xoserve Services Workgroup

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xoserve Services Workgroup
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xoserve Funding Arrangements - Model Comparison
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Models Compared
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User Choice Model

• Users approach xoserve to request services
• xoserve quote and charge on normal commercial
  basis
• Scope for negotiation
• Users can take-it or leave-it
• No visibility of service, charges or costs
• Outside price controls
• Adjust allowed revenue every five years

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User Choice Assessment

• Strength
• Flexible
• No constraints to meeting User requirements
• Commercial
• Benefits from standard commercial incentives

• Weakness
• Governance
• No visibility of costs, charges or services
  offered
• Discriminatory
• Not available to all

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User Choice Refinements

• xoserve publish pricing principles
• Audit of performance
• Internal and external, plus periodic Ofgem audit
• User Group/Board Oversight

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User Choice Services

• Used by some Users only
• One off, individual services
• Varied service level
• Commercially driven
• Users perceive an advantage

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User Choice Service Lines

• Provide Query Management
• User Admission Termination
• Must Reads
• Provision of Services in Relation to Obligations
  under GT licence
• Provision of user reports and information

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Incentive Scheme Model

• Services set out in UNC
• Users pay depending on usage
• Inside price controls
• Allowed revenue flexes with usage
• Potentially complex
• Charging structure
• Targets
• Sharing factors

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Incentive Scheme Assessment

• Strength
• Incentives aligned
• xoserve benefit by meeting User demands
• Flexible
• Automatic revenue adjuster
• Governance
• Transparent

• Weakness
• Incentives may be perverse
• Focus on what is measured
• Complex
• Operating costs increased
• Creates windfall gain or loss
• Match between cost and revenue change imperfect

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Incentive Scheme Services

• Available to all Users
• Defined in UNC
• Volume driven
• Those who use most pay most

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Incentive Scheme Service Lines

• Provide Query Management
• User Admission Termination
• Must Reads
• Provision of Services in Relation to Obligations
  under GT licence
• Provision of user reports and information

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Incentive Scheme Example - AMR

• Introduce charge per meter read received
• More reads means more revenue
• xoserve choose how to provide service
• Capex and/or opex funded by additional revenue

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Price Control Options

• Meter read income excluded
• Allowed Revenue Target Assumed Excluded
  Revenue
• Incentive Scheme
• Target Revenue set by Ofgem
• Variations shared e.g. 5050
• Caps and collars set by Ofgem

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Incentive Scheme Issues

• Incentive not to submit reads
• User liabilities to offset?
• Charge by category
• DM v NDM, monthly v annual read, AMR?
• Charge variations within price control period
• Level, structure, new charges
• Administrative costs
• More charge items to monitor and invoice

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What Might Users Pay for?

• Meter Reads Submitted?
• Queries Submitted?
• Supply Point Transfers?
• Invoices Issued?
• Information Requests?
• Admission/Termination?
• UNC Modification Proposals Raised/Implemented?