BSCCo Draft Business Plan : Customer Workshop 9 January 2012

Agenda ActivityLead WelcomePeter Overview of the BSCCo StrategyELEXON Leads Quick Break Round Table DiscussionAll Feedback SessionFacilitators Summary and Next StepsDavid Lunch

Timetable NovDecJanFebMarApr Board Parties Panel Note Process & Key Themes Review draft Strategy Consider comments & revisions Review Budget & Strategy Consider comments & revisions Issue for comment Workshop Strategy approval Consider Panel comments Request to vary timetable 6 11 Approve Budget Governance Consultation/Decision

Governance »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?

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” “To deliver the BSC effectively, efficiently and economically, to the benefit of our customers” Support the best strategic outcomes for the evolving industry by pursuing our vision 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 Business Plan

Strategic Priorities Continuation from

Priorities 1-3 Mark Couldrick 9 January 2012

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

Key Deliverables

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

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 “To deliver the BSC effectively, efficiently and economically, to the benefit of our Customers”

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 Source – Logica Status Report June 2011 »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 3 rd Parties on our behalf.

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

»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 Settlement Administration Agent Type of OrganisationNumberTotal Rows of Data Per Annum National Grid1882,790,000 ELEXON1882,790,000 Other BSC Parties1715,007,430,000 P114 Licence Holders54,413,950,000 TOTAL2421,186,960,000 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 2011/122012/132013/14 Q4Q1Q2Q3Q4Q1Q2Q3Q4 BSC Audit Qualification TAA Market Monitoring

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

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

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

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

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

25 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

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

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

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

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

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

31 Smarter Markets: Propositions 7 Mar Improving Market processes 5.Settlement Arrangements (HH settlement) 6.Change of Supplier process (next day) 7.Data Processing & aggregation (central) 8.Code Consolidation (SEC to form retail code) Enabling Retail Market Development 1.Time of use tariffs (to reduce consumption) 2.Demand-side response (to reduce costs) 3.Energy Services (to increase consumer benefits) 4.Payment Methods (increased options) Source: Ofgem Consultation - Promoting Smarter Energy Markets (15 Dec 2011)

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

33 Smart Grids: Activities 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. 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 GB ELECTRICITY DEMAND PROJECT …. an open forum to share ideas and information and develop thinking on how smart grid can be achieved 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 ……

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

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

Budget Nigel Smith 9 January 2012

38 Budget

39 Budget

Round Table Discussion

Wrap up – thank you for your support and feedback NovDecJanFebMarApr Board Parties Panel Note Process & Key Themes Review draft Strategy Consider comments & revisions Review Budget & Strategy Consider comments & revisions Issue for comment Workshop Strategy approval Consider Panel comments Request to vary timetable 6 11 Approve Budget Governance Consultation/Decision