Gas Performance Assurance Framework

1. Gas Performance Assurance Framework 11th January 2013 Confidential

2. 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

3. Update from 11th 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 • ScottishPower agreed to provide more detail on the model that they had outlined and provided for the Workgroup

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

5. Governance Structure – Initial Stage Performance Committee Performance Assurance Panel Report on issues Reporting by Xoserve Report on issues Analysis required KEEP THE FOCUS ON ESTABLISHING QUICK WINS Performance Assurance Panel to be appointed and constituted Reporting requirements to be established Performance Committee to be set up Receive reports • Request additional information as necessary • Consider materiality, ability to resolve and prioritise, outlining actions Parties can take to resolve • Consider where targets/incentives could be applied Either raise a MOD with Performance target and incentives (where necessary) or develop Working Practice and Procedure • Consider anonymous reports • Determine implications on industry process and procedures • Are the issues “resolvable”? • What is the materiality of the issue? • Will the issue be resolved without incentive? (possible MOD in progress or system issue that is scheduled to be fixed, maybe through Nexus) • Create report to Panel - issues, materiality, possible target/incentives • Process serials to be developed. For example: • AQ Review – AQs of 1kWh, unallocated site statuses • Meter read submission – meeting UNC requirements • Asset issues – incorrect data • Reconciliation – timing out of reconciliation, MOD640 sites • Opening Meter Readings • RGMA – flow and update issues

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

7. 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

8. 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

9. 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 • iGT 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 Difference between input and output by LDZ to consider unidentified gas

10. 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 MOD640 charges, sites not allocated gas and erroneously low AQs • Shrinkage and allocation