Distribution Network Operators (DNOs) are incentivised under the regulatory regime to reduce system losses. These are measured using settlement data as the difference between units entering and units leaving their distribution network. Retrospective adjustments made by suppliers to compensate for past errors supressed the units out part of the losses determination, making losses appear far higher than they actually were.
As part of the power and gas purchase agreement our client had with an international energy trading investment bank, they were required to provide independent assurance of the robustness of their business. The challenge was to review all industry related aspects of the business, identify risks and issues that could materially impact gross margin or gross margin reporting – and make recommendations for addressing these.