Last month we looked into the role of the REC Change Panel, chaired by RECCo’s Elizabeth Lawlor. In this edition we reflect on the REC Performance Assurance Board (PAB), hearing from Jon Dixon, PAB Chair.
PAB members
The membership of the PAB is drawn from a number of organisations. The six Party representatives were appointed following elections held by the Code Manager this summer.
In addition, the PAB has a number of seats for organisations with whom it will maintain relationships in order to facilitate its work, and it is for those organisations to decide who attends on their behalf.
For instance, there is a dedicated seat for Citizens Advice. We have also sought to develop relationships with comparable bodies that will facilitate a holistic approach to assurance.
We are therefore grateful that we have members from both the BSC PAB and the UNC PAFA. This arrangement may extend to the Smart Energy Code as the assurance arrangements for that code develop.
There are also a number of seats for independent RECCo appointees, to bring an external perspective and provide a potentially greater degree of challenge to conventional industry wisdom. The first RECCo appointee is Steve Arthur.
Steve has over 25 years’ experience in the water industry and was until earlier this year the Director of Market Performance at Market Operator Services Limited (MOSL).
The second RECCo appointee is Dorcas Batstone OBE. Dorcas has vast experience in both the energy and water sectors, having held senior positions in both Ofgem and Ofwat either side of her role as Head of Stakeholder Assurance at Elexon.
We will recruit a third independent appointee to the PAB shortly, and we are particularly to attract someone with a background in performance management from outside of the utilities industries.
We are encouraged by the calibre of people that have offered to serve on the PAB to date, and believe that this is testament to the opportunity the new arrangements offer to address some of the long-standing issues that have beset the industry and make improve things for the benefit of both participants and consumers.
The full membership of the PAB, its Terms of Reference and non-confidential papers can be found on the REC Portal.
Performance Assurance Report Catalogue
The breadth of activities within scope of the performance assurance regime is driven by the wide range of industry processes and services that will now be governed by the REC.
Our aim is to ensure that those processes and services are delivered efficiently and effectively, both for the benefit of REC Parties and other service users, and ultimately ensuring positive outcomes for consumers.
In order to deliver and operate an effective, risk-based approach to performance assurance, it is important that the Code Manager and the PAB have available thorough and timely data on which to make informed assessments and decisions.
The Performance Assurance Report Catalogue was developed in order to identify and procure such data. Wherever possible, this will be through existing reporting and/or central service providers, but where necessary from Parties directly.
Since its publication in July, the Code Manager has further developed the catalogue, seeking to address Party concerns around the scale and granularity of data being requested. These efforts continue. For instance, following discussion at the September PAB the Code Manager will:
The views and challenge provided by the PAB have also been informative, helping to establish an appropriate balance between the efficacy of the Performance Assurance Framework and the administrative burden it places upon reporting parties.
Performance Assurance Techniques
A core principle of the performance assurance framework is that it focuses on the root causes of risks and issues, so assessment activities may be industry wide where risk information suggests problems may be pervasive or focused on the performance of a particular party or group of parties.
In response to high or increasing risk scores the Code Manager may apply relevant Performance Assurance Techniques, consistent with the approach set out in the Performance Assurance documents.
These may be applied based on the monthly risk monitoring processes, facilitated by the reporting covered above. In some cases, the technique may be light touch such as providing relevant parties early notice of the issue with accompanying guidance on how it may be addressed.
In other cases, a more stringent technique may be appropriate, and these would generally involve the oversight and approval of the PAB.
These techniques may continue to evolve as the REC itself develops. Currently, the Code Manager and/or PAB can apply different Performance Techniques across the following areas:
Market Entry
As noted in article 2 of this newsletter, the Market Entry processes may require REC service users to undergo a qualification process, which is itself a Performance Assurance Technique.
The October meeting of the PAB was informed of a total of 87 applicants at various stages of the entry process, including 40 new applications that had been submitted via the REC Portal since 1 September 2021. Around half of those relate to organisations wanting to become non-Party users of REC services.
Once qualification to use REC services has been achieved, it must be maintained as detailed in the REC Qualification and Maintenance Schedule.
The Code Manager has undertaken extensive engagement with REC Parties in order to better understand where the pinch points in the calendar may be, and wherever practicable seek to avoid scheduling any maintenance activity at those times.
An obvious and common example of such a pinch point would be the period around Central Switching Service go-live. In addition to feedback from the PAB, the Code Manager has discussed this approach at the Regulatory Design User Group, which is a Switching Programme workstream, and issued a targeted Request for Information.
Derogations
This month the PAB considered its first derogations. These were raised proactively by the Code Manager in order to address an issue with the provision of gas metering data to Xoserve.
The REC currently includes a requirement on MEMs to provide MAP IDs to Xoserve, which is due to take effect via a sunrise provision aligned with November 2021 UK Link release.
The Code Manager raised the derogation request when it became aware that some parties would not be ready for that change. The scope of the derogation request was subsequently expanded following discussions with Xoserve and it ability to release the change on schedule owing to the pressure of SoLR related activities.
Noting that the proposed derogation would address both issues, the PAB agreed that it should be granted, with expiration to coincide with the February 2022 UK Link release. Further details are available on the REC Portal.
Although this derogation was relatively straightforward insofar as it related to an obligation not yet in effect, it may be an indicator of the benefits of both a proactive Code Manager and PAB, willing and able to address issues before they become problems for REC Parties, and of the improving collaboration that we are seeing across codes.
Final Reflections
This is of course early days in the operation of the REC and its institutions, including the PAB.
There is continuing need for further culture change across the industry if we are to realise the benefits of greater data sharing and collaboration, but there appears a genuine and widespread desire for this to happen.
I am optimistic that by working together we will be able to improve our common processes and through those increase the level of trust that the public has in our energy industry.
We will need this to happen if we are quickly recovering from the damage being caused by what is referred to in the media as an ‘energy crisis’, and perhaps ironically, to embrace the new technologies and services needed to reduce our dependence on traditional fuels and retail models. An effective performance assurance regime focused on consumer outcomes may make an important contribution to that.