ISG Terms of reference

Independent Stakeholder Group

 

1. Background

1.1. Throughout RIIO-ED1, Electricity North West (ENWL) has operated a number of stakeholder advisory panels and forums, which have contributed scrutiny of ENWL’s ED1 business plan commitments and provided input into the development of its business plan for RIIO-ED2. In addition, ENWL also received scrutiny and challenge throughout the development of its ED2 business plan from its independent Customer Engagement Group (CEG), which was established to ensure that the final plan reflected the needs and preferences of consumers.

1.2. To ensure that the customer voice continues to be heard over the duration of the RIIO-ED2 price control, ENWL refreshed its stakeholder advisory panel structure and established an Independent Oversight Group (IOG) to provide additional assurance of customer and stakeholder engagement in decision-making and to review ENWL’s performance against its business plan commitments as far as they pertain to stakeholders and customers.

1.3. The ENWL Independent Oversight Group (“IOG”) was a panel of independent individuals, with an independent Chair together with members representing each of the six advisory panels that ENWL has established to ensure ongoing stakeholder and customer input into its decision-making processes in important work areas.

1.4. The RIIO-ED3 Business Planning process has formally mandated the establishment of an Independent Stakeholder Group (ISG) to challenge and scrutinise network companies’ business plans and performance throughout RIIO-ED3. ENWL has therefore transitioned its IOG into the required ISG.

2. Role of the Independent Stakeholder Group

Ofgem has described the role of the Independent Stakeholder Group in the RIIO-3 Business Plan Guidance, RIIO-ED3 Framework Consultation and the ED3 Framework Decision: The ISG will provide challenge and scrutiny to network companies both as they develop their Business Plans, and on an enduring basis during RIIO-3, holding the network companies to account in the delivery of these plans.

2.1. The primary role of the ISG is to independently scrutinise and challenge ENWL’s RIIO-ED3 Business Plan development, ensuring it accurately reflects customer and stakeholder needs and preferences.

2.2. The ISG, with the support of ENWL stakeholder advisory panels, will review ENWL’s performance during the existing RIIO-ED2 period against the commitments made to customers in its business plan and on an enduring basis during RIIO-ED3.

2.3. The ISG will represent the interests of consumers and stakeholders and will play an important role in holding the company to account in respect to the delivery of its RIIO-2 and ED3 commitments as they relate to customer and stakeholder needs and preferences.

2.4. The ISG will advise and challenge ENWL on how to improve and keep delivering the best service to its customers.

2.5. The ISG will be presented with detailed information about ENWL, but members are not expected to be experts in electricity, engineering or business issues such as finance and economics.

3. Objectives and Scope

3.1. The ISG has the following objectives:

• To ensure customer and stakeholder engagement shapes ENWL’s ED3 business plan commitments and decision-making.
• To advise on the quality and scope of ENWL’s stakeholder engagement and its reflection in ENWL’s business plan, priorities and approach.
• To act as a critical friend and advisor, understanding challenges and expressing views about key issues and priorities that may affect the delivery of the business plan commitments as they pertain to stakeholders and customers.
• To review and consolidate feedback from ENWL’s RIIO-ED3 engagement programme and RIIO-ED2 advisory panels directly to the CEO, as appropriate, including raising any areas of concern.
• To contribute content on the ISG’s activities for the ENWL annual stakeholder engagement report, which is provided to Ofgem and the public.
• To review and advise upon the stakeholder feedback reflected in ENWL re-opener submissions to Ofgem and any other planned changes in respect of business plan commitments, where appropriate, during the RIIO-ED2 price control period

3.2. The ISG is primarily responsible for determining how effectively key areas of concern to relevant consumers and stakeholders have been addressed in ENWL’s ED3 Business Plan

• Providing challenge and scrutiny to ENWL’s ED3 Business Plan during its development and monitoring the delivery of the commitments of the plan.
• Encouraging change towards a culture of more consistent, relevant and more effective stakeholder engagement by ENWL, through scrutiny, challenge and monitoring of its engagement strategy, plans and performance and providing insight and feedback to ENWL to allow it to act on this information and use it to inform decisions early in the process of business plan development.

3.3. The ISG Chair will submit a statement as part of the ENWL Business Plan confirming the creation of the ISG and involvement in the development of the business plan, particularly inrelation to how consumers and stakeholders have been engaged and how that engagement has affected the development of the RIIO-ED3 Business Plan.

3.4. The ISG will respond, if required, to requests from Ofgem and provide feedback and furtherevidence from the ISG on ongoing engagement and research done by companies, for evidence-gathering purposes.

3.5. The ISG, if required, will respond to any Ofgem ‘Calls for Evidence’ following submission of the ENWL Business Plan to support Ofgem determinations of Business Plans.

3.6. The ISG is NOT expected to discuss or review specific financial topics, such as the cost ofcapital, treatment of debt or the level of gearing in the company. ENWL will provide sufficient financial information and other  information to the ISG to enable them to understand the overall company risk and reward package proposed in the business plan.

3.7. The ISG is NOT expected to undertake cost assessment or benchmarking. ENWL will provide sufficient cost information to enable the ISG to understand the overall totex package proposed in the business plan, including how efficiency and value for money is being demonstrated.

3.8. The ISG is NOT expected to scrutinise matters of Cyber Information Technology, Cyber Operational Technology or physical security upgrade plans.

3.9. The ISG does NOT have decision-making powers, nor does it jointly ‘own’ the business plan that ENWL submits. The ownership of the plan sits entirely with ENWL.

4. Membership and responsibilities

4.1. The ISG will be led by an independent Chair, recruited by ENWL.

• In the absence of the Chair, the ISG Vice Chair will chair the ISG meeting.

4.2. Working with the Chair, Members of the ISG will be appointed by ENWL. The ISG will be independent from any ENWL stakeholder advisory panels, however, some ISG Members may also Chair ENWL Stakeholder Advisory Panels, whilst others will be appointed solely to the ISG, reflecting the mix of skills and stakeholder representation required to fulfil the ISG role.

4.3. Stakeholder Advisory Panel Chairs will report into the ISG, as required, to fulfil the ISG terms of reference. The advisory panels will each have an agreed term of reference. These terms of reference will also be shared with the ISG to ensure transparency and understanding of the remit of each panel.

4.4. Membership of the ISG shall initially be until December 2026 and will be reviewed thereafter to create an enduring ISG with revised scope and objectives aligned to enduring RIIO-ED3 Business Plan scrutiny.

4.5. ISG members are selected according to their expertise and experience, reflecting the interests of existing and future consumers and stakeholders.

4.6. ISG members should act in an independent capacity and not solely as a representative of a particular organisation, or group of consumers or stakeholders.

4.7. ISG members are responsible for undertaking appropriate preparation for each meeting, including reading all the supporting information.

4.8. ISG members are expected to attend most meetings in person, although participation remotely may be agreed with the IOG Chair in certain circumstances.

4.9. Whilst deputies will not be permitted, ISG members may invite members of their respective advisory panels to present information to the ISG where those individuals have a particular insight or expertise that is relevant to the work of the ISG.

4.10. Individual ISG members are responsible for notifying ENWL and the ISG Chair if they wish to leave the ISG. ENWL and the ISG Chair will ensure that  the overall role of the ISG is notaffected during any change of membership.

4.11. A member may be removed from the ISG by ENWL or the Chair if they have committed a serious breach of the Standards of Conduct laid down in these terms of reference.

5. Standards of Conduct

5.1. The Chair and ISG members will observe the highest standards of integrity and independence and comply with the principles established by the committee on standards in public life (Nolan Principles).

5.2. The independence of the ISG Chair and Members from ENWL and Ofgem is essential.

5.3. The work of the ISG will be conducted in as transparent a manner as possible, without compromising either individual rights or ENWL’s commercially confidential information.

5.4. All members must declare any conflicts of interest that may be relevant to their role as a member of the ISG. A conflicts of interest register will be maintained by the ISG and kept available for public scrutiny. ISG members must also declare any conflicts of interest at the start of any meeting of the ISG.

5.5. ISG members may receive commercially sensitive data or personal data relating to named individuals in connection with their role as ISG members. ISG members must maintain appropriate confidentiality of any commercially sensitive data, intellectual property or personal data shared by ENWL. Members of the ISG must agree to keep all such information confidential and to abide by all laws, regulations and legislation in respect of such information (including the processing of any such information).

5.6. Members of the ISG must agree to enter into any separate agreements with ENWL in respect of confidentiality, intellectual property and/or data protection as ENWL may reasonably require.

5.7. ISG members must conform to ENWL’s codes of conduct and with the terms of the Consultancy Agreement established between each member and ENWL.

6. Meetings

6.1. The ISG shall normally meet monthly. Additional meetings will be necessary to perform Business Plan oversight in late 2025 and 2026.

6.2. The quorum will be three members plus the Chair (or elected alternate).

6.3. ENWL will provide secretariat support to the ISG.

• The secretariat shall record the names of those present and in attendance and the agreed actions of all meetings of the ISG.
• The draft minutes and agreed actions of the meetings shall be circulated promptly, not later than 10 working days after the meeting, to all members of the ISG.

6.4. A forward programme of indicative meeting dates and times will be agreed on at least a sixmonth rolling basis. The meeting agenda and any supporting material will be issued no later than 5 working days before the date of the meeting by the secretariat.

• ENWL will ensure that the ISG has timely access to relevant data, information and evidence which will enable the ISG to provide meaningful input and challenge. This will include having access to the company's strategies and plans, and information relating to its performance and culture.
• ENWL will demonstrate how it has considered the ISGs' feedback in decision making prior
  to the final submission of the business plan
• ENWL will test the quality and ambition of the RIIO-ED3 Business Plan with the ISG
• Senior ENWL leaders will attend ISG meetings to ensure a direct link to the business.
• Other members of the company and external stakeholders may be invited to attend for agenda items where they have relevant responsibility or knowledge.

6.5. ENWL will provide ISG with information and evidence that will enable it to monitor how consumers and stakeholders have been engaged and how such engagement has affected the delivery of the RIIO-ED2 Business Plan, the development of the ED3 business plan and decision making during the ED3 period.

• Ensuring the ISG has information about value for money for customers, including but not limited to the provision of clear bill impact for specific areas of funding.
• Ensuring that the ISG has access to relevant data, information and evidence that will enable it to provide meaningful input and challenge to the development and / or review of science-based business carbon footprint.
• Providing comparative data from other energy network companies (including RIIO-ED2 performance data) and from companies in other relevant sectors, and such backgrounddata as may be reasonably required and requested by the ISG.

6.6. The ISG Chair will have regular engagement meetings with the ENWL CEO, Ofgem and other ISG Chairs as required by Ofgem, and access to the Board where and when appropriate to ensure the Board is fully engaged in the work of the ISG.

• Meetings held with third parties conducted in the capacity of Chair/Member of the ISG will be recorded and notified to ENWL.
• No discussions about ENWL and the ED3 business planning process will be held with Ofgem, Government departments or bodies relevant to the ISG, without notifying ENWL prior to the meeting, including clarification of the purpose of the meeting.

7. Secretariat

7.1. ENWL will provide secretariat resources to enable the ISG to discharge its activities. This support will include:

• Providing the necessary secretariat support, and ensuring that appropriate information, training and induction are available for ISG members.
• Developing forward work plans and meeting agendas in liaison with the Chair and ENW.
• Organising meetings, including the issuing of agendas as agreed with the Chair and associated meeting papers.
• Producing meeting minutes and maintaining a log of agreed actions and challenge logs as agreed with the Chair
• Ensuring ISG and advisory panel information (and associated documents and governance arrangements) on ENWL’s website is kept up to date

8. Expenses

8.1. The Chair and the members of the ISG will be paid a day / hourly rate fee by ENWL and additionally can claim reasonable costs and expenses incurred in attending meetings or otherwise conducting IOG business.

8.2. The terms for the payment of fees and expenses will be set out in the individual contracts for the provision of services agreed between ENWL and the ISG Chair and members.

9. Terms of Reference review

9.1. Ofgem has stated that as the Sector Specific Methodology is developed, they will set out further details on guidance to ISGs on membership, role and remit.

9.2. A formal review of the terms of reference and members will be completed by ENWL and the ISG Chair following submission of the ED3 Business Plan to ensure enduring customer and stakeholder responsibilities can be achieved. Any changes will be reviewed by the ISG and agreed/approved by ENWL.

9.3. Changes to the terms of reference can be proposed by ENWL, the Chair, or a member at any time. Changes may also be subject to changed Ofgem requirements. All changes will be considered and agreed upon by ENWL and the Chair.