BSCCo Draft Business Plan 2012-2013: Customer Workshop 9 January 2012

Agenda Welcome Peter Overview of the BSCCo Strategy ELEXON Leads 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

Governance Consultation/Decision Timetable Nov Dec Jan Feb Mar Apr 1 3 6 8 10 Note Process & Key Themes Request to vary timetable Consider comments & revisions Strategy approval Review draft Strategy Panel 7 9 2 11 Consider comments & revisions Review Budget & Strategy Consider Panel comments Approve Budget Board 5 Workshop Parties Issue for comment 4 Governance Consultation/Decision

Ofgem consultation on governance Consultation closed 6 January 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” Support the best strategic outcomes for the evolving industry by pursuing our vision “To deliver the BSC effectively, efficiently and economically, to the benefit of our customers” 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 Continuation from 2011-2012

Priorities 1-3 Mark Couldrick 9 January 2012

Structure BSC Operations Key BSC Operations Support Services SMART SMART Strategic Account Management BSC Operations Market Developments Market Developments Comms Change Industry Insight Industry Insight Market Operations Service/Agent Management Facilities PMO / Design Authority /IT Customer Services Internal Audit Human Resources Commercial Management & Procurement Legal Services Key Financial Services BSC Operations Support Services Strategy & Development

Key Deliverables

The Eggheads Supporting the SCR Europe SMART Impacts SMART Market Developments Industry Insight Supporting the SCR Europe SMART Impacts

Supporting the SCR Europe SMART Impacts 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 Consultations Consultations Consultations BSC Operations “To deliver the BSC effectively, efficiently and economically, to the benefit of our Customers”

Application Strategy Ageing systems Technology Strategy 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 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. Source – Logica Status Report June 2011

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

Settlement Administration Agent 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 Type of Organisation Number Total Rows of Data Per Annum National Grid 1 882,790,000 ELEXON 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 BSC Audit Qualification TAA Market Monitoring

Priority 3: Improve the customer experience and develop richer customer relationships 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!

Where are we now? BSC Operations Key BSC Operations Support Services SMART Strategic Account Management BSC Operations Market Developments Comms Change Industry Insight Market Operations Service/Agent Management Facilities PMO / Design Authority /IT Customer Services Internal Audit Human Resources Commercial Management & Procurement Legal Services Key Financial Services BSC Operations Support Services Strategy & Development

Priority 4 – Develop our services and adapt our business to address industry challenges Chris Rowell & David Osborne 9 January 2012

Industry Transformation Implemented as a BSC Change Regulators Government EU Government Industry Delivered within the BSC Priority 4 Several Years Issue Identification Policy Design Establish Framework Implement Framework Operate Framework Delivered outside the BSC 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 Parties Possible consequential BSC Changes? Using: ELEXON staff (backfilled where required), external experts Socialised through: consultation responses, conferences, thought pieces, ELEXON communications, committee briefings

The Industry Challenges “In these matters the only certainty is that nothing is certain” Pliny the Elder Security Electricity Market Reform ? EU Initiatives Smart (metering – markets – grids) Sustainability Affordability Efficient, Effective & Economic BSC Delivery

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

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 ” FIT contract for differences Capacity Mechanism Source: DECC Technical Update on Electricity Market Reform (15 Dec 2011)

EU Initiatives Third Package Balancing, Settlement, Market Coupling, & (Single European Market) Balancing, Settlement, Market Coupling, & Data Exchange MiFID II Exemption (Markets in Financial Instruments Directive) Settlement Payments Network Codes (Analysis of Framework Guidelines) REMIT (Regulation on Energy Market Integrity & Transparency) BMRS (data reporter) Comitology Guidelines (Data Transparency) etc Settlement

Smart Metering: Activities Evolving the BSC Implementation of any changes to BSC systems & processes Evolving NHH settlement (profiling) Evolving the Assurance Framework (meter > bank) Supporting the SMIP Consequential changes to BSC framework Advice on the Smart Energy Code framework Commissioned work (e.g. BPM) ? Pursuing opportunities Data & Communications Company ? Smart Energy Code Secretariat ? DCC Service Provider (Data & Comms) X

Revised SMIP Delivery Plan Revised Plan impacts the BSC budget but not strategy Source: DECC Delivery Plan – 21 December 2011

Smart Metering: BSC Challenges Business Plan Period The future of the NHH Market Managing Profile drift Application of correction NHH v HH Centralised Data Registration Maintaining data quality Revised CoS processes? Managing non Smart? Settling the ‘rump’ Start of Mass Rollout Registration to DCC Mass Rollout completes 2011 2012 2013 2014 2015 2016 2017 2018 2019 Optimised BSC - SEC Metering CoPs etc E2E Performance Assurance Full SEC Data Collection & Aggregation? NHH ported software The future of the Supplier Hub Maintaining Data Quality Issues revealed by meter churn Risk of rapid loss of ‘legacy’ staff

Smarter Markets: Propositions Enabling Retail Market Development Time of use tariffs (to reduce consumption) Demand-side response (to reduce costs) Energy Services (to increase consumer benefits) Payment Methods (increased options) Improving Market processes Settlement Arrangements (HH settlement) Change of Supplier process (next day) Data Processing & aggregation (central) Code Consolidation (SEC to form retail code) 7 Mar Source: Ofgem Consultation - Promoting Smarter Energy Markets (15 Dec 2011)

Smarter Markets: Timetable Scoping Phase Policy Development Implementation Evidence Gathering Develop & Consult Start work programme Implement Reforms Apr 2011 Summer 2012 2013 onwards? Dec 2011 Source: Ofgem Presentation – Smart Metering Forum (1 Dec 2011)

Smart Grids: Activities GB ELECTRICITY DEMAND PROJECT …. an open forum to share ideas and information and develop thinking on how smart grid can be achieved 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 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 …… The projects aim to: • tackle real and immediate issues facing the industry • share the information and expertise built up through the trials across the industry • produce solutions to ensure the best value from future investment.

Market Development Budget Budget ≠ Commitment to spend No provision for ELEXON ‘vires’ activities Includes ‘bid’ provision External Expenditure 12/13 Budget held BUT scope expanded Source: Table 7, Page 27

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 Our people are our key assets Good for ELEXON Good for Industry Retention & Recruitment Staff Survey Invest in Future Leaders Knowledge Share & Self Development Great Place to Work & One ELEXON Days Staff policy Review

Budget Nigel Smith 9 January 2012

Budget

Budget

Round Table Discussion

Wrap up – thank you for your support and feedback Nov Dec Jan Feb Mar Apr 1 3 6 8 10 Panel Note Process & Key Themes Review draft Strategy Request to vary timetable Consider comments & revisions Strategy approval 2 7 9 11 Review Budget & Strategy Consider comments & revisions Consider Panel comments Approve Budget Board 5 Issue for comment Parties Workshop 4 Governance Consultation/Decision