Download - Stakeholder Engagement - ‘Critical Friends’ Stakeholder Panel

Stakeholder Engagement - ‘Critical Friends’ Stakeholder Panel Panel 4, Session 2 – Southern Power Networks

Gatwick 09 May 2013

Stakeholder Engagement – Critical Friends Stakeholder Panel

UK Power Networks (Operations) Limited. Registered in England and Wales. Registered No. 3870728. Registered Office: Newington House, 237 Southwark Bridge Road, London, SE1 6NP of 19

Contents 1. Introduction ......................................................................... 3

2. What are ‘Critical Friends’ stakeholder engagement panels? 6 3. Session 1 of Panel 4: Event location and attendees .......... 7

4. Format of engagement ....................................................... 7 5. Objectives and key questions ............................................. 9 6. Speakers and topics ......................................................... 10 7. Key feedback and actions ................................................ 12

8. Your feedback in numbers................................................ 18

9. Next steps ......................................................................... 19 10. Key contacts .................................................................. 19



1. Introduction UK Power Networks is one of the UK’s largest electricity distribution businesses. We own, operate and manage three electricity distribution networks in the UK. Our licenced distribution networks are in the East of England, London and the South East.

It is our job to ensure the infrastructure that brings power to homes, businesses, hospitals, schools and other public services delivers reliable, safe and sustainable electricity. Our responsibilities include:

Maintaining the safety and reliability of the electricity networks

Connecting new customer premises to electricity

Extending and upgrading the electricity network to meet changing needs



Our three networks distribute electricity using more than 160,000km of underground cables and overhead lines, and more than 135,600 substations. Laid out, our networks would stretch several times around the circumference of the Earth. From underground cables to overhead power lines, small rural substations to complex delivery networks in the capital, we are working on the electricity network 24 hours a day, 365 days a year, making sure the lights don’t go out. Safety and customer service are our top priorities; these are at the heart of everything we do.

Number of connected customers 8 million

Kilometres of overhead electricity lines 65,300

Kilometres of underground electricity cables 98,000

Revenue from the regulated business (2010) £1.1 billion

Revenue from the unregulated business (2010) £0.2 billion

Number of employees 5,000

Number of new connections per year 100,000

Our vision is to become an organisation which is respected as one of the best performing companies in the sector.



We work to a vision defined by our core values. This vision drives us to ensure that we bring all of our 8 million customers a reliable service that delivers value, safety and innovation. We have an important part to play in supporting the Government’s move to a low carbon economy. The energy industry is facing challenges to meet increasing demand and provide innovative technologies such as electric vehicles and heat pumps. Our vision emphasises the aspiration for us to be a leading company in the electricity distribution sector. It recognises that this can only be achieved if our company objectives are aligned with the interests of all relevant stakeholders, including shareholders, staff, customers and regulators.



Stakeholder engagement is therefore a fundamental and crucial part of our business. It is very important that we are regularly talking to our customers and asking them what they think our priorities should be for the future. To meet tough Government targets for cutting carbon emissions, we will have to introduce substantial changes to our networks. These changes will come at a cost, which is why we believe that we have a responsibility to our customers to ensure that their voices are heard and considered in developing our business plan. There are four main areas in which you can help us build our business plan:

Reviewing the different aspects of our plan, and how we intend to deliver on our performance targets;

Developing the underlying economic scenarios for our plan;

Discussing how our performance should be measured and what target we should set; and

Ensuring that our plan makes sense to you and offers value for money.

2. What are ‘Critical Friends’ stakeholder engagement panels? To ensure stakeholder feedback is fully captured and acted upon, we have designed our ‘Critical Friends’ stakeholder engagement panels, which are thematically grouped engagement sessions. The panels run alongside other forums and workshops that we organise as part of our business as usual engagement with our stakeholders. The ‘Critical Friends’ stakeholder engagement panels have so far focused on eight key topics over three sessions:

Customer satisfaction

Social obligations

Low carbon targets and transition

Safety

Low carbon technologies

Environment

Network reliability & availability

Connections



In the context of the ‘Critical Friends’ panels, we are consulting with people from a wide range of organisations and representative bodies, including (but not limited to) major energy users, small business and domestic customers, developers, local authorities and parish councils, charities, environmental groups and organisations which help vulnerable people.

3. Session 2 of Panel 4: Event location and attendees The session was held on 09 May 2013 at the address below: Hilton Hotel, South Terminal, Gatwick Airport, Gatwick. RH6 0LL On the day, we were joined by the following stakeholders:

Major Energy Users Council Commercial Services

Consumer Focus West Sussex County Council

GTC – UK CitiPower and Powercor

South East Councils Kent County Council

Premier Energy Birse

Npower Bellway Homes

British Red Cross

4. Format of engagement Session 2 of Panel 4 focused on Southern Power Networks. After a welcome address, several speakers gave short presentations (summarised below). Participants were invited to ask questions at any time during presentations, but dedicated Q&A sessions and Open Forum discussions were also held after the presentations to probe issues further, focusing on some of the more technical/detailed questions. Participants were also encouraged to raise any additional issues which are of interest.



For the Open Forum discussions, the stakeholders were reminded of the proposed ground rules for engagement to ensure that the opportunities for input were evenly distributed and the participants were able to fully express their opinions if they so wished. The following ground rules were established:

Avoid assigning intentions, beliefs, or motives to others (Ask others questions instead of stating untested assumptions about them)

Honour each party’s right to “pass” if he or she is not ready or willing to speak

Allow others to express their opinions completely

Make sure that the opportunities for input are evenly distributed

Respect all confidentiality or anonymity requests that the group has agreed to honour

Adopt a solutions-oriented approach

Stay focused on the issue that is the subject of the agreement Feedback forms were provided at the end of the final Open Forum discussion, inviting the participants to answer a number of questions about the event and, more generally, the direction of business at UK Power Network. The results are summarised in Section 8.



5. Objectives and key questions The Open Forum discussions focused on how stakeholder feedback has contributed to the draft Business Plan and the DNO’s role with Smart Meters. In relation to the draft Business Plan, we consulted our stakeholders on the following questions:

Is the Business Plan Update useful?

How could UK Power Networks improve its Business Plan Update?

Do you have any comments about the proposed outputs, costs or price impacts?

Are there any areas that you would like to see more information on in our Final Business Plan?

Do you have any general comments on this Business Plan Update?

How do you rate UK Power Networks’ stakeholder engagement on its business plan?

How does this plan compare with other electricity distribution networks? With regard to Smart Meters, we consulted our stakeholders on the following questions:

Do you understand the role of Distributed Network Operators (DNOs), suppliers and other entities in the smart meter process?

Do you think the benefits of smart meters to consumers and the energy industry outweigh the costs?

Do you believe smart meters will assist with reducing your energy consumption?

How likely are you to deploy advance smart technology at home or work? The feedback that we have collected is summarised in the sections below.



6. Speakers and topics Below we briefly summarise the opening statements by each speaker. Introduction Matt Rudling, Director of Customer Services Basil Scarsella, Chief Executive Officer Matt opened the session by thanking the stakeholders for their attendance and continued support of UK Power Networks. He stressed the importance the role of stakeholders was playing in helping to shape the final business plan that they would be submitting to Ofgem. Basil added that the revised Business Plan published in April reflects the feedback that stakeholders have provided to the company. He said that the plan is for the sessions to continue for other subject matters and stressed how useful they are for shaping the business. Matt stressed that he hoped they would be an enduring process with a recognised panel and an independent chair. Matt then introduced the Stakeholder Engagement process that UK Power Networks had gone through, explaining that we were undertaking the most extensive stakeholder engagement process in our history. He presented the wide range of organisations that we have consulted with and demonstrated the different methods of engagement that have been undertaken. He went on to explain that UK Power Networks was the first DNO to publish its draft business plan in November and was the first DNO to publish an updated business plan in April. He added that following the panel session, a report will be compiled that captures the issues raised and details the actions to have come out of the session. This report will be shared with the attendees and placed on the website. Key Themes and Impact on our Outputs Matt Rudling, Director of Customer Services Keith Hutton, Head of Regulation Matt Rudling introduced the Key Themes and Impact on our Outputs section, showing how stakeholder feedback has directly altered the way the business operates. Using “You Said, We Did, We Will Do” tables, he showed a number of examples of comments stakeholders had made and demonstrated how the business had responded to their input and where they would act upon it



further in time. Matt focused on the output areas of Safety, Customer Service, Connections and Environment. Keith continued the presentation by introducing the engagement around customer willingness to pay and how this had led to a targeted improvement to our services. He also demonstrated how stakeholder feedback had impacted ways the business operates, this time around Network Reliability and Availability. He then showed how the business had listened to stakeholders concerns around the Low Carbon Technology forecasts and adjusted them accordingly. He ended by explaining how the business was incorporating stakeholder feedback around Innovation into its plans. Business Plan Update Keith Hutton, Head of Regulation Keith demonstrated how UK Power Networks has also responded to stakeholder feedback to make material changes to the business plan. In each output area, he showed how their feedback had impacted the plan to deliver improved outputs before showing how efficiency improvements made over the last 2 years will also benefit our customers. He was able to demonstrate how the new Business Plan will deliver increased investment at lower cost and how this would mean that UK Power Networks would be proposing a price cut to all their customers. Smart Metering and DNO Brian Stratton, Head of Smart Metering Programme Brian introduced the planned roll out of smart meters, how they will fit into network and the role of the Data Communications Company (DCC). He then discussed the role of the DNO in the roll out and how DNOs are coordinating with suppliers in this process. He concluded by demonstrating how the smart meters will allow DNOs to offer additional services to their customers and explaining the benefits they will provide to DNOs for load management on the network.



7. Key feedback and actions

Key Themes and Impact on our Outputs

- One stakeholder asked what the acronym RIIO stood for. Basil Scarsella confirmed that it

referred to the Ofgem’s distribution price control that reflects Revenue = Incentives + Innovation + Outputs.

- A panellist asked whether we felt the connections targets we had quoted were challenging enough. He felt that an average of 53 days to deliver on a small project was poor. Matt Rudling responded by confirming that the average includes delays at the customer’s request. Basil Scarsella went on to give an example; if a customer wants to build an extension to their house, they may request a six week delay to allow for the completion of the building work which in turn adversely impacts on the average delivery time. He went on to state that we aspire to deliver connections in line with the customer’s needs. Historically distributors have dictated to the customer when they will complete the work. With the introduction of competition, it is obvious that a customer will choose a service provider based on who can best meet their needs. Ultimately if a customer requires a connection job completed tomorrow, that is what we should be able to deliver (albeit at an additional cost to the customer). The stakeholder went on to state that he believed four weeks would be a reasonable expectation for delivery. Another stakeholder asked for clarity on who we considered to be our customers in the connections arena. Basil Scarsella confirmed it was anyone requesting connections work, from a domestic customer at single premises to developers working on large scale projects. The panellist acknowledged that the inclusion of developers would increase the average delivery time.

- One stakeholder acknowledged the fact that we had voluntarily increased the EGS payment to domestic customers off supply for more than 18 hours to £100, but asked whether there were plans to do the same for non-domestic customers? Matt Rudling recognised that £108 payment to a business that may have lost a day’s trading is almost certainly insufficient to cover their costs. The stakeholder accepted that it would be unrealistic to fully cover commercial indemnity but asked whether consideration had been given to an increased payment, perhaps in the region of £300 to £500 as this may be a more meaningful payment to a small business. Basil Scarsella agreed that this may be a reasonable approach and added we would need to differentiate between business sizes or offer a flat rate to all. He acknowledged that this is an important point, but would not want to rush into any decision. He added that the best course of action would be to complete analysis on the numbers of small businesses who experienced a power cut in the past year that exceeded 8 hours.



Another panellist stated that for some it may cost more to pay the current EGS payment into the bank than the actual value of the payment. Matt Rudling concluded this discussion by reiterating the point that we do provide all information needed to make a claim on any insurance with the current payment offsetting part of any excess value.

- A panellist asked whether we had plans to share data on vulnerable customers with the gas industry. They added that this would be particularly beneficial in supporting vulnerable customers who were off the gas mains, as any loss of supply would put them more at risk. Matt Rudling confirmed that we had not considered this but confirmed we would explore the option. However, he added that we would need to establish that this exchange of data would be permitted within the scope of the Civil Contingencies Act. Basil Scarsella added that as part of our drive to capture data on vulnerable customers, we had written to all MP’s requesting that they notify us of any of their constituents in need of additional support, but the point around sharing data with gas companies was worth exploring.

- When discussing the willingness to pay slides, one stakeholder expressed surprise that customers were willing to pay £900m over and above their current bill to achieve the service levels we are targeted to deliver and asked how we had arrived at this conclusion. Keith Hutton advised that we had employed a market research company (Accent), who used detailed qualitative and quantitative surveys to collate the data from our customers. Basil Scarsella put the figure into context by explaining that the £900m was split between 8 million customers over an 8 year period. This would equate to a little over £10 per customer per year. When expressed in this manner the stakeholder accepted that this was a palatable cost.

- A panellist asked whether we had made any comparisons of our Low Carbon forecasts with those of National Grid. Keith Hutton confirmed that we had and they had been factored into our own forecasts.

- Another participant asked what happened if our actual business plan expenditure turns out to be significantly different to our forecasts. Keith Hutton explained that within the regulatory settlement there was an uncertainty mechanism covering +/- 20% variance. Any variance greater than 20% we would either refund or charge our customers accordingly. Any variance of less than 20% is absorbed by the business.

- A panellist asked about the capacity of the storage facility we were piloting as part of the Smarter Network Storage project. Robert Kemp confirmed that it had capacity of 6MW for 8 hours.



Business Plan Update

- One stakeholder asked who our target audience was when we produced our business plan

and whether it was public facing. Keith Hutton confirmed that there are three key stakeholder groups the plan is aimed at: Customers – public facing

Regulator

Internal stakeholders

- The stakeholder went on to add that the plan was lacking any reference to our Vision or Values, although these were included in the consolidated stakeholder engagement report. He felt that it would be appropriate to include them in the business plan. Basil Scarsella explained that the version of the business plan available today was an interim update and the final plan in July would include reference to our Vision and Values.

- A panellist explained that as an emergency planner he had been involved in the recent workshop to agree triggers with us for when we proactively contact the councils to notify them of a power cut. He fully supported the initiative but asked whether these triggers would be included in the business plan to which Keith Hutton confirmed they would not be. The stakeholder went on to add that their inclusion would give customers the added reassurance of the support available during a power cut.

- The stakeholder went on to add that it would be a worthwhile exercise to analyse fault patterns to identify hotspots for power outage or metal theft as we could use this data to forecast future incidents. Basil Scarsella confirmed that this analysis was already in place and we use this data to plan our work. Where a solution to a particular problem may take some time to complete, we write to customers to explain what we will be doing and manage expectations around the duration of the work. We also advise that whilst the work is on-going there is a risk of further outages, so we encourage any customer who may be vulnerable to register on our Priority Service Register. The stakeholder added that he believed the local constabularies would be keen for us to join community intelligence groups and share data around areas that suffer high numbers of power cuts.

- Another stakeholder was keen for us to push the self-service option through on connections

as this is something they had wanted for the past 7 years. Nigel Hall confirmed that this was a priority for UK Power Networks. The initiative would benefit all parties as at present a significant percentage of quotes are not taken up. He went on to emphasise our desire to deliver the work when the customer wants.



- A stakeholder asked whether our target for recycling 98% of street works spoil had been

negotiated with the Local Authorities. Keith Hutton was unsure, but would investigate and respond accordingly.

- One panellist suggested that the target of 2% reduction year on year for oil leakage seemed low. Keith Hutton explained that oil filled cables were used on the high voltage network, so replacing these assets will cause major disruption to significant numbers of customers.

- Another stakeholder asked what work we had carried out to provide weather protection to our assets. Robert Kemp confirmed there were a number of initiatives we employ. He gave an example of how we have raised assets on our grid and primary sites where they are known to be at risk from flooding. One panellist asked whether this target hardening work was detailed in the business plan. Keith Hutton explained that it wasn’t as it is viewed as ‘industry speak’ which the majority of our stakeholders show no interest in. The panellist went on to add that we would be welcome to join the East Coast Flooding Group. Robert Kemp advised that whilst we don’t sit on this group we do engage county councils to discuss issues such as flooding. These discussions include agreeing to the deployment of temporary flood measures as and when appropriate. Another stakeholder added that it was good to hear of our efforts, but we really should be more proactive in publicising the work that we’re doing. Basil Scarsella acknowledged that there was evidently more we could do with our external communications to councils and welfare groups. The panellist agreed that there was a lot of really good work going on, but no one seemed to know anything about it.

- A panellist asked how the 55% refunds to customers for any under spend was paid. Was the money paid to the supplier to pass on through the customer bill? If so how confident were we that the customer actually receives this? He went on to add that if the refund equated to a mere couple of pound as an example, he as a customer would prefer to see the money spent on network investment. Basil Scarsella acknowledged that as the DUoS (Distribution Use of System) charge only equated to approximately 18% of the customer bill a 10% saving on our cost would result in less than 2% saving on the overall bill. The stakeholder went on to suggest that he believed any such saving would be absorbed by increased costs to the supplier.



Smart Metering

- A stakeholder expressed concern at the fact the smart meter roll out was a supplier led

initiative. In other countries where it has been led by the distributor, it allows for regional roll out. With a supplier led approach each street potentially would have six different teams driving six different vehicles on six different days. This would appear contrary to the idea of reducing the carbon footprint.

- There followed some debate over when the clock should start if a last gasp signal is received in the early hours. UK Power Networks commented that would be reluctant to contact someone at 02.00 to advise them they are off supply but added the topic of how Customer Minutes Lost are measured was an issue that needed to be discussed further with our regulator.

- One panellist asked whether as part of the smart meter roll out, we would be able to update our asset records which in his experience are often out of date. Nigel Hall advised that whilst we would see certain data, we would not see everything necessary to completely update our records

- A stakeholder commented on the fact that analysing the data would still be a powerful tool while another asked whether UK Power Networks has the capability to handle all the data. Matt responded that this capability is currently being built but the staggered roll out of the smart meters over a number of years means that there will not be a sudden explosion in quantities of data.

- One stakeholder asked what resourcing plans we had in place given the volume of expected interventions. Brian Stratton advised that we were currently expanding the work force through the recruitment of apprentices. In addition we had planned a series of training events to support our existing staff.

- A panellist expressed concern over the fact that the Meter Operators responsible for installing the smart meters are not considered to be electricians which may cause confusion. Another stakeholder commented on the fact that the Meter Operator would be certificated to carry out this type of work and went on to ask whether there was a need for the customer to be home to give the Meter Operator access. A stakeholder added that there was a code in place that required the customer to be present during the installation which allowed for instruction on the usage of the meter to be given. In addition it was a fail-safe to avoid the



issues seen in California whereby customers who did not want a smart meter would return home from work only to find one had been installed. Matt Rudling closed the event.



8. Your feedback in numbers



9. Next steps We will build on the feedback collected in this and the final session in Panel 4 to create a consolidated report. The aim of the report will be to identify key messages from stakeholders and highlight the issues of concerns raised in the discussions. We will also outline an action plan and a timescale within which our stakeholders can realistically expect us to implement the various actions arising from the discussions. We will consolidate your comments on other issues of concern to you that are outside the topic areas that we intend to cover in the three panels. We will schedule dedicated sessions to cover those specific issue areas.

10. Key contacts For further information please contact us on [email protected] To speak to one of our dedicated Stakeholder Engagement Executives, please contact Andy Jenner on 07875 117136. If you would like to invite a friend or colleague to contribute views, our consultation continues online* at http://www.ukpowernetworks.co.uk/internet/en/have-your-say/ *Registration is required.

mailto:[email protected]

https://www.ukpowernetworks.co.uk/internet/en/have-your-say/

Download - Stakeholder Engagement - ‘Critical Friends’ Stakeholder Panel

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