Reviewing the requirements of Sections 35A (‘Provision of Cost Information’), 35B (‘Production of the Annual Review Pack’), Schedule 15 (‘Cost Information Table’) and Schedule 20 (‘Production of the Annual Review Pack’)

There is significant crossover between the requirements of Clause 35A and Clause 35B, without sufficient alignment to enable use of a common template. This results in some cases of the same or similar information being published in a different format in the two publications, which is inefficient to produce and risks being misleading for users.

Recent feedback from some industry parties during the process of developing the new DCUSA charging methodology models suggests that parties may not use the functionality to amend forecast CDCM inputs and recalculate tariffs in the ARP. This may be due to the requirement on distributors to give 15 months’ notice of a change to Use of System charges. The ARP was developed at a time when distributors were only required to give three months’ notice of a change to Use of System charges. The sensitivity of tariffs to changes in CDCM inputs is primarily of interest for charges which have not yet been published which are now much further into the future than when the ARP was put in place. The functionality to recalculate tariffs adds significant complexity into the ARP, and as a result reduces the transparency and usability of the information provided.

It should be straightforward for DNOs to provide more useful information in a more succinct manner – thus improving both the efficiency of provision and usefulness of the output.

Clause 35A also requires DNOs to convene a meeting to present the most recently submitted information. This meeting could be more efficiently arranged and conducted if responsibility for it lay with the Secretariat rather than DNOs, in line with the arrangements introduced for the Distribution Charging Methodologies Development Group (DCMDG).

The requirements of Clause 35A and Clause 35B should be combined, reviewed and, if appropriate, amended, alongside combining the details given in Schedule 15 and Schedule 20 into a single publication. A ‘first draft’ of a proposed template for submission was provided as an attachment to the Change Proposal (CP) form.  This template sought to standardise the years for which data is provided, and to link the years required more closely to the Price Control Periods, so would require publication of data from the start of the Price Control Period which was in place two years prior to the current year up to the later of four forecast years or the end of the current Price Control Period. The proposer provided this template as a starting point for discussions and in doing so did not intend to restrict the ability of the Working Group to review and, if appropriate, amend the requirements of the combined sections in full. The Proposer set out their view that a Working Group should ensure, by consultation with industry, that removal of any information or functionality which the solution seeks to remove is not detrimental to stakeholders.

The publication timetable should also be considered – a simple amalgamation of the publication requirements of Clause 35A and Clause 35B would result in five publications of the same template each year (quarterly in February, May, August and November as per Clause 35A, and annually with the publication of final charges by December 31st as per Clause 35B); however this could be given further consideration to ensure the timing of publications is appropriate, for example taking into account HM Treasury RPI forecasts which are currently released shortly after the quarterly submissions, rendering the information out of date very soon after publication.

It is also the view of the Proposer that a Working Group should consider whether the provision of a model template (as is currently the case in Schedule 20) would be appropriate once the two sections have been combined.

Finally, the Proposer suggested that a current requirement on DNOs in Clause 35A to convene a meeting (known as the ‘DCP 066A Teleconference’) could be amended to require that the Secretariat convenes such a meeting, at which all DNOs will be required to present their latest forecast information, and to which all supplier and IDNO Parties will be invited.

Clauses 35A and 35B and Schedules 15 and 20