USRV Incentives Review

Chris Warner

USRV Resolution Responsibility and Occurrence

E8.1.1 “…the User shall investigate Reconciliation Values that

have been Suppressed following Individual NDM Reconciliation…”

E8.1.2 Suppression occurs in accordance with the Network

Code Reconciliation Suppression Guidelines Financial tolerances per AQ banding Underlying negative consumption

Guidelines reviewed from time to time

Why Suppress?

Network Code Reconciliation Suppression Guidelines para 2.6

“The tolerances are set with a view to maximising the suppression of values generated from erroneous data and minimising the suppression of valid values”

Intended to protect Users from large erroneous invoice values

energy invoice must be paid first and subsequently queried

potential to cause severe financial hardship

Issues Identified pre 0637 Implementation

Uncertainty created for RbD Users by unresolved items

Considerable USRV backlog (38,000 items plus). Lack of incentive for non-RbD Users to resolve Lack of incentive for compliance with existing

Network Code resolution requirements Selective resolution?

More economic to leave unresolved Approval of credits only Lack of priority

Mod 0637 – Network Code Process

Various options discussed at Network Code Reconciliation Suppression Guidelines Sub-Group in 2003

Initial proposal for incentives raised by a Shipper Following discussions at Suppression Guidelines Sub-

Group, Modification Proposal submitted by Transco Final Modification Report issued to Ofgem on 15 Sep 2003 Direction to Implement issued by Ofgem on 19 Nov 2004 Following consultation with the Supply Point & Billing

Workstream, Modification implemented on 21 Feb 2005

Mod 0637 Regime – Resolution Incentives (E8.3)

Backlog (pre 21 Feb 2005) Unresolved after 4 months (or older) incurs £30/month until

resolved Ongoing Performance

50% resolution required by 20th of following month (no incentive charge applied)

95% resolution required by 20th of second month. Any unresolved below the 95% standard incur £20

Any unresolved after 4 months (or older) incurs £30/month until resolved

Additional features Allowance for significant volume increases

>20 USRV item increase, and => 50% increase (in comparison to previous 6 months average) additional 1 month on 2 and 4 month standard

Mod 0637 Regime – Re-distribution of Revenue

Overall monthly cap £100,000. If exceeded all charges scaled down to in aggregate

equal £100,000.

2% allowance for Transporters for administration of scheme

Remaining revenue allocated to RbD community Based on market share for relevant LDZ for relevant

period

Post 0637 Performance – Liable USRVs by Month

985725383657Nov-06

917226793921Oct-06

831723233937Sep-06

763721633495Aug-06

691415543139Jul-06

579816023057Jun-06

655923733502May-06

62187193705Apr-06

635210261429Mar-06

585818301663Feb-06

587829783592Jan-06

424618724629Dec-05

345223862592Nov-05

341313832997Oct-05

316312621906Sep-05

386313431956Aug-05

47126372225Jul-05

58118421175Jun-05

58778091277May-05

100% liable (M+>=4)95% liable (M+2-3)50% liable (M+1)Month

985725383657Nov-06

917226793921Oct-06

831723233937Sep-06

763721633495Aug-06

691415543139Jul-06

579816023057Jun-06

655923733502May-06

62187193705Apr-06

635210261429Mar-06

585818301663Feb-06

587829783592Jan-06

424618724629Dec-05

345223862592Nov-05

341313832997Oct-05

316312621906Sep-05

386313431956Aug-05

47126372225Jul-05

58118421175Jun-05

58778091277May-05

100% liable (M+>=4)95% liable (M+2-3)50% liable (M+1)Month

Post 0637 Performance – Liable USRVs by Achievement Targets

Post 0637 Performance – Generated USRVs

Generated USRVs

0

1000

2000

3000

4000

5000

6000

7000

8000

Feb

-05

Mar

-05

Apr

-05

May

-05

Jun-

05

Jul-0

5

Aug

-05

Sep

-05

Oct

-05

Nov

-05

Dec

-05

Jan-

06

Feb

-06

Mar

-06

Apr

-06

May

-06

Jun-

06

Jul-0

6

Aug

-06

Sep

-06

Oct

-06

Data for Feb and March 06 removed due to a system error

Generated USRVs

Post 0637 Performance – Trends of Liable USRVs

Trends of Liable USRVs

0

2000

4000

6000

8000

10000

12000

14000

May

-05

Jun-

05

Jul-0

5

Aug

-05

Sep

-05

Oct

-05

Nov

-05

Dec

-05

Jan-

06

Feb-

06

Mar

-06

Apr

-06

May

-06

Jun-

06

Jul-0

6

Aug

-06

Sep

-06

Oct

-06

Nov

-06

Dec

-06

Jan-

07

Feb-

07

Mar

-07

Apr

-07

May

-07

Jun-

07

Jul-0

7

Aug

-07

Sep

-07

Oct

-07

Nov

-07

Dec

-07

Linear (100% liable (M+>=4)) Linear (50% liable (M+1)) Linear (95% liable (M+2-3))

Mod 0637 Regime – Effectiveness?

Is the current level of USRVs a concern for Users? Why is the regime arguably not working? What changes could be made to improve

performance Changes to the existing regime? Additional measures?