Contestability in ≥ 5MW Connections

CUSTOMER

Northern Ireland Electricity Networks Ltd (NIE Networks) owns the electricity transmission and distribution network and operates the electricity distribution network which transports electricity to over 860,000 customers. With over 1,200 employees, NIE Networks work around the clock to plan, build, repair and develop Northern Ireland’s 49,000km of electricity network.

The network starts at substations located beside power stations or wind farms, and finishes at customers’ supply points; transporting electricity from fossil fuel and renewable generators to where it is used in homes, businesses, schools and communities.

The company is the only Distribution Network Operator (DNO) in Northern Ireland. 

CHALLENGE

The Utility Regulator (UR) for Northern Ireland has a statutory duty to promote competition, where appropriate, in the generation, transmission, distribution and supply of electricity. Within the UR Forward Work Programme 2014-15 it identified the introduction of contestability in the electricity connections market as an area where competition could be established.

From 31st May 2016 Contestability in both generation and demand connections >=5MW was introduced in Northern Ireland. For NIE Networks this means accredited Independent Connections Providers (ICPs) can provide a quotation for, and build, contestable elements of a new connection >=5MW.

This is Phase 1 of the introduction of contestability in connections and was run as a pilot in advance of NIE Networks having contestability licence conditions in place. The pilot will help frame the environment for Phase 2 which involves the opening of the rest of the connections market segments - scheduled for implementation in late 2017 at the earliest.

Prior to 31st May NIE Networks operated a monopoly; the introduction of competition means as an organisation they face scenarios, e.g. customer having a choice, never previously experienced before. Given the importance of responding to the introduction of competition, and the tight timescales involved, NIE Networks engaged Neueda to assist in developing and delivering a programme to prepare the company for facilitating, and operating in, a competitive market. 

The Neueda team have made and will continue to make a significant contribution to the transformation programme as NIE Networks prepares for competition in connections. Their methodology is rigorous and detailed; the team quickly secured the necessary buy-in and support from a variety of business representatives; and the outputs have been of high quality. We are confident that the remainder of the programme will be delivered successfully against very challenging timescales.
— Nigel Wray, Business Transformation Programme Manager, NIE Networks

APPROACH

A team from Neueda comprising project management, business analysis, change management and financial analysis expertise worked with NIE Networks to:

  • Mobilise the connections transformation programme to respond effectively to the challenges of competition;
  • Examine business scope, processes, roles, responsibilities and structures;
  • Establish the framework for the competitive market, its supporting processes,
  • contractual obligations, and future charging arrangements that are cost reflective;
  • Develop internal processes designed to meet the requirements of operating in a competitive market;
  • Provide programme and project management support to programme and workstream planning and delivery, risk and issue management and critical path development

RESULTS

Against tight timescales the connections transformation programme was mobilised and gained strong sponsorship from the NIE Networks connections leadership team. The programme was high profile within the company and had visibility up to executive level.

Organised across 5 workstreams – Finance, Compliance, Organisation Design, Business Processes and Communications, the programme delivered a range of key deliverables that were critical if NIE Networks was to be ready for the introduction of competition.

The Neueda team made significant direct contribution to:

  1. Developing an engagement framework, a series of external market facing processes that ICPs follow when delivering contestable works;
  2. Building a pricing model that is key for determining cost reflective pricing;
  3. Re-engineering internal processes to facilitate competition and also promote internal compliance;
  4. Establishing IT requirements for system enhancements that are necessary for full market opening to competition.

NIE Networks invested significant time and effort to introduce competition in the provision of connections >=5MW, and this was positively acknowledged by the UR. Against challenging deadlines NIE Networks was able to deliver on time.

The Neueda approach was to work collaboratively with NIE Networks on the programme, with each workstream having NIE Networks leads being partnered with/supported by a Neueda subject matter expert. This approach built a strong team ethic early and this was maintained throughout.