31 Jul 2023
July 2023 Industry Newsletter
Welcome to the July 2023 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 Energy Security and Net Zero (DESNZ) 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.
What has been going on in the last few weeks?
Gas and Electricity
- Central Switching Service (CSS) Outage: An industry wide failure occurred within the Central Switching Service (CSS), meaning that switches due to complete on 7th July 2023 have not completed and switches due to complete in the next 28 days may be impacted. An impact assessment is ongoing from the Data Communications Company (DCC) who are responsible for the CSS. However, it appears that switches due to complete on 7th July 2023 have not been processed and there will be further impact on switches due to be completed in the next 28 days. The supplier community and the DCC are assessing potential solutions to mitigate the impact for future dated switches and preserve switch dates where possible. We are currently working with our Trade Association and the wider Supplier community to help the DCC resolve this issue as soon as possible and further details will be provided on our website here when they become available.
- Ofgem and Retail Energy Code (REC) Third Party Intermediary Code of Practice (TPICoP): Following the conclusion of Ofgem’s Microbusiness Strategic Review and two REC workshops for Suppliers and Third Party Intermediaries (TPI) about how to best govern this area, the REC have announced their intention to implement a mandatory TPICoP by 01 October 2023. It is expected that the TPICoP will sit under REC governance and include provisions such as standardised LOAs, TPI performance assurance regimes and a push for increased transparency. REC are currently consulting on the high level principles of the proposed TPICoP and we’re currently awaiting a REC Change Proposal to be raised and for the TPICoP drafting to be released. In the meantime, you can find further details on the REC’s work plan here.
- Reform of Gas Demand Side Response (DSR) Arrangements: National Gas Transmission (NGT) (previously called National Grid Gas) continue to work on their UNC Review Group to discuss and explore possibilities to create a robust gas DSR product: UNC 0835R – Review of Gas Demand Side Response Arrangements. Following the July 2023 UNC Modification Panel, two modifications have been recommended for implementation and sent to Ofgem for their decision: UNC 0844 – Enabling Direct Contractual Arrangements with Consumers for Demand Side Response which aims to enable NGT to contract directly with consumers for the voluntary reduction of gas demand, and UNC 0845 – Enhancements to Demand Side Response (DSR) Arrangements including a D-5 Product aims to extend existing Gas DSR eligibility and increase the lead-time for any Gas DSR curtailment to 5 days. The original Review Group was recently extended by 10 months based on its good output and NGT will continue to work with Shippers and end user consumers to refine their Gas DSR product. The latest news is that a new modification, UNC 0852 – Shipper notification in relation to option exercise for Customer Demand Side Response has been raised, which seeks to ensure that NGT inform the relevant Shipper in the event that a Customer DSR option is exercised. We will continue to keep you updated of these developments.
- Unidentified Gas (UIG) Modifications: Following the closure of Corona Energy’s Modification UNC 0781R – Review of the Unidentified Gas process, Modification UNC 0831 – Allocation of LDZ UIG to Shippers Based on a Straight Throughput Method has been raised by SSE seeking to introduce a uniform allocation of UIG, where a set UIG value is applied evenly to all meters. This approach removes volatility and commercial challenges to the Allocation of Unidentified Gas Expert (AUGE) allocation table annually. At the last Workgroup meeting Xoserve confirmed that although they could not provide an accurate figure, the implementation of this modification would include a saving in the region of £300-£400k per annum
- An alternative Modification UNC 0831A – Allocation of LDZ UIG to Shippers (Class 2, 3 and 4) Based on a Straight Throughput Method has been raised by Brook Green Trading, aiming to encourage movement to Daily Metering, reduce levels of UIG and discourages risk premiums by removing Product Class 1 from the uniform allocation of UIG as these classes provide accurate daily meter readings. Following discussions regarding the current Central Data Service Provider (CDSP) system constraints, the Proposer decided to remove Product Class 2 from the UIG exemption, however it was noted that it may be worth this being reviewed in future to ensure that CDSP systems include provision for any potential future changes to UIG allocation methodologies.
- Legal text is due to be provided ahead of the next Workgroup meeting and we expect for 0831 and 0831A to be consulted on in the next few weeks.
What is the Energy Ombudsman’s Broker Alternative Dispute Resolution (ADR) Scheme?
As part of Ofgem’s Microbusiness Strategic Review, which concluded in 2022, the Energy Ombudsman was tasked with setting up a dispute resolution scheme to resolve energy related third party intermediary (TPI), otherwise known as Broker, complaints. This scheme operates in a very similar way to the Energy Ombudsman’s long running approach to resolving Energy Supplier related complaints.
What does this mean?
The Energy Ombudsman’s Broker ADR scheme is open for Microbusiness customers, which means that you are able to utilise their scheme if your organisation satisfies one of the following criteria:
- employ fewer than 10 employees (or their full time equivalent) and has an annual turnover or balance sheet no greater than €2 million; or
- uses no more than 100,000 kWh of electricity per year; or
- uses no more than 293,000 kWh of gas per year.
If satisfied, the Energy Ombudsman may be able to help resolve disputes relating to the service that you have received from your TPI/Broker if you are unhappy with the outcome of your complaint directly with your TPI/Broker.
Further details on the Energy Ombudsman’s ADR scheme can be found here.
Energy Regulation Horizon for 2023/2024
As you may be aware, 2023/2024 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.
- 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.
- Code Governance Reform
The framework of the UK’s Energy rulebooks, called Industry Codes, is currently going through huge reform following the development of the Retail Energy Code (REC) and the forward-looking plan to implement Ofgem as the industry’s Strategic Body. In these reforms, 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.
- 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.
- 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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