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EBCC MEETING 30th April 2014

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Title: EBCC MEETING 30th April 2014


1
EBCC MEETING 30th April 2014
2
AGENDA
  • 1.0 Introduction
  • 2.0 Minutes and Actions
  • 3.0 Operational Update
  • 4.0 Modification Proposals
  • 5.0 Significant Code Review Update
  • 6.0 Bank Ratings
  • 7.0 Review since October 2013
  • 8.0 Focus for 2014
  • 9.0 AOB
  • - EU Update
  • - Review of Winter 2013/14
  • - Risk Register
  • - Voluntary Discontinuances
  • 10.0 Date of Next Meeting

3
Operational Update March 2014
4
Operational Update
  • March 2014
  • 1 Cash Call issued and paid on due date.
  • Cash Collection 100
  • Rolling 12 Months 99.98

5
(No Transcript)
6
Modifications
7
Modifications
  • Mod 0429 Customer Settlement Error Claims Process
  • Implemented on 1st April 2014
  • Xoserve developed UNC framework guidelines for
    managing claims.
  • Xoserve will provide Transparency of quantity of
    claims received to EBCC Members.
  • Link to Modification 474S Inclusion of the
    guidelines relating to the Customer Settlement
    Error Claims Process within UNC governance and
    introduction of the User Pays charges associated
    with such claims Consultation closes 7th May
    2014.

8
Market Operator Security Provisions
  • Prepayment Agreement was concluded with an expiry
    date of June 2019 awaiting signed document.
  • Deposit Deed is now in place.

9
Significant Code Review Update
10
Security of Supply Significant Code Review
  • OFGEM published their final proposal on 12th
    February 2014.
  • EBCC response provided to Ofgem on 11th April
    2014.
  • Xoserve are currently working through the
    Business Rules to address the process through
    various internal workshops.
  • Work is currently underway to put in place
    operational procedures as per the mind maps
    previously discussed on the following slides.

11
Mind Maps - SCR
  • The following mind maps were put together to
    address areas which it was identified that
    additional work is required to operate a working
    through items highlighted as red.
  • Operating Process
  • Priority of Scoring for EBCC meetings
  • EBCC Operation
  • Relaxing Current arrangements EBCC

12
Reporting to ofgem/EBCC special arrangements
Availability of CEO due to increased values
Delegated Authority levels
Review current rules
Review sign off of credit payments
Suspension of all services
System access
Delegation of Authority
Operating Process
Shipper information
Emergency MOD
MOD 233?
Contact list
Resource
Cost
Banking Services
Temporary shared area
Succession capability
Daylight Limit
Skill set
Exclude EBI availability
Box account for communication
NGD Daily limits
Availability
Operating limits
Suspension of holidays WLB of key staff
13
Operating Process
  • Suspension of all Services
  • As a committee we need to address the areas
    currently within the powers of the EBCC
  • Review existing timescales and conclude what
    would be reasonable to suspend / relax?
  • System Access
  • existing rules for access require 5 day SLA need
    to agree special arrangements for identified
    resource (On hold)
  • Cost
  • increase cost of resource consider how budget
    affected / may need to agree recovery via
    neutrality possible modification?

14
Powers and Duties of EBCC
15
Existing rules apply- due to arrangements
drafting under UK termination process S.1.7.
No changes proposed.
Market Operator
Cash collection
timing for convention of meeting
Consider suspension for a period beyond invoices
issued and paid
EBCC Meetings
Relaxing current arrangements Business rules

FSR
Security
Cash calls
Appeal Process
Resource issues
Extend time?
Aggregate exposure
Still issue
Reduce or suspend appeal notice
Payment terms extend ?
Agree with EBCC members no validation
Accepting LOC from lower rated organisations
No appeal criteria
Validate cash call suite
of exposure underwriting
Manually update letters/notices as we do currently
System solution for manual adjustment
Timing extend?- 4pm end of gas day
Faxes? Scan, email or file interface
Process going forward
Suspending/ excluding peak SAP calc
Communication of delivery
Cost of funding change
16
Operating System continued
  • Modification 233v Discussions with National
    Grid through the SCR workshops on redrafting
    modification.
  • Banking Services We have discussed
    possibilities of increasing current overdraft
    facilities to establish if feasible and to what
    maximum limit.
  • Shipper Information- We will be writing out to
    all Users to confirm contact details with an
    ongoing 12 month review.

17
Priority of Scoring EBCC meetings
  • Risk Categorising all parties to establish how to
    manage volumes of potential EBCC meetings in the
    event of an Emergency taking into account various
    sources of information.
  • Example on following slide provides a suggested
    template to identify High, Medium or low risk
    customers.
  • Aspiration to have this in place for all
    customers before Winter 14.
  • Reviewed monthly through monthly Operational
    Meetings and we will give some consideration on
    reporting requirements.

18
Ability to pay
Communication interaction commercial
intelligence reporting
FSRs number of cash calls over previous period
Level of helpfulness
Payment trends
Priority of Scoring For EBCC meetings
Portfolio growth
Over or under delivery trends
Downgrade risk factor risk
Party underwriting
Graydons
How they act in market
S P
Security arrangements
Moodys
19
Priority Scoring - Low Risk Categorisation
Shipper A Shipper A
Cash Call Notices Issued last 12 months None
Energy Balancing Invoices Paid on due Date All paid on due date.
Customer does not respond to communication within agreed time scales. Always responds to communication.
Security in place on Renewal Date Yes All in place prior to or on Renewal Date.
High Medium low
Shipper A X
Shipper B X
Shipper C X
20
Priority Scoring - Medium Risk Categorisation
High Medium low
Shipper A X
Shipper B X
Shipper C X
Shipper B Shipper B
Cash Call Notices Issued last 12 months None
Energy Balancing Invoices Paid on due Date No - 2 Occurrences over last 12 months
Customer does not respond to communication within agreed time scales. Sometimes
Security in place on Renewal Date No In place D2
21
Priority Scoring - Medium Risk Categorisation
High Medium low
Shipper A X
Shipper B X
Shipper C X
Shipper C Shipper C
Cash Call Notices Issued last 12 months 3 Cash Calls and 2 Failure to pay Cash Calls.
Energy Balancing Invoices Paid on due Date No - 4 Occurrences over last 12 months
Customer does not respond to communication within agreed time scales. Sometimes
Security in place on Renewal Date No In place D2
22
Priority Scoring - High Risk Categorisation
High Medium low
Shipper A X
Shipper B X
Shipper C X
Shipper C Shipper C
Cash Call Notices Issued last 12 months 3 Failure to Pay Cash Calls
Energy Balancing Invoices Paid on due Date 4 Occurrences over last 12 months
Customer does not respond to communication within agreed time scales. Frequently
Security in place on Renewal Date No Repeated Calls
23
EBCC Operation
  • Conflict of Interest
  • Minutes
  • Quoracy
  • Ofgems role
  • National Grids role

24
Establish who from Xoserve required
National Grid input
Minutes
Review timing
Conflict of interest
Recording
INCIDENT ROOM
Checklists
EBCC Operation
Resources
Ofgems role
Quoracy
Consider membership ofgem/another party
Chair
Availability
Communication
Priorities on order Of discussion
Gemserve members appointment
Agree Adhoc appointment process
Factors
25
Bank Ratings
26
Current Position
  • Since September 2013 the global economic markets
    have remained fairly stable resulting in no
    downgrades outside of our forecast.
  • We advised members in September 2013 that Royal
    Bank of Scotland and National Westminster were
    likely to be downgraded and this was reflected in
    their downgrades in March 2014.
  • The following chart provides a summary of
    customers exposures to each rating category.

27
FI Risk Profile
  • 8 of all FIs currently providing Security have
    been subject to a downgrade change during the
    previous 6 months by Standard and Poors and
    Moodys Ratings Agencies.
  • Currently 79 of FIs are in the lowest categories
    of investment grade rating. This reflects an 18
    increase from the last reported figures. This is
    in part due to a movement within the same rating
    band.

28
Spread of FI Exposure
62,000,000
25,605,000
29
Outlook
  • Moodys anticipate undertaking a rating review
    throughout 2014. Since Sept 2013 0 FIs are on
    possible downgrade.
  • SP are commencing significant reviews across a
    large number of FIs, with 58 showing a negative
    outlook.

30
Deposit Deeds
  • Value of credit secured via Deposit Deed and LOC
    comparison between April 2012 to April 2014

31
Summary
  • Whilst we have seen a slight increase in the
    overall value of security during the period April
    12 to April 13, there is a consistent move to
    lower rated financial institutions within each
    rating category.
  • Continue to monitor those FIs which are
    currently on possible negative outlook with
    Standard Poors

32
Review since October 2013 Update
33
Review since April 2013
  • Cash Collection figures on rolling 12 month
    performance remain the highest over the past 5
    years.
  • Cash Collection Monthly figures 100 over the
    past 12 months on 10 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 June
    2013 Mod 446S amendments to legal text in UNC
    Section X4 implemented quoted legal text
    amended Section 7 - Appointment of Insolvency
    Practitioner. Mod 447s implemented to permit
    smearing of recovered debt where the debt
    predates the Code Cut Off Date FAQs added to
    deal with termination.
  • Successful LRQA Audit

34
Cash Collection
35
Cash Collection Failure To Pay Notices
36
Cash Call Issued
37
Value of Cash Call Issued
38
FTPCCNs issued paid
39
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 EU Reform
  • Members to review if there are any other
    significant areas that they would like the
    committee to focus on.

40
Focus EBCC Customer Satisfaction (Nov 12)
  • EBCC Customer Satisfaction

41
Year on Year Comparison
42
Focus for 2014/15 Update
43
EBCC Customer Satisfaction (Nov 13)
44
EBCC Customer Satisfaction Year on Year Comparison
45
Focus for 2014/15
  • Carried forward from 2013
  • Increase the profile of the committee
  • Significant Code Review
  • Watching brief on EU Reform
  • Focus for 2014/15
  • Gemini Consequential change (UK Link Replacement
    programme)
  • Feedback from Customer Satisfaction (November
    2013)
  • Exploitation of synergies with Neutrality finance
  • Members to review if there are any other
    significant areas that they would like the
    committee to focus on.

46
AOB
47
EU Third Energy PackageUpdate
48
Risk Register Update
49
Register Part 1
Risk Register as at 26/4/13
  Risk Likelihood - comments Likelihood
H1 loss 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
H2 Calculation 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
H3 APX 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
50
Register Part 2
Risk Register as at 26/4/13
  Risk Likelihood - comments Likelihood
H8 Users 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 FIs meeting the relevant criteria to provide security could reduce significantly. Moodys are currently have a schedule to review all FIs current rating in June 2012. Moodys review of FIs completed over the summer of 2012, SP now anticipate conducting their own review. 4
51
Voluntary Discontinuance
52
AOB
  • Questions/ Any further business?
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