‘Critical Friends’ Stakeholder Panel · From underground cables to overhead power lines, small rural substations to complex delivery networks in the capital, we are working on

Stakeholder Engagement - ‘Critical Friends’ Stakeholder Panel Panel 11, Session 2 –Southern Power Networks

Crawley 03 November 2015

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

Contents 1. Introduction ........................................................................... 3 2. What are ‘Critical Friends’ stakeholder engagement panels? 6 3. Session 2 of Panel 11: Event location and attendees .......... 6 4. Format of engagement ......................................................... 7 5. Objectives and key questions ............................................... 7 6. Speakers and topics ............................................................. 8 7. Key feedback and actions .................................................... 10 8. Your feedback ...................................................................... 15 9. Next steps ............................................................................ 18 10. Key contacts ......................................................................... 18



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 8.1 million Kilometres of overhead electricity lines 47,500 Kilometres of underground electricity cables 125,000 Number of employees 5,200 Number of new connections (2014) 86,000 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 8.1 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.



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 engagement sessions to discuss themes associated with our activities and services. 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 began in October 2012 and have so far focused on fourteen key topics over ten rounds of sessions:

• Customer satisfaction • Social obligations • Low carbon targets and transition • Safety • Low carbon technologies • Environment • Network reliability & availability • Connections • Corporate Social Responsibility (CSR) • RIIO-ED1 Business Plan resubmission • December 2013 storm performance • Emergency Planning • Future skills in the electricity industry • Ofgem’s final determination on our RIIO-ED1 Business Plan and reporting our progress on

achieving our output commitments 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 11: Event location and attendees The session was held on 3rd November 2015 at the address below: Crown Plaza Hotel, Langley Drive, Crawley RH11 7SX



On the day, we were joined by the following stakeholders: Ashford Borough Council Major Energy Users Councils British Red Cross Siemens Crossroads Care Southern Gas Networks East Sussex County Council Southern Water ECA (South East Region) Sterling Power Utilities Ltd Instictif Sutton & East Surrey Water London Ambulance Service Thakeham London Borough of Croydon The Long & Short Of It Ltd

4. Format of engagement After a welcome address given by the independent chairman, several speakers gave short presentations as summarised below. Participants were invited to ask questions at any time during presentations and discussions were held by the group as a whole as stakeholders probed some of the issues further. Participants were also encouraged to raise any additional issues which were of interest to them. Feedback forms were provided to the stakeholders inviting them to answer a number of questions about the event and the results are summarised in Section 8.

5. Objectives and key questions The panel focused on the following topics:

• To explain how we are developing our engagement practices • To share our approach to forecasting electricity demand and generation • To show how we’re innovating to deliver continued improvement • To demonstrate how we plan to implement our losses strategy

The main aims of this event was to seek feedback on the topics presented on, and also give stakeholders the opportunity to tell us what issues related to our business are most important to them.



6. Speakers and topics Below we briefly summarise the opening statements by each speaker. Welcome John Owen, Sales Manager, Siemens plc and Independent Chairman of SPN Panels John Owen (JO) opened the session by welcoming everyone and encouraging the stakeholders to participate in the discussions, feedback on any issues they have and ask any questions. Developing our approach to Stakeholder Engagement Matt Rudling, Director of Customer Service Matt Rudling (MR) opened with an overview of the Energy Industry Trilemma particularly; affordability (including access to connections), sustainability (including moving towards a low carbon economy with a mix of technologies) and reliability (or for UK Power Networks, ‘keeping the lights on’). MR went on to explain the elements of our corporate vision. MR explained why Stakeholder Engagement is important to UK Power Networks, giving examples of the successes we have seen through this process and the benefits these have delivered to our customers. He then presented on the changes we plan to drive our engagement activities forward. MR invited feedback on whether the engagement themes we have identified were suitable and whether the success criteria we are working towards were appropriate. Economic Assumptions for Load Forecasting Colin Nicholl, Head of Business Planning and Ben Gilding, Business Modeller Colin Nicholl (CN) and Ben Gilding (BG) shared our approach to forecasting electricity demand and generation. They went on to present changes that we are proposing to make to our short term forecasts. Before inviting feedback they presented on our approach to modelling long term low carbon technology take up rates.



Innovation Refresh Update Lynne McDonald, Low Carbon Network Fund Tier 2 Project Lead Lynne McDonald (LM) opened with an overview of our Innovation goals, demonstrating how Innovation can support our corporate targets. LM went on to explain how we approach innovation with a view to driving continuous business development. Next LM presented our Innovation strategy before inviting feedback on whether our Innovation principles were appropriate. The presentation continued with an overview of our Innovation portfolio and discussion around idea sharing and reporting. LM concluded with an invitation to stakeholders to share their ideas. Losses Strategy Overview Steve Mould, Lead Power Quality Engineer Steve Mould (SM) opened with some background to the scale of losses within the industry. He went on to give an overview of our Losses Strategy. SM explained what Network Losses are, differentiating between Technical and Non-technical losses before presenting on how we plan to implement the strategy. The presentation concluded with a number of questions presented to the audience for future consideration:

• What do you consider important for UK Power Networks to incorporate in to their losses strategy?

• How are losses currently affecting you? • How would you prefer to engage with UK Power Networks regarding future losses

discussions, stakeholder engagement and sharing of best practice?



7. Key feedback and actions The following details the comments and questions raised by stakeholders.

Developing our approach to Stakeholder Engagement - Following his presentation, MR asked the panellists whether there were any additional engagement

themes that should be included. JO asked whether MR would elaborate on the feedback received from Ofgem. MR confirmed that Ofgem had stated that they felt UK Power Networks’ engagement was not embedded in the organisation and felt it was a function added on the side the business, adding that it didn’t feel that way to us. He acknowledged that we needed to be doing more for our vulnerable and fuel poor customers and would welcome feedback on any of our engagement. JO then highlighted the fact that our Critical Friends Panels had been singled out as ‘best practice’ and was surprised at our ranking. Another stakeholder added that he often attends engagement events with other DNOs including WPD. In his view our engagement is of equal quality, but feels we do not present this as well in the submission.

- One panellist added that the use of KPIs and performance management make it clearly visible as to how

the ‘guy on the ground’ can impact on the overall business performance. MR responded that we do use KPIs in this manner and that we need an easy to understand dashboard to help link the work done to the delivery of the strategy.

- A stakeholder asked how we would perform if we had another storm like the one on Christmas 2013.

MR confirmed this particular storm to be the biggest challenge he has faced in 30 years of working for the company. The timing made it particularly difficult with the storm hitting on Christmas Eve leaving very little time to restore supplies. From the lessons learnt from this incident we have now trained 900 office staff to take calls in an emergency. They have received the full faults training and can handle the call and process the information to the same standard as the regular call centre staff. This gives us significantly more resource to call upon during major storms. This process has been used in anger and we were still able to answer calls on average in 5 seconds. In addition we have trained 1500 ‘scouts’ who are deployed to incidents immediately to assess the work, help prioritise restoration and ensure the most accurate and up to date information is available to our customers. The stakeholder went on to suggest that all DNOs appeared to struggle during this storm and asked whether we should be developing better technologies. MR advised that it is often necessary to get engineers on the ground to identify issues such as whether it’s a BT pole or one of ours that is affected and to establish accurate restoration times etc. That said we are looking at technologies and the roll out of smart meters will also help. He added that perhaps connections should be added as an engagement theme.

- MR went on to ask whether the panellists were happy with the success criteria we have identified. One

stakeholder suggested we should benchmark ourselves against best practice, but sub divide it i.e. aspire to be the best in all areas rather than just overall.

- JO asked whether there is public access to Ofgem’s measures. MR confirmed that all material is

available to the public but not very timely. MR went on to confirm we will update stakeholders on our



performance. A stakeholder suggested we should include tables comparing our performance with other DNOs.

Economic Assumptions for Load Forecasting

- One panellist asked whether within our housing forecasts we made allowances for fuel poor customers and the energy they may want to be using but can’t afford to. CN confirmed that at present we didn’t. We did use socio economic breakdowns and could look at possibly adjusting our model accordingly.

- Another stakeholder asked whether we were seeing the numbers of heat pumps shown in our forecasting. CN responded that at present we can’t see the number of heat pumps installed.

- One stakeholder asked whether we had any idea where we were with regard to numbers in 2015. CN

advised that we tend to receive most of our data on Q4, but from what we’re hearing the South East is only at 1/2% above 2014’s numbers and London is 5% down.

- Another stakeholder highlighted that as the demand profiles drive investment, if the forecast housing

isn’t built we’re in essence investing ahead of need. CN agreed this was a challenge. The stakeholder went on to add that the residential changes in planning will affect consumption figures.

- A panellist asked whether we were looking at maximum demand, Time of Use and Triad charges. CN

that we hadn’t modelled this yet but we are looking at it at a high level.

- A stakeholder stated that National Grid give regular updates and asked how we plan to update our stakeholders. CN confirmed that today’s event is part of this process but we will look at a range of longer term scenarios and will share these at a later date.

- Another stakeholder commented on how some cities are planning to ban diesel vehicles from their

centres. This is likely to have an impact on the take up of Electric Vehicles (EV). He went on to ask whether we were leading in this trend. MR confirmed that we are not leading for a number of reasons. The stakeholder went on to add that there appeared to be a discord between Government policy, Local Authority Policy and infrastructure availability. EVs are still expensive and not well supported from an infrastructure perspective. MR suggested this will change quite quickly. BG added that although we are seeing more charging points etc, it’s the cost of the EV itself that is proving to be the biggest barrier to uptake.

- One stakeholder noted that there appeared to be higher numbers of large PV connections despite the

lower incentive rates.

- One panellist highlighted the lack of ‘actuals’ on the graph relating to heat pumps. BG confirmed we are struggling to obtain this data but we know that numbers are low.



- JO commented that it appeared to be a chicken and egg situation with regard to EV infrastructure and asked whether Ofgem were encouraging investment in this area. CN confirmed that this wasn’t the case, however TFL are doing some work in this area. MR added that Ofgem do however encourage us to bring our concerns to them as they do not want to be a blocker.

- Another stakeholder expressed the importance to continue to monitor the market and amend our models

accordingly as there could be major changes i.e. switch from EV to Hydrogen fuelled cars.

- One panellist asked how Time of Use (ToU) tariffs impact fuel poor customers as we know that energy costs during peak time is high. LM responded with an overview of the ‘Energywise’ project in Tower Hamlet and how we were trying to understand the impact of a static ToU tariff. She added that the project will initially look at energy efficiency measures but will introduce the TOU tariff at a later stage. Another focus of the project is around the type of white goods used by residents. A stakeholder highlighted the fact that the reduction in tax benefits to Landlords is likely to impact the types of appliances supplied to the residents.

- Another stakeholder added that if we see overall demand drop, this would result in a reduction of

income to UK Power Networks.

- A panellist also suggested that with periodic meter changes it would make more sense to install a smart meter given the cost difference is minimal. LM highlighted that the smart meter roll out sat with the suppliers.

- Another stakeholder asked why some customers were refusing to take up the smart meter. LM replied

that we’ve seen that as customers will eventually get a smart meter anyway they’re less interested in being part of a pilot. In addition we are only working with British Gas on the project and so the offer is only open to their customers. Some customers just see it as too much hassle. Another reason is the fear of a ‘Big Brother’ culture. MR added that he believed this perception will change over time siting the uptake of smart phones as an example. LM also commented on how some customers seem happy to participate in the project, but they’re dissuaded by friends and family due to general trust issues with the utility sector.

Innovation Refresh Update

- LM asked whether our principles of innovation were appropriate. A stakeholder asked whether we would be willing to visit other companies and share our ideas. LM agreed that we would, adding that we had already done something similar with Japanese and South Korean companies. MR added that we were also looking to develop a cross utility forum.

- Another stakeholder suggested that our focus appears to be on low carbon technologies and asked

what we were planning with our current assets. LM responded by confirming we also have projects



looking at underground cable health indices, pressurised cables, open cut approach, losses management and partial discharge readings. We are also looking into new modules to use for our joints.

- A stakeholder asked whether we would be present at the LCNI conference. LM confirmed we would be

there.

- One panellist stated that there are a number of countries who appear to be ahead of us on demand management, particularly America. LM agreed that America has some good examples of Demand Side Management (DSM) and that we have engaged with Silver Springs Network. It’s important to understand which countries we can learn from but also which countries we currently lead so we can avoid making the same mistakes that they may make.

- Another stakeholder asked how much work we were doing with the future generation. LM confirmed that

we do engage with school children educating them in energy safety and through STEM ambassadors, but not so much around innovation.

Losses Strategy Overview

- A panellist asked for clarity that losses are basically down to heat. SM confirmed this was one contributing factor.

- Another stakeholder asked whether we were collaborating with customers about variable speed drives to

help them reduce consumption. SM confirmed we want to look into this suggesting we could work with National Grid. Variable speed drives would be an example of where we could include stakeholder engagement to help the strategy evolve. Influencing which products a consumer uses will normally be outside of the DNO’s control. We could consider this only if it can be captured through Stakeholder Engagement and sharing of best practice – and subsequently be used to influence future revisions of our strategy. The project is unlikely to be with National Grid; rather it’ll be industrial groups, as an example.

-

- One stakeholder asked whether we had any suggestions to submit to Ofgem in the incentive. SM confirmed was that we will have innovative areas in our LDR submission but, given the competitive environment that Ofgem are encouraging between DNOs through the LDR, we’ll be remaining tight-lipped until after the submission has been published.

- A stakeholder asked whether we had any maps that highlighted circuits with high losses. SM confirmed

that at present we don’t have such a map. however we are looking to improve our modelling which we could use to potentially create a heat map.



- The stakeholder went on to ask whether in addition to modelling we had any means to physically measure losses. SM confirmed this was an area we needed to work on, however smart meters would help in this regard. Once we have the theoretical knowledge we can update engineering standards.

- One panellist whether we had any comment with regard to power factor. SM answered that whilst we

may consider individual connections where addressing power factor benefits losses, we ultimately will look at the network in a holistic manner. As an example where addressing power factor at the DNO level is beneficial only to find that the cumulative effect at National Grid’s level is such that they then have to target high voltage issues. The impact of their intervention may then more than offset the benefits gained through our intervention and so, in that example, losses are worsened. A holistic approach therefore can benefit wider GB network.

- JO mentioned that he had heard of a case somewhere about installing metering higher up the network

and asked whether this had ever progressed. SM confirmed that, as WPD have recently had an NIA-funded project approved that relates to measurement of losses on the LV/HV networks, he didn’t think the previous work was being implemented as BaU.

- LM added that in the past few years there have been projects looking at technologies for helping with the

issue of losses. We are also collaborating with other DNOs to support both our current and future customers.

Question & Answer

- A stakeholder asked about transparency of future DUoS charges year on year. He was keen to know whether 2016’s charges were available to assist with his own budget planning. MR agreed to find out and respond accordingly.

- Another panellist commented on how every DNO has a website but with very different appearance

making it hard to find the information they may need. When he does eventually find the information he needs it’s often embedded in the middle of a 50 page document. MR agreed this was valuable feedback.

- One stakeholder asked what UK Power Networks wants from its stakeholders. MR stated that we need

to be held more accountable and this could be achieved if the agenda for engagement is developed by our stakeholders rather than us.

- A panellist commented on the fact that the increase in large PV and Wind Farms across the country is

not always popular with the public. He suggests that we need better communications to promote the merits of these developments. MR agreed but added that the increase in these developments is taking some networks close to capacity. We offer a Flexible DG initiative to help overcome this issue.



- Another stakeholder stated that he felt that the loss of subsidy may affect our forecasts in this area. CN clarified that we forecast for the short, medium and long term. He went on to add that some experts predict that solar power will be comparable to grid generation in years to come.

8. Your feedback

What were the strengths of the event? What did you find most useful or relevant and why?

• Strengths – good speakers, Weaknesses – Slides could be clearer • Pity about the slides (White on Yellow) • Strength – good content, well presented. • Insight into the strategy for innovation. Timely insights too into losses strategy and how that affects

asset management strategies. • Discussion about Electric Vehicles most relevant to me working within the house building industry.

Likewise discussion smart metering • Check colour scheme of projector before presenting. Good flow of info from one presenter to the

next.

0% 20% 40% 60% 80% 100%

I found the event useful

I found the content easy to understand

The venue was suitable for this event

The material covered was relevant

The presenters delivered the materialwell

There was enough time for me toexpress my views and provide feedback

About the Event

Strongly Agree

Agree

Disagree

Strongly Disagree



• Good speakers at event – very knowledgeable. Poor use of colour in Power Point. Understand network losses. New technologies and effects on demand forecasting. Future technologies of what effects may be and solutions may be needed through innovation in business

• White on yellow slides. Overview of complicity and challenges • Quite PowerPoint heavy. Felt there could have been some more interactive components to the day.

Did however convey a lot of information. • Very Technical subjects for some presentations however, really great that presenters made efforts to

explain the subjects in non-technical language wherever possible. Colours of slides quite challenging though great to change half way through.

• Strengths - length of conference, Q&A. Weakness – No take away copy of slides. • Strengths – holding the event. Weakness – publicising the event. • Focus of the group was biased thus not allowing all to take part in debate • It really wasn’t relevant to me/my organisation • Strengths – good speakers, able to answer questions. Data not up to date. Information on moving

forward how to carry this to our customers and business • PowerPoint slides need to be reviewed before display. Bus Planning & modelling – very informative.

Losses strategy – good for audience would have liked more detail but understand reasons for reduced content

What are the key messages you will take from the event?

• Benchmarking with other DNOs • I was unaware of the losses in the network and found that very interesting • UKPN are in listening mode and want to move more initiatives in to BAU • EV update much lower than expected. Smart metering uptake lower than expected • A vast subject – appears to be well managed in the main. • Engagement and UK Power aims – Innovation key to realising business objectives – RIIO and 77

commitments. • UKPN determination to change – Well defined and understood opportunity to improve. • UKPN want to improve and become the leading DNO • Innovation is not just technical! Fuel poverty is a continuing emerging and prioritised area of activity

for UKPN and DNOs in general. • Engagement is key. Changing networks due to renewables. Innovation important conversation • UKPN interested in innovation • Willing to share. Input into the future • A better understanding of company insight into main areas • UKPN are trying very hard to improve stakeholder involvement and I believe succeeding



Any other comments you would like to make?

• Should we have an additional column above for ‘no comment / don’t know’ or similar? • Very good forum, interesting discussions • Slides difficult to read. Annoyingly one presenter referred to an MPAN number – it’s simply MPAN • Will the presentation be available on your website? If not can they be emailed to me. • Similar group would be useful but for Utilities only • Challenge over investment decisions. How will you manage your conflicted priorities i.e.

Government / Ofgem • I believe UKPN are committed to improving their stakeholder engagement and general business

activities and ensuring that the two go hand in hand. • Difficult to comment on tech aspects as outside my sphere of expertise, however very interesting

none the less. Wide range of attendees represented. Good to have ‘league tables’ of performance but only where add value, not just for sake of it.

• As a large customer we would like an account manager coordinating our views/issues brought up over coffee with head of customer service.

0% 20% 40% 60% 80% 100%

I have a clear understanding of UK Power Networks’ future key engagement

themes I have a clear understanding of how

UKPN forecasts both electricity demandand low carbon technologies.

I have a clear understanding of UK Power Networks’ innovation strategy

I believe UK Power Networks' innovationstrategy will support them to deliver the

performance they aspire for RIIO ED1I believe that UK Power Networks Losses

Strategy will deliver the performancethey aspire to for RIIO-ED1

About the Business

Strongly Agree

Agree

Disagree

Strongly Disagree



• Forecasts on PV and wind power appear unrealistic given changes in RITS/RO and CCL • Although a stakeholder, this was not the right event for me (or I suspect some others that attended) • More focussed groups for individual groups & sectors • Liked perception that innovation was not just an engineering area to be dealt with

Are there any other topics/issues you would like to discuss at future events?

• Effect of work on the highway • Connections policy, Demand reduction – response incentive schemes, Discussion and example of

successful project • How LCT’s can be used to offset network reinforcement • Talking to Borough & district councils • Resilience & Security of network (Utilities) – ditto regards new technologies. • Asset management & RCM / CBM approach. Productivity within your technical workplace. • Outcomes – SROI & measures used within sector / DNOs – Perhaps linked with Ofgem stakeholders

/ customer vulnerability reporting trial. Happy to explore discussions where BRC could add value. • DSR products available. Voltage fluctuations / brown outs – how they are managed and recorded. • Power availability, short duration voltage dips • Perhaps a stakeholder event focussed on PSR, vulnerable people and to include participation of

those currently registered with the service • Update on losses strategy, Update on innovation strategy

9. Next steps We will build on the feedback collected in the three sessions of Panel 11 to create a consolidated actions report. The aim of the report will be to highlight the actions suggested by stakeholders in the three sessions, find common themes and messages, and explain how we are acting or preparing to act on the feedback collected. We will also report back to stakeholders with progress in Critical Friends sessions in 2016.

10. Key contacts For further information please contact us on [email protected] To speak to one of our Stakeholder Engagement team 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/

mailto:[email protected]

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

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‘Critical Friends’ Stakeholder Panel · From underground cables to overhead power lines, small rural substations to complex delivery networks in the capital, we are working on