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Citizens Advice response to ‘Electricity retail market-wide half-hourly settlement: consultation’

15 September 2020

Citizens Advice response to ‘Electricity retail market-wide half-hourly settlement: consultation’ [ 180 kb]

Citizens Advice, as the statutory advocate for energy consumers, has provided extensive input into the smart meter rollout, market-wide half hourly settlement, network access reforms and energy retail market reforms. We are pleased to see the draft impact assessment ahead of the final version.

Half hourly settlement is vital for the development of the electricity retail market in Great Britain as it can enable improved services to the domestic and microbusiness markets through better billing accuracy, greater network efficiency, reduced costs and lower carbon emissions. 

Citizens Advice supports the development of price signals in the electricity market to incentivise suppliers and consumers to use energy in a way that is more cost and carbon-efficient. Our support, however, is subject to appropriate protections and support being put in place, especially for people in vulnerable circumstances. 

Ofgem’s proposed ‘Option 2’ approach for requiring a prompt transition to HHS places greater pressure on the market to engage consumers on settlement reform and load shifting options. Citizens Advice want to see an inclusive approach to accessing benefits from Market Wide Half Hourly Settlement (MHHS). Therefore we support regulation to require exposure of suppliers to half hourly price signals. We expect this to lead to the better development of services that benefit consumers with low engagement with their energy, as compared to the counterfactual scenarios. This could include smart local energy systems or third party intermediaries that support households in choosing how to use energy in ways that are important to them. 

Citizens Advice welcome Ofgem’s preferred delivery mechanism and timeline, which provides an outline for the technical delivery of market-wide half hourly settlement. We are pleased to see that, as part of this approach, Ofgem has maintained a consumer opt-out for data sharing to encourage trust and positive engagement, particularly during the transition. We think there needs to be an easy option for consumers to exercise this opt-out and outline our reasons in our response.

There should also be a benefits realisation strategy to ensure MHHS delivers positive consumer engagement and inclusivity. As the Impact Assessment makes clear, risks to realising the proposed benefits and maximising the return on investment will be dependent on consumer trust and engagement with the changes to their services. At this stage, we understand Ofgem’s emphasis on delivering the technical capabilities to reform settlement, however, benefits realisation must be a core part of the process now, and in each of the subsequent phases of the project.