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Industry Dialogue on xoserve Services 14 th September 2007.

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Presentation on theme: "Industry Dialogue on xoserve Services 14 th September 2007."— Presentation transcript:

1 Industry Dialogue on xoserve Services 14 th September 2007

2 Five Key Areas Covered by Workgroup  Features of xoserve’s Systems  Cost Requirements  xoserve Funding Arrangements  Service Standards  Governance

3 Conclusions & Recommendations  UK Link Replacement  Shippers considered that they would not be in a position to assess the reasonableness of costs  Fund the high level features as agreed by the workgroup via traditional price control allowances, efficient costs established by Ofgem  Undertake more extensive consultation prior to 2010  Utilise a mechanism for funding any agreed additional regime changes

4 Conclusions & Recommendations  Ongoing Change  Recognised importance of funding ongoing change so that barriers are not created to the further development of the commercial regime  If transporters are not allowed revenue at the start of the price control period, then a mechanism is required to recover incremental costs from users  Standards of Service  No change proposed

5 Conclusions & Recommendations  User Pays Services  Workgroup developed a more detailed understanding of the governance and charging framework required, however recognised that significant additional development work will be required  Concerns that additional complexity and cost of introducing transaction charges may outweigh the benefits  Workgroup recommended an impact assessment accompanies any proposal to introduce user pays charges

6 What Has Happened Since Then?  UK Link Replacement  Meetings planned for later this year  Ongoing Change  Little progress  User Pays Services  Ofgem requested information to feed into an impact assessment  GDPCR Initial Proposals published  Ofgem requested service line cost information from transporters/xoserve as part of PCR process  Draft changes to GT licence conditions  Further thoughts on framework

7 User Pays for Existing Services  Key Features of GT Licence Changes  Charges derived from user pays services will be treated as excluded revenues  A joint Agency Charging Statement, detailing the methodology for deriving user pays charges, the charges and the scope of core services and user pays services  Ofgem will have the right to not approve the charging statement  Charges should, as far as reasonably practicable, reflect the costs in providing the service and shall not unduly discriminate  “The licence drafting will develop once there is further visibility of the proposals”

8 LicenceGTASAAgency user UNC Contract LicenceGTASAAgency user Obligations to Service Provision Service Provided on Behalf Flow of Revenue Framework

9 Other Considerations  Users would generally be shippers, but could also be other parties, eg MAMs, end users, Energywatch, traders  No changes planned to the services delivered  At commencement of regime, user pays services will be broadly similar for all users requiring the service  Where the nature of user pays services are defined in existing governance regimes, they could remain within those regimes  Existing arrangements for users to obtain bespoke services will continue

10 User Pays Services  Provision of Information  Reporting  User Admission  Must Reads  AQ Amendments & Appeals  Shipper Agreed Reads

11 What Needs to be Put in Place?  Refinement of Framework  Confirmation of Service Lines  Transporter Licence Conditions  UNC Modification  Agency Charging Statement  Contracts between xoserve and users  Invoicing and Cash Collection Processes

12 Draft High Level Timeline SEPOCTNOVDECJAN 08 FEBMARAPR User Pays Implementation Discussions MAY 01/04/08 – Start of Formula Year 24/09/07 – Ofgem – Updated Proposals Published Joint Agency Charging Statement Publication 12/07 – Ofgem – Final Proposals Published 21/02/08 – Panel - Issue Recommendation 20/12/07 – Panel Issue for Consultation Agency Framework Agreement Draft +28 days

13 Agency Change Funding Model Further Relevant Objectives ? Partial MOD xoserve GT Pay (Class 2) GT & Users Share Costs (Class 3 & 2 Mixed) No No MOD User pays if wanted Use Assets for Regulated Services? Yes Report and Share Benefit Continue No Degree to Which Furthers Relevant Objectives and Doesn’t Meet User Pays Criteria ? Fully To some extent Change

14 Next Steps Proposal  Establish an implementation group with two key objectives:  Implementation of user pays for a limited set of existing Agency services, to operate from 1 st April 2008.  Development of a proposal for the application of user pays to ongoing change. To be completed by 31 st March 2008.

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