User Pays User Group

8th December 2008

Agenda

Customer voting arrangements UPUC & UPCEG ToRs Funding change Contract refinements register Future service developments AOB

ACS review for 2009/10 Customer Survey Operational update

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UPUC - Customer Voting ArrangementsRecap of the Background

There has been significant time spent on debating customer voting for non-code service change

The agreed objective was to ensure a voting arrangement was put in place to ensure all users were able to influence decisions, and the influence reflected to an appropriate extent the customer’s usage of the services.

Existing industry models were reviewed, but none considered appropriate for User Pays

xoserve provided some proposals which weighted the voting rights of each customer

At the UPUG meeting on 17th October agreement was reached to use a weighting by using the square root transformation technique. The acceptance level was set at 75%

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UPUC – Customer Voting Arrangements

Following the UPUG meeting on 17th Oct, xoserve undertook further engagement with customers

Some concerns were expressed over the voting arrangements by I&C shippers The extent to which change might be imposed on them The financial risk that this may present to them

We were asked to review the voting arrangements being put forward under SPAA for I&Cs 1 customer 1 vote; by market type; niche market and mass market Options have been discussed previously by UPUG and not accepted

As a result, xoserve propose reviewing the pass rate for the existing proposal to address the I&C concerns This will need to be considered with the work done to further clarify the funding

of change covered later in the agenda

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What does changing the square root pass rate mean?

Acceptance level to agree change

Voting % by

groups

At 75% pass

At 80% pass

At 85% pass

Domestic/I&C 73% 6 6 6

I&C only 26% 1 2 4

Others 1% All All All

To stop change

Voting % by

groups

Saying NO at 75%

Saying No at 80%

Saying No at 85%

Domestic/I&C 73% 2 2 1

I&C only 26% 11 7 5

Others 1% 0 0 0

At 75% the top six plus one I&C company have to all vote yes, whilst at 80% it will take at least two I&C only companies to gain agreement

At 75% two of the top six or eleven I&C only companies can stop change, whilst at 80% it still take just two top six or seven I&C only companies. At 85% one large company can stop change.

Number of shippers

Number of shippers

Note: assumption is that others (MEUs etc) will not exercise their vote, which will be equivalent to a ‘yes’ vote

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Next Steps for Voting Arrangements

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UPUC and UPCEG Terms of UPUC and UPCEG Terms of ReferenceReference

User Pays User Committee Summary Terms of Reference

User Pays User Committee Discharges the functions described in the Contract Facilitates discussion, operation and development of UP Services Membership

contracted parties (voting rights), plus other non-voting participants e.g. chair, Gas Transporter etc

Additions following customer review Quoracy

four voting members and xoserve Customer voting convention

square root transformation technique, agreement based upon [75%] acceptance

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User Pays Contract Expert GroupTerms of Reference Summary

User Pays Contract Expert Group Discharges the functions described in the Contract Facilitates discussion, operation and development of UP Contract. In

particular: Administration of the Contract change procedures Reviewing the operation of the Contract conditions

Membership contracted parties (voting rights), plus other non-voting participants e.g. chair, Gas Transporter etc

Additions following customer review Quoracy

four voting members and xoserve Defines the process to change the Framework Contract, including

Conditions and Services Schedule

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Funding Non-code Service ChangeFunding Non-code Service Change

UPUC Non-code Services Change ProcessUser Pays User Committee representatives)

xoserve

1Submit Change Order

2 Prepare EvaluationQuotation Report: (EQR):

-Confirm requirements-Initial xoserve view

-Impact assessment to include consideration of UPCEG

(a)Considerations:

-Legally permitted-Existing legal/contractual

obligations-Within gas business

-Within capability3 Accept EQR by sendingBusiness Evaluation

Order 4 Prepare Business Evaluation Report (BER)

-Design options-Development funding

-Ongoing service funding-System constraints

-Changes to the Service Line Agreement-T&C change assessment 5 Approve Business

Evaluation Report (selected design option

and funding option)

(b)If xoserve incur

significant costs, BER to be

funded

7Sign off

User Pays community

AgreeChangeproposal

Agree

Agree option User Pays

Contract ExpertGroup

6 Develop and implement

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Funding Change – Non-code services a proposal

The contract review highlighted a requirement for explicit funding of change and transparency of the charging mechanism.

To address this, xoserve propose: Proposals for new non-code services follow the principles in MOD 213

(change to user pays code services)

Proposals for changes to existing non-code services are funded by a change budget

The ACS would be updated to reflect the charging methodology for the above

These proposals are considered in more detail on the following slides

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Funding Change – New non-code services

New non-code service requests As per the principles outlined in Mod 213:

User beneficiaries pay for the change The change order will define

Whether it is a new service request Who the beneficiaries are

The proposer’s views will be reflected in the EQR prepared by xoserve

Customers will vote on accepting the EQR and thus confirm Whether it is a new service and Who pays

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Change funding for existing non-code services

Propose funding of existing non-code services from a change budget A change budget would be agreed at least annually by UPUC and reflected in any

update to charges The change order will identify that it is a change to an existing service and should

be funded from the change budget The proposer’s view will be reflected in the EQR prepared by xoserve Customers will vote on accepting the EQR and thus confirm it is a change to an

existing service and the change budget can be used

Funding options Smear change budget across non-code services

£25k change budget equates to a 1% price increase on non-code services or A charge to fund the change budget will be made at the beginning of the financial

year to each customer based on their forecast usage of non-code services

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What else would need to be done if proposal is accepted?

Contract will be updated to reflect additions to the change process

The funding of change methodology for both new and changes to existing non-code services will be included in the ACS

Once up and running xoserve will provide monthly reports on change spend

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UPUC Non-code Services Change ProcessModifications

User Pays User Committee representatives)

xoserve

1Submit Change Order

2 Prepare EvaluationQuotation Report: (EQR):

-Confirm requirements-Initial xoserve view

-Impact assessment to include consideration of UPCEG

(a)Considerations:

-Legally permitted-Existing legal/contractual

obligations-Within gas business

-Within capability3 Accept EQR by sendingBusiness Evaluation

Order 4 Prepare Business Evaluation Report (BER)

-Design options-Development funding

-Ongoing service funding-System constraints

-Changes to the Service Line Agreement-T&C change assessment 5 Approve Business

Evaluation Report (selected design option

and funding option)

(b)If xoserve incur

significant costs, BER to be

funded

7Sign off

User Pays community

AgreeChangeproposal

Agree

Agree option User Pays

Contract ExpertGroup

6 Develop and implement

Proposer states whether it is a new service plus beneficiaries or a change to an existing service

EQR reflect proposer’s view of change and funding of the change

Customer vote to accept EQR and thus agree the nature of the change plus its funding approach

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Contract Refinements RegisterContract Refinements Register

Update

As at 1st December, only one further set of contract comments have been received

No additional points to those discussed at the last UPCEG Have reviewed change funding for non-code services within

this meeting Other main issue was the “final” word in the change Schedule

xoserve is reviewing this wording

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Contract and ToRs time line

xoserve has to complete any redrafting following discussion and agreements reached in this meeting, especially around funding of change

We will send out revised Contract on Friday 12th Dec for comments back by 24th December

Walk through the Contract on 15th December Will also contact individual parties who have formally commented

in detail on the contract Final contract to go out week of 5th Jan 2009 Contract signing to be completed by 31st Jan

Any subsequent changes will then be subject to the change process UPUC and UPCEG ToRs to be signed off at 12th Jan user pays

meeting

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Future service developmentsFuture service developments(to follow)(to follow)

AOBAOB

ACS Review for 2009/10ACS Review for 2009/10

ACS price review for 2009/10

ACS will be updated for 1st April 2009 ACS has to be with Ofgem by 1st March Draft to be reviewed at UPUC 9th Feb Indicative prices to be reviewed at UPUC 12th Jan

Updated demand forecasts will be required Requests for your expected demand for 2009/10 will be provided to

you this week Your forecasts for next year is required by Friday 2nd Jan

‘Final’ ACS review report for this financial year will also be produced, in line with the report produced for the September update

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Customer SurveyCustomer Survey

Customer Survey

Implementation and governance of the new User Pays regime have raised some distinct challenges for xoserve

Wish to learn lessons to improve customer service Like to know your views and opinions surrounding the

implementation of the User Pays arrangements Asked Maven to carry out a series of face-to-face and

telephone interviews They will be writing to you, the contract managers, and calling

to set up an interview Hope you can take part

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Operational UpdateOperational Update

Telephone Service Line

No of callsService

Availability(target 95% availability)

Call answering

(target 90% within 30 seconds)

October 31,330 99%(2 hrs loss of service13/10/08)

93%

September 28,950

100% 91%

August 28,735 100% 91%

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IAD Service Line

Number of Accounts(original forecast 12,500,

revised ACS average 13,900)

Availability(Target 95% availability during

core hours)

October 16,500 100%

September 14,900 100%

August 14,400100%

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Email Report Service Line

No. of email reports(forecast 150 per month)

Performance(2 and 5 business days)

October 137 100%

September 98 100%

August 91 100%

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Portfolio Reports

Reports sent in the month(forecast 80)

Performance standard

October 113

September 111

August 110

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AQ Enquiries

Number of AQ Enquiries processed

Performance(Target process by end of second

Business Day)

October 23,595 100%

September 2,393 100%

August 164,450 100%

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IAD Account Transaction Volumes

Accounts Created (normal process)

Bulk Password Resets

Number Within 10 days Number Requested

Completed within Month

October 1038 95% 153 153

Sept 673 64% 200 200

August 590 86% 1,068 1,068

July 880 99% 150 1,200

June 695 97% 1,050 135

May 687 66% 135 0

April 556 85% 1,890 1,890

• Ongoing close monitoring of performance in this area continues

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