Improving Quality of Service – Information and Incentives in the GB Electricity Industry

1. Mott MacDonald Improving Quality of Service – Information and Incentives in the GB Electricity Industry Alan Friday (ERA Technology Ltd), Chris Watts (Ofgem)

2. Contents • Overview of IIP • Audit framework • Statistical work • Overall impressions • Results of the audit

3. Overview of IIP • Address known weaknesses of RPI-X regulation for the DNOs • Improve quality of service data • Improve balance between incentives for cost efficiency and quality of service • Key quality of service measures identified as being: • Frequency and duration of supply interruptions • Speed and quality of telephone response

4. Overview of IIP (2) • Over past 2 years Ofgem and the industry have been working to ensure that quality of supply information is • accurate • as consistent as possible across companies • To achieve these goals Ofgem has put in place: • standard definitions and guidance • minimum levels of accuracy for reporting interruptions • annual audits of data

5. Overview of IIP (3) • New quality of service incentive scheme in place on DNOs from 1 April 2002 to 31 March 2005 • Up to 2 % revenue at risk (£4 million) • Rewards and penalties for performance against own targets for number and duration of interruptions • Relative scheme for quality of telephone response

6. Stage 1 MPAN’s Connectivity Model Ofgem’s requirements Stage 2 Statistical Analysis Accuracy Stage 3 Audit of Reporting Sample Size & Make-up Sample Accuracy Final Accuracy Audit framework

7. Statistical analysis-nature of interruption data • Data is highly skewed Mean = 191 Median = 12  = 817 • Usual method using sampling charts based on normal distribution not applicable

8. Statistical analysis-describing the data • Data fitting software used to investigate which distribution best describes the data • Lognormal provided the best fit • Characterised by 50% value (M) and slope (S) • Iterative process used to define sample size

9. Audit process • Data from each DNO analysed to determine sample sizes for low voltage and higher voltage interruptions • Specific incidents selected and communicated to each DNO to allow preparation • Each incident scrutinised by audit team to determine appropriate CIs and CMLs • Audited and reported values recorded in incident work book • Workbook for each DNO used to determine accuracy of measurement system

10. Results of the audit • Main sources of inaccuracy were: • inaccurate reporting of customer numbers before new connectivity systems were introduced • manual intervention in incident reporting • inaccurate reporting of customer numbers for LV faults affecting only part of a feeder • missing restoration stages • incorrect incident start times

11. Overall impressions • Impressive amount of work has been done by all DNOs in developing their systems to meet accuracy targets • Welcome the commitment that DNOs have made to the audit process • preparation of audit trail • availability of appropriate staff • Culture change in many DNOs emphasising importance of correct information