EBCC MEETING 25 th October 2013. AGENDA 1.0Introduction 2.0Minutes and Actions 3.0Operational Update...
-
Upload
jean-pearson -
Category
Documents
-
view
215 -
download
1
Transcript of EBCC MEETING 25 th October 2013. AGENDA 1.0Introduction 2.0Minutes and Actions 3.0Operational Update...
AGENDA
1.0 Introduction2.0 Minutes and Actions3.0 Operational Update4.0 Modification Proposals5.0 Significant Code Review Update6.0 Bank Ratings7.0 Review since April 20138.0 Focus for 2013/149.0 AOB
- EU Update - Winter Planning Prep - Risk Register - Voluntary Discontinuances
10.0 Date of Next Meeting
Modifications
• Mod 0429 Customer Settlement Error Claims Process– Implementation effective at April 2014– Xoserve to develop internal process – Energy Adjustments to be processed via ADS at average SAP
Market Operator Security Provisions
• Meeting was held with the MO on 17th October 2013.
• MO agreed to the final drafting approved by EBCC members and are happy to sign and approve the Prepayment Agreement
• Confirmation that the Deposit Deed will be in place with the required level of Security.
Security of Supply Significant Code Review
• OFGEM are now consulting further on DSR auctions with the industry and taking further interest in the impact on credit arrangements. – Meeting held on 14th October 2013 minutes published on Ofgem’s website.
Operating Process
Delegation of Authority
Shipper information
System access
Suspension of all services
Emergency MOD
Resource Cost Banking Services
Review sign off of credit payments
Reporting to ofgem/EBCC special arrangements
Review current rules
Succession + capability
MOD 233?
Skill set Exclude EBI availability
Availability
Suspension of holidays WLB of key staff
Daylight Limit
NGD Daily limits
Operating limits
Availability of CEO due to increased values
Contact list
Temporary shared area
Box account for communication
Delegated Authority levels
Priority of ScoringFor EBCC meetings Portfolio
growth
Communication interaction
commercial intelligence
reporting
Downgrade risk factor risk
Security arrangements
Party underwriting
Payment trends
Over or under delivery trends
FSRs number of cash calls over previous
period
Level of helpfulness
How they act in market
Ability to pay
D + B
Moody’s
S + P
EBCC Operation
National Grid input
Establish who from Xoserve
required
Conflict of interest
INCIDENTROOM
Ofgem’s role
Chair Availability
Quoracy
Gemserve members
appointment
Communication
Agree Adhoc appointment
process
Consider membership ofgem/another party
Priorities on orderOf discussion
Factors
Minutes
Checklists
Recording
Review timing
Resources
Relaxing current arrangements Business rules
Security
Cash collectionMarket Operator
EBCC Meetings
Cash calls
No changes proposed.
Existing rules apply- due to arrangements drafting + under UK termination process S.1.7.
timing for convention of meeting
Appeal ProcessResource issues
Extend time?
Reduce or suspend appeal notice
No appeal criteria
Still issue
Payment terms extend ?
Timing extend?- 4pm – end of gas day
Agree with EBCC members no validation
FSR
Consider suspension for a period beyond invoices issued and paid
Validate cash call suite
System solution for manual adjustment
Manually update letters/notices as we do currently
Cost of funding change
Communication of delivery
Faxes? Scan, email or file interface
Aggregate exposure
Accepting LOC from lower rated organisations
% of exposure underwriting
Process going forward
Suspending/ excluding peak SAP calc
Current Position
• Since April 2013 the global economic markets have remained fairly stable resulting in no significant downgrades.
• Royal Bank of Scotland, National Westminster are on possible downgrade and Citibank are currently on possible upgrade with Moodys, non of the FI’s are currently on watch with S & P.
• RBS, Loan to deposit ratio is currently on 100% in 2009 it was 130%.
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
>A
a1
/AA
+
Aa
2/A
A
Aa
3/A
A-
A1
/A+
A2
/A
A3
/A-Sep-12
Apr-13
Sep-13
Aggregate secured credit by rating band
2,20
0,00
0
0
26,0
80,0
00
0 102,
052,
000
128,
942,
000
66,9
73,0
00
76,8
54,0
00
133,
861,
500
135,
123,
000
1,77
5,00
0
1,77
5,00
0
3,50
0,00
0
64,9
12,0
00
56,5
80,0
00
117,
511,
000
114,
537,
,000
5,34
5,00
0
Impact of ratings review
• 4% of all FIs currently providing Security have been subject to a downgrade change during the previous 12 months by Standard and Poors and Moody’s Rating Agencies.
• Currently 61% of FIs are in the lowest categories of investment grade rating.
>AA+/Aa1
>AA/Aa2
>AA-/Aa3
>A+/A1
>A/A2
>A-/A3
FI Ratings April 2013
32%
20%
2%
8%
21%
8%
57%
4%
13%
100%
0%
Outlook
10% Possible Downgrade
90% Not on Watch
Moody’s Outlook
63% Negative
37% Stable
S & P’s Outlook
• Having completed a significant rating review throughout 2012 and again in June 2013. 10% of FIs are currently reported as possible downgrade.
• S&P are commencing significant reviews across a large number of FIs, with 63% showing a negative outlook.
10%
90%
37%
63%
Deposit Deeds
• Value of credit secured via Deposit Deed and LOC – comparison between April 2012, September 2012, April 2013 and September 2013
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
400,000,000
Apr-12 Sep-12 Apr-13 Sep-13
LOC Deposit Deed
32
2,1
62
,00
0
33
2,9
41
,50
0
17
,65
3,0
00
24
,43
6,0
00
34
2,3
94
,00
0
30
,76
1,2
50
36
2,3
85
,00
0
33
,47
4,0
00
Conclusions
• Security value whilst it has increased we have only seen a small increase on the Deposit Deeds since April 2013. Most Users are very settled with the Deposit Deed since they were introduced.
• Since the EBCR were revised in December 2011, we are continuing to see a movement from the higher banding A1 to A2.
• Continue to monitor those FI’s which are currently on possible downgrade
Review since April 2013
• Cash Collection figures on rolling 12 month performance highest remain the past 5 years.
• Cash Collection Monthly figures 100% over the past 12 months on 7 occasions.
• Continued pro-active engagement with Users reaching 70% of indebtedness to minimise Cash Calls.
• No Terminations managed - No financial losses• Security Renewals 100%• Energy Balancing Credit Rules revised 16th May 2013 to permit
smearing of recovered debt where the debt predates the Code Cut off Date.
• Sale of Lehman’s Debt completed.• Successful LRQA Audit
Focus for 2013/14 addressed at April 2013 meeting
• From the meeting held in April 2013, the following key areas were identified to focus on :-
– Increase the profile of the committee
– Emergency Credit Rules
– Watching brief on European
• Members to review if there are any other significant areas that they would like the committee to focus on.
Focus 2013/14
• EBCC Customer Satisfaction
EBCC Customer Satisfaction (Nov12)
92.00%
100.00%
92.00%
96.00%
92.00%
100.00%
92.00%
84.00%
96.00%
92.00%
100.00%
84.00%
93.33%
75.00% 80.00% 85.00% 90.00% 95.00% 100.00% 105.00%
Accountability
Customer Focused
Delivery of Commitments
Expertise
Flexibility
Professionalism
Partnership
Quality of Deliverables
Skill
Strategic Objectives
Trust
Value Added
Overall Average
Year on Year Comparison
EBCC Customer Satisfaction Overall Average
85.00%
92.50%
93.33%
80.00% 82.00% 84.00% 86.00% 88.00% 90.00% 92.00% 94.00%
2010
2011
2012
Nov-12
Nov-11
Nov-10
Current Position
• Congestion Management Procedures NC – Adopted in August 2012, first implementation is due to take place in October 2013 (MOD 449). Final stage of implementation is due July 2016.
• Capacity Allocation Mechanisms NC – Due to be formerly adopted imminently with a likely implementation date of October 2015. This encompasses the Gas Day Change and the European trading platform (PRISMA).
Current Position Cont.
• Balancing NC – Adopted in October. Implementation has been set as 1st October 2015.
• Interoperability and Data Exchange NC – Final Draft of the NC submitted to ACER on 10 September 2013. No indicative implementation date, but it is likely to coincide with CAM.
• Tariffs – The Framework Guidelines are still in consultation, the NC has not yet commenced drafting. There is uncertainty about the implementation – ideally this should coincide with CAM.
UK Progress
• Modifications raised for the Gas Day change and to implement new Code definitions ie Interconnection Point.
• NG scoping PRISMA (European trading platform) to facilitate ‘bundled’ cross border trades. Feedback to recent consultations has been positive and NG are looking to join PRISMA in 2014.
Winter Planning
• An updated pack will be issued to members in due course to include a meeting template
• Meeting/ teleconference will be held with newly appointed members to run through the operation of an emergency meeting during November 13
Register Part 1
Risk Register as at 26/4/13 :
Risk Likelihood - comments Likelihood
H1loss of Gemini system - sustained loss for
1 working day or more
Once in 10 years – to date Gemini over 2 years Gemini has had 1 short overnight outage. Also due to Oracle Software Upgrade, Gemini affected between 22nd and 25th October. Loss of Gemini on 14th and 15th May due to Server problems. GRP implementation planned 9th June.
Suggest move
from a 2 to a 3
H2Calculation for IMS is found to be
incorrect.
Has happened in Dec 05 and also recently when during Oracle OS upgrade UAT it was found that accruals not included in a D-1 or D-2 recalculation – twice in last 6 to 7 years – once in 5 years. April 08 data was uploaded incorrectly. Recent issues identified on the 7th of March and 6th April following batch job issues.
Suggest move
from a 3 to a 5
H3APX Gas files containing system prices
and trades arrives late.
Pre Gemini IMS this used to stop PIMS jobs running – since introduction of Gemini IMS this has not happened – once in 5 years. Controls and monitors are now in place to ensure files are received. 3
Register Part 2
Risk Register as at 26/4/13 :
Risk Likelihood - comments Likelihood
H8User’s unable to provide CVA data due to the CVA system / website being down
This happened once on 13/03/07 – Once in 5 years. Controls in place that would receive notification from CVA. 3
H9
In the absence of being unable to adjust the ABI calculation the industry could be unduly exposed to avoidable financial debt. Should NGD be aware of more up to date information.
Due to SCR Mod 233 this was put on hold to await outcome of SCR consultations. Potential implementation of OFGEM SCR proposal has the potential to increase the likelihood and impact of this issue.
Suggest move from 3
to 4
H10
Due to the current European financial climate, there is a risk that the number of FI’s meeting the relevant criteria to provide security could reduce significantly.
Moody’s are currently have a schedule to review all FI’s current rating in June 2012. Moody’s review of FIs completed over the summer of 2012, S&P now anticipate conducting their own review. 4