Project Nexus is an IT project that was undertaken to update the UK’s gas industry processing system.
What is Project Nexus?
Project Nexus is a project that is led by Xoserve and sponsored by Ofgem to replace the ageing UK Link system that was established in 1996 to operate the Supply Point Administration and other gas administration functions in Britain.
Ofgem appointed PwC to oversee the project on their behalf. The aim of the project was to create a system that is future-proofed to meet not just current requirements but also to anticipate future demands and changes. It also set the requirement that all gas market operators had to update their IT systems to work with the new system.
The UK Link system is operated by Xoserve who provide services to the gas industry including meter administration through the Supply Point Administration and settlement arrangements for gas suppliers, transporters, and shippers.
In June 2017 Xoserve successful transitioned to its new IT system from the UK Link system.
Why Was a New System Needed?
The planning and consultation on the new system started a decade before the transition but the momentum grew as the need for a new system became increasingly apparent. One of the critical reasons for the IT system replacement was due to the roll-out of smart meters as the UK Link system was not able to handle the real-time information that smart meters could provide.
The system was able to handle the larger businesses daily metering but the strain that an additional 20 million meters would place on the ageing system was going to be too great.
The other key reasons were the issues that were occurring with the settlement arrangements and that smaller customers were disproportionately penalised in this process, and that the Independent Gas Transporters could not communicate all of their data to Xoserve.
What Are the Impacts of Project Nexus?
Project Nexus was not only an IT project to replace an ageing IT system but an opportunity for Xoserve and the gas industry to review its processes and practices. As such the project was supported across the gas industry.
One of the market reforms that took place was to replace the Reconciliation by Difference process which entailed reconciliation of Non-Daily Metered customers, such as smaller businesses and domestic customers, and where lost gas within the local distribution network was allocated.
Under the old system, these losses were disproportionately factored into the Non-Daily Metered customers which saw them unfairly charged. The introduction of the new IT system enabled Xoserve to reconcile all 20 million additional supply meters belonging to smaller customers so that the losses could be fairly allocated to all customers.
A further benefit of Project Nexus was that it allowed the Independent Gas Transporters to communicate with Xoserve and the new system which they previously had difficulties with on some of their data.
The new IT system has also given the gas industry and Xoserve a more flexible system for the future to enable further changes in the industry to be more easily facilitated.
Why Did Ofgem Sponsor Project Nexus?
Ofgem chose to sponsor Project Nexus in 2016 as they wanted to ensure that the IT system that replaced the UK Link system offered the best outcomes for all UK consumers and that a system was created that aided the industry in future proofing itself to the challenges it faces.
One of Ofgem’s hopes was that the system could make improvements to the processes to aid efficiency such as the settlement process by utilising the information that would be available from smart meters as they provide more accurate and timely data on gas usage.
The ageing IT system was also identified by the Competition and Markets Authority as having an adverse effect on competition in the gas industry which made the project a priority in being able to rectify this situation.
When Did the Switch Over Take Place?
The switchover of the data from UK Link system to the new system took place between 23-31 May 2017. During these nine days, the gas industry could not communicate with Xoserve and the database. Normal service was reinstated by 6 June 2017 when all data was successfully transferred, and the system was fully tested.
The transition was hailed as a success as it went relatively smoothly and it went very much unnoticed outside those in the gas industry that were party to transition. The only customers that may have been affected by the transition were those that were switching suppliers during this period as the energy suppliers could not communicate with Xoserve.