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Issue 492 | Code Governance Consultation

Issue 492 | Code Governance Consultation

The assessment procedure consultation was issued for this urgent proposal on 22 May. RWE npower raised the proposal on 28 April following Ofgem’s decision to reject the BSC Panel’s request for P272 to be delayed (see Alert 21/04/15). The regulator said at that stage it would be open to alternative solutions to address the risks to consumers. P322 proposes new arrangements to migrate sites in Profile Classes (PCs) 5-8 to half hourly (HH) settlement. This will require:  suppliers to settle HH those sites with advanced meters on PCs 5-8 on a change of supply or renewal of contract from 5 November 2015 to 2 November 2017;  suppliers to submit migration plans to confirm the date by which any given relevant metering system will be migrated to HH settlement; and  the migration plans are to be agreed and monitored by the Performance Assurance Board (PAB). Under the timetable proposed P322 would be implemented on 3 August 2015 with a deadline for migration plan submissions of 31 August. PAB would initially consider these plans on 24 September. The mandatory start date for migration would be 5 November, with an end date of 2 November 2017. The workgroup issued a request for information at Ofgem’s suggestion to understand when contracts are expected to finish and therefore to inform the workgroup in determining the P322 end date. Although this initially closed on 20 May suppliers are now invited to respond by 3 June in order that views can be considered with the responses to the current consultation. We recommend that you respond to the consultation, which closes on 5 June, and raise any issues with the proposed revised plan for implementing P272. Further background P272 was approved by Ofgem on 29 October last year for implementation on 1 April 2016. The proposal, raised by SmartestEnergy, will mandate that consumers in Profile Classes 5-8 are settled using (HH) consumption data. For further details on the proposal and the regulator’s decision see our Alert dated 30/10/14. The BSC Panel issued a request to Ofgem on 20 March for an extension to the implementation date for P272 to 1 April 2017. The regulator said in its decision to reject the request that while it is concerned about the risks to consumers from a large-scale migration taking place over a few months and from widespread contract interruptions, it did not think that granting an extension will address them. In particular it said suppliers could continue to place consumers on NHH contracts until the last possible moment. Ofgem considered other measures potentially including, but not limited to, an extension to the implementation date, are needed to fully mitigate the risks identified. RWE npower raised P322 on 28 April (see our Alert 06/05/15) and requested it should follow urgent procedures. This was agreed by Ofgem and under the timetable set out the final modification report will be issued to the Authority on 11 June after consideration by the BSC Panel. P322 The new arrangements to migrate sites with PC 5-8 to HH settlement consists of two requirements:  a requirement for suppliers to settle HH metering systems with advanced meters on PCs 5-8 on a change of supplier or renewal of contract from 5 November 2015 to 2 November 2017 (subject to the P272 implementation date). The PAB may use any performance assurance techniques it deems necessary to ensure compliance with this requirement, which may include escalation to the BSC Panel; and  a requirement for suppliers to submit migration plans to demonstrate how they will meet the first requirement and the requirement to move all metering systems with advanced meters on PCs 5-8 to HH settlement by the date specified in the BSC. The BSC will also require that these plans are agreed and monitored by the PAB. The proposal details the items that will be included in the reporting template to be provided by Elexon. Key elements of this requirement include: – suppliers will need to declare that they have agreed their migration plans with the relevant HH data aggregator, HH data collector and HH meter operator agent and confirm that the supplier’s agent is or will be HH qualified by the time that it will be responsible for the metering system; – the migration plans may propose a migration date that exceeds the 30 Business Day change of measurement class deadline for applicable metering systems if the volume of metering systems involved in any one period is not feasible or there are other reasons why it may not be feasible to meet the deadline, subject to the PAB approving such plans. However, the proposed migration date for a metering system may not be later than 2 November 2017, even if this means the full 30 business days for change of measurement class is not available; – the PAB will review and determine whether the plans and any supporting evidence are sufficient to ensure compliance with the P322 and P272 requirements of the BSC and do not pose any unnecessary risk to settlement; and – suppliers that are Registrants of relevant metering systems before 31 August must submit an initial Supplier Migration Plan to the PAB by 31 August 2015 for the PAB to consider at its September 2015 meeting. From October 2015 suppliers must provide monthly updates to PAB on the progression of their plans. They must submit a revised plan for approval as soon as they become aware of any circumstances that will prevent material compliance with their current plan. Impact and costs Impacts on suppliers are identified as the need to update their customer and agent contracts as part of the transition from NHH to HH settlement, which may require them to change agents and to update their forecasting, pricing and billing systems. They will also need to submit migration plans. The proposal will impact NHH supplier agents who will need to qualify for the relevant metering systems if they have not already done so. It will also impact HH supplier agents and distribution network operators who will need to carry out the relevant change of measurement class activities and associated processes and may need to update their systems to handle the increase numbers of HH meter system IDs. Elexon said it has not yet conducted an assessment of P322 but said the activities for it are the same as P272 so the bulk will be covered by the P272 cost of £11,000. Relatively small additional costs for BSC changes and increases in activities due to extended timescales are expected. Implementation The workgroup has recommended an implementation date of 3 August 2015 if the Authority’s decision is received on or before 20 July 2015. The key dates of the P322 implementation approach are:  P322 Implementation Date: 3 August 2015;  migration plan submission deadline: 31 August 2015;  the PAB consideration of initial migration plans: 24 September 2015;  migration mandatory start date: 5 November 2015; and  migration end date: 2 November 2017. Applicable objectives and workgroup discussion The majority of the workgroup agreed that P322 would better facilitate applicable objectives and therefore should be approved. In respect of promoting effective competition it considered present implementation timescales for P272 have the potential to disrupt customers unnecessarily and additional time for implementation could allow suppliers to choose an implementation path that would reduce this impact. This could help suppliers facilitate positive engagement with customers, particularly when considering new types of products. One workgroup member expressed concern that the proposal would not help competition as it provides a long period of uncertainty for customers with respect to pricing and said the migration period should therefore be as short as possible. In respect of promoting efficiency in the implementation of the balancing and settlement arrangements, the majority considered that extending the P272 implementation time would ease system and development costs for industry participants and increase how efficiently developments can be made alongside other industry requirements. In addition, the workgroup noted that many suppliers had indicated that they would be unable, or at least would struggle, to achieve the existing P272 implementation date. Discussions included debate on the appropriate end date for P322. The Ofgem representative suggested that a request for information should be issued to understand when contracts are expected to finish. The workgroup considered the results in determining its views for this consultation. However, any supplier still wishing to respond should do so by 3 June and the workgroup will consider responses when it meets after the consultation. Next steps Responses to the consultation are requested by 5 June. The consultation questions are set out on page four of this Alert; a proforma response form has been provided. Under the urgent timetable agreed the final modification report is due to be issued to the Authority on 11 June following consideration by the BSC Panel. Cornwall Energy contact: Josephine Lord 01603 604400 josephine.lord@cornwallenergy.com   Consultation questions 1. Do you agree with the Workgroup’s initial unanimous view that P322 does better facilitate the Applicable BSC Objectives than the current baseline? 2. Do you agree with the Workgroup that the draft legal text in Attachment A delivers the intention of P322? 3. Do you agree with the Workgroup’s recommended Implementation Date? 4. Do you agree with the Workgroup that there are no other potential Alternative Modifications within the scope of P322 which would better facilitate the Applicable BSC Objectives? 5. Do you agree with the Workgroup’s recommended Implementation approach where Suppliers must submit initial Supplier Migration Plans by 31 August 2015, subject to 3 August 2015 Implementation Date? 6. Do you agree that under P322 Suppliers should be required to migrate any applicable metering systems (MS) to HH Settlement where it gains or where the contract is renewed from 5 November 2015? 7. Do you agree that under P322 Suppliers should be required to complete migration to HH Settlement within 30 Business Days of a change of Supply or Contract Renewal? 8. Do you agree with the Workgroup’s recommended implementation approach where Suppliers must have migrated all applicable MSs by 2 November 2017, subject to P272 Implementation Date being amended to align with this date? 9. Do you believe that Suppliers should provide SMP information at a GSP Group level? 10. Do you have any further comments on P322?

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