Senior Stakeholder Forum

1. Senior Stakeholder Forum Tuesday 8th October 2013

2. Agenda • Welcome & Introductions • Industry Change Programme (2015) • European Reform Chris Logue (NGT) • SMART DCC Day One Sharon Johnson (BGT) • Nexus Andy Miller (Xoserve) • Key Industry Risks Nick Salter (Xoserve) • UK-Link Programme • Programme Update Sandra Simpson (Xoserve) • Key Risks & Issues Sandra Simpson (Xoserve) • Transition Options Sandra Simpson (Xoserve) • Outstanding Actions • AOB, Next Meeting & Close

3. Industry Change Programme (2015)

4. European Developments Senior Stakeholder Group 8th October 2013 Chris Logue – EU Policy Manager

5. European Codes • European Codes are legally binding, there are 12 code areas • Framework Guidelines, will be developed by ACER are a key scope setting step, ACER have 6 months to develop FG • Ofgem is actively involved in ACER and takes part in framework guideline development • ENTSOs then have 12 months to draft Codes, Stakeholders heavily involved • Once the Code has been approved by ACER, it goes into Comitology stage, where DECC will input for UK 5

6. European Network Codes • network security and reliability rules; • network connection rules; • third party access rules; • data exchange and settlement rules; • interoperability rules; • operational procedures in an emergency; • capacity allocation and congestion management rules; • rules for trading • transparency rules; • balancing rules • rules regarding harmonised tariff structures; • energy efficiency • network security and reliability rules; • network connection rules; • third party access rules; • data exchange and settlement rules; • interoperability rules; • operational procedures in an emergency; • capacity allocation and congestion management rules; • rules for trading • transparency rules; • balancing rules • rules regarding harmonised tariff structures; • energy efficiency • Obligation on ENTSO’s and ACER to develop EU wide potentially binding codes in 12 different areas

7. Code Status Update

8. Gas Codes Timeline Status of Development of European Gas Network Codes Future dates are subject to change KEY Dates shown in italics are best approximations based on current understanding. Activities undertaken by ACER It has been necessary to 'round' some dates for the benefits of the diagram Activities undertaken by ENTSOG Activities undertaken by European Commission 2012 2013 2014 2015 2016 Network Code / Next Step Oct Oct Oct Oct Oct Jul Jul Jul Jul Jul Apr Jun Aug Nov Apr Jun Aug Nov Apr Jun Aug Nov Apr Jun Aug Nov Apr Jun Aug Nov Guideline Jan Sep Dec Jan Sep Dec Jan Sep Dec Jan Sep Dec Sep Dec Feb Mar May Feb Mar May Feb Mar May Feb Mar May Mar May Implementation of CMP Congestion Management Comitology Go Live Go Live obligations for 1st October Principles (CMP) 2013 ENTSO Capacity Allocation ACER G ACER Comitology Go Live Post-Comitology Mechanisms (CAM) Review revision Review of Code ENTSOG Drafting Awaiting Final Approval by Comitology Initial Cons Go Live (?) Go Live (?) Balancing EC before going to ACER Review Finalise drafti ultati Comitology drafting ng on ACER ENTSOG Drafting Comitology Develops Interoperability & Data Redraft of Network Code after Cons Go Live (?) ACER Review (duration Framework Finalise Exchange public consultation Initial drafting ultatio unknown) Guidelines on drafting n Interoperability ACER Develops ENTSOG Drafting Comitology Awaiting Publication of the Framework Cons Tariffs FG Extension ACER Review (duration Finalise revised final ACER FG Guidelines on Initial drafting ultati unknown) drafting Tariffs on

9. EU Code & Legislation Implementation October 2015

10. EU Code & Legislation Implementation Each tranche of Third Package code (CMP, CAM, Balancing, Interoperability and Tariffs) contains requirements for translation into the GB regime It is for TSOs to decide what the logical grouping of implementation phases should be in order to achieve compliance NG NTS believe that compliance against the EU legislation, including Third Package codes can be best met through implementation phases Each phase will have a particular IS release plan and associated UNC, Licence and process changes 10

11. Phase Contents 11

12. High level Roadmap CAM CMP Balancing Interoperability Tariffs Other Today 2014 2015 2016 2017 2018 Phase 1a From 1st Oct 2013 Surrender process (UNC Mod 0449) Phase 1b By Oct 2014 LTUIOLI & enhanced provision of data to ENSOG platform Other EU legislation – REMIT Phase 2a either 1st Oct or 1st Nov Gas Day (enabler) Data exchange, allocations & Gas Quality reporting Short term auctions (within day + day ahead +monthly ) capacity allocation arrangements at IPs Cross border nominations etc Phase 2bon or before 1st Nov Phase 3 Short term UIOLI Long term capacity auctions from Mar 16 (effective 1st Oct 16) Gas quality data publication Implementation of tariff arrangements at IPs (2017) Phase 4 Other codes (TBD) [Trading Code] Incremental capacity auctions at IPs (TBC) 12

13. UNC Modification and System Development • Phase 1a for substantially completed for 1st October 2013 • Includes initial delivery of CMP via UNC Mod 0449 • Phase 1b delivery during 2014 • REMIT – awaiting implementing acts….. • CMP – LTUIOLI mod to be raised in time for Oct 14 implementation • Phase 2a for completion by October 2015 • Includes Gas Day delivery via UNC Mod 0461 • Mod 0461 is under development and some initial system analysis work has already been initiated 13

14. UNC Modification and System Development • Phase 2b – (Nov 2015) • CAM • Bundled cross border capacity (Bacton and Moffat) • Splitting the Bacton ASEP • Use of common booking platform (PRISMA) • Balancing • New nomination process at IPs • Interoperability • New allocation process (OBAs?) • Common data exchange protocols (AS4, Edig@s?) 14

15. DCC Go-Live – Supplier View Date : 8th October 2013 Sharon Johnson

16. The next five years will see constant change for suppliers DCC Go Live Q3 Market Integration Testing Design and Build Cutover Volume Deployment SMETs2 Gas Metering Reading Submission More Frequent than Quarterly Submission (Optional) Quarterly Submission Nexus Go Live IGT Harmonisation Gas Metering Point Reconciliation Commences Market Integration Testing Market Integration Testing COS Design CRM DCC/SEC Implementation Bug Fixes Acquisition & Withdrawals Centralised Registration COS Build Industry Interactions IGT Consequential Change & new Smart Gateway New Industry Processes Implementation Metering SMETS2 Readiness Asset & Work Management to support Roll Out Billing & Settlement Billing and Prepayment Operation Settlement Operational Enhancement as smart meters get roll out Slide 16

17. We have a good view of what DCC Day 1 looks like • Key Changes: • New Security capabilities • Changes to IS Operating Model and E-E Service Levels • New Integration Layer • New Processes – training of smart operations staff and SEEs • Changes to job booking criteria • Metering Operations changes • Supply Chain • Logistics • Asset Management and Faults Dumb Phase 2b Phase 3 SMETS1 SMETS2 • Success will depend on: • Design Clarity • Effective Governance • Successful testing phase SEE Slide 17

18. Delivery of Nexus within DCC Go-Live timescales is helpful, earliest clarity on plans needed • Allows us to move incrementally to more frequent read submission – delivering the benefits of smart in a controlled way • Allows focus on other changes that are coming down the track • Some assumptions / asks: • Clarity on Plan as soon as possible so we can plan engagement. • Delivery IGTs early, ahead of main DCC go-live activities would be helpful • Clarity on design – so we can impact ways of working • Ongoing visibility of plan, and of testing requirements Slide 18

19. Nexus Modifications

20. UNC Mods developed in PNUNC Note: The above are Xoserve’s initial view for discussion of significant implications

21. Nexus Modifications Update • Modifications 432 & 453 (Settlement Regime Mods) and Modification 434 (Retrospective Adjustments) • Targeted for Ofgem approval in March 2014 • Timescales for the production of the draft modification report are challenging • Work is taking place to ensure mapping between legal text and BRD. • Modifications 440 (Single Service Provision) • Target submission to January Mod Panel with approval in March / April • Industry review of legal text to commence in November

22. Nexus Modification Update • iGT 039 modification • Development continues until Q1 2014 • Target approval June 2014 • New Modification 467 • A new modification raised for the data preparation exercise for iGT/single service provision • Further modifications will be required to deal with transition matters

23. Data Cleansing Update • Xoserve continues to work with organisations on a 121 basis and at industry group level • First Data Cleansing quarterly forum held in September • Good level of attendance and understanding • Feedback received from some organisations on the ability to resource this activity

24. Key Industry Risks • Industry bandwidth to absorb all change in a short period of time; EU, SMIP, Nexus • Extent of any Gemini changes required for Nexus mods unknown until Q2 2014 • Going live with inaccurate data may pose risk for shipper and industry • Establishing new business as usual operations for allocation, read submission, AQ and reconciliation

25. UK-Link Programme Update

26. UK-Link Programme Update • Logical Analysis continuing (Xoserve & Cap Gemini) • Level 3 Process Modelling complete and Level 4 in progress until the end of the Jan 2014 • Design, Build, Implement (DBI) workshops taking place with 3 vendors • Separate Organisation appointed as Client Advisor • Preferred supplier for DBI mid November • Commence Detailed Design March 2014 • Sustaining activities complete for existing UK-Link system

27. UK-Link Programme Key Risks/Issues • The Nexus modifications will not be approved before April 2014 but the financial approval for the delivery of the programme needs to be in place in March • Mitigation: Xoserve are exploring options with suppliers to commence contract on a T&M basis until approval of the modifications then implement the fixed price contract. Early approval to continue High Level Design will take place in December Consideration is being given to the transition options

28. UK-Link Programme Transition Options • Option One: Single Release (all functionality) • Risks / issues / considerations: • Can organisations absorb all functionality in one release? • Is it possible to implement changes in close proximity to other industry changes? • Risk over being able to implement settlement reform changes to Gemini over the winter period (October to March) and in close proximity to EU changes

29. UK-Link Programme Transition Options • Option Two: Phased Release Option • Functionality implemented in several releases over a longer period of time • Risks / issues / considerations: • Very complex to implement • Increased effort to run two systems over a period of time • More expensive • Higher risk option from an IT implementation perspective • Considerations on how a phased approach would work for implementing settlement reform changes on Gemini over the winter period (Oct to March)

30. UK-Link Programme Industry Groups • UK-Link Committee • Agree new and amended file formats • Discuss technical matters, e.g. interface architecture • Typically IT people to attend • PNUNC (& replacement) • Modification development (including transition mods) • Discuss business matters, e.g. testing window/plan, transition planning, clarifications during design/development • Programme Updates • Typically business focussed attendees