1. CIRED presentation Improving Quality of Service – Information and Incentives in the GB Electricity Industry Alan Friday (ERA Technology Ltd), Chris Watts (Ofgem) Mott MacDonald

2. CIRED presentation Contents  Overview of IIP  Audit framework  Statistical work  Overall impressions  Results of the audit

3. CIRED presentation Overview of IIP  Address known weaknesses of RPI-X regulation for the DNOs –Improve quality of service data –Improve balance between incentives for cost efficiency and quality of service  Key quality of service measures identified as being: –Frequency and duration of supply interruptions –Speed and quality of telephone response

4. CIRED presentation Overview of IIP (2)  Over past 2 years Ofgem and the industry have been working to ensure that quality of supply information is –accurate –as consistent as possible across companies  To achieve these goals Ofgem has put in place: –standard definitions and guidance –minimum levels of accuracy for reporting interruptions –annual audits of data

5. CIRED presentation Overview of IIP (3)  New quality of service incentive scheme in place on DNOs from 1 April 2002 to 31 March 2005  Up to 2 % revenue at risk (£4 million)  Rewards and penalties for performance against own targets for number and duration of interruptions  Relative scheme for quality of telephone response

6. CIRED presentation Accuracy MPAN’s Connectivity Model Stage 1 Statistical Analysis Sample Size & Make-up Ofgem’s requirements Stage 2 Sample Accuracy Final Accuracy Audit of Reporting Stage 3 Audit framework

7. CIRED presentation Statistical analysis- nature of interruption data  Data is highly skewed Mean = 191 Median = 12  = 817  Usual method using sampling charts based on normal distribution not applicable

8. CIRED presentation Statistical analysis- describing the data  Data fitting software used to investigate which distribution best describes the data  Lognormal provided the best fit  Characterised by 50% value (M) and slope (S)  Iterative process used to define sample size

9. CIRED presentation Audit process  Data from each DNO analysed to determine sample sizes for low voltage and higher voltage interruptions  Specific incidents selected and communicated to each DNO to allow preparation  Each incident scrutinised by audit team to determine appropriate CIs and CMLs  Audited and reported values recorded in incident work book  Workbook for each DNO used to determine accuracy of measurement system

10. CIRED presentation Results of the audit  Main sources of inaccuracy were: –inaccurate reporting of customer numbers before new connectivity systems were introduced –manual intervention in incident reporting –inaccurate reporting of customer numbers for LV faults affecting only part of a feeder –missing restoration stages –incorrect incident start times

11. CIRED presentation Overall impressions  Impressive amount of work has been done by all DNOs in developing their systems to meet accuracy targets  Welcome the commitment that DNOs have made to the audit process –preparation of audit trail –availability of appropriate staff  Culture change in many DNOs emphasising importance of correct information