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Ofgem’s review of Xoserve’s Funding, Governance and Ownership (FGO)

Transmission Workgroup – June 2015 Seán McGoldrick

Xoserve

Background and Current Arrangements

Background ¾  Established as a limited

company on May 1st, 2005. ¾  Facilitated Distribution

Network (DN) Sales ¾  Designed to provide

transactional services to the industry on behalf of Gas Transporters – “The Transporters’ Agent”

¾  Ownership and Management of UK Link suite of systems

¾  Management of NTS’ Gemini system (remains under NTS Ownership)

3

Current Arrangements

4

Shareholders / Xoserve Board Members

NTS NGD SGN NGN WWU

Xoserve

NTS GDNs

Shippers Other industry parties

Service Providers

National Grid

Framework agreements with Offshore Development companies for IS services

General Service Agreement between National Grid and Xoserve

Shareholder Agreement

Agency Service Agreement (ASA)

ASA Funding

Uniform Network Code (UNC)

Formula and Code User Pays Revenue

Non-Code User Pays conditions

Non-Code User Pays revenue

Xoserve

Why FGO?

6

Stakeholder feedback

¾ Ofgem received a number of comments relating to Xoserve: ¾  Need more cost transparency

¾  “Gold-Plated” solutions v Always goes for the least-cost option

¾ More industry engagement needed

¾  Change Black Box.

¾  CEPA review carried out

¾  Industry-wide workshops held looking at identifying desired enhancements to Xoserve’s FGO arrangements

¾  Cooperative Business Model recommended

Xoserve

Future design options

8

Ofgem’s conclusions

¾ Xoserve to become the Gas Industry’s “Central Data Service Provider” (CDSP).

¾ The Scope of central data services provided by the CDSP is to be kept whole

¾ GTs costs for Central Data Services will be recoverable via “Pass Through” mechanism

¾ Central Data Service requirements will be subject to cross-industry governance

¾ Service outputs and funding requirements will be determined through industry-facing business planning processes, ratified by the CDSP Board.

9

Ofgem’s conclusions

¾ Central Data Services will be provided on a not-for-profit basis

¾ The CDSP Board will be reconstituted to include both GT and Shipper nominated members

¾ Xoserve to retain the latitude to develop / provide additional services

¾ DNs and NTS to continue to hold shares in Xoserve

¾ Ownership and Control separated.

¾ Target go-live date is April 1, 2016.

CDSP Funding Options

¾ Reallocation of CDSP costs to each party based on stake in the service

¾ GT costs recoverable via Pass Through

¾ Remove from RIIO

¾ Agree annual business plan

¾ Costs will only change in exceptional circumstances

¾ Ofgem approval required

¾ Carry-over to subsequent FY

¾  Invoicing mechanism TBD.

10

Potential realignment of control / obligation

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Supply Point Capacity

Registration

Supply Point Shipper

Registration

Provide Query Management

Record / Submit data in

compliance with the UNC

Facilitate DN Interruption

Auction

Metered Volume and Quantity

DM Supply Point Capacity and

Offtake Review

Annual Quantity Reviews

Transportation Invoices

Balancing Invoices

User Administration

and Termination CSEPs NExA Supply

Meterpoints

Generation of Supply Point

Meter Reference Number

Emergency Contact

Information

Shipper Agreed reads

Provision of information to

registered Metering

applicants

Energy Balancing Demand Estimation

User Pays and non-code services

Theft and iGT exchanges Meter Notices

Provision of information and

Agency Management

Gemini Capacity Booking

Gemini – Imbalance Settlement

UK-Link Services Provision of User

reports and information

Network and User relationship management

Data flows and services to

Network Operators

User Pays Code services

Shippers

Shippers & DNs (& iGTs)

DNs (& iGTs)

National Grid NTS

DNs & NTS (& iGTs)

All

CDSP Funding Options Current cost apportionment Future cost allocation

(example only)

12

NGGT, 11%

DNs, 89%

NGGT

DNs

iGTs

Shipper1

Shipper 2

Shipper 3

.

.

.

.

¾ Need to close down current funding and financing arrangements at point of switch over to new model

¾ Need to ensure new arrangements provide for an enduring financial model.

Changes to governance

¾  Introduction of Cross-industry governance for:

¾ Change Management

¾ Build annual change workplan

¾ Consider F&A work

¾ Performance management

¾ Contract Management

¾ Operational Service KPI management

¾ Ongoing management of control / costs. 13

NTS GDNs Shippers

New Contractual Arrangements

iGTs

CDSP

Ownership impacts

¾ GTs to retain Ownership

¾ CDSP to become a “Not-for-profit” organisation

¾ Xoserve to be de-risked in event of failure of the CDSP

¾ GT and Shipper membership of the Board

¾ Exact composition TBD

¾ Constituency nomination

¾ Ofgem to have “step-in” powers. 14

S1

DNs

S3

iGTs

S2

Tx

CDSP Board

Central Data Service Provider

Current activities

Development of CDSP Blueprint

¾  Initial Workgroups being held

¾ Obligations

¾ Governance

¾ Business Plan & Budget Setting

¾ Monthly POBs scheduled

¾ Development workgroups being scheduled now

¾ Transition: Understanding what can / cannot be delivered in time for April 2016

¾ Development of plans for subsequent roll-out / formalisation of remaining functions.

16

What’s needed from you?

¾ Keep up to date with progress

¾ Regular update from FGO Programme Manager

¾ Contribute to informal & formal consultations

¾  Input to development workgroups

¾ Only National Grid Transmission attending on behalf of Tx sector

17

Transmission Stakeholders

The FGO Programme needs YOU

Questions?

18

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