18 Sep 2019
September 2019 Industry Newsletter
Welcome to the September 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. The change was voted on back in May and there was no clear preference for the many alternates for this modification. Since being referred to Ofgem for determination, Ofgem have announced that they intend to undertake a regulatory impact assessment and a ruling will only be announced once this has been completed.
- Erroneous Transfers Performance Assurance Board: This is something which sounds very complex, but is in fact quite simple. An Erroneous Transfer (ET) is where a supply that has been registered by a Supplier in good faith but by mistake (or ‘erroneously’) is taken back by the original Supplier. There are lots of rules and regulations around ET events under the Supply Point Administration Agreement (SPAA) for Gas supplies and the Master Registration Agreement (MRA) for electricity supplies. The Erroneous Transfers Performance Assurance Board (ETPAB) has been set up as a joint SPAA & MRA committee to monitor Supplier performance in this area and ensure that the right actions are being taken to ensure that Consumers get back to their preferred Supplier as soon as possible, and to share industry wide best practice.
What is ‘Faster Switching’?
You may have heard the term ‘Faster Switching’ being discussed at a number of different events, and you may be wondering what this means. We’d like to break this down for you:
Faster Switching or The Switching Programme is the name of the Ofgem-lead project which is seeking to reduce the timescale for Change of Supplier events. This is a large scale project that will fundamentally change the key infrastructure of the UK Energy Market.
What does this mean for a Non-Domestic Customer?
We’re going to be honest here, we really don’t think this is going to have much of an impact for the standard Non-Domestic customer.
Faster Switching has been developed primarily with Domestic consumers in mind – and the Domestic market works a little differently than the Non-Domestic market. We’ve created a table below to detail these subtle differences and why Faster Switching impacts the Domestic market much more than the Non-Domestic market:
|Domestic Market||Non-Domestic Market||Faster Switching Changes|
|Utilises Tariffs for varying pricing structures, which can be exited from whenever the Customer wishes (sometimes at a cost detailed in the tariff terms).||Utilises Contracts to cater for varying non-domestic metering requirements, with set contract start and contract end dates which cannot be breached.||Faster switching will allow for Domestic customers to change Supplier more quickly whenever they choose, however some Non-Domestic customers will still be supplied via contracts and must organise their Change of Supplier events around their contracted dates – as they do currently.|
As you can see from this comparison, it is unlikely that the Non-Domestic Energy Market is going to be severely impacted by the changes as part of Faster Switching, however it may increase the speed in which a Non-Domestic Customer is able to change Supplier if they are out of contract. If you have any questions regarding Faster Switching, please get in touch with us.
Energy Regulation Horizon for 2019
As you’re probably aware already, 2019 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. We will continue to keep you up to date with any further developments we have on Brexit’s impacts to the UK Energy Market as part of this newsletter.
- 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. We we’ll keep you informed if this is the case.
- 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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