Gas Performance Assurance Framework 11 th January 2013

Gas Performance Assurance Framework 11 th January 2013 Confidential

Objective To ensure that gas settlement has accurate allocation, control, self monitoring and governance post Project Nexus so that no commercial advantage can be derived from settlement Gas Settlements, Energy Retail 2

Update from 11 th January meeting • There was general agreement on the benefits and need for a Performance Assurance regime amongst Workgroup attendees • Attendees also agreed that quick wins would be advantageous • However it was recognised that a framework for a Performance Assurance model could be the initial focus, with issues and controls being introduced on a “merit/materiality” basis • Scottish. Power agreed to provide more detail on the model that they had outlined and provided for the Workgroup Gas Settlements, Energy Retail 3

Governance Structure – Foundation Stage Reporting by Xoserve Performance Committee Report on issues Reporting requirements to be established Performance Assurance Panel Report on issues Analysis required Performance Assurance Panel to be appointed and constituted Performance Committee to be set up Consider: • Funding • Meeting frequency • Funding • Specification of reports • Facilitating meetings • Meeting frequency • Timings of reports • Analytical support needed • Facilitating meetings • Ensuring accuracy • Rationale for agreeing materiality • Decision making powers • Trend analysis…. • Governance – including interaction with Performance Assurance Panel …… • Rationale for approving materiality • Rationale for agreeing priorities • Governance • How are Panel appointed • Who can be on the Panel …. . Gas Settlements, Energy Retail 4

Governance Structure – Initial Stage Reporting by Xoserve Performance Committee Report on issues Performance Assurance Panel Report on issues Analysis required KEEP THE FOCUS ON ESTABLISHING QUICK WINS Reporting requirements to be established Process serials to be developed. For example: • AQ Review – AQs of 1 k. Wh, unallocated site statuses • Meter read submission – meeting UNC requirements • Asset issues – incorrect data • Reconciliation – timing out of reconciliation, MOD 640 sites • Opening Meter Readings • RGMA – flow and update issues Gas Settlements, Energy Retail Performance Assurance Panel to be appointed and constituted Performance Committee to be set up Consider anonymous reports Receive reports • Determine implications on industry process and procedures • Request additional information as necessary • Are the issues “resolvable”? • • What is the materiality of the issue? Consider materiality, ability to resolve and prioritise, outlining actions Parties can take to resolve • Will the issue be resolved without incentive? (possible MOD in progress or system issue that is scheduled to be fixed, maybe through Nexus) • Consider where targets/incentives could be applied Create report to Panel - issues, materiality, possible target/incentives Either raise a MOD with Performance target and incentives (where necessary) or develop Working Practice and Procedure 5

Governance Structure – Ultimately? ? ? Reporting by Xoserve Performance Committee Report on issues Performance Assurance Panel Report on issues Analysis required MONITOR DETECT Reporting established and incremented as required INCENTIVISE/CONTROL Performance Assurance Panel appointed and monitoring and incentivising Performance Committee receiving frequent reports and reporting to Panel Reporting requirement: Monitoring requirement: Controls: • Initial allocation • Accurate allocation • • Meter reading performance • Certainty of costs Provide guidance on proven techniques • AQ update performance • Retrospective update • Formulate standards required/expected/necessary • Meter point reconciliation • • Retrospective update • Rolling AQ Propose targets and incentives via modification/working practice documents • i. GT CSEP and site reconciliation • Industry wide scaling • Reporting of input/output measures and scaling • LDZ input measures • Accuracy of allocation algorithms Gas Settlements, Energy Retail 6

Performance Assurance Panel The Panel would be made up of Independent Industry Experts • There would be a tender process to appoint [5] Industry Experts and a consumer representative [Consumer Focus] • This process would be run by [Xoserve] as the legal entity who would procure the services of the experts and contract their engagement • To allow Xoserve to appoint the [5] Industry Experts, the Performance Assurance Committee will provide a recommendation of the mix of skills and experience necessary to make the Panel an effective advisory body, with impartial experts • Industry Experts would be contracted, with the terms of contract including – Confidentiality, Data Protection, Indemnity and Conflict of Interest Gas Settlements, Energy Retail 7

Performance Committee The Committee will be open to all Parties to the UNC • Xoserve will provide reports to the Committee, as requested and determined by the Committee and through requests from the Panel • The Committee should also work with Xoserve and the AUGE to facilitate requests from the Panel, where they are trying to assess materiality of an issue • The Committee will make a recommendation to Xoserve on the Skills and Experience required of the Performance Assurance Panel to allow them to undertake an appointment process • The Committee will also determine the budget for the Committee through majority vote Gas Settlements, Energy Retail 8

Controls under Performance Assurance A number of reports will be provided by Xoserve to the Committee on a monthly basis, for example: • Input measures – frequency, quality and control • Output measures (for example meter readings) – frequency, quality and control • i. GT registrations and data update – frequency, quality and control • Site registrations – exceptions and handling • Asset information – status, verification and responsibility • Data quality (measure of errors) – meter readings, asset information • Process serials – AQ update, threshold crossers, dead meters, product switching • Accounting of unidentified gas – AUGE continuing role Gas Settlements, Energy Retail Difference between input and output by LDZ to consider unidentified gas 9

Possible issues to be controlled/resolved Post Nexus a lot of issues could be resolved, but these are possible ongoing elements to be considered: • Offtake errors • Meter reading submission in line with UNC and Licence requirements • CSEP update • Shipperless and unregistered sites • Incorrect asset information and invalid meter readings • AQ update performance and the timing out of reconciliation, prevalence of MOD 640 charges, sites not allocated gas and erroneously low AQs • Shrinkage and allocation Gas Settlements, Energy Retail 10