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Engagement Log: Transparency

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Engagement Log: Transparency ENGAGEMENT LOG: TRANSPARENCY Annex NGET_A9.01_Engagement Log December 2019 As a part of the NGET Business Plan Submission 0 ENGAGEMENT LOG: TRANSPARENCY ENGAGEMENT LOG Priority: I want you to be transparency in your performance Topics: Transparency in Performance and Stakeholder Led Business plan Author: Mohammed Farooq Document Version Number: 1.0 EXECUTIVE SUMMARY 2 1. PRE-ENGAGEMENT 4 1.1. What is the topic and why is it being engaged on? 1.2. What existing insight has been utilised? (incl. Truth assessment) 1.3. What are the desired outcomes for engagement? 1.4. What is the engagement approach? 2. POST-ENGAGEMENT 10 2.1. What were the engagement outcomes and how has this influenced options? 2.2. What was the feedback on the engagement approach? 2.3. What were the initial National Grid conclusions? 3. STAKEHOLDER GROUP CHALLENGE & REVIEW 17 3.1. What were the challenges and how did NGET respond? 4. CONCLUSIONS 20 4.1. What impact has this feedback had on National Grid and the RIIO-T2 business plan? 4.2. Business plan outputs aligned to stakeholder engagement outcomes – golden thread 5. APPENDIX 21 5.1. Engagement principles checklist 5.2. Business plan / engagement topic prioritisation framework 5.3. Stakeholder segments 5.4. Engagement approach – spectrum 5.5. Detailed outputs from engagements (embedded documents) 1 ENGAGEMENT LOG: TRANSPARENCY EXECUTIVE SUMMARY This stakeholder priority covers the transparency of our performance, ensuring our financial reporting is transparent and easy to understand by stakeholders. It also covers the concept of a stakeholder-led business plan, making sure we do not only engage with stakeholders when we have to, but instead we implement this concept as a business-as-usual activity which will lead to increased transparency and will highlight what is important for stakeholders. The aim of our engagement is to understand whether we are doing the right thing for our stakeholders. The desired outcome is to know if our business plan approach and the way we report our current performance aligns with what stakeholders want from us, or whether we should change our proposal. In planning engagement, insight has been gathered from business as usual activities, satisfaction knowledge. We are looking to understand how stakeholder want to engage with us and what information they want, why they want it and how they want it deliver. The approach chosen to engage with stakeholders is both topic and stakeholder specific. A combination of ongoing engagement, bi-lateral meetings, webinars and online surveys are being used. The key outcomes and feedback we have got to date on our engagement approach can be summarised in the table below. SUMMARY OF ENGAGEMENT TO DATE: CHANNELS Bi-laterals meeting Webinar and Online Survey Ofgem workshop Consumer listening workshop STAKEHOLDER Consumer groups GROUPS Customers (demand and generation) and TOs Energy suppliers Regulator Others including environmental groups ENGAGEMENT • More transparent and consultative business plans. FEEDBACK • Transparency on the link between activities, operational performance and financial reward. • Transparency on differences between actual costs and allowances. • Stakeholders wanted to be involved in the business plan process Our current annual business planning process is mainly inward facing. No conclusions can be taken until all the engagement process has been completed, but all the learnings from this stage will be use in our RIIO-T2 engagement to create an ongoing stakeholder-led process. We took the opportunity to get Frontier Economics to carry out an assessment on our engagement and how the outcomes of our engagement align to our proposals. Frontier Economics highlighted 2 ENGAGEMENT LOG: TRANSPARENCY that is was clear from the engagement that stakeholder priorities for this topic will be address through the proposal set for the T2 period. Considerable challenge and review have been undertaken by the Independent Stakeholder User Group on this priority. A key challenge was around how we are making a step change in the transparency for the T2 period, we have responded by making a commitment to report on more that the financial and operation commitment in respect to our reporting. As a result of enhanced engagement process for this priority, stakeholders have helped shaped the business plan and more importantly will be getting wants important to them. 3 ENGAGEMENT LOG: TRANSPARENCY 1. PRE-ENGAGEMENT 1.1 WHAT IS THE TOPIC AND WHY IS IT BEING ENGAGED ON? I. What is the subject: background and all information (evidence) required to understand what is being engaged on; link to outputs (or incentives) The stakeholder priority, I want you to be transparent in your performance, comprises of two topic areas: 1. Transparency of performance 2. Stakeholder-led business plan This priority relates to how we involve our stakeholders in the development of our annual business planning process and how we communicate our performance against the activities we undertake, and the financial reward earned, in a way that is easily understood. Transparency of performance We produce substantial performance reporting which is either published or delivered directly to stakeholders. We have heard through bi-laterals and other channels including the media, that we are not transparent in our financial reporting and the reporting is not always easily understood by stakeholders. This has an impact on stakeholder views of National Grid’s transparency. Stakeholder-led business plan Feedback from Ofgem and other key stakeholders has been that we generally only engage with stakeholders when we have to, either at the time of a price control review or when statutory obligations mean that engagement has to be part of our process (when obtaining planning consent, for example). Other networks and other non-energy organisations include stakeholder engagement as part of their annual business planning process. We, therefore, want an annual stakeholder-led business planning process to become our business-as-usual as this will lead to increased transparency and deliver what is important for stakeholders. II. Where are we today/what do we deliver today, and what do we currently understand from stakeholders on future development 1. Transparency of Performance What we are already delivering We report significant amounts of information on our performance to Ofgem or through external publications. The most significant reports are: • On an annual basis, we provide Ofgem the regulatory reporting pack (RRP) that forms part of Ofgem’s Annual report. This details our spend, outputs delivered and Return on Regulatory Equity (RoRE). RIIO-Electricity-Transmission-Annual-Report-2017/18 4 ENGAGEMENT LOG: TRANSPARENCY • We also publish Our performance report annually to inform our stakeholders on how we are doing against the outputs defined for RIIO T1. Link to Our Performance Report • Our Annual Reports and Accounts which details our financial performance in line with international accounting standards as well as details of our strategy, vision and significant events. Link to National Grid Annual Accounts and Reporting 18/19 2. Stakeholder Led-Business Plan What we are already delivering We already talk to our stakeholders as part of our business-as-usual (Bi-lateral, forums etc.) activities across a wide range of topics, but what we don’t have is a formalised process that ensures our annual business plan is informed by stakeholder feedback. By the end of T1 we will have a well-defined process that will enable us to create an annual stakeholder-led business plan. This will involve consulting our stakeholders to understand what they need from us, creating a business plan that will deliver these needs, and communicating this to our stakeholders. We will look to improve this process year-on-year based on what our stakeholders want from us. III. The industry drivers for this topic There is a strong emphasis in the industry on legitimacy of returns. This drive comes from the regulators, consumer bodies like Citizens Advice and some of our other stakeholders. Organisations need to be more responsible/fair and need to consider how they can impact or help society. Stakeholders have a great desire in getting involved in participating in the development of company’s business plans, we have seen this happening in the water and aviation sector. Creating a stakeholder-led business planning process can support the process of making our plans and performance more transparent, by showing that we change our plans on an annual basis to deliver what our stakeholders need. IV. The link to the stakeholder priorities and the scale/materiality of the topics The topic of the Transparency of Performance and Stakeholder led-business plan aligns to the stakeholder priority of ‘I want you to be transparent”. Refer to appendix 5.2 to see the table of alignment. V. Topic prioritisation: materiality vs ease of engagement We used the framework below to determine the topic prioritisation: 5 ENGAGEMENT LOG: TRANSPARENCY Business plan / engagement topic prioritisation framework High Stakeholder Group focus . All topics of high materiality given explicit time on the Stakeholder Group High materiality High materiality forward agenda and low ease of and high ease of . engagement engagement Topics of low-materiality may not be explicitly covered on the forward agenda, but material is made available and can be covered by exception Low materiality Low materiality Direct engagement focus and low ease of and high ease of . All topics of high materiality and/or high Business Plan Materiality Plan Business engagement engagement ease of engagement will benefit from extensive direct stakeholder engagement . Topics of low materiality and low ease of engagement primarily covered by inform Low High only and potentially not until the propose Ease of Engagement phase Business plan topics and mapping onto framework 1.2 WHAT EXISTING INSIGHT HAS BEEN UTILISED? I. What existing insight has been drawn upon; BAU engagement, satisfaction survey insight, FES horizon scanning; output from listen phase CSAT Feedback “You don’t keep me updated.
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