1. Current system regime – options for change Gareth Evans

2. Impacts of process  Shipper feel unable to rely on costs, so difficult to justify internally, except by scale.  Similarly long implementation lead times cannot be reconciled.  Business solution development hampered by apparent disconnect between public discussion and system development.  Process seen to be overly rigid at times, and slowing down industry change.  Excessive time spent debating appropriateness of cost allocation.

3. Impacts of process  User pays means shippers will pay for changes if progressed inside, or outside of the UNC.  Shippers have much greater control over costs and processes outside of the UNC as working outside of monopoly environment.  Resulted in movement of services to 3 rd parties (NRPS, AUGE, AMR datahub), rather than with xoserve.  Risk of fossilisation of xoserve systems/processes.  Increase in complexity in governance (creation of 3 rd party vehicles, increasing reliance on UNCC/Panel for oversight).

4. Principles for Change  Two guiding reasons why process felt to be inadequate:  Costs cannot be verified by Shippers.  Lack of oversight over xoserve activities means Shippers prefer alternative routes.  Two principles need to be furthered to improve framework:  Transparency  Rigour  Following are a series of possible options that would further these two principles.

5. Oversight Committee  Creation of committee to handle detailed change management activities.  Expect to be a working committee that would evaluate changes when raised and actively work to identify costs, in particular efficiencies.  Would have access to information so it can challenge solutions and build assumptions.  Composition (fixed or variable depending on change?)  Shippers  Transporters  Xoserve  Adds another layer to the change management process.

6. Board Structure Changes  Placement of Shipper representatives on xoserve’s board.  Can be executive or non-executive members.  Would expect to have same powers/responsibilities as other board members.  Gives Shippers access as well as a say in xoserve activities.  Does not alter xoserve day-to-day activities.  Would require changes outside of the UNC.

7. Tender of processes  Xoserve tenders for some/all services, as opposed to providing them internally.  Gives flexibility on service provision.  Brings commercial pressures to bear.  In itself does not increase transparency on process, would increase confidence that costs are efficiently incurred.  Would require licence changes.

8. Legal/complete Separation  Xoserve is legally/completely separated from transporters  Three ways of doing this.  Creation of wholly owned-transporter entity with separate board and framework (Elexon Model)  Creation of separate licence entity, appointed by tender by regulator (proposed DCC model).  Creation of organisation equally owned by all Transporter/Shipper licence holders (SPAA/MRA model).  Gives maximum transparency as ownership is effectively industry-wide.  Cannot be progressed in the UNC.