Review of industry code governance 26 March 2010

2 Introduction Brief overview of the proposals: –Self-governance –Significant Code Reviews –Charging methodologies –The role of the Code Administrator and Panel

3 Self governance Final Proposals allow for modifications to be made to the UNC on the basis of self–governance decisions rather than acceptance by the authority Potentially much wider than existing ‘self-governance’ of associated documents etc Proposer may suggest route, but initial ‘filter’ of decisions to be made by Panel Route may change later in process (i.e. following receipt of responses) Option for Ofgem to re-direct (either way)

4 Significant Code Reviews Changed definition from ‘Major Policy Review’ in order to draw clearer distinction between code reviews and Government reviews Impact on panel will be limited – focus of process ahead of a modification being raised (which will then progress in the normal way) However, opportunity for Panel to suggest live proposal be elevated to a SCR Conclusion of SCR may result in licensee being directed to raise a proposal: –Discretion retained on final content of that proposal –Licensee will be free to make recommendation as they see fit.

5 Charging methodologies Final proposal to include connection and use of system charging methodologies within relevant code Panel will therefore be providing oversight of charging methodology proposals Rules potentially the same, though relevant objectives differ Charging methodology decisions will become subject to appeal to the Competition Commission Focus will be on the methodology, not the numbers Existing charging methodology fora continue to have a role

6 The Role of the Code Administrator and Panel Authority approval, rather than appointment, of independent chair Provision of a vote for the chair – scope to be set out in modification rules Voting consumer representative - scope to be set out in modification rules Option for further consumer representative to be appointed by the Authority Requirement for rationale for recommendations made against relevant objectives

7 Other potential modifications Send back - Rules and procedures to be followed in the event of reports being sent back CoP principle that legal text be produced early in the process as the norm Alternative proposals –If alternative suggested, should panel send both to development? –Any other improvements necessary? Critical friend – greater role of the code administrator –Does Joint Office have the necessary ‘powers’ to fulfil this role?

8 Way forward March: Final policy proposals, CoP and licence drafting consultations published 14 May: deadline for responses due to the CoP and licence drafting consultations Late May: statutory consultation on licence modifications issued, CoP published Late June: licence modifications take effect Autumn: modifications to code rules implemented