Design Advisory Board - Ofgem

Design Advisory Board Meeting 9

Anna Stacey

19th September 2019

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Agenda

1. Welcome and meeting overview

2. Proposal for TOM development phase and DAB refresh (Ofgem)

3. Summary of consultation responses to the DWG Transition

Approach (ELEXON)

4. DAB views on Final report on preferred TOM and Transition

Approach (Ofgem)

5. Wrap up and next steps

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Project Update

Proposed Governance for Development Phase

Agenda

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1) DWG’s Next Steps

2) Proposed Governance structure

I. Creation of two new industry groups

II. TOM Development principles

3) DAB ToR update

I. Broader scope

II. Meetings on an ad-hoc basis

Next Steps Identified by the DWG

In the final report the DWG identified next steps, which included potential quick wins and areas of the TOM that require further consideration:

• Areas for further consideration:• Rationalisation of industry data items• Exception reporting for TOM data services• Interfaces between data services, BSC central and registration systems• Data transfer• GSP group correction• Export settlement• ‘Run off’ of old settlement• PAB and TDC performance targets under the TOM• Identifying impacted sections of Industry Codes

• Potential quick wins:• Improvements to EHHS – recommended to be taken to issue group• TDC to consider introducing ratcheted materiality now - Recommended• Moving NHH Advanced CT meters to existing HH arrangements – not

agreed• Introduce threshold above which UMS must be HH – not agreed• Incentivising suppliers to submit meter readings more frequently – not

agreed

Proposed Development Phase Governance: New structure

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• Standing down the DWG – Final report delivered

• Move into the next phase with the creation of 2 new industry groups: CCDG & AWG

SRO – Decision Maker

Design Advisory Board

Ofgem TOM TeamStakeholder Engagement

Architecture Working Group

Code Change and Development

Group

OfgemTOM Board

OfgemProject Board

Proposed Development Phase Governance: CCDG & AWG

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• CCDG & AWG

• Similar relationship to DAB as DWG

• ELEXON chaired

• CCDG – code changes and outstanding details of the TOM

• Will agree a work plan for Ofgem to approve. Expected to last 12-18 months

• AWG – system architecture design

• Will agree work plan for Ofgem to approve. Certain milestones will need to be met before FBC publication.

• Ofgem Technical Consultant

• Provide Technical Steer

• Ensure discussions aren’t biased in favour of any party

Proposed Development Phase Governance: Development Principles

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• Development Principles – building on the existing Design Principles

• System architecture focused

• Development Principles:

• Potential central database of HH data

• Data & communication standards

• Security Standards

• Use of HH data for Load Shaping & other BSC services

• Transition

• Data Service Qualification

Proposed Development Phase Governance: updated DAB ToR

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Updates to the DAB Terms of Reference:

• CCDG & AWG added, DWG removed

• Scope widened – we are particularly interested in the DAB’s expert advice to add to evidence we are gathering on the impact assessment & access to data

• Meetings more ad-hoc as not tied to CCDG & AWG output

• Work plan provision removed

• House keeping – removed old terms

1.) Does the DAB support the proposed changes to the ToR’s?

DWG Transition Approach Consultation Responses

MHHS TOM Transition

19 September 2019

Kevin Spencer

Collated responses

DAB 9

Consultation Responses

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We received 25 responses.

■ Responses were received from:

– Large Suppliers

– Small Suppliers

– LCCC

– DCC

– Citizens Advice

– Distribution Businesses

– A Meter Administrator

MHHS TOM Transition: Consultation Responses

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■ Ofgem SCR / MHHS Programme considerations

– MHHS implementation process/plan following FBC

– Customer experience/education

– Architecture

– Commercials and contracts

■ Passed to PAB and/or TDC as appropriate

– Performance Targets and Disputes Process

■ Detailed solution development for future industry group/s

– Rationalising data items, Exception reporting, Interfaces to Data Service, Registration, GCF,

scaling weights, Elective HH improvements, Settlement of Export, ‘run-off’ arrangements

■ DWG considerations for Stage 2

– Any themes not captured by the above


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Key Themes

■ Clarification on edge cases eg. Domestic CT, related meters, behind-the-meter, multiple

suppliers and Export under the future arrangements.

■ May be merit in sub dividing MCs that cover domestic and non-domestic smart meters.

■ Could run the TOM earlier using default profiles (profiling), whilst data for load shaping is

collected.

■ Consumers could change their metering to avoid capacity charging.

■ DNO costs to moving Measurement Class may outweigh any benefits.

Question 1: Do you agree with the DWG’s proposed mapping for Metering System types to Market Segments?

Yes No Neutral/Other Not Answered

16 0 3 6


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Key Themes

■ No benefit in migrating to elective then migrating again, as brings costs and complexities.

■ Technically feasible but not supported by all Suppliers, based on HHDC processing rules.

■ Value of developing Elective process depends on when the MHHS TOM is implemented.

■ Elective can deliver modest benefits in the shorter term; processes should be improved.

Question 2: Do you believe it is feasible to use the elective HHS process to migrate significant numbers of MPANs to HHS as an interim step in the transition process?


9 9 4 3


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Key Themes

■ Performance measures should be targeted at organisations responsible for resolving errors.

■ Performance measures currently don't allow time for issues to be resolved.

■ Need to consider industry payment schedules which are linked to settlement runs.

■ New/changed performance serials need to be clearly understood upfront.

■ Need tight definition of what can be considered 'outside a supplier's control‘.

■ Settlement run timing should consider other defined processes e.g. DCC fault resolution.

■ Pre-requisite should require proportion of Smart-SP

Question 3: Do you agree with the PAF Assumptions and Principles and that all the potential impacts on the PAF have been identified?


13 6 3 3


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Key Themes

■ Phased approach should benefit industry parties through lower cost.

■ Need to consider timescales and interaction with Faster Switching.

■ Parties may choose to delay qualification until later in the transition period.

■ Should clarify what the MDS is and what it is not ie. MDS performs aggregation for settlement

but also facilitates data access for flexibility aggregators etc.

Question 4: Do you agree with the phased approaches proposed for BSC and Registration Systems?


14 2 5 4


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Key Themes

■ MSS should have a DUIS role created so that it can function independently of supplier

■ PSS should be a qualified role so that it can be subject to BSC monitoring/auditing.

■ PAF should account for a drop in NHH performance as MPANs are migrated to SDS.

■ Phased approach creates problems where MPANs revert to legacy NHH arrangements.

■ Need clear lines of responsibility to ensure volume is not double-counted across sectors.

Question 5: Do you agree with the phased approach proposed for the Smart and Non-smart Market Segment?


17 1 3 4


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Key Themes

■ Should qualify ADS before any migration so that HHDA doesn't need to be upgraded to handle

higher volumes of data.

■ Advanced meters are first being upgraded to HH under current process, then moved to the

TOM. Need to avoid issues as with P272.

■ Need to consider customer-appointed agents.

■ Incorrect assumption: non-domestic customers have a choice of metering and many WC sites

will continue with advanced meters on an enduring basis.

■ Shouldn't encourage Advanced WC to change to smart meters.

Question 6: Do you agree with the phased approach proposed for the Advanced Market Segment?


16 2 2 5


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Key Themes

■ Should qualify new services before mass migration to avoid investment in temporary systems -

e.g. shouldn't modify HHDC to use Wh.

■ Need to consider how to treat NHH customers with small EACs.

■ NHH vs. HH UMS not based on a threshold; a handful of NHH UMS customers are very large.

■ Transition might coincide with a ramping up of UMS end points (lamp post charging).

■ Need to account for customer involvement in the process.

Question 7: Do you agree with the phased approach proposed for the Unmetered Market Segment?


14 3 2 6


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Key Themes

■ Would be helpful to describe how transition would be governed or orchestrated.

■ Need to account for impacts of qualification, data cleanse, migration timeframes, credit cover,

forecasting, significant CoMCs, SEC accession, DCC activities and other industry changes.

■ Need entry/exit requirements for each phase, data to support shortened settlement timetable,

plan for moving the standing data.

■ Request explanation for "end-dating of LLFC Ids relating to DUoS tariffs in MDD".

■ Architecture is a key dependency but is not included.

Question 8: Do you agree that the critical path captures all the key activities and dependencies?


9 8 4 4


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Key Themes

■ Should consult when the market has mostly moved to HH settlement; too early to decide now

because smart meter penetration/distribution is not understood.

■ Need changes far in advance; many business process are linked to the settlement timetable.

■ Need an idea of when transition to new settlement timetable will be triggered because LCCC

have a full schedule of system changes and a 12+month lead time.

■ Decision to reduce settlement timetable should be taken nearer the time based on market

monitoring and clearly defined trigger points.

■ Settlement timescales will create a billing risk for suppliers.

Question 9: Do you agree with the DWG’s proposed approach for transitioning to the revised Settlement Timetable?


14 2 5 4


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Key Themes

■ DF run can potentially be brought earlier, in time, following continual review.

■ Need to review RF performance to assess the details of the dispute materiality thresholds.

■ Consider mechanism for parties to recover mis-settled energy outside the disputes process.

■ Shorter settlement timetable means more disputes and this needs to be costed.

■ Materiality threshold should be low enough to settle legitimate disputes, otherwise there will

be inaccurate settlement and more costs to suppliers.

■ Materiality thresholds need to be reviewed.

Question 10: Do you agree that the DWG’s proposed Dispute Timetable and approach to materiality strikes an appropriate balance between shortening timescales and correcting material Settlement errors?


13 2 3 7


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Key Themes

■ During transition need checkpoints to monitor progress against principles.

■ Avoid temporary arrangements being introduced for transition, increasing costs.

■ Not enough detail regarding suppliers reverting to NHH arrangements or customers switching

supplier during the transition period.

■ Should consider impact on end consumers/bills.

Question 11: Do you agree that the DWG’s proposed transition approach aligns with the nine High Level Transition Principles set out for the transition approach?


19 1 2 3


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■ Transition approach is too high level to inform an accurate cost estimate in Ofgem's RfI.

■ Areas for discussion: GCF, align implementation with TCR, switching supplier when suppliers at

different stage of transition, Ofgem support for industry engagement of consumers.

■ There will be extra work for DNO relating to customer-provided UMS information.

■ Need to handle transition carefully to ensure it is smooth and no unnecessary or excessive

costs are incurred.

■ Should cover run off arrangement and how this affects different parties eg. data aggregators.

Question 12: Do you have any other comments?

DWG preferred TOM and Transition Approach

Key points from DWG Final Report

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1) The DWG preferred Target Operating Model

I. Key features

II. Aggregation

III. Does the TOM align with the Ofgem Policy decisions

2) The settlement timetable

I. Including the final disputes run

3) The DWG transition approach

4) Innovation, competition and flexibility

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DWG Preferred Target Operating Model

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DWG Preferred TOM: Aggregation

• There was a minority view on the DWG TOM where one member believed that aggregation of meter data for settlement purposes should continue to be a separate, competitively-provided service outside of central settlement services.

– This minority view was echoed in the Preferred TOM consultation responses.

• The minority view is:

– There is no good reason to centralise aggregation and remove competition in the service;

– It is not proven that centralisation will deliver greater quality, efficiency, cost-effectiveness or innovation than a competitive service (the member cited the costs of the existing Non Half Hourly (NHH) Data Aggregation systems maintained by ELEXON on behalf of Data Aggregators);

– Creating a central hub of MPAN-level HH data creates risks to Settlement if this is not secure; and

– Centralisation removes an opportunity for Data Aggregation to become an area for greater differentiation between agents in the future.

• Details on the minority/majority view are set out in Attachment B of the DWG report: DWG’s Development of the TOM. Pg 7-9.

https://www.ofgem.gov.uk/system/files/docs/2019/02/dwg_mhhs_tomv1.1_attachment_b_tom_development.pdf

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DWG Preferred TOM: Aggregation

• Before making a final decision on the TOM, Ofgem has released a Request for Information that asks for costs and impacts based on both aggregation within central settlement systems and aggregation outside of central settlement systems.

– We will use the responses we receive from this to develop a draft impact assessment for consultation.

• Ofgem needs to provide a steer on which TOM to develop in the new workgroups in order to allow the work to progress. Although its important to note that depending on the findings of the draft impact assessment, Ofgemmay direct the workgroups to work on an alternative TOM.

1.) What do the DAB see as the key opportunities and risks on the aggregation aspect of the preferred TOM?

2.) Does the DAB think the development of the DWG preferred TOM should be progressed whilst further information and evidence is being gathered?

https://www.ofgem.gov.uk/publications-and-updates/request-information-electricity-settlement-reform

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DWG Preferred TOM: Policy Decisions

• Supplier Agent functions – Ofgem’s decision:

‘our work on market-wide settlement reform should not include centralisation of agent functions. Additionally, we think there may well be a case for future models where data is

not aggregated for submission into central settlement systems.’

NB: The final decision on where aggregation should happen will need to take into account other factors including security and privacy considerations, and our Impact Assessment.

• Access to Data for Settlement Purposes – Ofgem’s decision: – Ruled out pursuing either of the enhanced privacy options. – Domestic consumers will be on an opt out – Microbusiness consumers will be mandatory– Export will be mandatory– HH collected for settlement purposes can also be used for forecasting– Customers with existing smart meters that were installed before the licence

amendments to reflect new access to data framework will remain on opt-out until they switch tariff or supplier

3.) Does the DAB agree the DWG preferred TOM aligns with the policy decisions made to date?

https://www.ofgem.gov.uk/publications-and-updates/decision-agent-functions-under-market-wide-settlement-reform

https://www.ofgem.gov.uk/publications-and-updates/decision-access-half-hourly-electricity-data-settlement-purposeshttps:/www.ofgem.gov.uk/publications-and-updates/decision-access-half-hourly-electricity-data-settlement-purposes

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Settlement Timetable

Run Name Proposed timing Current timing

Interim Information (II) run

4 WDs 4WDs

Initial Settlement (SF) Run

5-7 WDs 16WDs

Interim ReconciliationRun

33 WDs 39WDs (and then removal of R2 and R3 runs at 5 and 7 months)

Final Reconciliation (RF) Run

4 months 14 months

Post Final Settlement (DF) run

20 months (which

would include a ratcheted materiality)

28 months

4.) What are the DAB’s views on the proposed settlement timetable, including the disputes run (at 20 months).

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DWG Transition Approach

• ‘DWG Attachment B_Transition Approach’ document contains the detailed transition approach.

• The DWG Transition Approach uses a series of phases. These can be summarised as:

• Governance and Code changes• Qualification of new TOM services• Migration/adoption of MPANs by the new TOM services• Parallel running with new TOM services and existing agent

functions• Cut over to the new TOM• Cut over to the new settlement timetable

https://www.elexon.co.uk/documents/groups/dwg/dwg-final-stage-report/

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DWG Transition Approach

• Key points to note from the DWG recommendations:

• It will be a phased transition approach, with incremental phases –no ‘Big Bang’.

• Different market segments can transition at different times. • Move to the new settlement timetable is to occur once the full

TOM is in place • The PAB will deploy/adjust PAF techniques as appropriate during

transition

5.) What are the DABs views on the DWG Transition Approach?

6.) Does the DAB agree the development of the DWG transition approach should be progressed by the new workgroups?

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DWG Preferred TOM and innovation, competition and flexibility

• The DWG has designed the TOM to be as flexible as possible.

• The consultation responses to the Preferred TOM confirmed that the TOM is not a barrier to future market innovation.

• An Ofgem Working Paper has been published, which sets out our considerations on potential future changes which the TOM design would need to take into account.

8.) Does the DAB believe the DWG Preferred TOM and Transition Approach are consistent with the TOM strategic objectives and meet the requirements of the design principles?

9.) Does the DAB consider that the DWG preferred TOM and Transition Approach:

a.) promotes innovation

b.) promotes competition

c.) facilitates a smart, flexible energy system

d.) reduces the barriers to entry into the energy market for new entrants?

https://www.ofgem.gov.uk/publications-and-updates/future-enabling-target-operating-model-market-wide-settlement-reform

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Next Steps

Next Steps

• Next DAB: 21 November 2019

• Will be going through RfI responses/Draft IA

• Access to Data work

• Actions

Design Advisory Board - Ofgem

Documents

Transcript of Design Advisory Board - Ofgem