BSCCo Draft Business Plan 2012-2013:

Customer Workshop

9 January 2012

Agenda

Activity Lead

Welcome Peter

Overview of the BSCCo Strategy ELEXON Leads

Quick Break

Round Table Discussion All

Feedback Session Facilitators

Summary and Next Steps David

Lunch

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

11Approve Budget

Governance Consultation/Decision

Governance

»In parallel »Ofgem consultation on governance»Consultation closed 6 January»Modification P281 - Change of BSCCo Board of

Directors & Chairman

Today is about BSCCo Strategic Priorities

These are relevant under any Governance

Welcome

Peter Haigh

9 January 2012

Where are we now?

Where are we now?

Percentage of customers rating ELEXON 8-10 out of

10

Overall satisfaction ratings

Key Theme – Continuity of the mission and vision

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

address common industry problems”

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

benefit of our customers”

Support the best strategic outcomes for the evolving industry by pursuing our vision

Maintain and build upon our previous achievements to fulfil our mission

We’ve come a long way – but we ‘re only part way along the journey we

embarked upon in our 2011-12 Business Plan

Strategic Priorities

Con

tinu

atio

n fro

m

2011-2

012

Priorities 1-3

Mark Couldrick

9 January 2012

Key

BSC Operations

Support Services

Strategy & Development

Structure

5

• Parameter reviews: MIDS review complete and changes raised• Key BSC elements: CAP monitoring, LLF Audit of Methodology, LLF audit well underway

with the majority of site visits complete, OID updates, UMS Load Research, PrA operations, MIDs review complete

• Review of ELEXON guidance notes: 11 drafts produced• Analysis of issues: 2 Disputes, Corrected over £100k of error through transmission loss

analysis, Teleswitch issues, exporting GSP Group, SVA agent problems, circular production and review, working to resolve ECVAA web service issue

• Mods, Issues and CP support: P272, GVC, Issue 39, P274 and P275, reviewing and redlining for four GVC CPs, raised various CPs and TAIs

• Committees support: Panel, PAB, ISG, SVG, TDC, UMSUG, STAG, PEG, and Credit Committee. Team has written approx. 50 papers, chaired over 20 meetings

• Support to other governance bodies: Support to ENA DCMF workshops on GVC (DPCR), MRA IREG forum, MUESLI and Audit principles for UMS, UMSUF, support to National Grid on P217 impact, bi weekly calls with Ofgemand BGC

• Training: 3 presentations at the Introduction seminar, Indian delegation training (£6k), all major Customers, mainly Suppliers approx. 30 training sessions on: ELEXON overview, CVA, SVA, Profiling, detailed NHH processes, MDD, credit, UMS, D095, Erroneously large EACs/AAs, Imbalance Prices, Smart, Ofgem, DECC, internal

• Assisted in Market Entry and provision of OSMs: in house and various visits• Performance assurance: Risk process maps produced, amended the PAB SR72

monitoring criteria to better support the TDC objectives, organised erroneously large EAC/AA forum

• Profiling and Settlement Review: 3 PSRG meetings, Mandatory HH settlement for PCs 1-4 cost benefit analysis report, support to assessment of P272, SVG agreed to twice yearly profiling (trial complete and changes raised), HH GSP Group correction agreed by SVG and Panel, visits to BSC Parties on mandatory HH settlement

• Support to Smart and workstream 1: Process Modelling, SMIP support, draft SEC which handed to DECC, Tech Spec and various consultation responses produced/reviewed, smart grids support and Ofgem smarter markets liaison

• Advice requests: Helpdesk calls; typically 10 a week ranging from simple queries to in-depth market areas, other direct calls to the team approx. 10 a week including UMS and profiling issues

• Credit monitoring, managing credit default , market monitoring (SVA and UMS),• Data Requests: from DECC and Ofgem and sustainability first on profiling data• Other: Ofgem SCR support with fortnightly teleconference meetings, provided support to

FAA Rationalisation project• CRM: Technical support and champions

April 2011 – October 2011 Key Deliverables

Market Analysts and Advisors Team

8

• Committee support: Panel, ISG, SVG, TDC, PAB, TAMEG. The Team has written 28 papers. We have chaired 12 meetings and reviewed 38 papers.

• Metering

• Reconciled 150 CVA Aggregation rules to Site Plans and 80 to Site Plans and MTDs. 22 issues/queries have been noted. One Trading Dispute has been raised.

• Dealt with 598 Metering Queries

• 7 x Metering Dispensations (D/366 - 372)

• Training – 2 x EdF Haven

• Contribution – Smart Design Specification

• TAMEG meeting + Workshop– Ownership of Commissioning, ongoing.

• Technical Assurance

• Facilitated the resolution of 31 Cat1 non compliances

• Organised and facilitated MTD workshops as part of PAB strategy.

• Changes to Settlement Risk net significances

• Fault Investigation Process Review

• Wrote Newscast articles on :-

• TA No Access

• TAPAP Disputes Visits

• TAAMT Rectification guidance article

• TAAMT Rectification Guidance Note. ELEXON Website

• Materiality Calculation for NCs for Service Management

• Updated LWI for SR28 Supporting Data for SRR.

• Working on next TAPAP check – Disputes. Candidates notified of site visit dates (10) and agreed. First visit scheduled 29 November 2011, final visit 26 January 2012.

• Trading Disputes

• Twelve Disputes determined by TDC. Settlement Error ~ £6.4million.

• Eleven Disputes deemed invalid by ELEXON, no objections.

• ESD completed DA348/360 and DA391, £4.4million.

• ESD methodology approved DA329.

• One Q8 Claim £5k

• Day in the Life promotion completed with Internal Communications team.

April 2011 – October 2011 Key Deliverables

Metering and Disputes Team

7

• RER (2012/13) updated, consulted on and approved to timetable• ROP (2012/13) updated and consultation completed to timetable• APAR 2010/11 completed, approved by PAB and praised for clarity by

Panel• Reviewed and distributed main BSC Audit Report and 188 Audit Issue

documents, plus doing the compliance check and Audit peer comparison

• Scope for 2011/12 BSC Audit reviewed to cut out lower risk roles and approved

• Held team building/planning meetings with auditor in July & October• Supported BSC Audit contract extension discussions, securing

significant cost savings• CP1334 support provided and BUSRR criteria updated and guidance

note written• Issue 41 – provided chair and technical support to 3 meetings and

wrote Panel paper, and presented to Panel – good feedback received• PAB meetings chaired and supported• 97% performance across industry continues to improve• Escalated a Supplier to the PAB• PAB Strategy workstreams progressed: KPIs done and Agent

Performance underway. Initiated review of Strategy for next (2) years• SVA Forum held September 2011, good feedback received• Published public version of PAF KPIs as PAB requested• Training on PAF and Audit to Haven• Support to P275 (including in initial drafting of Mod)• Supported CSR initiatives

April 2011 – October 2011 Key Deliverables

Market Compliance Team

6

• 5 OFTOs (Walney 1, Barrow, Gunfleet 1 & 2 and Robin Rigg)• Meeting with NGRID to resolve process for transfer of information for

registrations • 308 UMS charge codes approved• 142 MDD change requests approved• Handover OSM accounts• Charlotte chaired Introduction Seminar• Understanding of customer reports – 8 customer interviews and c90

responses to emails sent re use of reports• 17 Market Entry meetings held• 13 customers Acceded to the Code• 9 customers exited the Code• 2 re-Qualifications applications approved by PAB• 4 Qualification applications approved by PAB• Annual review of SCs approved by PAB• 1 Bulk Change of Agent approved by PAB• 2 Supplier escalations to PAB• Attended team building/planning meetings with auditor in July &

October• CP1334 implemented and BUSRR criteria updated and guidance note

written• Presentation at SVA Forum re PARMS• 64 OSM visits• 21 training visits• Visited 20 Supplier Agents (covering 75 MPIDs) to go through new

PARMS Serials

April 2011 – October 2011 Key Deliverables

Customer & Settlement Operations

Key Deliverables

• Supporting the SCR• Europe• SMART Impacts

The Eggheads

• Consultations• Consultations

• Consultations

Priority 1: Actively manage, and continually improve, BSC services to ensure that we deliver in an efficient,

effective and economic way

• Supporting the SCR• Europe• SMART Impacts

“To deliver the BSC effectively, efficiently and economically, to the benefit of our Customers”

Priority 1: Actively manage, and continually improve, BSC services to ensure that we deliver in an efficient,

effective and economic way

» Application Strategy• Ageing systems

» Technology Strategy• Expensive technology

» Data Services

Central Data Collection

Source – Logica Status Report June 2011

» Number of CDCA Outstation Channels (March 2011)• 25,404

» Number of Readings collected per night, 7 days a week, 365 days a year• 1,219,392• At the end of each day the meters are read, processed and

validated, then distributed by 13:00 the next day to our customers• The average success rate over the past year has been 98.2%, and

that’s 98.2% the after day, not over a settlement reconciliation life cycle.

» Number of Readings Per Annum• 445,078,080

» The readings are obtained using a number of technologies through infrastructure contracts Logica have in place with 3rd Parties on our behalf.

BMReports

Source – BMRS Page Views - Logica Status Reports April 2010 – March 2011 – BOA’s – Roger Harris – TOMAS Extract 22 July 2011

» 1 April 2010 to 31 March 2011

» Number of Page Views• High Grade BMRS – 9,737,615• Low Grade BMRS – 353,841,209

- Includes a high volume of data scripting/scraping

» One of the major inputs to the calculations is the Bid Offer Acceptances (BOAs are instructions given by National Grid to Parties to balance the system)• 722,123

» The BSC allows Parties and P114 Licence Holders to receive Sub-flow 2 data as well, and ELEXON also uses it in TOMAS

» It’s the same 882,790,000 rows of data, but by the time we’ve distributed it to everyone who has requested it that’s 21,186,960,000 rows per/annum for just 1 data flow

Settlement Administration Agent

Type of Organisation Number Total Rows of Data Per Annum

National Grid 1 882,790,000

ELEXON 1 882,790,000

Other BSC Parties 17 15,007,430,000

P114 Licence Holders 5 4,413,950,000

TOTAL 24 21,186,960,000

Source – Copies of data received by ELEXON – Details of other Parties and P114 Licence Holders – Mark Gribble Logica

Priority 2: Drive efficiencies and savings in our operational business

2011/12 2012/13 2013/14

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

BSC Audit

Qualification

TAA

Market Monitoring

Customer Relationship Mgmt & OSM Service

We take huge pride in the Customer Service we deliver and that’s reflected in the

results we achieve

More of the same = BETTER

Further Web Developments

Streamline & enhance services through our web-

channels

More self-service and on-line services

More customer engagement

Sharing Knowledge & Expertise

To be a leader in the efficient transformation of

energy markets – by providing shared solutions

to address common industry problems.

Getting Customers Involved

It’s good to talk!Structure

Priority 3: Improve the customer experience and develop richer customer

relationships

Key

BSC Operations

Support Services

Strategy & Development

Where are we now?

Priority 4 – Develop our services and adapt our

business to address industry challenges

Chris Rowell & David Osborne

9 January 2012

23

Priority 4 Delivered within the BSC

Delivered outside the BSC

Issue Identification Establish FrameworkImplement Framework

Operate FrameworkPolicy Design

Possible consequential BSC Changes?

Several Years

Implemented as a BSC Change

Industry Transformation

Key activities include:• Reviewing the transformation landscape & consultations• Identifying possible impacts on BSC – analysis & modelling• Providing insight from our BSC experience• Providing expert (industry) support to programmes• Providing education on the BSC to policy makers• Providing information to BSC PartiesUsing:

ELEXON staff (backfilled where

required), external experts

Socialised through: consultation responses, conferences, thought pieces, ELEXON communications, committee briefings

GovernmentEU Industry

Government

Regulators

24

The Industry Challenges

Sustainability

Affordability

Security

Efficient, Effective & Economic BSC Delivery

Electricity Market Reform

EU Initiatives

Smart (metering – markets –

grids)

“In these matters the only certainty is that nothing is certain” Pliny the Elder

25

Changing our governance and vires

Recognition that ELEXON has the skills and capabilities to undertake a

wider role – but this will require changes to our governance and vires

Await the outcome of Ofgem’s consultation with interest

Continue to support Ofgem and industry in developing its thinking

We will know more when Ofgem has determined the way forward

26

Electricity Market Reform

“ ELEXON has a strong track record of calculating and managing complex payments and settlements in a way that minimises the credit risk and impacts for both suppliers and generators ”

Source: DECC Technical Update on Electricity Market Reform (15 Dec 2011)

FIT contract for differences

Capacity Mechanism

27

Settlement

BMRS (data reporter)

Settlement Payments

EU Initiatives

REMIT(Regulation on Energy

Market Integrity & Transparency)

MiFID II Exemption

(Markets in Financial Instruments Directive)Balancing,

Settlement, Market

Coupling, &Data

Exchange

Network Codes(Analysis of Framework

Guidelines)

etc

Third Package(Single European Market)

Comitology Guidelines

(Data Transparency)

28

Smart Metering: Activities

Pursuing opportunities

• Data & Communications Company ?• Smart Energy Code Secretariat ?• DCC Service Provider (Data & Comms) X

Supporting the SMIP

• Consequential changes to BSC framework• Advice on the Smart Energy Code framework• Commissioned work (e.g. BPM) ?

Evolving the BSC

• Implementation of any changes to BSC systems & processes• Evolving NHH settlement (profiling)• Evolving the Assurance Framework (meter > bank)

29

Revised SMIP Delivery Plan

Source: DECC Delivery Plan – 21 December 2011

Revised Plan impacts the BSC budget but not

strategy

30

Business Plan Period

Smart Metering: BSC Challenges

Full SEC

2011 2012 2013 2015 2016 2018

Optimised BSC - SEC• Metering CoPs etc• E2E Performance Assurance

The future of the NHH Market• Managing Profile drift• Application of correction• NHH v HH

Maintaining Data Quality• Issues revealed by meter churn• Risk of rapid loss of ‘legacy’ staff

Data Collection & Aggregation?• NHH ported software• The future of the Supplier Hub

Start of Mass Rollout

Registrationto DCC

Centralised Data Registration• Maintaining data quality • Revised CoS processes?

Managing non Smart?• Settling the ‘rump’

Mass Rollout completes

201920172014

31

Smarter Markets: Propositions

7 Ma

r

Improving Market processes5.Settlement Arrangements (HH settlement)6.Change of Supplier process (next day)7.Data Processing & aggregation (central)8.Code Consolidation (SEC to form retail code)

Enabling Retail Market Development1.Time of use tariffs (to reduce consumption) 2.Demand-side response (to reduce costs)3.Energy Services (to increase consumer benefits)4.Payment Methods (increased options)

Source: Ofgem Consultation - Promoting Smarter Energy Markets (15 Dec 2011)

32

Smarter Markets: Timetable

Source: Ofgem Presentation – Smart Metering Forum (1 Dec 2011)

Scoping PhasePolicy

DevelopmentImplementation

Start work programm

e

Implement Reforms

Evidence Gathering

Develop & Consult

Apr2011

Summer

2012

2013 onwards?

Dec2011

33

Smart Grids: Activities

The projects aim to:• tackle real and immediate issues facing the industry• share the information and expertise built up throughthe trials across the industry• produce solutions to ensure the best value from future investment.

The project aims to:• evaluate and understand the potential GB electricity demand-side resource• evaluate the key customer, commercial, regulatory and policy issues and interactions

GB ELECTRICITY DEMAND PROJECT

…. an open forum to share ideas and information and develop thinking on how smart grid can be achieved

SMART GRID FORUM

The project aims to:• Identify future challenges for electricity networks and system balancing, including current and potential barriers to efficient deployment of smart grids; • Guide the actions that DECC/Ofgem are taking to address future challenges,• Identify actions that DECC/Ofgem, the industry or other parties could be taking to facilitate the deployment of smart grids ……

34

Market Development Budget

External Expenditure

Budget ≠ Commitment to spend

12/13 Budget held BUT scope expanded

Includes ‘bid’ provision

Source: Table 7, Page 27

No provision for ELEXON ‘vires’ activities

Priority 5: Invest in our people for the benefit

of our industry

Peter Haigh

9 January 2012

Priority 5: Invest in our people for the benefit of our industry

Retention & Recruitment

Staff Survey

Invest in Future

Leaders

Knowledge Share & Self Development

Great Place to Work &

One ELEXON Days

Staff policy Review

Good for

Industry

Good for ELEXO

N

Our people are our key assets

Budget

Nigel Smith

9 January 2012

38

Budget

39

Budget

Round Table Discussion

Wrap up – thank you foryour support and feedback

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

Governance Consultation/Decision