USRV Incentives Review Chris Warner

USRV Resolution Responsibility and Occurrence  E8.1.1  “…the User shall investigate Reconciliation Values that have been Suppressed following Individual NDM Reconciliation…”  E8.1.2  Suppression occurs in accordance with the Network Code Reconciliation Suppression Guidelines  Financial tolerances per AQ banding  Underlying negative consumption  Guidelines reviewed from time to time

Why Suppress?  Network Code Reconciliation Suppression Guidelines para 2.6  “The tolerances are set with a view to maximising the suppression of values generated from erroneous data and minimising the suppression of valid values”  Intended to protect Users from large erroneous invoice values  energy invoice must be paid first and subsequently queried  potential to cause severe financial hardship

Issues Identified pre 0637 Implementation  Uncertainty created for RbD Users by unresolved items  Considerable USRV backlog (38,000 items plus).  Lack of incentive for non-RbD Users to resolve  Lack of incentive for compliance with existing Network Code resolution requirements  Selective resolution?  More economic to leave unresolved  Approval of credits only  Lack of priority

Mod 0637 – Network Code Process  Various options discussed at Network Code Reconciliation Suppression Guidelines Sub-Group in 2003  Initial proposal for incentives raised by a Shipper  Following discussions at Suppression Guidelines Sub- Group, Modification Proposal submitted by Transco  Final Modification Report issued to Ofgem on 15 Sep 2003  Direction to Implement issued by Ofgem on 19 Nov 2004  Following consultation with the Supply Point & Billing Workstream, Modification implemented on 21 Feb 2005

Mod 0637 Regime – Resolution Incentives (E8.3)  Backlog (pre 21 Feb 2005)  Unresolved after 4 months (or older) incurs £30/month until resolved  Ongoing Performance  50% resolution required by 20th of following month (no incentive charge applied)  95% resolution required by 20th of second month. Any unresolved below the 95% standard incur £20  Any unresolved after 4 months (or older) incurs £30/month until resolved  Additional features  Allowance for significant volume increases  >20 USRV item increase, and  => 50% increase (in comparison to previous 6 months average) additional 1 month on 2 and 4 month standard

Mod 0637 Regime – Re-distribution of Revenue  Overall monthly cap £100,000.  If exceeded all charges scaled down to in aggregate equal £100,000.  2% allowance for Transporters for administration of scheme  Remaining revenue allocated to RbD community  Based on market share for relevant LDZ for relevant period

Post 0637 Performance – Liable USRVs by Month

Post 0637 Performance – Liable USRVs by Achievement Targets

Post 0637 Performance – Generated USRVs

Post 0637 Performance – Trends of Liable USRVs

Mod 0637 Regime – Effectiveness?  Is the current level of USRVs a concern for Users?  Why is the regime arguably not working?  What changes could be made to improve performance  Changes to the existing regime?  Additional measures?