28 Oct 2019
October 2019 Industry Newsletter
Welcome to the October 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?
- 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 and as soon as we hear of any updates, we’ll let you know.
- Capacity Market Reinstatement: Following an investigation by the European Commission, it has ruled that the GB Capacity Market should be reinstated. The Government welcomes this decision, noting “[The decision] enables the Capacity Market to continue its important work as Great Britain’s principle tool for ensuring electricity security of supply”. What does this mean? It means that the mechanism to make payment to capacity providers will be restarted including recouping around £1b of deferred payments for the suspended period. This won’t impact our customers as we have ensured that we have our proportion of these costs available.
- 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. A second phase of this group is expected to commence to make changes to these processes and close these gaps. As always, we’ll keep you updated on the progress of these changes.
Who are Microbusiness Customers?
Microbusiness Customers are defined as meeting one of the following criteria:
- Employs fewer than 10 employees (or their full time equivalent) and has an annual turnover or balance sheet no greater than €2 million, or
- Consumes not more than 100,000 kWh of electricity per year, or
- Consumer not more than 293,000 kWh of gas per year.
What does this mean?
Suppliers are obligated to ask Microbusiness Customers if they want a Smart Meter installed, rather than automatically offering an AMR meter. Microbusiness Customers can still opt out.
What are the differences between an AMR and Smart Meter?
|Based on SMS technology just like your mobile phone;|
It communicates one way, sending read and consumption data from the meter to the Supplier.
|Based on a Home Area Network (HAN) just like your wi-fi at home using its own communications hub;
It communicates two ways, where Suppliers can receive and send data to the meter;
Allows a customer to review their consumption data in real-time via a device fitted within their premises called an In Home Display (IHD).
If you would like more information regarding metering, please get in touch.
Energy Regulation Horizon for 2019-2020
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.
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 tabled three month delay and a possible 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.
- Climate Change Levy Increases
The Climate Change Levy is a tax on non-domestic energy users in the UK and is used to provide an incentive to increase energy efficiency and reduce carbon emissions. Before the Brexit referendum the rates for 2019 were set under the EU Emissions Trading Scheme (EU ETS). Although our future in the EU is now uncertain, the agreed CCL increases have gone ahead – increasing in 2019 by 45-66%. Please get in touch for further details.
- 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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