1. MOD Obligation on Shippers to provide at least one valid meter reading per meter point into settlement once per annum
25th February 2016
Angela Love

2. Agenda
Why Change?
Solution in MOD570
Solution Options
Discussion

3. Why Change?
Whilst there is a Supply Licence (SLC 21B.4) requirement to take all reasonable steps to obtain a meter reading at least once every year, there is nothing that requires that meter readings are provided into settlement every year to assure settlement accuracy
It has become apparent, through recent and previous AQ Review processes that Shippers have readings that are not being provided to the Transporters’ Agent as business as usual
By introducing a requirement to submit a reading into the settlement system every year, there should be an increase in settlement accuracy and also ensure that reconciliation does not time out (via the line in the sand)
The Panel determined in December that MOD570 should be deferred pending consideration of MOD564R. At the February Panel is was agreed that MOD570 be referred for development

4. Solution in MOD570
Modification 570 seeks to place a requirement on Shippers to submit at least one reading into settlement once per year and for this to be used in the settlement process
The Modification also proposes that reporting is produced by Transporters to monitor Shipper performance
The proposal also recognised that there might be a need for a grace period, given the changes to arrangements being introduced through Project Nexus
The Proposer is cognizant of the early discussions on the MOD570 solution, including concerns over what the new Nexus validation and systems arrangements could mean for performance

5. Are there any other options that should be considered?
Solution Options
The Proposer agrees with the concerns set out within early discussion about the MOD570 and believes that there are at least three options that could be considered to create a solution for MOD570:
A target set by the Performance Assurance Committee
A three year rolling target, with a view to reaching [99 – 100]% performance before close out
A target to be achieved within [x] months after Nexus Go-Live (a grace period)
Are there any other options that should be considered?

6. Assessment of Options Option Benefits Drawbacks
Target set by the PAC based on risk posed to settlement
PAC could undertake analysis of the settlement risk posed by poor meter reading performance
PAC may also be able to consider the cost of procuring readings to meet a greater performance level, thus considering a Cost Benefit Analysis
Unclear how PAC would agree the target and what would be determined as an acceptable level of settlement risk
Could take a long time to deliver and therefore will not improve settlement accuracy in the short term
Three year rolling target
Will give time for parties to adapt to the new Nexus arrangements and address any issues with submitting readings through the new validation rules, whilst incentivising that issues are addressed earlier in the process
Additional time allowed for meter readings to be taken from difficult to access sites
More akin to the electricity market
Process needed for target to be assessed/agreed
Will not improve settlement accuracy in the short term
Continues possible exposure to settlement inaccuracy
Target to be achieved within [x] of Nexus Go-Live
Will allow parties to adapt to new Nexus arrangements and address any issues with submitting readings through the new validation rules
Soft landing and allows for the grace period talked about in MOD570

7. Discussion