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Citizens Advice response to Ofgem’s voluntary Request for Information to inform the Business Case of market-wide half-hourly settlement

Energy

2 October 2017

​Citizens ​Advice ​response 256 KB ​to ​Ofgem’s ​voluntary ​Request ​for ​Information ​toinform ​the ​Business ​Case ​of ​market-wide ​half-hourly ​settlement

In this response, we give our views on how settlement reform will impact customer messaging and competition among suppliers and other market actors. With this we are feeding into Ofgem’s Business Case for market-wide half-hourly settlement.

Customer messaging:

  • We believe it is important that consumers are informed and educated about changes to settlement, although the content of this communication will depend on which data access rules Ofgem put in place.

  • If market-wide half-hourly settlement (HHS) was introduced under the current data access conditions, suppliers would still need to write to their customers, informing them what HHS means in terms of what their half-hourly data is used for and what opportunity this brings to them in terms of new products and services they can now access.

  • We are supportive of Ofgem and BEIS’ intention to consider alternative data access options and we would welcome proposals that facilitate HHS whilst respecting data privacy. But it is important to recognise that all the other data access options currently considered would constitute a significant change to the smart metering privacy framework and licence conditions, and a curtailment of consumer control and choice. This will need to be communicated to consumers by their supplier.

Impacts on competition:

  • In a future with market-wide HHS, there will be some incentives for suppliers to help their customers adjust their consumption behaviour but it will likely depend on how individual suppliers respond to them.

  • We believe the best way to incentivise suppliers or any other company to deliver useful services to consumers that make use of their HH data is by letting the consumer retain control over who accesses their HH energy usage data and in what detail. For example, under the current privacy framework, a consumer could choose to share only a monthly meter read with their energy supplier but half-hourly or even near real-time data with a service provider offering something beneficial such as energy efficiency advice.

Background to settlement reform: “Settlement reconciles differences between a supplier’s contractual purchases of electricity and the demand (energy use or production) of its customers. Currently, most domestic and smaller non-domestic customers’ usage is settled on a ‘non half-hourly’ basis, as they do not have meters that can record consumption in each half-hour period. These customers are settled using estimates of when they use electricity, based on a profile of the average consumer (within a given Profile Class). Smart and advanced meters can record a customer’s usage during each half hour period, enabling half-hourly settlement, where suppliers’ contractual purchases of electricity are reconciled against their customers’ actual usage during each half hour. “ Ofgem