July 2022 Industry Newsletter

Welcome to the Corona Energy Industry Newsletter.

At Corona Energy we believe in putting the Customer first.  We use our position as one of the largest non-domestic energy suppliers in the UK to voice your needs, views and concerns at key regulatory meetings. This can involve lobbying Ofgem, The Department for Business, Energy and Industrial Strategy (BEIS) and other regulatory bodies and industry parties to ensure you are represented and treated fairly.

As part of our service to you, this monthly newsletter will keep you informed of the latest developments in the world of energy regulation in a way that is informative, easy to read and useful to our Customers.

Monthly Roundup

What has been going on in the last few weeks?

Gas and Electricity

• Ofgem’s Microbusiness Strategic Review and the Alternative Dispute Resolution (ADR) Service: The energy Ombudsman are continuing their engagement with both Brokers and Suppliers in the run up to the December 2022 implementation of their ADR Scheme.  We continue to engage bilaterally to ensure that our Customer and Broker partner’s views are represented. As the new Supply License Conditions apply to a wide range of Third Parties, we would suggest that both our Broker and Framework partners assess whether the new conditions apply to them. Further details on the scheme can be found here.

Gas

• Gas General Non-Transmission Services Commodity (NCO) Increase: Due to the increase in the wholesale gas price and higher than expected impact on shrinkage cost, National Grid have announced an indicative increase to the NCO charge from 0.0092p/kWh to 0.0399p/kWh from 01 October 2022. The NCO use a flat rate applied to all sites and for all kWh’s of gas consumed, and we will be contacting our customers who this will impact directly.
• Corona Energy Sponsored Unidentified Gas (UIG) Modifications: Following eight months of in depth and detailed work, Corona Energy’s Modifications 0781R – Review of the Unidentified Gas process has now closed, with the Work Group Report being approved at the June UNC Panel meeting. There was general Work Group consensus that a ‘vanilla smear’ approach to UIG would be preferable, with a set UIG value applied evenly to all meters uniformly. This approach removes volatility and commercial challenges to the Allocation of Unidentified Gas Expert (AUGE) allocation table annually. It will also save money as an AUGE would not be required, and will create more transparent and easy to understand methodology. We are continuing to work with key stakeholders and should see a new Modification raised within the coming weeks.

Ofgem’s Microbusiness Strategic Review

We have reported on Ofgem’s Microbusiness Strategic Review regularly over the last couple of years. The outcomes of the review are wide-ranging for all Suppliers and Third Party Intermediaries (TPIs), and we wanted to share a little more information about why the review was undertaken and the impacts the outcomes may have.

What does this mean?

The Competition and Markets Authority (CMA) investigation and subsequent final orders were published in 2016.  This introduced a number of measures to increase competition in the UK energy market. However, since then there has been a consensus that although the CMA’s final orders resulted in end user consumer benefit, Microbusiness customers in particular were still subject to sharp practices, and were faced with an opaque and difficult to understand energy procurement landscape.

As a result, in May 2019 Ofgem announced their Microbusiness Strategic Review in order to identify and resolve a number of ‘areas of harm’ for Microbusinesses in the energy market. Ofgem have worked closely with consumer groups such as Citizens Advice at all stages of the Microbusiness Strategic Review and even undertook some limited engagement with Microbusiness customers in order to better understand the challenges faced by small business owners when procuring their energy provision.

Following two rounds of consultation, Ofgem’s final outcomes are:

• Provision of Principle Contractual Terms: This provision seeks to ensure that Microbusiness customers are fully aware of the particulars of their supply contract, including the disclosure of third-party costs. This will go live on 01 October 2022.
• Banning Notification Requirement: This provision  removes the requirement of Termination Notices for Microbusiness supply contract exit (excluding evergreen contracts). This will go live on 01 October 2022.
• Broker Dispute Resolution: This provision ensures that Suppliers are only able to work with Brokers placing Microbusiness supply contracts who have signed up to a qualifying Alternative Dispute Resolution (ADR) scheme. This will go live on 01 December 2022.
• Information and awareness: This provision provides salient industry information to Microbusinesses via Citizens Advice. This will go live on 01 October 2022.

We have undertaken rigorous engagement with our TPI Partners regarding the outcomes of the Microbusiness Strategic Review. If you would like to discuss matters further, please contact your Corona Energy Account Manager.

Energy Regulation Horizon for 2022/2023

As you may be aware, 2022/2023 is set to be another year of major reform in the world of energy. We have compiled the Top 4 items to watch out for this year.

1. Market-Wide Half Hourly Settlement
   This industry project run by Elexon and Ofgem seeks to utilise the output of smart metering (half-hourly consumption data) to input more accurate data into Settlements in order to reduce reliance on forecasting. The estimated benefit of this project is c.£1.5-£4.5bn. The implementation of Market-Wide Half Hourly Settlement is expected in late 2024.
2. Code Governance Reform
   The framework of the UK’s Energy rulebooks, called Industry Codes, is currently going through huge reform with the development of the Retail Energy Code (REC). The REC seeks to take complex industry processes from various industry codes and bring them together into a single, dual fuel code. This will make a more transparent repository of these key processes.  In this reform, it is likely that Supplier obligations will change which might have an impact on our Customers. We will keep you informed if this is the case.
3. Ofgem’s Targeted Charging Review (TCR)
   Ofgem are currently undertaking a Targeted Charging Review. This looks at how Networks apply their charging methodologies. The review relates to the complex world of Network charging arrangements that are passed through to consumers via their Supplier. Tariffs and groupings have now been finalised by the networks and we will keep you updated of the changes when these are implemented.
4. Demand and Microgeneration Management
   Demand Side Response (DSR) and peer-to-peer trading means that we are heading towards a world where you can purchase your energy from your peers. These are people in your local area of the grid who are generating energy with small turbines or solar panels. Currently, the existing networks and associated regulations in the UK need to be updated to align with new technology and innovation but it is interesting to see what opportunities could be used in the future. If you are interested in DSR, we have articles on Battery Storage and the future of the network on our website.

Disclaimer: The information provided in this newsletter is intended to be a general guide and should not be taken to be legal and/or regulatory advice. At no time will Corona Energy actually or be deemed to be providing advice and no actions taken by Corona Energy shall constitute advice to take any particular action or non-action. Whilst every effort is made to provide accurate and complete information in this newsletter, Corona Energy cannot guarantee that there will not be any errors. Corona Energy makes no claims, promises or guarantees about the accuracy, completeness, or adequacy of the contents of the newsletters and expressly disclaims liability for errors and omissions in the contents of this newsletter. Neither Corona Energy, nor its employees and contractors make any warranty, expressed or implied or statutory, including but not limited to the warranties of non-infringement of third party rights, title, and the warranties of merchantability and fitness for a particular purpose with respect to content available from the newsletters. Neither does Corona Energy assume any legal liability for any direct, indirect or any other loss or damage of any kind for the accuracy, completeness, or usefulness of any information, product, or process disclosed herein, and do not represent that use of such information, product, or process would not infringe on privately owned rights.

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