25 Nov 2019
November 2019 Industry Newsletter
Welcome to the November Corona Energy Industry Newsletter.
It’s safe to say that Energy regulation isn’t the easiest subject matter – it can be dry and often uses complex language with details being hard to come by. At Corona Energy we believe in putting the Customer first, that’s why we use our position as the third largest Non-Domestic Gas Supplier in the UK Market to voice your needs, views and concerns at key regulatory meetings, from 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 you: our Customers.
What has been going on in the last few weeks?
- Ofgem’s Christmas Publishing Moratorium: As happens every year, Ofgem has confirmed that their last publishing day for any decisions before Christmas will be 18 December 2019. What does this mean? Basically that any decisions outstanding by this date will not be considered before the publishing of Ofgem papers resumes on 2 January 2020.
- Amendments to Gas Transmission Charging Regime: This change seeks to make some parts of Gas Transmission Charging ‘site specific’ rather than ‘socialising’ and spreading costs across the network – meaning that it would have been more expensive for sites further away from a network entry point such as the Outer Hebrides. As reported last month, Ofgem are undertaking a Regulatory Impact Assessment on the proposed solutions. We’re hoping to hear some news before the Christmas Publishing Moratorium, but this decision may be pushed back into the new year.
- Renewables Obligation (RO) Provisional and Final Orders: Ofgem has issued a number of provisional and final orders to Suppliers who have missed the deadline for disclosure of their Renewables Obligation Certificates (ROCs) or made their Renewables Obligation (RO) buyout payments. We’ve seen this lead to a number of Suppliers exiting the market and initiating the Supplier of Last Resort (SoLR) process in the past, so only time will tell as to whether we see this happening again.
- Theft Arrangements: There has been a focus on industry theft arrangements of late, with it being noted that arrangements in the Gas industry have led to a disconnect between Shippers and Suppliers which could add to the current volatility of Unidentified Gas. The Uniform Network Code (covering Shippers and Transporters) and the Supply Point Administration Agreement (covering Suppliers) have worked together on the Joint Theft Reporting Review Group and identified a number of process areas that could be improved to remove these issues. The first phase pf the group has now been officially closed and we are expecting the second phase to start in the new year.
Climate Change Levy
You may have seen the Climate Change Levy (CCL) detailed as a separate line item on your energy bills and wondered what it was about – especially in light of the fact that it has increased recently.
CCL is a government imposed tax that was created to encourage non-domestic customers to reduce their gas emissions. The money raised from CCL is then used by government to invest in green generation (generation that has a lower or non-existent carbon impact).
What does this mean?
CCL is charged to all non-domestic customers, however if you are charged at the reduced 5% VAT rate, you are CCL exempt. Examples of consumers with a lower rate of VAT include:
- Religious institutions;
- Managing agents of residential properties (e.g. care homes); or
- Low consuming business (Less than 1,000 kWh/month for Electricity or 4,297 kWh/month for Gas).
If you think you’d qualify for the lower VAT rate and so would be eligible for a CCL exemption, please get in touch with us and we can send you the relevant paperwork.
Energy Regulation Horizon for 2019
As you’re probably aware already, 2019 – 2020 is set to be a year of major reform in the world of energy. What should you be focussed on? Below we’ve complied the Top 5 to watch this year.
- UK General Election
Unsurprisingly we have a new matter to topple Brexit from the number 1 position on our list – the 2019 General Election! For those who have not read through the manifestos of our political parties, there are a number of proposals that could fundamentally change how the energy industry is run – a lot of which could impact our customers. When the election is over and decisions made, we’ll be sure to keep you updated with the latest news relevant to our sector.
The issue on everyone’s lips at the moment, the uncertainty around Brexit is a concern for all businesses and policy makers across all UK industries. With the latest three month delay to the Brexit date of January 2020, we expect to see the uncertainty continuing. But rest assured, Corona Energy will continue to keep you updated as best we can.
- Code Governance Reform
The framework of the UK’s Energy rulebooks, called Industry Codes, is going through huge reform at the moment with the development of the Retail Energy Code (REC). The REC seeks to take complex industry processes from various industry codes (The Master Registration Agreement, The Supply Point Administration Agreement, The Uniform Network Code, The Distribution Connection Use of System Agreement just to name a few) and bring them together into a single, dual fuel code to make a cleaner more transparent repository of these key processes. In this reform it is likely that Supplier obligations may change and this might have an impact on our Customers. The basic REC framework has now been created and the phased implementation will take place over the next few years. We we’ll keep you informed of any updates that may impact you.
- Ofgem’s Significant Code Review (SCR) and TRIADs
Ofgem are currently undertaking a SCR, or in depth investigation, on Electricity Network Access and Forward-looking Charges. This mostly deals with the complex world of Network charging arrangements which are passed through to consumers via the Supplier but has little impact on Consumers and Suppliers as the changes are likely to impact the networks. However, there is talk of removing TRIAD charges. TRIADs are basically the three times in the winter of a year with highest electricity demand, and are used by National Grid to calculate some aspects of electricity transmission charges. TRIADs can be pretty costly for some larger Half Hourly metered customers and over time there have been many initiatives to reduce TRIADs including shifting times of peak demand and off-setting demand with generation. With talks of removing TRIADs, the way transportation charges are calculated may need to be changed. We’ll keep you updated with any developments.
- Demand and Microgeneration Management
Demand Side Response (DSR) and peer-to-peer trading basically means that we’re heading towards a world where you can purchase your energy from your peers. These peers are those people in your local area of the grid who are generating – for example with a small turbine or solar panels. We’re a way off this yet with the existing networks and associated regulations needing to catch up with new innovations, but this opens up many opportunities. If you’re interested in DSR, why not check out our article on Battery Storage and the future of the network on our website? Or come and talk to us about the possibilities: we’d love to hear from you.
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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