By Steve Adcock
xoserve plays a key role in the operation of the gas market in Britain. In this article we review the drivers for the changing nature of that role, the planned significant investment in its systems and the introduction of smart metering.
Xoserve was founded on 1 May 2005, and is an integral part of the restructured gas distribution sector in Britain. By delivering transportation transactional services on behalf of all the major gas transportation companies, xoserve provides a central data service point for gas market participants engaged in gas shipping, supply, connection and metering.
Although xoserve itself is relatively new, many of its employees have a rich heritage of providing these types of services and running complex IT systems since the British gas industry was opened up entirely to supply competition in the late 1990s.
xoserve is jointly owned by the four major gas distribution network companies, National Grid, Northern Gas Networks, Scotia Gas Networks and Wales & West Utilities, and National Grid’s gas transmission business.
SERVICES AND SYSTEMS
xoserve manages the core market information relating to the 22 million gas supply points in Britain (consisting of both domestic and industrial/commercial premises). A key element of this is known as Supply Point Administration, and the information is vital as it is used to register the connection, record the user (shipper/ supplier) and hold the meter asset and metering provider details as part of supporting supply competition through the customer transfer processes.
xoserve also captures information about gas usage at each connection point to support demand forecasting and estimation, in addition to enabling calculation of transportation volumes and charges to provide invoicing services for industry energy settlement and gas transporter revenue.
The supply point and asset data changes daily due to the large number of consumers switching their suppliers through the industry transfer processes and asset data item changes. There are between 4 and 6 million supply point transfers each year as consumers take advantage of the competitive gas market. In addition some 150,000 new supply points are created each year and changes are made to supply, meter asset and provider details to reflect asset or usage changes. xoserve also receives and processes around 60 million meter readings per annum.
The existing IT estate that supports the data and processes xoserve provides was established as part of the opening up of gas market competition starting with the industrial/commercial sector in 1996 and domestic competition by 1998. This IT estate is commonly referred to as the UK-Link system and has undergone a number of industry-driven and technically sustaining enhancements over the past 15 years.
The majority of customer transfer processes and data transactions are handled through xoserve’s communications network (know as the information exchange – IX) and are largely automated through the UK-Link systems. However as with all large data transaction services it is the exceptions that require the skilled intervention of xoserve people to ensure data errors are corrected to avoid downstream impacts in supply point administration or invoicing and settlement.
A significant part of the role xoserve plays in the gas market is in managing the change to systems, processes and data to support market developments. Over the past 15 years our people have developed a wealth of knowledge that plays a key role in analysing, designing and delivering change that not only supports the market development but does so whilst protecting the daily operation of the market.
THE IT ESTATE AND THE EVOLVING MARKET
The development of the gas market through regulatory reform, shipper and gas transporter change requirements and the continuous drive for efficiency and service improvements, has seen the IT estate expand from that established under the UKLink banner in 1996 to those that exist today in meeting the wide range of customer requirements.
Whilst today’s IT infrastructure, applications and communications network is the result of a continuous investment programme over the last 15 years, the core of these systems reflects the bundled nature of service provision that existed when supply competition began.
Those around at the time of introduction of supply competition will recall that connections, disconnections, meter asset provision, meter reading and supply point administration were all services provided by the then single gas transporter “Transco”. Today competition exists in most of these areas and as a consequence the nature of the system developed in 1996 does not reflect the market design of today or where the market will be heading over the next 5-10 years, given the focus on smart and advanced metering, European energy requirements, renewables and smart grids.
Today xoserve operates a range of IT platforms to meet the needs of the gas market and leverages IT expertise and delivery model efficiency through use of IT partners operating both on and offshore in providing development, support and hosting arrangements. Indeed as part of Transco we were one of the first UK companies to really leverage the offshore (based in India) expertise in delivery of IT services and have now over 15 years experience in working with our primary offshore IT partners.
PLANNING FOR THE FUTURE – INVESTING IN TOMORROW
Shortly after xoserve was created, a review was undertaken of the expected lifespan of the IT estate the company had inherited and a strategic plan developed for the investments that would be needed to sustain and enhance the services provided to customers. This strategic plan focused on a two-tranche approach to meeting current and future service provision.
Strategic Investment Programme (SIP) Tranche 1
Tranche 1 of the plan which started in 2007 and is due to be completed by 2011 is focused on technically sustaining its services and managing operate cost and risk associated with the ageing IT estate.
Whilst the original intention was to focus on infrastructure components, the first example being the technical refresh of the UK-Link delivered in 2008, it was recognised that xoserve needed to begin to establish the architecture and building blocks for its future if it was to be in a position to support more wide-ranging change and adapt to future market needs.
It was also recognised that industry change was potentially being inhibited by some of the redundant system capabilities, arising from the introduction of competition across a number of the former transporter bundled services, and there was a need to understand the future nature and scope of services xoserve would be providing. As a result, the approach was adapted to begin the process of putting in place the building blocks whilst in parallel starting the consultation with the industry on future services.
During 2009 and 2010 xoserve set about replacing a number of its core business systems with platforms that will provide the flexibility for delivery of future services and our investment programme began putting in place:
- New data centre hosting arrangements and service desk
- Refreshing our communications gateway
- Establishing business process and data driven applications
- Business intelligence capability to meet the industry data and information requirements, and
- Introducing a new customer portal to refresh and improve the way we provide access to, and use of, our services.
Whilst endeavouring to minimise the impact of these changes on its customer/user base, xoserve is also looking to engage stakeholders to ensure that where possible it can exploit opportunities for improved service provision as it introduces new interface arrangements. This engagement has already started on our planned replacement of the internet access to data service and the Conquest query management service.
The delivery of these investments by late 2010/early 2011 will provide not only the basis for future development in Tranche 2 but critically it will establish the key capabilities that xoserve will need in supporting future change requirements and in being able to offer innovative service provision through a modern flexible IT estate.
Strategic Investment Programme (SIP) Tranche 2
Tranche 2 of the programme is about identifying, designing and delivering the future service requirements to meet the need of Britain’s gas market. This will leverage what will be delivered in Tranche 1 but with a wider scope and focus on the next 10-15 years. Key areas of input to Tranche 2 will be the emerging European requirements, the impact of renewables, carbon reduction initiatives and the Department of Energy and Climate Change (DECC)/Ofgem smart metering implementation programme.
A key component of Tranche 2 is Project Nexus which aims to define the services that xoserve will be delivering in the medium to long term, in order to enable the replacement of ageing applications brought in at the opening up of supply competition.
xoserve recognised that to achieve this there would need to be a significant level of industry consultation and during 2008-09 it began the Project Nexus consultation to identify market requirements that would support Tranche 2 and inform the direction of Tranche1.
During the Project Nexus consultation, DECC undertook their consultation on smart metering and it became apparent that as this turned into a design and delivery programme it would likely impact on the requirements capture for Project Nexus.
Acting on feedback from key stakeholder groups, xoserve adapted the planned timeline for requirements gathering and industry design of Tranche 2 to ensure the findings of the smart metering implementation programme could be dovetailed with the design and delivery of its future services.
Clearly an industry concern was that the existing ageing IT estate would be sustainable given the change in timeline, and this is where other investment in infrastructure sustaining measures in SIP Tranche 1 is assisting to maintain service at the current levels whilst developing the future service design for delivery around 2014.
BEING “SMART” ABOUT SMART
There are many key considerations in the planning and rollout of smart meters, in relation to the physical activities involved in meter installation, home user display units for consumers and the communications infrastructure. However, given xoserve’s role the key aspects it is focusing on is how smart metering could and should drive change to the prevailing data and transactional services sector roles and responsibilities, the future data supply chain and whether there are benefits in bringing together gas and electricity processes.
A key influence on the design, nature and scope of the future services xoserve will provide is the industry discussion on the role of a data and communications provider and the extent to which there is convergence of gas and electricity processes.
Whilst in its narrowest form the data and communications role is one of replacing the “man in a van” in collecting meter readings, the capabilities of the smart meter may introduce many new service opportunities and two-way data flows requiring a change from the existing arrangements.
In setting the vision for a smart enabled world there should be a focus on what is achievable, desirable and beneficial. However, there is also the need to balance this with achieving a timely rollout of smart meters to deliver the forecast benefits and in doing so not unduly impact on the effectiveness of operation of both the gas and electricity networks and the ability for consumers to continue to exercise supplier choice.
How the vision is translated in to a prioritised delivery plan will be key in securing not only the smart metering benefits but in supporting the transitional arrangements that may require dual processes and systems to exist across a 10-year rollout period. The importance of these transitional arrangements should not be underestimated as they will be key to maintaining service and importantly ensuring settlement processes are effective in the transition from “dumb” to smart metering.
Establishing a clear definition and design of the future data supply chain, transactional service provision and transfer to smart metering should be a key focus of the smart metering implementation programme, with the industry plan to achieve this based on well thought-out and achievable milestones, not aspirations and hope!
In setting out the industry plan, the different operating frameworks in electricity and gas are a key consideration in assessing the transitional impact of rolling out smart metering and evaluating the sequence of steps that will balance the benefits of change with the costs and risks of what is a very stable low risk set of market arrangements.
A further key area for consideration is the extent to which change in the retail and wholesale sectors are necessarily aligned. The early benefits of smart metering in the retail sector may focus on the ability to provide flexible tariffs and to inform and modify consumer behaviour in energy use to realise carbon reduction and energy saving. However, the degree to which such immediate benefits in the retail sector may need to be aligned to change in the wholesale sector needs to be fully assessed.
This may point towards evaluating the “enabling” change in the wholesale sector until there is a critical mass or “tipping point” that drives benefit driven reform. This wholesale tipping point may vary in timing in gas and electricity markets and be of different nature and scope given the difference in operating frameworks.
There are lessons in the way major market change has been introduced in the past that should be used to help inform the approach to smart metering rollout, particularly from a data and process definition, programme management and systems development perspective. Whilst in 1996 the systems to support the rollout of supply competition were delivered on time, it became clear in the early period of operation there had been insufficient focus on the industry-wide data and process definition, resulting in high levels of exceptions, serious invoice quality issues and failures in the data supply chain.
The introduction of smart metering will likely bring with it a significant increase in data frequency and data attributes. The replacing of a “man in a van” with technology should not be seen as the panacea for removal of data errors and exceptions, further that the ability to put smart meters on walls should not on its own drive the pace of rollout with the expectation that IT can follow and will cope.
As a provider of transactional data services through its significant IT infrastructure that includes a B2B private and secure communications infrastructure and highly resilient and reliable applications, xoserve has a reputation for protecting the industry’s data and ensuring through its activities and supporting systems that the day-to-day operation of the gas market “just happens” from the customer perspective.
Coupled with this is a significant capability in advising on, analysing, designing and delivering industry change and a wealth of knowledge and experience that can be drawn upon in support of industry programmes.
xoserve may not be viewed externally as bringing innovation to the gas market place, yet since its creation 5 years ago it has significantly invested in its people, partner relationships and IT capability to ensure it continues to provide resilient and reliable services.
xoserve firmly believes this is what its primary stakeholders want from a company entrusted with managing core gas industry processes and data.
Recognising its modus operandi is not that of a highly commercial organisation, it is very much a common agent that provides the hub for industry transactional services with a focus on quality, cost and low risk long term service provision. The basis of this common agent framework was put in place during National Grid’s gas distribution network sales in 2005 through industry consultation and has provided a highly efficient and reliable centralised point of service for Britain’s gas market.
Because of its role and depth of understanding of the gas market xoserve is able to offer relevant experience and knowledge in defining and managing large volume transactional services, providing resilient IT systems and successfully managing change whilst protecting existing services; ingredients that xoserve believe are essential in protecting the operation of the gas market as it embarks on what promises to be another significant change programme.
xoserve does not believe that it has the answer to smart metering, but that it can be a key contributor to the smart metering implementation programme and possesses the change culture and operational experience to contribute to achieving the outcomes required in the future, whilst maintaining the reliable and efficient operation that is at the heart of Britain’s gas market today.