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.
Performance Assurance Techniques Workstream
We have commenced our main review of Supplier Charges. The Issue 69 Working Group met on 19 September 2019 to review our initial ideas for change. If you were unable to attend the first group, please get in touch and we will be happy to let you know the main themes of discussion.
We propose holding a further Issue 69 Working Group in January 2020 with a view to further refining the ideas towards a set of recommendations for the PAB. We would like to invite you to join us for this second session to feed in your views on our refined proposals for change. You may be particularly interested in joining if you work for a Supplier or other BSC Trading Party paying or receiving Supplier Charges, and you are involved in processing them. Also if you have other experience of financial compensation / incentive schemes.
We have also commenced our review of Peer Comparison and would like to invite you to share your views at an Issue 69 Working Group on 14 November 2019 in the Orange Rooam at ELEXON. You may be interested in joining if you work for a Supplier or Supplier Agent receiving Peer Comparison reports.
From 23 September 2019 we have commenced a review of performance measures and standards. Note that we do not intend to develop new performance standards as part of this review, but rather develop a methodology for setting standards and the governance required to do so, to ensure the PAB can respond to changing Settlement Risks in a proportionate and timely way. This page will be updated with news of proposed Issue 69 Working Group meetings relating to this topic.
Contact email@example.com to find out more.
Our review of SVA Qualification/Re-Qualification has drawn to a conclusion. All recommendations for change were approved by the PAB in September 2019 and you can read our report (PAB224/11a) on the webpage below. Highlights of the approved recommendations are as follows:
- New Licensed Distribution System Operators (LDSO) to be subject to Qualification
- Replacement of Re-Qualification technique with “Maintenance of Qualification”
- Introduction of a Qualification Check focusing on staff and processes after a change of ownership has occurred
- Single assessment of managed service provider’s systems and processes
- Reworded Annual Statements – to include upcoming material changes and a view of a party’s size / risk profile
- Updated Self-Assessment Document (SAD) questions and storyboards scenarios to be maintained as
Category 3 Configurable Items.
- PAB 224
Performance Assurance Techniques Workstream
We have commenced our review of Peer Comparison and would like to invite you to share your views at an Issue 69 Working Group, planned for early November 2019. You may be interested in joining if you work for a Supplier or Supplier Agent receiving Peer Comparison reports.
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 2020.
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.
Keeping you up to date
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 firstname.lastname@example.org.
Workstream 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.
This workstream has now completed. We identified a set of related Settlement Risks; we developed a report on the production and submission of Meter Technical Details (MTDs); we held an industry day; and we handed over management of the risks to the operational teams.
Workstream 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.
This workstream has reached its conclusion, having discussed with the Issue 69 workgroup:
- How risk areas should be identified
- How these risks should be evaluated, including the workgroup’s endorsement of a new measurement approach
- How ELEXON could achieve greater engagement with PAF stakeholders
- How the identified risks should be evaluated in the future
- Some examples of the proposed PAF design in use
The recommendations have been used for the 2019/20 assurance year. The updated Risk Evaluation Register was effective on 1st April 2019. Webinars introducing the Risk Evaluation Methodology and the Risk Evaluation Register are up on YouTube for anyone who wants to learn more about the BSC risk management approach. The Risk Operating Plan was approved in the March 2019 PAB meeting. It describes:
- The PAB’s risk appetite for each Settlement Risk.
- The planned technique deployment to achieve the target impact.
- The planned technique deployment to strengthen controls or mitigate events.
- The estimated costs of such deployment.
Risk Visualisation Tool
An online risk visualisation tool has been developed to help BSC parties identify where settlement risks occur in BSC processes. In addition, it contains basic information about each risk, the parties affected by the risk, and relevant controls. At present, the tool only applies to the SVA market, however it is due to be expanded to include CVA risks. We welcome your feedback on the tool to email@example.com.
For any questions on the operations of the assurance framework, contact firstname.lastname@example.org.
Workstream 3 – Review of the PATs
This workstream will assess, in light of feedback received on the PAF, if there are any gaps in the current set of mitigating assurance techniques (using the new Risk Evaluation Methodology and risk register to identify gaps in risk mitigation), which techniques are cost effective for the level of risk they mitigate, and which techniques are not.
It will then produce a set of recommendations for retaining, altering, adding or removing techniques. To date, recommendations have been produced for the Technical Assurance of Metering, BSC Audit, Supplier Charges, and Qualification (including Re-Qualification) PATs. The papers, which were presented to the PAB, can be found in the documents section of the relevant PAB meeting:
- Technical Assurance of Metering (TAM) – PAB217
- BSC Audit – PAB220
- Supplier Charges part 1 – PAB220
- Qualification (including Re-Qualification) – PAB
This workstream will also consider the general working practices that ELEXON and the PAB adopt in relation to coordinating and applying the techniques.
Workstream 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.
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).