medium or low risk customers.
• Aspiration to have this in place for all customers before Winter 14.
• Reviewed monthly through monthly Operational Meetings and we will give some consideration on reporting requirements.
Priority of ScoringFor EBCC meetings Portfolio
growth
Communication interaction
commercial intelligence
reporting
Downgrade risk factor risk
Security arrangements
Party underwriting
Payment trends
Over or under delivery trends
FSRs number of cash calls over previous
period
Level of helpfulness
How they act in market
Ability to pay
Graydons
Moody’s
S + P
Priority Scoring - Low Risk Categorisation
High Medium low
Shipper A
X
Shipper B
X
Shipper C
X
Shipper ACash Call Notices Issued last 12 months
None
Energy Balancing Invoices Paid on due Date
All paid on due date.
Customer does not respond to communication within agreed time scales.
Always responds to communication.
Security in place on Renewal Date
Yes – All in place prior to or on Renewal Date.
Priority Scoring - Medium Risk Categorisation
High Medium low
Shipper A
X
Shipper B
X
Shipper C
X
Shipper BCash Call Notices Issued last 12 months
None
Energy Balancing Invoices Paid on due Date
No - 2 Occurrences over last 12 months
Customer does not respond to communication within agreed time scales.
Sometimes
Security in place on Renewal Date
No – In place D+2
Priority Scoring - Medium Risk Categorisation
High Medium low
Shipper A
X
Shipper B
X
Shipper C
X
Shipper CCash Call Notices Issued last 12 months
3 Cash Calls and 2 Failure to pay Cash Calls.
Energy Balancing Invoices Paid on due Date
No - 4 Occurrences over last 12 months
Customer does not respond to communication within agreed time scales.
Sometimes
Security in place on Renewal Date
No – In place D+2
Priority Scoring - High Risk Categorisation
High Medium low
Shipper A
X
Shipper B
X
Shipper C
X
Shipper CCash Call Notices Issued last 12 months
3 Failure to Pay Cash Calls
Energy Balancing Invoices Paid on due Date
4 Occurrences over last 12 months
Customer does not respond to communication within agreed time scales.
Frequently
Security in place on Renewal Date
No – Repeated Calls
EBCC Operation
• Conflict of Interest
• Minutes
• Quoracy
• Ofgem’s role
• National Grid’s role
EBCC Operation
National Grid input
Establish who from Xoserve
required
Conflict of interest
INCIDENTROOM
Ofgem’s role
Chair Availability
Quoracy
Gemserve members
appointment
Communication
Agree Adhoc appointment
process
Consider membership ofgem/another party
Priorities on orderOf discussion
Factors
Minutes
Checklists
Recording
Review timing
Resources
Bank Ratings
Current Position
• Since September 2013 the global economic markets have remained fairly stable resulting in no downgrades outside of our forecast.
• We advised members in September 2013 that Royal Bank of Scotland and National Westminster were likely to be downgraded and this was reflected in their downgrades in March 2014.
• The following chart provides a summary of customers exposures to each rating category.
FI Risk Profile
FI Ratings April 2014 4% 4%
13%
38%
41%
0%
>AA+/Aa1
>AA/Aa2
>AA-/Aa3
>A+/A1
>A/A2
>A-/A3
• 8% of all FIs currently providing Security have been subject to a downgrade change during the previous 6 months by Standard and Poors and Moody’s Ratings Agencies.
• Currently 79% of FIs are in the lowest categories of investment grade rating. This reflects an 18% increase from the last reported figures. This is in part due to a movement within the same rating band.
Aggregate secured credit by rating band (LOC)
£1,7
75,0
00
£133
,861
,500
£66,
973,
000
£102
,052
,000
£26,
080,
000
£2,2
00,0
00
£1,7
75,0
00
£135
,123
,000
£76,
854,
000
£128
,942
,000
£0 £0
£5,3
45,0
00
£114
,347
,000
£24,
550,
000
£55,
712,
000
£56,
580,
000
£3,5
00,0
00
£0
£128
,442
,500
£101
,415
,000
£61,
845,
000
£50,
210,
000
£3,5
00,0
00
£0
£20,000,000
£40,000,000
£60,000,000
£80,000,000
£100,000,000
£120,000,000
£140,000,000
£160,000,000
A3/A- A2/A A1/A+ Aa3/AA- Aa2/AA >Aa1/AA+
Sep-12
Apr-13
Sep-13
Apr-14
Spread of FI Exposure
£62,000,000£25,605,000
Outlook
• Moodys anticipate undertaking a rating review throughout 2014. Since Sept 2013 0% FIs are on possible downgrade.
• S&P are commencing significant reviews across a large number of FIs, with 58% showing a negative outlook.
S&P
42%
58%
stable
negative
Deposit Deeds
• Value of credit secured via Deposit Deed and LOC – comparison between April 2012 to April 2014
£322,1
62,0
00
£17,6
53,0
00
£332,9
41,5
00
£21,4
07,0
00
£342,3
94,0
00
£30,7
61,2
50
£362,3
85,0
00
£33,4
74,0
00
£345,4
62,0
00
£36,0
06,5
00
£0
£50,000,000
£100,000,000
£150,000,000
£200,000,000
£250,000,000
£300,000,000
£350,000,000
£400,000,000
Apr-12 Sep-12 Apr-13 Sep-13 Apr-14
LOC
Deposit Deed
Summary
• Whilst we have seen a slight increase in the overall value of security during the period April 12 to April 13, there is a consistent move to lower rated financial institutions within each rating category.
• Continue to monitor those FI’s which are currently on possible negative outlook with Standard & Poors
Review since October 2013 Update
Review since April 2013
• Cash Collection figures on rolling 12 month performance remain the highest over the past 5 years.
• Cash Collection Monthly figures 100% over the past 12 months on 10 occasions.
• Continued pro-active engagement with Users reaching 70% of indebtedness to minimise Cash Calls.
• No Terminations managed - No financial losses• Security Renewals 100%• Energy Balancing Credit Rules revised 16th June 2013 Mod 446S
amendments to legal text in UNC Section X4 implemented – quoted legal text amended Section 7 - Appointment of Insolvency Practitioner. Mod 447s implemented to permit smearing of recovered debt where the debt predates the Code Cut Off Date – FAQs added to deal with termination.
• Successful LRQA Audit
Cash Collection
98%
99.61%
98%
99.36%
98%
99.26%
98%
99.73%
98%
99.90%
98%
99.98%
95%
96%
97%
98%
99%
100%
% O
f C
ash
Co
llecte
d
2009 2010 2011 2012 2013 2014
Yearly Cash Collection Targets Payment Due Date
Target PDD Collected PDD
Cash Collection Failure To Pay Notices
The above graph shows a breakdown of the number of Failure To Pay Notices issued year to date.
21
28
14
18
8
4
0
5
10
15
20
25
30
No
. O
f F
TP
N's
2009 2010 2011 2012 2013 2014
Yearly Breakdown of Failure to Pay Notices for Cash Collection
Cash Call Issued
This Graph provides a yearly breakdown of cash calls issued.
Yearly Total Of Cash Calls Issued
56
64
55
3
103
0
20
40
60
80
100
120
2010 2011 2012 2013 2014
No
. O
f C
ash
Calls
Value of Cash Call Issued
This graph is a year To Date breakdown by financial value and should be viewed in conjunction with the yearly breakdown of cash calls issued.
Yearly Total Value Of Cash Calls Issued
£13,034,000
£42,595,000
£20,582,000
£17,998,000
£131,000£0
£5,000,000
£10,000,000
£15,000,000
£20,000,000
£25,000,000
£30,000,000
£35,000,000
£40,000,000
£45,000,000
2010 2011 2012 2013 2014
Valu
e (
£'s
)
FTPCCN’s – issued & paid
This graph is a yearly breakdown of Failure to Pay Cash Call Notices issued and paid. To assess the total no. of cash calls issued and paid read in conjunction with total no. of cash
calls issued and paid on page 8.
Yearly Total of FTPCCN's Issued & Paid
9
4
1 1
2
00
1
2
3
4
5
6
7
8
9
10
2009 2010 2011 2012 2013 2014
No
. o
f C
as
h C
all
s
Focus for 2013/14 addressed at April 2013 meeting
• From the meeting held in April 2013, the following key areas were identified to focus on :-
– Increase the profile of the committee
– Emergency Credit Rules
– Watching brief on EU Reform
• Members to review if there are any other significant areas that they would like the committee to focus on.
Focus EBCC Customer Satisfaction (Nov 12)
• EBCC Customer Satisfaction EBCC Customer Satisfaction (Nov12)
92.00%
100.00%
92.00%
96.00%
92.00%
100.00%
92.00%
84.00%
96.00%
92.00%
100.00%
84.00%
93.33%
75.00% 80.00% 85.00% 90.00% 95.00% 100.00% 105.00%
Accountability
Customer Focused
Delivery of Commitments
Expertise
Flexibility
Professionalism
Partnership
Quality of Deliverables
Skill
Strategic Objectives
Trust
Value Added
Overall Average
Year on Year Comparison
EBCC Customer Satisfaction Overall Average
85.00%
92.50%
93.33%
80.00% 82.00% 84.00% 86.00% 88.00% 90.00% 92.00% 94.00%
2010
2011
2012
Nov-12
Nov-11
Nov-10
Focus for 2014/15 Update
EBCC Customer Satisfaction (Nov 13)
EBCC Customer Satisfaction (Nov13)
96.67%
96.67%
90.00%
100.00%
93.33%
100.00%
96.67%
90.00%
93.33%
93.33%
100.00%
90.00%
95.00%
84.00% 86.00% 88.00% 90.00% 92.00% 94.00% 96.00% 98.00% 100.00% 102.00%
Accountability
Customer Focused
Delivery of Commitments
Expertise
Flexibility
Professionalism
Partnership
Quality of Deliverables
Skill
Strategic Objectives
Trust
Value Added
Overall Average
EBCC Customer Satisfaction Year on Year Comparison
EBCC Customer Satisfaction Overall Average
85.00%
92.50%
93.33%
95.00%
80.00% 82.00% 84.00% 86.00% 88.00% 90.00% 92.00% 94.00% 96.00%
2010
2011
2012
2013
Nov-13
Nov-12
Nov-11
Nov-10
Focus for 2014/15
• Carried forward from 2013
– Increase the profile of the committee– Significant Code Review– Watching brief on EU Reform
• Focus for 2014/15
– Gemini Consequential change (UK Link Replacement programme)– Feedback from Customer Satisfaction (November 2013)– Exploitation of synergies with Neutrality finance
• Members to review if there are any other significant areas that they would like the committee to focus on.
AOB
EU Third Energy Package
Update
Risk Register
Update
Register Part 1
Risk Register as at 26/4/13 :
Risk Likelihood - comments Likelihood
H1loss of Gemini system - sustained loss for
1 working day or more
Once in 10 years – to date Gemini over 2 years Gemini has had 1 short overnight outage. Also due to Oracle Software Upgrade, Gemini affected between 22nd and 25th October. Loss of Gemini on 14th and 15th May due to Server problems. GRP implementation planned 9th June.
Suggest move
from a 2 to a 3
H2Calculation for IMS is found to be
incorrect.
Has happened in Dec 05 and also recently when during Oracle OS upgrade UAT it was found that accruals not included in a D-1 or D-2 recalculation – twice in last 6 to 7 years – once in 5 years. April 08 data was uploaded incorrectly. Recent issues identified on the 7th of March and 6th April following batch job issues.
Suggest move
from a 3 to a 5
H3APX Gas files containing system prices
and trades arrives late.
Pre Gemini IMS this used to stop PIMS jobs running – since introduction of Gemini IMS this has not happened – once in 5 years. Controls and monitors are now in place to ensure files are received. 3
Register Part 2
Risk Register as at 26/4/13 :
Risk Likelihood - comments Likelihood
H8User’s unable to provide CVA data due to the CVA system / website being down
This happened once on 13/03/07 – Once in 5 years. Controls in place that would receive notification from CVA. 3
H9
In the absence of being unable to adjust the ABI calculation the industry could be unduly exposed to avoidable financial debt. Should NGD be aware of more up to date information.
Due to SCR Mod 233 this was put on hold to await outcome of SCR consultations. Potential implementation of OFGEM SCR proposal has the potential to increase the likelihood and impact of this issue.
Suggest move from 3
to 4
H10
Due to the current European financial climate, there is a risk that the number of FI’s meeting the relevant criteria to provide security could reduce significantly.
Moody’s are currently have a schedule to review all FI’s current rating in June 2012. Moody’s review of FIs completed over the summer of 2012, S&P now anticipate conducting their own review. 4
Voluntary Discontinuance
AOB
• Questions/ Any further business?