Review of Xoserve funding, governance and ownership

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Client Ofgem
Dates 2013
Service(s)Policy & Economics, Regulation & Competition
CEPA (in association with TPA Solutions and ESP Consulting) was appointed by Ofgem to undertake an implementation project to develop precise arrangements in funding, governance and ownership (FGO) for Ofgem’s favoured ‘co-operative’ model for Xoserve, the central agent providing information and data services to support market and network operations in Great Britain.

The objective of the project was to introduce new funding and governance arrangements for Xoserve to make the company more customer responsive given the industry’s reliance on Xoserve’s services. The work was split into three phases.

In Phase 1 CEPA first undertook a detailed analysis of the services that are provided by Xoserve, the legal framework which defines them, the systems used in their provision and who benefits from their usage. We also reviewed funding and governance for similar organisations in other utilities contexts (including the retail electricity market and the retail water market in Scotland). We then developed detailed proposals for co-operative based funding and corporate governance arrangements for Xoserve in detailed working papers.

In Phase 2, CEPA engaged with the gas industry through industry steering and working group meetings. We organised and ran these working groups where we presented our proposals to industry and highlighted the benefits of our proposals. Following the working groups, we developed a series of published reports that supported an Ofgem consultation on the proposed new arrangements.

In Phase 3, CEPA undertook a detailed option design exercise for the regulatory and contractual arrangements to support the proposed co-operative funding and governance model. This included an assessment of what legal instruments (including licences, industry code, multiparty and bilateral contracts) should be used to impose rights and obligations on the parties who use and will govern Xoserve and its services. Our report was used to support a consultation by Ofgem on its propose legal and regulatory arrangements.