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Market research & Insight

Issue 486 | P322

Josephine Lord Josephine Lord Consultant
The change report for DCP225 Theft Risk Assessment Service – Party Obligations was issued for voting on 1 May 2015. The proposal seeks to include provisions for the Theft Risk Assessment Service (TRAS) into DCUSA that will include placing obligations on supplier parties to submit data to the TRAS. It also provides a description of the services to be provided by the TRAS. Voting closes on 13 May. Within the change report, a summary is provided of the 16 responses received following the earlier joint DCUSA and SPAA consultation on the respective TRAS change proposals, which issued on 2 March and closed two weeks later. In that consultation it was highlighted that suppliers will not be required to start providing data from the implementation date but that the initial submission of historic data would be required by 30 June 2015 and the monthly data feeds from November 2015. Alongside the consultation, appendixes set out the data items and the format that suppliers would be required to provide to the TRAS. The key issues raised by industry members during the working group consultation can be broken down into three areas: the data items suppliers will be required to provide; the requirement to provide the initial data feed by the end of June 2015; and the need for suppliers to have visibility of the TRAS service provider contract provisions. We recommend you note the proposal’s progress to date, take note of the data items specified in the consultation’s annexes and vote accordingly if desired. We would highlight that the data items requested go above and beyond any current requirements on suppliers to both provide and validate information on their customer portfolio and will likely require significant resource to ensure compliance. Further background In January 2013 the regulator directed gas suppliers to implement a central TRAS to assess the risk of gas theft at consumer premises to help target theft investigations. In July 2014 the TRAS requirements were extended to also cover electricity and placed the same licence condition requirements on electricity suppliers (see Alert 07/05/14). Both electricity and gas suppliers are therefore required to have a fully operational TRAS in place by 26 February 2016. The TRAS requires a governance structure to allow it to be amended, and for compliance to be assured. The DCUSA has been identified as an appropriate home for the electricity obligations (and SPAA for gas obligations). Therefore, DCP225 aims to facilitate the introduction of the TRAS for electricity suppliers and to allow parties to meet their licence requirements in relation to this. DCP225 was raised by British Gas on 10 December 2014 (see Alert 10/12/14). The proposal seeks to include provisions for the TRAS in the DCUSA that will include placing obligations on supplier parties to submit data to the TRAS and a description of the services to be provided by the TRAS. In addition, DCP225 proposes to introduce a new schedule into the DCUSA, which will include a list of the relevant information that suppliers will have to provide to the TRAS provider, and will be based on the requirements agreed with the TRAS provider during the procurement process. The modification proposal notes that as the TRAS procurement plan anticipates the signing of the contract with the TRAS provider on the 19 May 2015 and as DCP225 is required to allow the DCUSA Panel to sign the contract, that the modification has an implementation date of 18 May 2015 at the latest. DCP201 Provisions for the Theft Risk Assessment Service (TRAS) was approved in March 2014 (see Alert 19/03/14) and will share the costs of the TRAS between all supplier parties based on their metering point market share. Market share on this basis is already used in DCUSA for recovering TRAS costs, and therefore the methodology for determining each supplier's market share will be based on the method already set out in the DCUSA. Under the proposed TRAS arrangements DCUSA will become a data controller and so the DCUSA must be amended to hold DCUSA harmless for any breaches of the Data Protection Act 1998 when providing data to the TRAS provider on behalf of supplier parties. The proposal also suggests that the DCUSA voting arrangements should be reviewed and consideration given to the fact that as only supplier parties are contributing to the costs of TRAS, only suppliers should be entitled to vote on changes to DCUSA clauses and schedules relating to the TRAS arrangements. Meetings DCP225 was considered by the DCUSA Panel and SPAA Executive Committee at their meeting on 21 January. Both noted that the timescales to progress the TRAS change proposals are tight, as they must be implemented prior to the TRAS contract being signed by DCUSA and SPAA. Failure to meet this implementation date may impact the ability of the TRAS provider to implement the TRAS by February 2016 as set out in the Ofgem direction. The DCUSA Panel and SPAA Executive Committee therefore agreed that the TRAS change proposals should be progressed as urgent changes. In line with the procurement plan, the preferred bidder was selected by the DCUSA Panel and SPAA Executive Committee in February 2015, although negotiations with the preferred bidder are ongoing and the expectation is that the DCUSA Panel and SPAA Executive Committee will be in a position to sign the TRAS contract in May 2015. A dual fuel TRAS working group has been established to procure a TRAS provider and to oversee the implementation of the TRAS. At its first meeting on 4 February 2015 the working group agreed the high level TRAS principles that needed to be reflected in the DCUSA and the SPAA. These could be separated into three parts: TRAS provider responsibilities; TRAS supplier responsibilities; and other provisions such as funding and data protection. TRAS provider responsibilities The group agreed that the codes should include high level details of the TRAS provider responsibilities. These should be included in sufficient detail to allow DCUSA and SPAA parties to be able to confirm for themselves that they are meeting their licence obligations. The group agreed that the requirements should include:  identifying, collecting, scrutinising and evaluating supplier data;  assessing geographic, behavioural and other such trends;  creating, maintaining and operating a Stolen Meter Register and Security Device Register;  monitoring the risk of theft when consumers change supplier such that consumers should not be able to frustrate the investigation of potential theft of electricity by their current supplier by changing to another supplier;  producing a Theft Risk Assessment Methodology (TRAM) to be delivered to, and approved by, the SPAA Executive Committee and DCUSA Panel and reviewing the TRAM quarterly for the first year, and annually thereafter;  establishing the Theft Target and the Theft Target Methodology within 12 months of the TRAS effective date;  receiving supplier data and results of theft investigations from suppliers in the agreed formats;  producing and distributing Lead Generation Reports to each TRAS supplier on the (24th) working day of each month;  establishing a helpdesk to support suppliers in the submission of data and understanding of the Lead Generation Reports and responding to ad hoc requests from suppliers for further details regarding a potential TRAS lead;  providing a 24/7 tip off line: o a Category A event – Serious Safety Concern; o a Category B event – no Serious Safety Concern;  maintaining emergency contact details for referring Category A Tip Offs;  providing the hosting of the TRAS provider solution on a site that satisfies the Tier III Data Centre standards; and  providing monthly management reports to the DCUSA Panel/SPAA Executive Committee including, but not limited to, performance against service levels; rationale for any failure to meet service levels. The group noted that the TRAS provisions are being implemented by suppliers and the costs associated with the service are being recovered from suppliers, however, the Ofgem TRAS directions refer to distributors for electricity and transporters for gas. Therefore the group suggested that reporting to distributors and transporters could be offered as an additional service under the TRAS contract that would need to be agreed separately to the main TRAS contract. TRAS recipient (supplier) responsibilities The working group agreed that the obligations on suppliers relating to the TRAS should be based on the submission of data. There are two types of data that suppliers will be required to provide to the TRAS provider: data relating to electricity/gas supply customers and supply points; and data relating to theft investigations. The group agreed the following principles in relation to supplier data:  the codes will include a list of data items that suppliers are required to send to the TRAS provider, together with details of the frequency, format and method of transfer;  there will be an initial data drop of historic data;  the TRAS provider will specify the date when the initial data drop of historic data is required and this will be incorporated in the codes;  there will be an ongoing monthly submission of data that could be either delta's or a full refresh;  a process will be included in the codes setting out the monthly cycle e.g. data submitted on (3rd) of the month based on the position on (1st) of the month. Lead Generation Reports provided by the TRAS provider on (24th) day of the month;  where a supplier is unable to meet any obligations regarding the submission of data then the standard process for requesting a derogation would apply;  that the TRAS provider is expected to agree a defined number of formats that suppliers can use and a single supplier could submit its data in a variety of these agreed formats; and  data will be transferred via secure file transfer protocol. In terms of theft information, the group concluded that an obligation should be included within the codes to require suppliers to provide details of non-TRAS related theft investigations to the TRAS provider and also to provide feedback to the TRAS provider with regards to any TRAS leads that have been investigated. This feedback would include responses such as, but not limited to: theft proven; no theft identified; meter fault identified; and supply point no longer within the supplier’s portfolio. Other provisions Additional provisions are based on data sharing, data protection and funding/re-distribution of funds. Each supplier will be required to feed data into the TRAS and this data will then be used to determine potential theft leads in relation to its own customers and in relation to customers that are not within the suppliers' own portfolio. For example, data could be used to analyse geographical trends where proven theft in one street is an indicator with regards to other properties in the area. The TRAS is also based on the principle that data provided by one supplier in relation to a specific property will be used on an ongoing basis even after the customer has changed supplier i.e. the TRAS provider will not have to start collecting data from scratch each time there is a change of supplier. Working group consultation In response to the working group consultation issued in March, the majority of respondents expressed concerns regarding the 30 June deadline. It was noted that there was not sufficient lead time to enable the data to be extracted from supplier systems and sent to the TRAS provider. In addition, June 2015 is a busy time for gas suppliers preparing for the implementation of Project Nexus. However, when concerns with the June 2015 deadline were raised with the preferred bidder, it was confirmed that delaying the date for the initial data feed would have a consequential impact on the TRAS implementation date. It stressed that the reason data is required by June 2015 is so that the TRAS solution can be developed and implemented in February 2016. Nevertheless, the working group concluded that the initial data feed should be provided by suppliers between 30 June 2015 and 31 July 2015, rather than by 30 June 2015. In addition, the monthly ongoing data feeds should be provided from November 2015. It was noted that this would impact the delivery timescales and therefore a fully functioning TRAS would not be available until March 2016, however, the working group considers that the solution in place by February 2016 will allow suppliers to meet their TRAS licence condition. A number of consultation respondents highlighted concerns regarding the data items included in the legal drafting. Two workshops were arranged with the preferred bidder on the 26 March and the 1 April 2015. All SPAA and DCUSA parties were invited to participate, plus industrial and commercial suppliers who are not currently SPAA parties. During the workshops, the preferred bidder explained the justification for the each of the data items and the group categorised data items as mandatory or preferred. A revised set of data items have been included in the legal drafting. The initial feed of consumption data will be used to create estimated consumption data. This will then be compared against the monthly consumption data fed into the system from November to determine outliers for further investigations. For the ongoing monthly data feeds, both the preferred and mandatory data items would be required but the working group concluded that only the mandatory data items should be provided in the initial data set. Provision of the preferred data items would be optional at this time. A comprehensive list of what is classed as mandatory and preferred data items is contained within the commercial and residential appendixes of the legal drafting. Whilst suppliers raised concerns regarding the volume of data required, it was acknowledged that provision of a full refresh would be a more robust solution as it would be clear whether any fields had been intentionally left blank, and errors one month would be picked up in the full refresh in subsequent months. One respondent proposed that a data group be established to agree, with the TRAS provider, a reduced sample data subset that can be used to prove the value of the data to the TRAS solution. However, the establishment of a data subgroup should not be specified within the change proposal. One respondent requested that the date for submission of data be moved to mid-month as suppliers already have intensive data processing requirements at month start and month end. The preferred bidder confirmed that this was possible and that the legal drafting should be amended to clarify that data should be based on the position at the end of the 5th calendar electricity/gas day each month. Suppliers should have five working days to provide this data to the preferred bidder. One respondent suggested that any data stored in free formatted character fields should be exempt, as although the data is collected, the data could not be automatically harvested and sent to data protection standards in terms of accuracy. The group agreed that legal drafting should be amended to clarify that suppliers should use reasonable endeavours to provide the data, where this is not stored in an appropriate format it does not need to be submitted.The working group concluded that the legal drafting within the TRAS change proposals contains sufficient detail, with the TRAS provider's detailed contractual provisions contained in the TRAS contract but also requested that the SPAA Executive Committee and DCUSA Panel consider whether certain key provisions from the TRAS contract should be provided to SPAA and DCUSA parties. The working group unanimously agreed that the legal text, consulted on in March, be issued for industry voting. Next steps Voting will close on 13 May and a Change Declaration is expected on 14 May. The dual fuel TRAS procurement plan anticipates that the contract with the appointed TRAS provider will be signed in May 2015. DCUSA and SPAA require all TRAS related obligations to be implemented within the Codes before signing the TRAS contract. Based on the proposed timescales for the TRAS change proposals, Ofgem’s decision is currently expected after 21 May. Therefore the proposed implementation date for DCP225 is one working day after the decision. The consultation notes that failure to implement the change proposals in May 2015 will lead to a delay in signing the TRAS contract, which may impact the ability of the TRAS provider to implement the TRAS by February 2016 as required by the licence obligations. Although suppliers will not be required to start providing data from the implementation date, the initial submission of data will be required during the implementation phase (30 June - 31 July 2015) and the monthly data feeds will be required from November 2015.

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