Revised Retail Audit Plan and Guidelines by yrf69717

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									Guidelines for Profile Audits v3.0

 Version               Date issued              Comments/amendments made
 1.0                   22 July 2005
 2.0                   10 March 2006            Updated with recommendations for the audit project team.
 3.0                   7 June 2006              Electricity Commission Board approved version


These guidelines have been produced to promote understanding and encourage
consistency in the methodology and processes surrounding profile audits.

 The general approach set out in this information guide in no way reduces the requirement upon participants to know and
 comply with their obligations under the Rules. Neither should it be interpreted as reflecting the Electricity Commission’s view
 on Rules.


Abbreviations used in these guidelines


  Board                       Electricity Commission Board
  Commission                  Electricity Commission
  Rules                       Electricity Governance Rules 2003
  kWh                         Kilowatt hour
  MA                          Market Administrator
  NSP                         Network Supply Point
  Regulations                 Electricity Governance Regulations 2003



Background
1. The following methodology is recommended for use when auditing profiles under
   rule 8 of code of practice G2 of schedule G8 of part G of the Electricity
   Governance Rules 2003 (Rules).
2. In line with its objective to encourage rather than regulate, the Electricity
   Commission (Commission) recommends that these guidelines be followed. The
   list of Commission appointed auditors may be found at the following website:
   http://www.electricitycommission.govt.nz/opdev/retail/retailregisters.

Overview
3. With the introduction of full-retail competition in April 1999, consumption profiling
   was introduced to the market as a method of allocating electricity consumption
   determined by incrementing kWh register meters to half hour periods. This
   allowed for the identification of individual retailer energy purchases in each half
   hour at each Network Supply Point (NSP). The ability of competing retailers to
   develop and maintain their own profiles was a key component of contestability in
   the retail market.
4. The market administrator (MA) must approve all new profiles in accordance with
   the approval process for profiles as set out in rule 6 of code of practice G2 of
   schedule G8 of part G of the Rules.
5. Rule 7.9.1 of code of practice G2 of schedule G8 of part G of the rules sets out
   that the current profile population will be subjected to a random audit.
6. Any participant may request an audit of any participant’s profile, which may cover
   the application and use of any profile as specified in rule 8 of code of practice G2
   of schedule G8 of part G of the Rules.
7. The application of all profiles must be reviewed every 2 years in a random
   selection process agreed by the MA, under the supervision of the Commission
   Board (Board). This profile audit must cover:
          o the documentation detailing the rules of the profile (rule 8.1);
          o the application of dynamic and estimated elements of the profile (rule 8.2);
            and
          o the consumers on the profile population list (rule 8.3).
8. The MA is also required to review the structure of every approved profile
   administrator at least every three years. This review should cover:
          o the appropriateness of the criteria for profile definition; and
          o whether the existing sample needs to be redrawn (rule 9).
9. These guidelines describe the audit requirements for profile audits and specify
   the items and information the auditor must examine and the format in which the
   audit report must be presented.
10. The Commission will brief the auditor before any audit takes place, identifying the
    scope of the audit, elucidating any contentious rules, and setting out its
    expectations of the audit.

Audit methodology – population list for sampled profiles
Description of audit
11. The following items must be determined by the auditor performing an audit of a
    sampled profile unless exemption is granted by the Board.
Population representation
12. The profile sample must be representative of the profile population. It is the
    responsibility of the profile owner to maintain a valid statistical sample that takes
    account of population changes.
Changes to population
13. The auditor should check that any changes have been appropriately
    communicated to the MA. These should be communicated when:
          o the membership of the population has changed by more than 20%; or
          o if more than 5% of the profile sample has been lost or removed.




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14. The auditor should check that the methodology outlined in Appendix Three of
    code of practice G2 of schedule G8 of part G of the Rules has been correctly
    applied.

Audit methodology – application and use of profiles
Description of audit
15. The following items must be determined by the auditor performing an audit of a
    sampled profile unless exemption is granted by the Board.
Current population list
16. Each profile owner should have a profile population list for every month that the
    profile is in operation, and maintain profile details in accordance with rule 7.9 of
    code of practice G2 of schedule G8 of part G of the Rules.
Eligibility criteria
17. The profile owner must establish that a clear audit trail exists to demonstrate the
    eligibility criteria of consumers as required by rule 7.3.2 of code of practice G2 of
    schedule G8 of part G of the Rules.
Use of profiles
18. The auditor shall verify that profiles used for reconciliation purposes have been
    approved by the MA in accordance with rule 7.8 of code of practice G2 of
    schedule G8 of part G of the Rules.

Audit report
Content and format of audit report
19. The auditor must produce an audit report addressing all the matters identified in
    this audit specification and presented as described in the section on information
    tabulation of these guidelines.
Profile owner input to audit report
20. Before submitting an audit report to the MA the auditor must report any non-
    conformance with the rules back to the profile owner.
21. The profile owner must then have an opportunity to inform the auditor of any
    actions taken by the profile owner to correct the non-conformance, and the
    auditor must include these details in its report to the MA.

Requirements of an auditor
22. When approving auditors, consideration should be given to a prospective
    auditor’s knowledge of the Rules and experience with profiling.
23. Auditors should be clearly briefed by the Commission and, where necessary,
    receive shared training to ensure consistency across audits.

Information tabulation
24. The profile audit report must contain comment on all matters raised in these
    guidelines and comment on:


Profile Audit Guidelines – Final Version 3.0                                      3
          o the extent to which the profile owner has made available the information
            required by the auditor;
          o the extent to which the profile owner complies with the Regulations and
            Rules with clear identification of any rule breaches; and
          o any other matters the auditor considers relevant.
25. Auditors’ comments must be arranged in the order presented in the table below
    and under the appropriate headings.
Persons involved in audit
26. Auditors must identify the following:
      o the profile owner being audited;
          o the auditor responsible for the audit; and
          o all persons used to perform the audit.


Population list audit
Type and name of audited                       [Profile owner]
party
Name of profile                                [Profile name]
When audited                                   [Date of audit]
Name of auditor                                [Name of auditor]
Persons involved in audit                      [Identify all persons involved in audit]
Availability of information                    [Comment on whether the profile owner has made
                                               available the appropriate information].
Compliance with rules                          [Comment on whether the profile owner has complied
                                               with the Regulations and Rules. Identify any breaches].
Outcome of audit
Section                                                   Comment
Population representation
Changes to population
Overall comments
[Provide justification for decision]




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Application and use of profiles audit
Type and name of audited                       [Profile owner]
party
Name of profile                                [Profile name]
When audited                                   [Date of audit]
Name of auditor                                [Name of auditor]
Persons involved in audit                      [Identify all persons involved in audit]
Availability of information                    [Comment on whether the profile owner has made
                                               available the appropriate information].
Compliance with rules                          [Comment on whether the profile owner has complied
                                               with the Regulations and Rules. Identify any breaches].
Outcome of audit
Section                                                   Comment
Current population list
Details of profile
Eligibility criteria
Use of profiles
Overall comments
[Provide justification for decision]


Sources of information
The Rules can be found on the Commission website:
http://www.electricitycommission.govt.nz.

If you require further assistance, please contact the market administrator:

Electricity Commission
P O Box 10041
Wellington
Attention: Market Administrator

Telephone:          04 460 8860
Fax:                04 460 8879
Email: retailoperations@electricitycommission.govt.nz




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