Independent Stakeholder Group (ISG) Terms of Reference

The SP Energy Networks (SPEN) Combined Independent Stakeholder Group (ISG) is established to act independently and in the interests of present and future consumers and stakeholders. The ISG provides scrutiny, challenge and advice to THE COMPANY as it develops its RIIO-ED3 business plan and as it delivers commitments and outcomes for both the ED2 and ED3 business plans.

The ISG helps ensure that the company’s approach to engagement and decision-making is open, inclusive, evidence-led and demonstrably focused on improving customer outcomes and delivering value for money. This includes helping to ensure that consumer and stakeholder views, needs and preferences are meaningfully reflected in the business plan and subsequent decision-making.

In fulfilling this role, the ISG will provide independent scrutiny of  the company’s stakeholder engagement approach, how stakeholder and consumer evidence is used to inform decisions, and the delivery of commitments and outcomes through the price control period.

The ISG operates at arm’s length from SPEN and Ofgem. It is independent of the company’s executive management and governance processes, while being enabled by SPEN to access information, stakeholders and decision-makers needed to perform its role effectively.

The ISG does not have decision-making authority and does not jointly own SPEN’s business plan. Accountability for the business plan and delivery remains with the company

Members are appointed as individuals and are expected to exercise independent judgement in the interests of consumers and stakeholders. Members may draw on their professional experience and networks but do not act as formal representatives of their organisations.

3.1 ED3 business plan development

During ED3 business plan development, the ISG will:

• Provide challenge and scrutiny of the company’s stakeholder engagement approach, including whether SPEN has identified and engaged the right stakeholders; whether engagement is sufficiently broad, open, inclusive, accessible and proportionate; and whether local, regional, statutory, vulnerable and seldom-heard perspectives have been appropriately considered.
• Scrutinise the quality of stakeholder engagement and consumer research, including the purpose, methods, sample and representation, limitations, clarity of reporting and proportionality of the approach.
• Review how stakeholder challenge, expertise, local and sector-specific insight and consumer research findings have informed the development, refinement and assurance of the business plan. This will include reviewing the traceability between the evidence gathered, the decisions made and the content recorded in the Stakeholder Engagement and Decision Log and Consumer Research Log.
• Test whether the consumer voice, including views on priorities and trade-offs, has been understood and acted on; whether key areas of concern have been addressed; and whether SPEN has explained where evidence has not been followed or where different evidence points in different directions.
• Test the robustness of SPEN’s rationale for major proposals, including the balance between ambition, risk, deliverability, bill impacts and value for money. This includes testing assumptions and trade-offs and considering how effectively stakeholder and consumer evidence has informed the preferred approach.
• Scrutinise how SPEN has considered the needs of vulnerable consumers and seldom-heard groups, including evidence on outcomes and how services will be improved.
• The ISG will review whether research and engagement have identified different levels and types of need across the three licence areas and whether proposed services and investment respond to that evidence.
• Review the company’s approach to net zero and the environmental action plan, including how stakeholder evidence informs priorities and delivery pathways.
• Provide feedback early enough to influence SPEN’s decisions before business plan submission. The ISG will not engage directly with stakeholders on SPEN’s behalf, nor jointly develop, draft or edit the business plan.

3.2 ED3 delivery oversight

Throughout ED3, the ISG will:

• Monitor progress against ED3 commitments and outputs, including where delivery is dependent on stakeholder participation or behavioral change.
• Scrutinise the quality and effectiveness of SPEN’s ongoing stakeholder engagement and consumer insight, including how it influences decisions, operational priorities and changes to delivery. The ISG will monitor whether SPEN is developing a consistent, relevant and effective culture of engagement and evidence-led decision-making.
• Identify emerging stakeholder themes, risks and opportunities and escalate them to SPEN leadership as appropriate.
• Consider whether changes to SPEN’s plans or programmes remain consistent with stakeholder evidence and consumer outcomes.

3.3 Interface with other panels and forums

SPEN may maintain specialist panels, working groups or forums. The ISG will not duplicate specialist scrutiny carried out elsewhere. Instead, it will:

• Receive structured updates from relevant groups, including key themes, evidence and recommendations.
• Challenge how SPEN has interpreted and responded to those inputs.
• Escalate cross-cutting issues and ensure consistency across licence areas and customer segments. The Chair will also seek appropriate input from statutory consumer bodies, including Citizens Advice and Consumer Scotland, and facilitate permanent or ad-hoc participation, where required

The ISG is not expected to:

• Undertake cost assessments or benchmarking activities that are primarily for economic regulation (for example cost of capital, financing structure or detailed comparative efficiency analysis).
• Review sensitive security arrangements where external disclosure would be inappropriate (for example cyber security, critical national infrastructure security details).
• Replace SPEN’s direct engagement with consumers and stakeholders.

SPEN will enable the ISG to perform its role by:

• Providing timely access to relevant information, analysis and evidence, including stakeholder mapping, engagement plans and outputs, research briefs, methodologies and findings, the Stakeholder Engagement and Decision Log, the Consumer Research Log, options appraisals and decision papers.
• Ensuring the ISG has sufficient time to review materials and provide meaningful challenges, including access to key decision points and programme milestones. SPEN will provide access to relevant decision-makers at key points to enable effective and timely scrutiny.
• Supporting the ISG to provide early input into the scope and design of material consumer research and stakeholder engagement where this would improve quality, avoid duplication or strengthen the evidence available for decision-making.
• Providing an appropriately resourced secretariat to support meeting administration, action tracking, publication and logistics.
• Facilitating access to SPEN leaders and subject matter experts when requested by the Chair to support scrutiny of specific topics.
• Ensuring Board-level visibility and engagement with the ISG’s work, including periodic sessions with the ISG Chair.

6.1 Size and composition

The ISG will comprise an independent Chair, a Co-Chair, and typically 10-12 members of the core group. Membership will be kept under review to ensure the ISG has the breadth and depth needed for its remit and to reflect the diversity of the communities served across SPD, SPM and SPENW.

In addition to the members of the core group, there will be a number of workstreams reporting into the ISG as appropriate. There may be independent subject matter experts serving alongside core ISG members on these workstreams.

Collectively, the ISG should provide:

• Strong consumer and community insight, including vulnerability and inclusion.
• Experience in stakeholder engagement, consumer research and customer insight, including the ability to assess qualitative and quantitative methods, representation, limitations and the application of findings.
• Understanding of energy systems, networks and the transition to net zero.
• Expertise in areas such as resilience, environment, data and digitalization, local government, and customer service.
• Awareness of regional and place-based priorities across SPEN’s licence areas.

The ISG will maintain a skills matrix and review it at least annually, alongside succession planning.

6.2 Independence criteria

Members must be able to act independently. A person will not normally be considered independent if they:

• Are currently employed by SPEN or provide paid services to SPEN through another role, except where such roles are independently appointed advisory or panel positions and are transparently declared and managed to avoid conflicts of interest.
• Have had a material business relationship with SPEN within the previous three years.
• Have significant personal or financial links with SPEN senior employees that could reasonably be perceived to affect independence.
• Have exceeded the agreed maximum tenure for the role.

6.3 Appointment and tenure

The Chair is appointed by SPEN through a process designed to secure independence, credibility and capability. The Chair is responsible for proposing membership appointments to SPEN, using an open and transparent process where feasible, supplemented by targeted recruitment where specialist expertise is required.

Appointments will normally be for fixed terms, renewable subject to performance and continued independence.

If SPEN proposes to end the Chair’s appointment, this will be handled in a manner that safeguards the perceived and actual independence of the ISG, including transparency with ISG members on rationale and process.

7.1 Chair responsibilities

The Chair will:

• Set and agree the ISG work programme and forward agenda, aligned to key ED3 milestones and enduring delivery priorities.
• Chair meetings and ensure balanced participation, constructive challenge and clear conclusions.
• Commission deep dives or additional meetings where risks, emerging issues or material changes warrant further scrutiny.
• Request attendance from SPEN leaders and subject matter experts as needed to support scrutiny.
• Ensure appropriate induction and ongoing development for members, including understanding of ED3 requirements and SPEN context.
• Oversee production of ISG outputs, including reports and any statements relating to business plan submission.
• Act as the primary point of contact with Ofgem on ISG matters where appropriate.

7.2 Co-Chair responsibilities

The Co-Chair will support the Chair in managing the group’s work, meeting delivery and deputize where required. The Co-Chair will lead specific deep dives or strategic tasks agreed by the Chair.

7.3 Member responsibilities

Members will:

• Prepare for meetings, review papers and contribute to discussion and challenge.
• Provide insight and constructive scrutiny focused on consumer outcomes and stakeholder evidence, including testing the quality of engagement and research, the interpretation of findings and the traceability of evidence into decisions.
• Contribute to ISG outputs, including review of drafts and agreement of conclusions.
• Declare conflicts of interest and comply with confidentiality obligations.
• Support a respectful and inclusive culture within the ISG, including openness to differing views.

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SPEN will provide a dedicated secretariat to support the ISG. The secretariat will:

• Coordinate meeting dates, agendas, papers and logistics.
• Record minutes and actions and maintain recommendations, challenge and response log, tracking SPEN’s responses and agreed close-out. The log will distinguish observations, clarifications, recommendations and formal challenges, and record SPEN’s response, resulting change, residual concern and agreed basis for closure.
• Support publication of agreed outputs and maintenance of the ISG webpage.
• Maintain the register of interest and other governance documents as required.

The ISG will meet at least quarterly. Meeting frequency is likely to increase during high-intensity phases, including business plan development and pre-submission periods, or where significant delivery risks or changes arise.

Meetings may be held in person, online or hybrid, with periodic in-person sessions used for deeper challenge, workshops or site visits where valuable.

Agendas and papers should be issued with sufficient notice to enable meaningful review. As a guide, papers should normally be circulated at least five working days in advance.

Quorum will be the Chair (or Co-Chair) plus at least four members.

The ISG will operate in line with the principles of selflessness, integrity, objectivity, accountability, openness, honesty and leadership. Members will maintain high standards of professional conduct.

A register of interests will be maintained. Conflicts must be declared on appointment and at the start of each meeting. The Chair may require a member to step back from discussion or decisions on a specific item where a conflict exists or could reasonably be perceived.

Members may receive confidential, commercially sensitive or personal information. Members will comply with confidentiality and data protection requirements and sign appropriate agreements where required.

The ISG will produce the following as a minimum:

• An annual work programme setting out priorities, planned scrutiny activities and key milestones.
• A maintained recommendations and response log, showing SPEN’s response and actions against ISG challenge.
• An annual report on the quality and effectiveness of stakeholder engagement and consumer research, how evidence has influenced decisions, whether key consumer and stakeholder concerns have been addressed, and SPEN’s progress against relevant commitments and outcomes.
• A statement, written and signed by the Chair and submitted with the ED3 business plan, confirming that the ISG has been established with appropriate Terms of Reference, governance and membership; has been fully engaged in business plan development; has received sufficient information to monitor how consumers and stakeholders were engaged and how this influenced the plan; and that the statement is based on an assessment carried out by the ISG using evidence provided by SPEN.

SPEN will maintain a public ISG webpage and publish, where appropriate:

• The current terms of reference.
• Chair and member biographies.
• The work programme.
• The register of interests.
• Meeting summaries or minutes, subject to appropriate redaction.
• ISG reports and relevant outputs as appropriate.

Publication timings will balance transparency with the need to protect confidential information and ensure minutes accurately reflect agreed positions.

The Chair, Co Chair and members may be remunerated for their time at agreed rates and may claim reasonable travel and subsistence expenses in line with SPEN policy and any contractual arrangements.

Gifts and hospitality will not be accepted beyond token or immaterial levels. Any hospitality offered in connection with ISG activity will be handled transparently and in line with SPEN policy.

These terms of reference will be reviewed at least annually and after business plan submission to ensure the ISG remains fit for purpose for ED3 delivery oversight. Amendments will be agreed between the Chair and SPEN following consultation with ISG members.