User Pays User Group Wednesday 30 th April 2008

2 Today’s Agenda  IntroductionHelen Barratt  Contract and Governance – The Way ForwardAndy Miller  Operational Update Vicky Palmer  Demand  Invoicing  IAD  OutagesDave Ackers  Charging mechanismAndy Miller  AOB  SPAAAndy Miller  Summary and next stepsHelen Barratt

3 Objectives  Work with you to incorporate change mechanism within the contract  Develop effective User Pays governance  Listen to you and respond constructively  Seek ongoing open dialogue and feedback  Facilitate the development of User Pays in the best interest of the industry as a whole Customer Focused Collaborative Constructive Open

4 Current Position  Agency Charging Statement, Licence changes and Modification approved  Service requests received from all customers  Smooth transition from an operational perspective  A number of parties have signed the contract  Addressing the actions outlined in Ofgem’s ACS approval letter  Contract and governance issues still to be resolved

Proposed approach to contractual change and governance

6 Proposed approach  Acknowledge your feedback on key areas  Customers must have a voice when it comes to contractual changes  User Pays non-code services must have some form of governance  Approach  Take forward and resolve as an industry  Propose User Pays User Group as governance body for non-code services  Develop User Pays User Group Terms of Reference  Develop contractual change  However, these may be developed independently

7 A Potential Way Forward - Governance  Governance proposal for non-code services  User Pays User Group  Terms of Reference – requires your input in development  Membership  Secretary  Quorum  Frequency of meetings  Notice of meetings  Minutes of meetings  Reports  Duties  Other Views on ToR

8 A Potential Way Forward – Change  Contracting proposal  Customers and xoserve must agree on contractual change for the change to happen  xoserve has one vote and the customers collectively have one vote  Escalation route requirements  Customers to decide how they wish to reach a consensus for their one vote  Mechanism for handling legislative and regulatory change  To be reflected in the contract Thoughts?

9 How might this work? User Pays Contractual Framework User Pays User Group Change Customerxoserve One Vote Contract Governance Change

Contract Refinements Register

11 Refinements Register  Many and varied comments have been received on the current contract  Where possible these have been addressed with the individual parties  Some comments are likely to result in a change to the contract  See examples at the back of the pack  These will be progressed and incorporated into revised contract when agreed

Draft Time Table

13 High Level Time Line PartyActivityMayJuneJuly Amendments to the Conditions xoserveRevised contract to customers 13 th CustomersPeriod for review 13 th 6 th xoserveRevise & re-issue6 th 20 th CustomerSigned by all parties by 11 th July 20 th 11 th Governance arrangements for no-code services xoserveDraft Terms of Reference9 th AllReview TofR9 th 6 th CustomersCustomer Contract Group agree consensus/voting approach 9 th 6 th xoserveToR final drafting & back to all 9 th 20 th AllToR agreed 20 th 15 th AllUser Pays User Group Meetings 20 th 17 th 15 th

Operational Update

15 Current demand for services  IAD demand is lower than previously indicated  Demand is still changing  Intention is to review cost recovery position in July/August ServiceForecastCurrent Demand IAD12,50010,500 TelephonesBand mix different to forecast but overall currently equal to forecast recovery DVD10 2,020Pay as you go AQ spec calc2.5 millionPay as you go Portfolio reports80125

16 Operational Update General Overview  Operational service provision continues as is  Operational governance arrangements in place  Some teething issues have led to some customer frustration  However, appropriate controls over provision of User Pays services are working

17 Operational Update  IAD Service  Created circa 700 new accounts – all processed within SLA  No system performance issues  Telephone Service  On target for handling 30,500 calls. SLA for answering being achieved  Power cut interrupted service for 30 mins on 23 rd April  Reporting Service  Processed 110 requests – all returned to Requestor within SLAs  M No DVD  The July edition will be first to be provided under User Pays  Portfolio Reports  All timetabled reports have been sent on due dates

Invoicing

19 Invoicing  Contract Managers will be provided with an ed scanned invoice as well as a paper copy  Non-code services chargeable from 1 st April, code chargeable from 9 th April (when Mod was approved)  If customers wish additional details can be provided for IAD for an interim period, e.g. number of account creations and deletions  Propose to review this after three months  Please contact me after the meeting or if you’d like to receive this additional information

IAD outages

21 IAD planned outages  Outage planned for 17 th /18 th May  Addresses system security issues regarding concurrent account usage  In addition DN interruption functionality being implemented  Outage planned for 21 st /22 nd June  Addresses password security and reset issues  Customer password reset  Day 1 and 28 days reset  In addition functionality to monitor transactional usage being implemented

IAD charging mechanism

23 IAD charging mechanism  Currently IAD is charged by an account basis  Accounts are for a specific shipper short code  Current basis of charging is the most cost reflective given current system configuration  Some customers have asked for a review of potential alternative charging approaches  Alternatives are likely to lead to price changes for all customers therefore need to have customer consensus to review

24 IAD charging mechanism – potential alternatives  Alternatives  By an account that accesses all of a company’s shipper short code  On a transactional basis  Proposed review to include  Identification of alternatives  Impact on system and processes  Cost of change  Timescales  Price impact for customers  Consensus to proceed? Discuss

AOB

26 SPAA/User Pays  There are differences between SLAs  Feedback from some customers is a desire to have them more aligned  Happy to explore options and implications with customers  How is the best way to take this forward?  Any change will have to be go through the agreed governance process for User Pays Thoughts?

Summary and next steps

28 Objectives  Work with you to incorporate change mechanism within the contract  Develop effective User Pays governance  Listen to you and respond constructively  Seek ongoing open dialogue and feedback  Facilitate the development of User Pays in the best interest of the industry as a whole Customer Focused Collaborative Constructive Open

Contract Refinements Register

30 Contract areas requiring review ClauseTextComment 2.6The parties agree that there is no obligation on the Customer to issue any requests for the provision of the Services, nor any obligation on the part of xoserve to accept such requests. Amend to cover xoserve to reasonably accept service requests 3.4xoserve may from time to time add additional Service Schedules to these Conditions by publishing the same on the Website. In the event of an additional Service Schedule the Agency Charging Statement may require modification accordingly. Any such modification shall be made in accordance with the provisions of Special Standard Condition A15 of the Transporter’s Licence. The addition of Service Schedules shall not amount to an alteration or change of these Conditions or of the Service Schedules for the purposes of this clause. Amend to be more explicit re the ACS modification e.g. “to include the Charges for the services detailed in the additional Service Schedule"

31 Contract areas requiring review ClauseTextComment 4.2To enable xoserve to perform the Services, the Customer agrees to provide xoserve with any and all information, data and/or other materials which xoserve may reasonably request from the Customer from time to time. The Customer shall use all reasonable endeavours to ensure that any and all information, data and/or other materials which it provides to xoserve will be complete, accurate and up to date as at the date of its submission to xoserve. Amend to limit clause to data only relating to the services provided 5.8The Customer shall be responsible for the payment of any and all bank charges which may be incurred (either by the Customer or xoserve) in the payment and receipt of payment of xoserve's invoices. Amend to be more clear on requirements

32 Contract areas requiring review ClauseTextComment 7 Data Protection Clauses 7.4 and 7.5Comments received and being reviewed. 7.6If any data held by xoserve relating to and/or provided by the Customer is lost, damaged or otherwise destroyed due to xoserve's own negligence and/or breach of the Contract, xoserve shall use all reasonable endeavours (at its own cost and expense) to reconstitute such data from any back up copies it may have. The Customer shall provide xoserve with all such assistance as xoserve may reasonably request to assist in the re-instatement of the data. Comments received re last sentence – regarding payment for all reasonable expenses incurred.

33 Contract areas requiring review ClauseTextComment 8.3The obligations of confidentiality shall continue indefinitely except they shall not apply to information: Amend to limit of 5 years 10.1If the Customer wishes to terminate a specific Service Request or the Contract it may do so on not less than 28 days’ written notice in accordance with the provisions of clause 12.7 on condition that (subject to any specific provisions in any of the Service Schedules) the Customer pays any and all sums then accrued for Services performed under any Service Request up to and including the date of termination and any applicable early termination charges as set out in the relevant Service Schedules. Comments received re what if xoserve action leads to termination (also 10.4). Under review.

34 Contract areas requiring review ClauseTextComment 11.3Neither party shall be liable (including without limitation to refund Charges or pay liquidated damages) for failure to perform and/or any delay in performing any obligations (other than obligations as to payment) to the extent that such failure and/or delay is caused or contributed to by a Force Majeure Event. The party which suffers a Force Majeure Event shall use its reasonable endeavours to mitigate the effects of the Force Majeure Event and to recommence performance of its affected obligations as soon as possible and to the extent reasonably practicable. xoserve will not charge the Customer for Services which have not been provided/made available to the Customer due to any Force Majeure Event affecting xoserve. Amend to cover circumstances where customer pays in advance for services 11.5Without prejudice to Section U1.9 of the Uniform Network Code, the ……….. To be amended to cover all of UNC, not just specific clause

35 Contract areas requiring review ScheduleTextComment Schedule 1 Contract ManagerAmend to cover this being a named person within xoserve Schedule 4 IntroductionAdd reference to normal operations include daily re- fresh. Schedule 7 Clause 4.4 For the avoidance of any doubt, no reduction to the Charges shall be applied in the event that there is any failure to amend the Customer Password in accordance with the provisions of paragraph 2.5.3, nor shall xoserve incur any liability as a consequence thereof. Amend to cover for liabilities if xoserve fail to update password within required time.