BSC Panel 212a

1. BSC Panel 212a 9 May 2013

2. DECC: Update on Electricity Market Reform Alice Douglas/ David Osborne 9 May 2013

3. Settlement Agent for FIT Contracts for Difference Update for BSC Panel 9 May 2013 Alice Douglas

4. BSCCo to be designated as EMR Settlement Agent Both for Contracts for Difference and Capacity Mechanism Announced in OJEU for transparency No challenges to designation received Designation through Code and Licence changes using powers in the Energy Bill – after Royal Assent

5. Anticipate that Settlement Agent will carry out measurement and payment functions

6. Challenging timescales to meet • Contracts for Difference regime in place in 2014 • Consultation on draft secondary legislation autumn 2013 • Secondary legislation introduced to Parliament early 2014 • Counterparty to be designated mid 2014 • CfD payments may be required from end 2014 • System design and set-up: up to 18 months

7. BSC Parties will not cover cost of EMR • Clear that BSC Parties should not shoulder the cost of EMR • Elexon’s enduring CfD settlement role will be funded by the Counterparty (operational costs to be recovered from suppliers) • Significant set-up cost for CfD systems • DECC will pay a grant to Elexon to compensate for the work undertaken by Elexon in preparation for its anticipated statutory role • Potential efficiencies with Capacity Market being considered

8. Grant terms under development Aiming for 4-6 weeks but some risks exist. Monthly payments in advance – ‘trued up’ against actual spend Milestone payments for work by external contractors.

9. Governance and transparency Monthly reports to DECC and BSC Panel Fortnightly DECC/Elexon project management discussions at ‘working level’ Role of skeleton team for Counterparty Body Programme Board for delivery to be established – membership TBC

10. Ofgem: Update on Longer Term Settlement Reform Jonathan Amos 9 May 2013

11. Smarter Markets Programme: Electricity settlement project BSC Panel meeting 9 May 2013 Jonathan Amos and Grant McEachran

12. Background – Smarter Markets Programme • Smarter Markets Programme: • Change of supplier • Electricity settlement • Demand-side response • Consumer empowerment and protection Smarter energy markets Other Ofgem and Government policy, as well as industry activity We aim to have reforms in place as soon as reasonably practicable and by the end of roll-out at the latest

13. Way forward – scoping reform 1. SCOPING THE PROBLEM • Existing issues • Future outcomes Conclude by Q1 2014 • Objectives • Scope • Process 2. SCOPING THE APPROACH Our work will provide a robust platform for progressing any reforms

14. Why do we need to scope out reform? RISK 1. Drivers of reform are not fully understood Reform does not deliver for consumers RISK 2. Incentives of industry may not be sufficiently aligned with those of consumers Ofgem is best placed to mitigate both risks by scoping reform

15. Opportunities to get involved in our work APR MAY JUN JUL AUG SEP SET UP APPROACH Explain our work & discuss approach to engagement Workshop Relevant forums & bilateral discussions Discuss scope and objectives PROBLEM DEFINITION Bilateral discussions & workshop Identify existing issues and future outcomes

16. Questions We would welcome views on: • our planned approach to scoping out reform • how we can involve the BSC Panel in our work

18. Report on Progress of Modification Proposals Adam Lattimore 9 May 2013

19. Modifications Overview

20. 212a/04 P292 ‘Amending Supplier & Meter Operator Agent responsibilities for smart Meter Technical Details’ Simon Fox 9 May 2013

21. P292 BackgroundMeter Technical Details • MTDs record for Smart Meters will record • Physical attributes of the Meter • Smart capabilities of the Meter • Current Configuration of the Meter • MOAs use MTDs to manage any requested work on site • NHHDCs use MTDs to validate Meter reading data for Settlement, in particular the mapping of the physical registers on the meter to the logical registers used in profiling to allocate energy to the correct time of use periods • LDSOs and Suppliers use MTDs to translate Register Read information received on D0010

22. P292 BackgroundLegacy NHH MTD Arrangements • MOA • install & maintain Meters via site visit when requested by Suppliers • responsible party for maintaining MTDs, including any configurations • forward MTDs to any other participant who requires this information e.g. NHHDCs, MOAs or LDSOs • Suppliers • responsible for ensuring its appointed MOA carries out the above

23. P292 BackgroundDECC SMIP Principles For Smart Meters • Meter Operators • Will install & maintain Meters via site visit when requested by Suppliers • Will no longer configure Metering Equipment • Suppliers • Will be responsible for recording and maintaining the current configurations of each SMS device • Will, once the SMS is configured, forward on these configuration settings to any other participant who requires this information e.g. NHHDCs, MOAs or LDSOs • become the data owner and responsible party for all MTDs

24. P292 Background:BSC-MRA Working Group • This group met seven times between 27 Feb 12 and 12 Feb 13 • Took as its starting point option 2 (of 5) in the Smart Metering Implementation Programme (SMIP)s ‘Legacy Systems Changes’ paper – Supplier distributes MTD using existing flows • Also reviewed the SMIP requirement to amend the installation request to include other smart metering equipment and what the response flow should be • By incorporating other smart equipment in the ‘device details’ flow, and making a distinction between device details (MOA responsibility) and configuration details (Supplier details) and non-smart / smart flows arrived at CP1388 (effectively Option 5 in the ‘Legacy Systems Changes’ paper) • Issued a consultation on solution elements (e.g. new flows, installation requests/responses) in Oct 12.

25. P292Issue • E.ON raised P292 to address the need for the BSC to • reflect the new obligations on MOAs and Suppliers - of Suppliers establishing and sending MTDs; and • enable the necessary changes to Code Subsidiary Documents

26. P292Proposed Solution • Proposed Solution, amend • Section S to reflect that Suppliers are responsible for ensuring the establishment and maintenance of MTDs for smart NHH Metering Systems and that these are passed to other parties, rather than MOAs; and • Section X to include a definition of the Smart Metering Equipment Technical Specification

27. P292Panel’s Initial Views • Report Phase • CP1388 • Implementation - June 2014 BSC Systems Release • The Case for Change - Applicable BSC Objective (d) • Recommendations - To approve, but not under self-governance

28. P292Report Phase Consultation Responses (1)

29. P292Report Phase Consultation Responses (2) • The majority of respondents agree that the draft legal text delivers the intention of P292 • some minor amendments • Arguments against proposed legal text • Section L2.4 already sets out the responsibility of the Supplier for establishing, maintaining and providing MTDs, which it can delegate to its agents • to capture the concept of compliance at time of installation • the SMETS may undergo changes under the SEC, so the BSC should also reference the SEC

30. P292Report Phase Consultation Responses (3) • The majority of respondents support the Implementation Date • Arguments against • Potentially unknown detailed solution • Alignment with DCC go-live date • Arguments for • Provides framework to be in place in time for mass roll-out of Smart Meters • Enables any changes to CSDs to come into effect at the same time

31. P292Report Phase Consultation Responses (4) • The majority of respondents agree that P292 would better facilitate Applicable BSC Objectives (d) • Arguments against • Significant costs in system changes, with potentially limited duration • Unknown scope & impact of SEC on Settlement • Arguments for • Enables Suppliers & NHHMOAs to fulfil future responsibilities • Reduction in number of parties involved in distributing the data • Only one that fitted • BSC Objective (c)

32. P292Report Phase Consultation Responses (5) • The majority of respondents agree that P292 shouldn’t be subject to self-governance • Arguments against • Changes Party obligations • Could result in wasteful use of resources in an appeal to the Authority • Arguments for • P292 is an enabler to facilitate the change to how current obligations will be delivered for smart Meters • Transfers obligations, not create new ones

33. P292Report Phase Consultation Responses (6) • The majority of respondents agree that P292 should be approved • Arguments against • Already allowed for under Section L • Preferred / wish to be able to discuss alternatives • Not minimal change • Concern over reference to CP1388 • Arguments for • Aligns with SMIP operating model • Drive efficiency, timeliness, accuracy and reduce risk • Allow CSD changes

34. P292Consequences if P292 is not approved NHHMOAs will be responsible for sending MTDs for Smart Meters to the NHHDC. This will mean that • The BSC would not be in line with SMIP operating model • Impact on CPs against CSDs; and • Supplier to provide configuration details to the NHHMOA / NHHMOA act as a “post box” to provide the MTDs to the NHHDC and Supplier • This in turn will create greater risk to Settlement, as there will be no defined processes or assurance in place

35. P292Recommendations • We invite the Panel to • NOTE the P292 Draft Modification Report and the Report Phase Consultation responses; • CONFIRM the recommendation to the Authority contained in the P292 draft Modification Report that P292 should be made as it would better facilitate Applicable BSC Objective (d); • APPROVE an Implementation Date for P292 (if approved) of 26 June 2014; • APPROVE the BSC legal text for P292; and • APPROVE the P292 Modification Report or INSTRUCT the Modification Secretary to make such changes to the report as the Panel may specify.

36. 212a/05 Request to raise a Modification: ‘Changes to BSC Section H ‘Audit’ and BSC Service Description for BSC Audit to reflect current Practice’ David Barber 9 May 2013

37. Background • The current Balancing and Settlement Code (BSC) Audit contract comes to an end on 30 September 2013 • The new contract for the BSC Audit and Qualification Service Provider starts on 01 October 2013 • ELEXON is currently undertaking a competitive tender process to appoint the new BSC Auditor and Qualification Service Provider.

38. Modification Proposal (1 of 2) • The Issue: • As part of the procurement project, ELEXON has reviewed BSC Section H5 ‘Audit’ and the Service Description for BSC Audit and identified minor changes which require updating to reflect current processes, services and terminology • Proposed Solution: • To reflect the current processes and services, the minor changes identified in the Code and Service Description need to be made

39. Modification Proposal (2 of 2) • PAB recommendation to raise this Modification • Details of the changes provided to the PAB in March for comment • PAB recommended that the Modification is raised to align the BSC and the BSC Service Description for BSC Audit with current practice and the new BSC Audit and Qualification Service Provider contract from commencement on 01 October 2013 • Additional minor housekeeping changes • In addition to the changes agreed by the PAB, we have included minor Housekeeping changes to both BSC Section H and the BSC Service Description

40. Applicable BSC Objectives • Modification Proposal better facilitates the achievement of BSC Objective (d): • Ensures consistency between the Code, Service Description and current practice • Ensures that the Code and Service Description align with the new contract commencing on 01 October 2013

41. Proposed Progression (1 of 2) • Recommend: Report Phase – approve • Merits of Proposal are self-evident: • Believe it is self-evident that inconsistencies currently exist in both the BSC and the Service Description compared to the current process. • Recommend Implementation Date of: • 1 October 2013 in line with the commencement of the new BSC Audit and Qualification Service contract.

42. Proposed Progression (2 of 2) • We are requesting Self-Governance • We believe Proposal meets Self-Governance Criteria: • No material impact on consumers, competition, the Transmission System or BSC governance • Corrects inconsistencies between the Code, Service Description and current practice • No impacts on BSC Parties or those subject to BSC Audit • Will issue Self-Governance Statement to Authority and seek views of Report Phase Consultation respondents

43. Recommendations We invite the Panel to: • RAISE the Modification Proposal in Attachment A; • SUBMIT the Modification Proposal directly to the Report Phase; • AGREE a provisional view that the Modification should be made; • AGREE a provisional Implementation Date of 1 October 2013 in line with the commencement of the new BSC Audit and Qualification Service Provider contract; • AGREE the draft legal text in Attachment B; • AGREE the draft changes to the BSC Service Description for BSC Audit in Attachment C; • AGREE a provisional view that the Modification Proposal meets the Self-Governance Criteria; and • AGREE that the Draft Modification Report should be issued for consultation and submitted to the Panel at its meeting on 13 June 2013.

44. Minutes of Meetings 211, 210, and Actions Arising Adam Richardson 9 May 2013

45. Chairman’s Report BSC Panel Andrew Pinder 9 May 2013

46. 212a/01 ELEXON Report Peter Haigh 9 May 2013

47. Distribution Report David Lane 9 May 2013

48. National Grid Update Shaf Ali 9 May 2013

49. European Update: Ofgem Lisa Charlesworth 9 May 2013

50. 212a/01a Report from the ISG 9 May 2013