City of London Stakeholder Consultation
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1 City of London Stakeholder Consultation 15 May UK Power Networks. All rights reserved
2 Safety and Housekeeping No planned fire alarms Emergency exits Fire assembly points Toilets Mobile phones Disclosure - we intend to record our findings and publish a report and our actions - Data Protection Consent 2
3 TODAY S AGENDA REGISTRATION OVERVIEW OF THE LONDON PLAN IMPROVING CUSTOMER SERVICES CENTRAL LONDON INFRASTRUCTURE PLAN 3
4 Ben Wilson - Director of Strategy and Regulation Overview of the London Plan 4
5 Our Business Plan : State of Play We have engaged extensively on our Business Plan and continue to welcome your comments 1 July 2013: Final business plan to be submitted to Ofgem November 2012: First to publish a detailed business plan April 2013: First to publish an updated plan post consultation 5
6 Further developed Included Refined We have made material changes to the business plan certain inputs to our planning scenario the scope of investment required to respond to the decarbonisation of the UK economy the scope of the DG Infrastructure required for timely and efficient connection of medium to large-scale generation the scope of investment in the London Infrastructure Plan to ensure the network has capacity and resilience comparable to other world cities additional secondary deliverables to underpin the primary outputs greater investment to improve the end-to-end customer connections process greater investment in automated technology to improve quality of electricity supplied greater investment for changes to inspection and fault process to improve quality of electricity supplied our innovation strategy using peer panel reviews our initiatives supporting community engagement and the services we will provide to vulnerable and fuel poor customers the way that we will set our distribution use of system prices to reduce volatility 6
7 The London Network 7
8 LPN Network reliability and availability Our Commitments Maintain LPN as the network with the lowest level of customer interruptions and customer minutes lost in the UK Maintain the health of the network during RIIO-ED1 Continue to improve the load index of the networks by reducing the number of LI4/5 sites Flooding resilience for further 18 substations in LPN Reduce the number of 12 hour failures per year on average by more than 30 per cent DPCR5 average performance LPN revised forecast performance % reduction from DPCR5 average CIs % CMLs % Initial LI performance at start of DPCR5 Revised LI performance at end of DPCR5 Forecast LI performance for end of RIIO ED
9 LPN Network reliability and availability Improvement as % of HI target* Axis title LPN s unplanned interruption performance 50 CIs 50 CMLs 0 07/08 09/10 11/12 13/14 15/16 17/18 19/20 21/ /08 09/10 11/12 13/14 15/16 17/18 19/20 21/22 LPN CI - UKPN Initial forecast performance LPN CI Actual performance LPN CI - UKPN Revised forecast performance LPN CI Ofgem Target LPN CML - UKPN Initial forecast performance LPN CML Actual performance LPN CML - UKPN Revised forecast performance LPN CML Ofgem Target LPN s performance against Ofgem s DPCR-5 HI scores 150% 80% 100% 70% 60% 50% 50% 40% 0% LPN Actual LPN Forecast Agreed HI Improvement * HI improvement as agreed with Ofgem 30% 20% 10% 0% End of DPCR5 End of ED1 HI 1 HI 2 HI 3 HI 4 HI 5 9
10 Proposed options for enhancing LPN infrastructure Option description 1. Reduce the level of utilisation in central London e.g. towards upper quartile of industry 2. Share benefits with DUoS customers of a strategic approach to investment., including some additional benefits for the increased risk DUoS customers are taking. 3. Invest ahead of need in specific locations funded through the RAV but refund RAV when new connections are made 4. UKPN to fund investment either through existing licensee or new IDNO 5. A lead developer/consortium applies for the connection through section 22 connection application 6. Shallow connection charges for large new developments 7. Vintageing of connection applications in an agreed geographical location UKPN Preliminary conclusions Evidence suggests that our networks are better utilised than all other DNOs This will make the cost benefit analysis for strategic investment clearer for DNOs Requires legislative change and would apply uniformly across the UK Asset stranding risk is with UKPN with no mechanism to charge for this risk Customers can already do this but is outside of UKPN direct control Can be accommodated in existing legislation but would apply uniformly across the UK UKPN will use this approach within existing quotation timescales but will require co-operation of connection customers UKPN is proposing a combination of options 1, 2, 5 and 7 10
11 Our efficiency improvements will benefit customers UK Power Networks cost performance for DPCR5 years 1-3 Allowance ( m) Spend ( m) Comment Direct capex 1, HIs and LIs over-delivered NOCs Reliability improved Indirects Cost base reduced Non op capex Separation and transformation Notes: Nominal prices. 2012/13 data is based on internal management reporting and is unaudited. Excludes pensions, TMA and atypicals The changes we have made Outputs for RIIO-ED1 Reduced indirect staff headcount by 25% Introduced culture of recording and managing against unit costs Optimised investment so we only do the work that is necessary Invested significantly in to improve systems Improved Opex underperformance from -14% in 10/11 to -2% in 12/13 (forecast) Deliver 55% of DPCR5 RAV-related cost savings to customers under IQI Deliver upper quartile performance in unit costs Ensure we have well justified regional differences Ensure work volumes are justified by detailed health and load modelling Maintain frontier performance in Indirect costs 11
12 LPN s 2015 to 2023 proposed expenditure forecasts billion DPCR5 expenditure (normalised to allow for difference in length of planning period) Initial expenditure forecast Revised expenditure forecast % difference: DPCR5 expenditure and revised expenditure forecast Load related capex % Non-load related capex % Network operating costs % Indirect costs % Non-operational capex % RPEs Totals % 0.34bn increase primarily driven by London Infrastructure Plan, increased work volumes and smart meter readiness Decrease in 0.16bn compared to initial forecast Our ED1 plan delivers increased investment at lower cost 12
13 We propose a price cut for customers LPN RIIO- ED1 revenue forecasts The changes we have made Po cuts of 10% at the start of ED1 c 1-2% p.a. real growth thereafter to match RAV growth and maintain financeability Financeability assumptions unchanged from November plan We accept Ofgem s proposed uncertainty mechanisms Maintaining UK Power Networks as the lowest priced DNO 13
14 Matt Rudling Director of Customer Services Improving Customer Services 14
15 Customer Service We are committed to improving our customer service BMCS Monthly Scores Broad Measure of Customer Satisfaction LPN performance for DPCR5 (Feb ) LPN s forecast performance for RIIO-ED1 7.5 Interruptions Connections (minor) General Enquiries UKPN LPN UKPN SPN UKPN EPN Industry Mean The changes we have made Improved and updated customer literature Improved the internal customer related processes Introduced a Customer Charter Introduced a web based self-service system for less complex connections Committed to ongoing stakeholder engagement to understand the priority areas for improvement Outputs for RIIO-ED1 Implement Business transformation to replace processes and systems Target upper quartile performance in time to connect metric Introduce online instant quotes Focus on fuel poverty and vulnerable customers 15
16 Customer Services Service Delivery You said We did We will do Improve the quality of information provided to customers We have amended our practice and now hold daily meetings between the Dispatch Centre and Service Delivery managers. 98% of the jobs raised now have an estimated time of restoration that our staff could provide to customers. This compares to 3% of the jobs in We are modifying our IT systems to provide you with text updates in power outages 24/7. We will focus on the quality of information we provide to our customers and the speed at which this information is shared. We will improve our capacity for making pro-active phone calls to customers off supply. We will make use of social media to keep customers informed. Develop a Customer Portal We have specified customer portal as an outcome in the Business Transformation project. We anticipate that we will test, if not launch, the Customer Portal by mid
17 Customer Services Service Delivery You said We did We will do Can reliability and availability standards be made tougher? Develop a customer database UK Power Networks should offer an account manager service for larger customers While the EGS requires customers to apply for payment, we proactively contact all customers experiencing a fault for over 18 hours. We have introduced a temporary solution for faults and uploaded ~ 2 million customer contacts into this database. Our connections team currently operates an account approach in dealing with specific infrastructure projects and companies. We are assessing how this approach could be extended to large customers and those that have frequent interactions with us. We are assessing reducing the EGS to 12 hours from We are also examining automating EGS payments. We will pay special attention to ensuring improvements for vulnerable customers. We will develop a customer database as part of the overall business transformation programme. We will complete the assessment and report back to stakeholders with our findings and recommendations. 17
18 Mark Adolphus Director of Connections Central London Infrastructure Plan 18
19 As a result of feedback we have made material changes to the London Infrastructure Plan The London Infrastructure Plan is our central London investment strategy to ensure that the London network, particularly the central business district (CBD) has capacity and resilience that is comparable with other world cities. We have listened to our customers and other stakeholders and undertaken further internal analysis of the plan, this has resulted in material changes to the proposed expenditure. There are currently two major concerns : 1 Faults with long restoration times primarily due to the complexity of the LV interconnected network 2 Available capacity required to cater for load growth 19
20 Engagement with stakeholders has helped identify our focus areas We plan to enhance network resilience, network capacity and customer service for London by: Increasing capacity at four main substations (Calshot Street, Vauxhall Nine Elms, West End, White City) at an estimated cost of around 100 million Increasing network automation and remote control to improve the quality of supply and network resilience at an estimated cost of around 42 million. We have revised the scope of the proposed investment based on outcomes and advice from: WTP studies - There was strong support from the London Infrastructure Forum for this investment given the importance of this investment for the economic growth and prosperity of the wider UK economy over the long term. Ofgem having assessed our planned projects, Ofgem raised concerns that some constituted investment ahead of need. Following discussion with them, we have agreed to scale some of these projects back Network options analysis UK Power Networks has assessed different investment options to improve the resilience performance and capacity of LPN s network assets. It engaged an independent engineering consultant, Sinclair Knight Merz (SKM), to provide an expert review of the possible investment options for addressing the issues. Stakeholder engagement UK Power Networks recognises that any investment solutions must be line with requirements of customers and key stakeholders. We extensively engaged with stakeholders, including through the London Infrastructure Forum, on an appropriate investment solution. 20
21 The current capacity utilisation picture 21
22 Additional Firm Capacity 22
23 We are proposing 100m of additional expenditure UK Power Networks is planning for four new main substations in Central London with a possible further three in due course Project name Initial firm capacity to be installed (n-1) Latest status in UKPN business plan Costs to DUoS customers ( million) Cost to connection customer(s) ( million) Calshot Street 66 MVA Included in DPCR-5/ RIIO-ED1 Business Plan Vauxhall Nine Elms 66 MVA Included in RIIO-ED TBC West End 60 MVA Included in RIIO-ED White City 66 MVA Included in RIIO-ED City of London 33 MVA Waiting for initial customer enquiry before agreeing funding allocation Not applicable Not applicable Earls Court 66 MVA Waiting for initial customer enquiry before agreeing funding allocation Not applicable Not applicable West Ferry Road 66 MVA Waiting for initial customer enquiry before agreeing funding allocation Not applicable Not applicable Total 423 MVA TBC 23
24 Resilience UKPN proposal Total Costs Dedicated interconnected network maintenance team - 30 year period (OPEX) Provision of remote control facilities on 1 in 3 RTU & ACB remote coverage RIIO-ED1 Provision of Leicester Sq West Group 'Unit' protection - DPCR 5 Four further interconnected Groups convert to Unit protections RIIO-ED1 0.9m p.a. 9.7m 6.2m 24.8m Total LPN proposed resilience expenditure in ED1 is 34.5m CAPEX and 7.2m OPEX 24
25 25
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