Review of the Performance Assurance Framework
ELEXON is currently undertaking a review of the Performance Assurance Framework. This page tells you about the review and provides the latest update on progress.
Smart workstream – The November PAB meeting will be asked to approve monitoring and reporting of the smart metering rollout risks, to commencing market-level reporting in January 2018. Read the PAB paper.
PAF Procedures workstream – We are presenting two reports to the November PAB meeting, looking at how the PAF is currently operated, and alternative approaches to risk management that we could adopt. Read the PAB paper.
The next step will be an Issue 69 group meeting; anyone interested in joining the group should contact the Change team as per the instructions on that page.
SVA Forum – We presented updates on the Smart and PAF Procedures workstream to the SVA Forum on 8 November 2017.
Keep an eye out for…
Issue 69 group – we’ll be convening the group for the PAF Procedures workstream, which will look for attendees to help us design the new PAF. If you have experience in risk management, internal audit, performance monitoring and reporting and the Settlement Risks, this may be of particular interest.
Smart risk education day – in Q1 2018 we’ll be holding an education day around the smart metering rollout risks; watch this space for more information about content and dates.
Key aims of the review
- Better engagement with parties about issues that do and don’t matter to them (their risk appetite)
- Increase the quantity and quality of participation in consultations
- Meet the current and future assurance needs of the Panel, the PAB and the wider electricity industry e.g. smart metering, alternative business models, CVA risk
- Improve the measurability of Settlement error and the mitigating effect of assurance activities
- Deliver a valued and trusted assurance service to BSC Parties under the strategic and tactical guidance of the BSC Panel and PAB
The review is projected to run to Q2 2019.
A core ELEXON team, supported by risk management and data experts, will deliver the review in four workstreams. Industry experts signed up to the Issue 69 working group will be called upon to review and comment on key approaches and proposals.
The PAB will be the primary decision making body, and will receive regular updates on the project’s progress.
The four workstreams will culminate in a revised framework, a new set of risks with estimated error, a refreshed set of mitigating techniques and improved reporting. This proposed framework will be implemented via the BSC Change process where required, after PAB and Panel approval. Any improvements that can be made sooner will be progressed as necessary.
Work stream 1 – Smart Metering Rollout
To provide immediate assurance against the challenges of the smart metering rollout by developing Proof of Concepts to enable the effective monitoring of significant Settlement Risks associated with the rollout.
Work stream 2 – PAF Procedures
To deliver recommendations to improve the operability and effectiveness of the REM and other PAF procedures that ensure that risks are more meaningful and reflective to participants.
Work stream 3 – Review of the PATs
To produce a set of recommendations in relation to existing or new techniques that can be applied efficiently and cost effectively to mitigate identified risks.
Work stream 4 – Data Provision
To create Proofs of Concept to test the viability of alternative methods of data provision that place less burden on participants to provide data and that supports more accurate risk appraisal.
As well as this webpage, we will use Newscast and the OSMs to provide key information and how you can get involved. The Issue 69 webpage holds documents related to that group’s work.
We will also be attending BSC and external forums to present on the objectives and activities of the review. If you would like us to present to your forum, please email us at email@example.com.
What is the Framework
Around £1.7bn in transactions went through the BSC Settlement systems in 2016/17. BSC Parties require an assurance framework that allows them to have confidence in the accuracy of the allocations of energy and charges.
The current approach to the Performance Assurance Framework (PAF) was introduced in 2007 under Modification P207.
With 16 assurance techniques, over 200 identified Settlement Risks, an annual central cost of around £3m, and impacts on all BSC Parties (plus their agents and BSC Agents/systems), the PAF must be delivered in an effective and efficient way.
Why review the PAF?
After 10 years of live operations, and some significant industry changes such as smart metering and innovative business models, the BSC Panel considered the PAF should be reviewed and included it in its strategic forward work plan 2016/17. ELEXON initiated a project and the Panel approved the preliminary scope and approach at Panel 255 in July 2016.
ELEXON then engaged with a broad spectrum of stakeholders to validate the scope and approach for the design phase of the review. The Performance Assurance Board (PAB) endorsed these proposals and Panel approval was gained in March 2017 (PAB 264/07 – PAF Review Scope and Approach Approval).