Enduring Solution ESS 2 Stage 2 Enduring Solution

Enduring Solution ES-S 2 Stage 2 Enduring Solution – Stage 2 (ES-S 2) Harmonisation of electricity retail market operations Presentation by: Michael Atkinson – ES-S 2 Project Team 23 September 2009

Enduring Solution ES-S 2 Stage 2 Context – Enduring Solution Project T ESB implemented market facing systems in December 2004 Y T Tested in recent high levels of switching in domestic market in Ro. I NIE implemented interim solution in November 2007 Constrained by need to further upgrade / replace existing systems Y Options to remove constraints explored with NIAUR during 2008 Y Agreed with NIAUR to procure an Enduring Solution (ES) that would Y v v T Upgrade existing systems and provide for business separation Provide a base for harmonisation and smart metering Procurement process commenced at end 2008 Industry Group (ESSG) established early 2009 Y Rf. P issued in May 09 ; responses to Rf. P received July 09 Y Outline timeline initially to deliver end 2011 Y 2 Private and Confidential MOSSG Meeting 23 September 2009

Enduring Solution ES-S 2 Stage 2 Move to Full Harmonisation T T T Harmonisation on agenda from start of ES project Y High level NIAUR views - April 2008 and Nov 2008 consultation papers Y Approach discussed with SIG and ESSG ES planned initially on parallel and incremental approach Y Progress to extent possible at Rf. P and include further updates at BAFO with likelihood of significant post Go Live release Y Some ten additional messages included at Rf. P Significant joint progress with NIAUR / CER since spring 09 Y 3 Strong desire now to maximise extent of harmonisation included in main contract for enduring solution Private and Confidential MOSSG Meeting 23 September 2009

Enduring Solution ES-S 2 Stage 2 What is Harmonisation? T Harmonisation considered in context of: Alignment with other jurisdictions Y Focus on market operations from perspective of suppliers Y T Initially wide scope, now focused on alignment with Ro. I T Harmonisation – the objective may be: Common set of messages Y Common set of business rules Y Market procedures to describe consistent set of rules for supplier interactions Y Integrated governance mechanism Y 4 Private and Confidential MOSSG Meeting to the extent that can be implemented with an acceptable impact on overall enduring solution timetable and cost In place from start, to get to best short term position within ES, and then remains to ensure further convergence 23 September 2009

Enduring Solution ES-S 2 Stage 2 Aspiration and Approach T A joint project is being established between NIE and ESB T Aspiration - harmonisation bringing real benefits to suppliers Y T Principal scope is market messages and associated processes Y T 5 developed for inclusion in core ES project contract alignment of technical solutions will also be considered Overall approach Y Recognise existing differences between jurisdictions Y Consider options for alignment on a case by case basis Y Engage with appropriate stakeholders Y Develop pragmatic outcomes – which are cost effective and efficient Private and Confidential MOSSG Meeting 23 September 2009

Enduring Solution ES-S 2 Stage 2 Joint Arrangements with NIE and ESB T Overall plan is to work in a cyclical manner through messages Y T T 6 Clustered probably in six groups Working together on schema and process alignment Y Approximate three month timeline Y Teams established and actively engaged Outcomes will be discussed with industry steering group Y Stakeholder engagement at critical points Y Detailed plans being developed Y Need for commitment from all involved parties to work within an acceptable impact on enduring solution procurement timetable Private and Confidential MOSSG Meeting 23 September 2009

Enduring Solution ES-S 2 Stage 2 Meeting the challenges – leading to best outcome T T Suppliers Y Outcome must bring real benefits with savings to customers Y Suppliers will incur cost depending on level of system changes Network Operators Ultimately the outcome must be deliverable and cost effective Y Significant changes to systems / processes may arise with costs Y T Enduring Solution Project Harmonisation will impact cost and timeline – Stage 2 and Stage 3 Y Project Team will not go to contract until requirements well defined Y Need a sensible balance of ‘ideal’ solution vs what is achievable within acceptable impact on ES timetable Y Balance extent of harmonisation vs timetable to deliver ES 7 Private and Confidential MOSSG Meeting 23 September 2009

Enduring Solution ES-S 2 Stage 2 Messages and Associated Processes - Options T Five principal options identified 1. Full harmonisation – Development of new schema and processes 2. Full Harmonisation – Substantive adoption of Ro. I schema and processes 3. Full Harmonisation – Substantive adoption of NI schema and processes 4. Partial Harmonisation – Common schema, different processes 5. Deferred Harmonisation – Limited change in enduring solution 8 Private and Confidential MOSSG Meeting 23 September 2009

Enduring Solution High Level Assessment of Options Suppliers active in Ro. I and NI Costs Benefits Costs NIEES and ESBCS Costs ESBCS Benefits Costs NIE Network operators Costs ESBN Benefits Risks 9 Private and Confidential ES-S 2 Stage 2 Full Partial Defer New Based on Ro. I Based on NI Messages only Existing ES Highest for Full Lowest for Full Mid range for Full Cheaper than Full Lowest initially – costly long run Limited Very limited Mid range, lower than Full Limited, lower than Partial Similar for all Full harmonisation options, once end target realised Mid range for Full Highest for Full Lowest for Full Highest for Full Limited or none, given present focus of market operations Mid range for Full Highest for Full Lowest for Full Highest for Full Mid range, lower than Full None direct, benefit is ability to support retail market Implementation risks higher, longer term benefits earlier and more assured MOSSG Meeting Cost/benefit tradeoff Avoids change Limited, lower than Partial Avoids change Long term benefits uncertain 23 September 2009

Enduring Solution ES-S 2 Stage 2 Governance T T Intention is to establish: Y Project Steering Group, to provide overall direction Y Project Working Group, to go through detailed proposals within brief defined by Steering Group, and to report any unresolved issues to it Aligned governance from end 2009 also required to ensure: Alignment arising from project does not drift due to incremental decisions taken separately in each jurisdiction Y Further convergence around areas not fully aligned within ES Y T Principles of that governance likely to include Common set of principles applying to further development Y Single change control process, possibly working in parallel in separate jurisdictions Y 10 Private and Confidential MOSSG Meeting 23 September 2009

Enduring Solution ES-S 2 Stage 2 Examples of Areas Where Full Harmonisation May Not Be Achieved in Short Term Area NI Ro. I Schedule appointment Request appointment 70 k. VA 30 k. VA/100 k. VA New Connections No energisation without registration Energisation possible without registration HH Meter Intervals Half Hourly Quarter Hourly Meter Read Cycles Three months Two months Fieldwork Appointments Thresholds – Meters & Tariffs Estimated Reads Different rules Meter Types Prepayment Meters 11 Private and Confidential Different categories Keypad, customer choice, in competitive market MOSSG Meeting Token, financial hardship, not in competitive market 23 September 2009

Enduring Solution ES-S 2 Stage 2 Next Steps T T 12 Seeking views today on overall approach and proposed options Y Builds on presentation to ESSG last week Y Initial paper setting out approach and analysis of options circulated Regulators will determine appropriate way forward, in particular Y Focus of harmonisation alignment Y Appropriate timescales for delivery and impact on ES project Y Approach to dealing with issues likely to fall outside those timescales Y Steering Group and Working Group arrangements Private and Confidential MOSSG Meeting 23 September 2009