Customer and Social Issues Working Group on 22 January 2014

Publication date
4th February 2014
Information type
Policy area

1. Present

Ofgem James Veaney/Stephen Perry/Phil Sumner
Stakeholders Chris Alexander (Consumer Futures)
GDNs Tracy Hine (NGGD)/David Gill (NGN)/Eileen Brown (NGN)/Margaret Hunter (SGN)/Mark Oliver (WWU)
DNOs Sharon Roper (NPg)/Kelly Graham (NPg)/Alison Sleightholm (WPD)/Sam Risdale (SSEPD)/Billy Fraser (SSEPD and SHETL)/Kendal Adams (SPEN)/Susan Bradshaw (SPEN)/Steph Rogan (SPEN)/Lynn Wilson (SPEN)/Brian Hoy (ENWL)/Paul Measday (UKPN)/Hannah Ngoma (UKPN)
TOs Steve Thompson (NG) (telecon)/Malcolm Burns (SSE) (telecon)/Jennifer McGregor (SSE) (telecon)

2. Introduction

2.1. James Veaney (JV) welcomed everyone to the latest RIIO-ED1 CSIWG meeting. JV stated that this meeting would be primarily focused on discussing how the stakeholder engagement score converts into a financial reward and how to incorporate social objectives into the RIIO-ED1 Stakeholder Engagement Incentive.

3. Consultation on how the Stakeholder Engagement panel score converts into a financial reward

3.1. Stephen Perry (SP) noted that there is currently little guidance about how the panel score is converted into a financial reward. For 2013, a ‘rule of thumb’ was applied to DNOs that  converted the score awarded, out of ten, to a percentage of available reward received. SP stated that we are planning to consult on how the stakeholder engagement score converts into a financial reward to ensure that network companies are not rewarded for poor performance and that the full value of the incentive is achievable.

3.2. The network companies had several initial views on our proposed consultation.  Malcolm Burns (MB) considered that the minimum requirements assessment process should ensure that poor performers are not rewarded. JV noted that may be possible for a company to meet the basic requirements but still be considered poor.

3.3. Brian Hoy (BH) presented slides on behalf of ENWL and highlighted potential options for converting the score into a financial reward. BH noted that he didn’t want any changes to erode the strength of the incentive.  JV reassured the working group that this consultation was not about reducing the value of the incentive.

3.4. Mark Oliver (MO) suggested that how the stakeholder engagement score converts into a financial reward could change over the price control period as performance improves. Tracy Hine (TH) noted that as the level of engagement increases, stakeholder expectations will also increase.

3.5. The working group discussed whether the panel should have more awareness of the financial impact of their decisions. The network companies considered that it was more useful for them to focus on assessing performance, rather than assessing the level of financial reward.

3.6.  BH noted that the labelling of the scores (eg “poor”, “good” and “excellent”) can have a large impact on how the network companies are scored. BH suggested that we may want to consider this as part of our consultation.

3.7. BH considered that there were two key issues – one was deciding at what point a network company should earn a reward/earn all of their potential reward and the other was the scaling between these two points.

3.8. SP presented Ofgem’s initial views on how the stakeholder engagement score could be converted into a financial. Kelly Graham (KG) asked whether we had assessed the financial impact of our proposals, based on last years’ scores. SP confirmed that we had and agreed to circulate the data.

Action – Ofgem to circulate financial impact of our proposals, based on last years’ scores.

3.9.  BH questioned what the analysis showed. SP confirmed that if companies scored the same as last year, some network companies would receive a smaller financial reward under our proposals. JV noted all network companies have expressed a desire to improve and suggested that in the future years the same company could benefit from our proposed options. SP noted if the top performing company scored the same as last year, they would financially benefit from some options.

3.10. SP confirmed that we would be consulting on this shortly. JV encouraged any stakeholder that had strong views on this topic, to submit them to Ofgem imminently.

Action – Stakeholders to submit any ideas on the stakeholder engagement panel score can convert into a financial reward, by 29th January 2014.

4. Stakeholder Engagement and Social Objectives

4.1. SP provided an overview of our proposals to incorporate social objectives into the stakeholder engagement incentive (slides attached).

4.2. Lynn Wilson (LW) provided an overview of Scottish Power’s views on our proposals (slides attached) and provided some examples for our proposed template.

4.3. The working group generally agreed on our approach to amend the minimum criteria and panel scorecard.

4.4.  Sharon Roper (SRo) questioned how the stakeholder engagement reward would be split between social and stakeholder engagement. JV stated that DNOs would not be assessed separately for social objectives and stakeholder engagement and that DNOs were able to decide the level of focus that they want to place on social objectives.

4.5. Paul Measday (PM) suggested several changes to the minimum criteria. PM noted that challenging stakeholders might not want to be engaged, so the focus should be on whether they have “appropriate engagement processes”, rather than whether a DNO has actually engaged with challenging stakeholders. BH considered that the focus on “positive outcomes” may only reward DNOs if they change processes. PM suggested rewording the minimum criteria to focus on “justified outcomes”.

4.6. The DNOs were less supportive about introducing a new common template in advance of this year’s submissions.

4.7. BH noted that trying to quantify the financial impact of activities can be quite challenging and very subjective. Paul Measday suggested that this template might incentivise DNOs to overestimate the benefits of their activities.

4.8. Alison Sleightholm (AS) noted that some of the most important stakeholder engagement activities may not pass a cost-benefit analysis test and she didn’t want this template to stop DNOs from undertaking these activities. Sam Risdale (SRi) did not want the template to disincentivise DNOs to innovate and share learning from failed projects.

4.9. Paul Measday (PM) questioned whether this template would form part of the panel assessment. JV confirmed that the template would not form part of the panel assessment. PM suggested that the DNOs could try submitting the template following the panel assessment.

Action – All parties to review how stakeholder engagement outputs could be captured, following the 2013-14 stakeholder engagement submissions.

Action – Ofgem to assess 2013-14 stakeholder engagement submissions against the DPCR5 minimum criteria for the actual Stakeholder Engagement incentive.  Separately Ofgem would informally assess those submissions against the proposed RIIO-ED1 minimum criteria and provide informal feedback to DNOs.

Action – Ofgem to confirm submission dates for the 2013-14 stakeholder engagement incentive, as soon as reasonably practicable.

5. Regulatory Instructions and Guidance (RIGs)

5.1. SP noted that over the next year we will need to develop RIGs for the customer satisfaction survey, complaints metric and telephony data. SP noted that although the overall RIGs development timelines had not been finalised, it may be beneficial to start identifying changes to the customer service RIGs.

Action - Ofgem to forward a note to the DNOs highlighting the key areas where changes are required to the RIGs, as soon as reasonably practicable.

Action - Ofgem to circulate a Word version of the current RIGs to DNOs.

Action - DNOs to develop a revised set of RIGs, as soon as reasonably practicable.

6. Any other business

6.1. Alison Sleightholm (AS) noted that there are situations where a customer’s overall level of satisfaction with the DNO is low, but the customer scores the DNO highly for each of the introductory customer satisfaction survey questions. AS suggested adding two additional questions to the customer satisfaction survey; one to confirm the overall level of satisfaction and another to ask why the overall level of satisfaction is low.

6.2. JV considered that it would be useful for the DNO to understand what is influencing overall levels of satisfaction, but he did not want to make changes to the customer satisfaction survey that might lead a customer to revise their score. JV stated that he would need to consider this request further.

Action – Alison Sleightholm to forward her request to JV/SP for Ofgem to consider.