FINANCE COMMITTEE (FIN) - TERMS OF REFERENCE

Constitution:

Sub Committee of the Executive Committee
Reports to the Executive Committee

The overall purpose of the Finance Committee is to advise the Executive Committee on financial issues associated with the management of the Pool, and to progress financial issues as identified in the Pool Business Plan or delegated from the Executive Committee.

Membership:

Chairman

Sponsors of the FIN as determined by the Executive Committee will act as Chairman. In their absence the CEO will provide a chairman.

Pool Member Representative

As nominated by Executive Committee members.

The Committee should have a balance of representatives from generator and supplier companies, and incorporate an appropriate mix of skills to undertake the duties of the Finance Committee.

Other Representatives

Representative from Energy Settlements and Information Services Ltd
Representative from Energy Pool Funds Administration Ltd
Representatives nominated by Chief Executive
Committee Secretary (from CEO)

Appropriate experts may be invited to attend meetings as necessary.

A quorum shall comprise of 3 Pool Member representatives and the Chairman. Decisions of the FIN should where possible be by consensus of Pool Member Representatives. In the absence of consensus, the matter shall be referred to the Executive Committee. Decisions of the FIN will not have binding effect unless, and then only to the extent, the Executive Committee shall have delegated the relevant decision making powers to the FIN or unless approved by resolution of the Executive Committee.

Decisions of the meeting should be reported to the Pool Members within 3 working days of the meeting. Any Pool Member can appeal a decision to the Executive Committee within 5 working days of the decisions being notified. An appeal of any decision must be channelled through the members' representative on the FIN.

Frequency of Meetings:

Minimum of Quarterly; extraordinary meetings may be requested by any committee member subject to agreement by the Chairman.

Role of FIN Committee Sponsors:

Committee sponsors will undertake the following roles:

Spokesman and representative for FIN decisions and recommendations to PEC, with justifications where necessary.
Representative of PEC to FIN with justifications of decisions where necessary.

The Finance Committee should:

1. Ensure that the CEO prepares, in a timely manner, Annual Budgets covering, in detail, proposed expenditure for the next 3 years.
   
   
2. On a quarterly basis the Finance Committee will hold a "Quarterly Business Plan Review Group Meeting". A PEC sponsor of FIN must chair this meeting. The purpose of the meeting is to review, challenge and seek justification of:
   
   
   • Proposed committee Business Plan figures
   • Proposed CEO Business Plan figures
   • Quarterly committee finance reports including costs to date and forecast full year costs compared to the approved Pool Business Plan
   • Quarterly CEO finance reports
     
     

   The FIN should prepare a brief for PEC highlighting any major concerns. The PEC committee sponsors of each PEC sub-committee (or an alternate) and the CEO Chief Executive are expected to attend this meeting.

3. 1. Oversee the preparation of, and agree a statement of Accounting Policies and Procedures to be adopted by the Chief Executive’s Office.
   2. Ensure commercial and financial systems operated by the CEO are in place to support existing operational requirements and future developments of the Pool.
      
      
4. Ensure that before any major commitments are entered into, the following steps have been completed and approved by PEC:
   
   1. A Business Case has been prepared which demonstrates the full costs, likely benefits and delivery timescales.
   2. Responsibilities and Delegations of Authority are agreed.
   3. Funding arrangements are in place and cost recovery mechanisms have been agreed.
   
   
5. Ensure that the arrangements for invoicing costs in accordance with the Pooling and Settlement Agreement operate satisfactorily.
   
   
6. Advise on appropriate nature of security cover required by Pool Members.
   
   
7. Review the acceptability to Pool Members of borrowing facilities.
   
   
8. Monitor Pool income, expenditure and commitments against budget on a regular basis including:
   1. Monthly Management Accounts including commentary and predictions of Forecast Outturns.
   2. Project progress reports covering all major projects sponsored by the Pool.
      
      
9. Receive and make recommendations as appropriate on issues arising from any sub-committees.
   
   
10. Monitor the activities of the Pool Funds Administrator.
    
    
11. Undertake and/or commission reviews as directed by the Executive Committee or requested by the CEO, Pool Members or in such areas as the FIN may itself decide.
    
    
12. Prepare an annual report to Pool Members on its activities.

It is not for the FIN to involve itself in an executive role except to the extent that it may be required to make recommendations to the Executive Committee on the soundness and viability of specified areas of proposed expenditure.