1. User Forum
20 September 2018 1

2. Agenda Item * Description Who Time 1 Registration
Tea and coffee on arrival
Trading parties
09: :00
Live video streaming starts*
10:00 2
Welcome
Housekeeping
Update on actions
Steve Arthur
10: :15 3
Update on market improvement activities since July
Introduction to the new suite of dashboards and key observations
Update on data improvement plan activities
Steve Arthur / Mike Robertson
10:15 – 11:00 4
3x half hour group sessions to discuss insights from dashboard charts and identify key blockers, dependencies and changes required to deliver improvements (online sessions to be facilitated for Skype participants)
Update on MPOP Data Improvement activities and plans
(Coffee available from 11:30)
11:00 – 13:00 5
Lunch
13:00 – 13:45
CPM008 Redistribution of Market Performance Standards Charges change proposal
 Nigel Sisman / MOSL
13:45 – 14:30 6
Market Design
Decision on RF Settlement Run
Update on Panel Plan and Change Panel
TEIC Work Plan
 Adam Richardson / Rebecca Mottram
Zainab Mohammed
14:30 – 15:15 7
AOB wrap up and close
15:15– 15:30
User Forum, September 2018

3. Welcome and Update on Actions
Steve Arthur

4. User Forum Actions ID Status Action Date Raise Owner
Target Completion Date
Comments and Update
UF06_01
Recommend Closure
MOSL to look at costing around disputed runs if required (G reads)
14 June 18
Steve Lyon / Steve Arthur
Costings are being looked at within MOSL and information will be shared before RF Settlement comes in to effect.
UF06_02
TPs to generate test scenarios around G reads, MOSL agreed to outline additional test scenarios.
TPs / MOSL
RF Settlement run decision by Ofwat will be covered later today
UF06_03
TPs to identify additional monitoring metrics to be reported as part of top 10 DQ initiatives.
TPs
Will be covered as part of the MPOP
UF07_1
Update on NAPS change proposal
19 July 18
Market
Design
Awaiting decision from Authority
UF07_01
Publication of the MPOP and next steps
19th July
Market Performance
This is will be discussed in the next agenda item
User Forum, September 2018

5. Market Performance Operating Plan

6. Part One – Key Information and Updates6

7. Update on key market improvement activities since July
July – draft MPOP published for consultation
August – development of underpinning plans, governance and initial key deliverables
September – launch of trading party data improvement plan activity
July – trading party feedback received
September – release of three new dashboards to support enabling efficient settlement and switching
User Forum, September 2018

8. Feedback on the MPOP
Feedback on the MPOP received from 13 respondents, representing a range of wholesaler, retailer and independent views
The responses were broadly supportive, with respondents generally welcoming the MPOP and the priority outcomes/plans to be progressed
Key themes emerging from feedback where further clarity has been requested include:
Overall governance of MPOP and the ability to plan and resource the activities
The overall process by which market issues have been included and prioritized
Whether the resolution of the RF settlement issue is being prioritised within MPOP
Whether the MPOP sets out the right balance between a self-regulation approach to improvement versus a more coordinated central approach.
In summary, MOSL welcomes the feedback it has received and is now progressing the MPOP as set out in the draft documentation. A baseline version of the MPOP, with minor updates to address areas of feedback received, is due to be published alongside copies of the consultation responses received.
User Forum, September 2018

9. Introduction to the new suite of dashboards
Three new dashboards have been developed and launched, covering (1) retailer settlement, (2) wholesaler settlement and (3) switching
Launched to trading parties on 13 September via communication to Contract Managers
An associated guidance document and a short film introducing the dashboards is available on the MOSL website on the Market Planning & Risk page
These dashboards are ‘V1.0’ – further iterations of these dashboards are planned, as well as the development of a further dashboard in relation to regional wholesaler performance
MOSL is also in the process of developing detailed SPID/meter level reports for each trading party
User Forum, September 2018

10. Update on data improvement plan activities
Part A: summary information on in-flight or planned data improvement activities that are expected to have an impact on settlement
Part B: targets and planned trajectories for making improvements against specific metrics (YVE and long-unread meters for retailers; unpaired SPIDs, non-market meter reads and meter location data for wholesalers)
User Forum, September 2018

11. Update on data improvement plan activities
Activity
Responsible
Date
Retailer and Wholesaler Settlement dashboards published
MOSL
13/09/18
Request for Information for Data Improvement Plans issued
User Forum discussion session regarding overall approach
20/09/18
Submission of completed data improvement plan templates
trading parties
12/10/18
Presentation of initial market-level summary to the Panel and MPC
31/10/18
Commence monthly cycle of review and tracking
Nov 18  
User Forum, September 2018

12. Part Two – Breakout Session12

13. Breakout sessions Blockers Dependencies Changes required
Format: three groups to rotate around stations to review/discuss key insights from the dashboard charts and to capture the information below
To successfully deliver improvement, what needs to be addressed in terms of the primary…
Blockers
Dependencies
Changes required
At the overall market level
Specifically for wholesalers
Specifically for retailers
User Forum, September 2018

14. Backup – dashboard screenshots

15. Document title here
User Forum, September 2018

16. Document title here
User Forum, September 2018

17. Document title here
User Forum, September 2018

18. User Forum, September 2018

19. Lunch 19

20. Ofwat’s referral of CPM008: ‘Redistribution of Market Performance Standard Charges’
Nigel Sisman 20

21. Ofwat referral of CPM008 Background
Trading parties pay Market Performance Standard Charges (MPSC)
Code provisions attribute monies (‘pot’) to trading parties proportional to MOSL charges
CPM008 proposed to have separate retailer and wholesaler ‘pots’
To avoid financial transfer from retailers to wholesalers given major transaction volume differences
Apportionment proportional via MOSL charges.
Ofwat considered the proposal is likely to result in weak incentives for good performance for wholesalers and large retailers.
Ofwat advocated further work to improve on the proposal or to develop an alternative.
Ofwat referral of CPM008
User Forum, September 2018

22. Market Performance Committee (MPC) activity
The Panel requested the MPC to:
Consider Ofwat’s comments
Endeavor to return to the Panel in October with a revised proposal (if possible)
The next slide further reflects the MPC’s deliberations
Section 1
Background
Section 2
Analysis of incentive and redistribution properties
Section 3
Early experience of outcomes
Section 4
MPC deliberations
Section 5
Analysis of performance-based approaches
Section 6
Wider considerations
Section 7
Conclusions
Appendix 1
Supplementary data tables
Appendix 2
Example of approach 4
Appendix 3
Example of adaptation of approach 3
Document title here

23. Key deliberations Should the “pot” be redistributed? No Yes
Maintains incentives associated with payment of charges for performance failures. Promotes clear, focussed decision making about trading party efforts and expenditures to manage performance and MPS liabilities.
Should the “pot” be redistributed?
Charges and redistribution should not generate a net charge to the trading party community (because otherwise it might contribute to costs that will be transferred to customers). No
Yes
Pot distributed “outside the market”
Pot distributed “within the market”
Non-performance based e.g Code, CPM008
Pot distributed “within the market”
Loss of money from the industry unacceptable – imposes extra cost on consumer
Challenge to find good, efficient schemes in a timely way – perhaps a longer term ambition
Counter intuitive outcomes – unacceptable to Ofwat
Appears attractive – complements MPSC provided good approach can be found!
User Forum, September 2018

24. Seeking a performance based attribution approach
Four approaches were considered Approach 3 does not attribute all monies, so might need refinement. Given time pressures, MPC’s marginal preference was for approach 4. No
Metric
Approach 1
On-time tasks
Success fee per task – On time tasks using two separate (wholesaler/retailer) pots 2
Success fee per task – On time tasks using one pot 3
On-time tasks expressed as a % of total tasks
Percentage on-time tasks multiplicative adjustment to MPSC 4
Banded approach tilted to reward good performance
User Forum, September 2018

25. Understanding approach 4
Initialisation
Define number of zones
Define redistribution multipliers*.
Application
Rank trading parties by performance
Stack MPS charges in ranking order
Define zone boundaries consistent with aggregate MPS charges
Attribute redistribution credit taking account of components in all zones.
*Redistribution multiplies should sum to number of zones if redistribution is to match aggregate MPS charges
See report Appendix 2 for more comprehensive information
User Forum, September 2018

26. Approach 4 - initialisation
Consider an illustrative example involving five zones
Concepts
The “MPS charge stack” is divided into equal-sized zones
Each zone is associated with its own multiplier
The MPS charges associated with better performing zones attract more favourable multipliers than those in lower performance zones
Cumulative threshold boundaries % 20 40 60 80
100
Redistribution multipliers
0.5
1.0
1.5
2.0
User Forum, September 2018

27. Approach 4 - application
Concepts
Each trading party has a performance value and an MPS Charge
Trading parties are first ranked by performance and then a stack of the charges is made
Each block in the stack represents the size of the MPS charge
The stack is then partitioned into the zones
MPS charges then attract the relevant redistribution credit depending upon the zone
In what follows: if a trading party has a performance of 90 per cent and MPS charges of £25,000 then it will be represented as:
Position in stack determined by ranking associated with 90 per cent performance
Height of block represents £25,000
User Forum, September 2018

28. Approach 4 - application
Stack constructed from MPS charges for each trading party, with the best performing trading party at the top
MPSC
100%
TPs in this zone receive 2 x MPS charges as redistribution credit
Increasing performance,
Height of bar represents MPS charges for each TP
80%
TPs in this zone receive 1.5 x MPS charges as redistribution credit
60%
TPs in this zone receive 1.0 x MPS charges as redistribution credit
40%
TPs in this zone receive 0.5 x MPS charges as redistribution credit
20%
TPs in this zone receive no redistribution credit so face full exposure to MPS charges 0%
TPs straddling the zone will attract two different redistribution rates based on their components in each zone
User Forum, September 2018

29. … and a second numerical example (approach 4)
User Forum, September 2018

30. Approach 4: some issues from Skype Open House 12 September
Some issues were raised in Open House, initial response has been provided, for example:
Issue: Perfect performers won’t get a reward!
Yes, but perfect performance unlikely!
More general point arises from the principle of applying a multiplier to MPS charges (a measure of inadequate performance) as a reward for good performance
Issue: Isn’t it best to be at the bottom of the top band but with high charges?
Yes, best theoretical outcome, but difficult to achieve this position
Dangerous to contemplate reducing performance if risk of falling in “lower” zone
Effects easily mitigated by increased number of zones
If perverse behaviours occur these would be apparent in analysis of regime performance.
Issue: Cliff edge effect, a small performance change could move trading party into a different zone
Yes, but a positive to drive incentives
If perceived as dysfunctional then might be mitigated by more zones and less reward differentiation between zones.
User Forum, September 2018

31. Understanding refined approach 3
Initialisation
Define bands of trading parties by size
Two stage application
Define first attribution
Calculated as MPSC * performance factor
Define secondary attribution
Calculate rank of trading parties by performance (higher performance higher rank)
Calculate unattributed MPSC within band
Calculate individual trading parties secondary attribution based on rank weighting * unattributed MPSC
Individual trading party attribution = first attribution amount + second distribution amount
User Forum, September 2018

32. Application of enhanced approach 3
Approach developed to address issues associated with differing sizes of trading parties
“unattributed”
Primary attribution
Secondary attribution
Total attribution
MPSC
TPs ranked in terms of size using a metric eg. PIV
“Very large TPs”
“Large TPs”
Height of bar represents MPS charges for each TP
Secondary attribution
Unattributed monies apportioned in ratio 1:2:3 based on performance ranking
“Mid-range TPs”
“Smaller TPs”
Primary attribution = MPSC * Performance %
User Forum, September 2018

33. … and a second numerical example (enhanced approach 3)
Perhaps many ways to vary the themes in an enhanced approach 3?
User Forum, September 2018

34. Enhanced Approach 3: Some issues from Skype Open House 12 September (1/2)
Some issues were raised in Open House, initial response has been provided, for example:
Issue: Could some players gain disproportionate benefits if in a poor performance group?
The approach is designed to group trading parties into groups reflecting a measure of size. Individual trading party outcomes will be affected by the group to which they are allocated, their individual performance and their relative performance position (ranking) within the group.
The secondary distribution allocates the residual pot for the group and so the secondary distribution benefit is linked to performance levels in the group.
The effects, however, might be expected to be small and it is unlikely that the effects would detract from trading parties’ incentives to respond to the MPS charges themselves.
User Forum, September 2018

35. Enhanced approach 3: Some issues from Skype Open House 12 September (2/2)
Issue: Ranking approach may generate large differences in outcomes for even quite small (0.5-1 per cent) performance differences
The strict ranking has good incentive properties
0.5 per cent performance difference might represent a large number of transactions (particularly for larger trading parties)
If the issue is perceived as a problem then a banded approach where within the volume band trading parties are associated with performance ranges for ranking purposes then additional parameters could be defined. But this would further complicate the formulation.
User Forum, September 2018

36. Conclusion MPC under tight time pressure to meet Panel’s timeline
MPC notes Ofwat might lean towards no redistribution
However MPC believes redistribution is acceptable at least for this year
MPC has recently advocated approach 4 but could be persuaded otherwise.
However developing alternatives may take time and we risk ”timing out”.
Should MPC/Panel proceed with a performance based attribution recommendation and Ofwat decline then the industry might face a no-redistribution approach and some uncertainty as to whether monies are to be returned or how funds might be used.
User Forum, September 2018

37. Market Design Update – The Panel and Change
Adam Richardson, Market Design Director 37

38. Panel Plan – focus areas
(1) Promoting effective competition:
Credit
Developer services
(2) Reducing friction and complexity in the market arrangements:
Market performance
Trading disputes
Trade effluent
Effectiveness of bilateral arrangements
(3) Embedding good working practice and efficiency in market code governance:
Best practice change provisions
Panel and Committee governance
Data protection
User Forum, September 2018

39. Panel Plan - Review Consultation (summer 2018)
Responses (shared with Panel in August)
Revisions:
Drawing out the focus on the end-customer in the Panel’s strategic priorities
Credit, developer services, trade effluent and trading disputes updated to align with the latest information.
Next steps:
Panel to approve revisions (September)
Interim review (January 2019 – tbc)
User Forum, September 2018

40. Trade Effluent Issue Committee
Update on Committees 
Panel
TDC
MIMP
MPC
GDPR Issue Committee
Trade Effluent Issue Committee
Credit Committee      
Meeting held 22 August 2018
Currently working on new change pertaining to the materiality of trading disputes
OPSWG to raise change in Nov 2018
CPM008 to be brought back for decision at the November Panel
Meeting held 11 September 2018
Currently working on new change pertaining to Meter Networks validation rule amendment
Initial meeting to be held in autumn 2018
Post implementation review to start in Nov/Dec 2018
Will seek nominations for vacant seats
User Forum, September 2018

41. Last three months (June 2018 – August 2018)
Change Proposals
Panel and Committees
Trading Party Engagement 13
Changes Raised 1
New Committees / Groups Established 7
Consultations issued 4
Changes Implemented 17
Meetings held 96
Responses reviewed 12
Recommendations to the Authority 54
Papers published 14
Nomination requests
Implemented :
CPM010: Amendments to the Retailer Board Nomination Process
CPM011: MOSL invoices and payment terms
CPW019: Alternative Eligible Credit Support
CPW039: Deferral of Final Settlement Runs
Meetings:
Panel (6x), TEIC (4x), MPC (4x) and TDC (3x)
Consultations:
TDC (13)
CPW (13)
CPW (15)
CPW (19)
CPW (21)
CPW (14)
*CPM (1)
*CPM008 still ongoing
User Forum, September 2018

42. Change proposals raised in the last 12 months
User Forum, September 2018

43. Changes recently approved by the Authority
Title
Implementation Date
CPW010
Emergency Contact Details
28 September 2018
CPW019
Alternative Eligible Credit Support
31 July 2018
CPW025
Use of TCORRs on inactive data entities
17 May 2018 (R6.0)
CPW026
Removing SPID version design
CPW032
Amend H/04 form to clarify tariff effected date
CPW036
G/02 & G/03 Trade Effluent Form amendments and creation
CPW039
RF deferral - Deferral of Final Settlement Runs
31 August 2018
CPW040
Changes to the content of the NAPs Report
User Forum, September 2018

44. CPW039: Deferral of final settlement runs
Panel recommended CPW039 to Ofwat for approval (16 July 2018)
CPW039 was approved by Ofwat and implemented on 31 August 2018:
Initial period of deferral will expire on 31 December 2018, and in any event will be no later than 28 February 2019 (Ofwat amendment)
Panel will determine the catch-up timetable.
Implications and next steps:
Settlement data quality: proceed with data improvement projects
Future corrections: Removal of ‘G’ Reads in the Live Market (CPW041)?
Post-final settlement invoicing: resolution of discrepancy in the Wholesale Retail Code (WRC) (change proposal tbc)
User Forum, September 2018

45. Awaiting Authority decision
Change
Title
Panel Recommendation
Implementation
CPW038
Tariff Report Updates
Approve (June 2018 )
17 May 2018 (Release 6.0)
CPW037
Removing Error Codes list from CSD 0301
Approve (July 2018 )
5 Days after Authority approval
User Forum, September 2018

46. Changes (forward view)
User Forum, September 2018

47. Release summary – change proposals
User Forum, September 2018

48. Forecast release summary
28 September 2018 (Code Only)
Reference
Title
Status
Trading Party
CPW036
G/02 & G/03 Trade Effluent Form amendments and creation
Awaiting Implementation
TEIC
CPW035
General Enquiries (F/01 Form)
NWGB
CPW032
Amend H/04 form to clarify tariff effected date
South East Water
CPW026
Removing SPID version design
MOSL
CPW010
Emergency Contact Details
Anglian Water
26 October 2018 – Release 5.0
Reference
Title
Status
Trading Party
CPW033
Meter Effective to Date Field in MDS_METER Report
Awaiting Implementation
United Utilities
CPW028
Unpaired SPIDs
Awaiting Authority Decision
CPW043
CPW028 Housekeeping Changes
Draft Recommendation
MOSL
03 December 2018 (Code Only)
Reference
Title
Status
Trading Party
CPW045
Updates to the Service Management Interface
Draft Recommendation
MOSL
CPW044
Digital Certificates & Public Keys updates
CPW041
G read removal governance
In Assessment
Impact to CMOS
User Forum, September 2018

49. Forecast release summary
17 May 2019 – Release 6.0
Reference
Title
Status
Trading Party
CPW042
Provision of adding re–read flag into the MDS Meter Reads file
Draft Recommendation
Severn Trent
CPW040
Changes to the content of the NAPs Report
Awaiting Implementation
United Utilities
CPW038
Tariff Report Updates
Awaiting Authority Decision
MOSL
CPW025
Use of TCORRs on inactive data entities
South East Water
08 November 2019 – Release 7.0
Reference
Title
Status
Trading Party
DCP00X
CSD 0301 to enhance CMOS
Pipeline Change
MOSL
CSD 0101 & 0105 to enhance CMOS
Long Unread Report
United Utilities
TDC Materiality amendments
TDC
Volume Transfer Settlement Reconciliation
Seven Trent
Meter Networks validation rule amendment
TEIC
SPID Data Erasure
Vacancy challenge process
Thames
Retailer Notification process
Impact to CMOS
User Forum, September 2018

50. Trade Effluent Update
Zainab Mohammed 50

51. Overview
The Panel agreed to the establishment of the TEIC on 26 September 2017.
The TEIC was requested to design an appropriate approach and framework to be used in operating the Committee effectively. It was noted that the framework and approach should consider:
The consistency of issue recognition
Approach to prioritisation
Filtering market related trade effluent issues for consideration
Commonality of understanding, action and delivery
Limitations on Committee timeframe and resources.
User Forum, September 2018

52. Operational Practices
Overview of issues
Operational Practices
Learning
CMOS
Data 39 18 16 10
User Forum, September 2018

53. Operational Processes Training CMOS
Issues and Outputs
Operational Processes
Issues:
Temporary consents
Normal consents
Output:
CPW months in progress, due to be implemented next month
Training
Issue:
Knowledge and capability of participants in the market is inconsistent\incomplete
Training sessions
Jargon Buster
Do I need a consent?
SVAM Guidance
CMOS
Functionality is not specific to trade effluent requirements:
Change proposal to allow sewerage wholesalers to set up meter networks
Guidance on charging methodologies
User Forum, September 2018

54. Training
Feedback from 17 November session indicated more training would be welcome on:
In January, the TEIC committed to developing actions to address prioritised issues. Training and support materials:
Training
Operational Processes
Meter Networks
Charging mechanisms.
Guidance
G\02 and G\03 guidance
Jargon Buster
Consider items requiring a training plan
Do I need a consent?
User Forum, September 2018

55. AOB Wrap Up & Close

56. Thank You!