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Response to Ofgem consultation on mandatory half-hourly settlement: aims and timetable for reform

13 January 2017

Response to Ofgem consultation: MandatoryHHS-CAresponsefinal [ 460 kb]

In general we support the approach outlined in the consultation. However, we are concerned that the number and scope of the reforms could be potentially challenging given the amount of change occurring in the industry at the same time. Given this, we look forward to seeing Ofgem’s further detailed plans following this consultation.

We also have significant concerns about any potential impact the introduction of mandatory settlement could have on the existing data privacy framework for smart meter consumers. Specifically it will be vital that existing consumer control through opt-ins and opt-outs to the sharing of non-anonymised usage data are retained.  Half-hourly settlement should be approached in the same way as all other consumer-data-derived smart metering benefits. If the consumer benefits are clear then consumers will opt-in to sharing more detailed data in exchange for them.

In our view a robust business case is essential to informing any decision to move to mandatory half hourly settlement (HHS)  and we welcome the use of the Treasury’s five case model to provide structure and to manage the process.  We are pleased to see the inclusion of an impact assessment and an assessment  of distributional impacts of mandatory HHS within the proposals.  We expect a full cost-benefit analysis to be published which should consider the question of  whether elective HHS can meet the same policy aims and provide better value for money than mandatory HHS. Any decision to proceed with a mandatory approach should learn the lessons of the process to introduce mandatory HHS for larger sites.

We agree with the use of the significant code review (SCR) process to drive the change process, and cannot see any alternative way of achieving this type of holistic reform. We agree that an SCR  should only go ahead once the work is thoroughly scoped and planned. However, this will be arguably the broadest SCR yet, and other SCRs have suffered from delay. We would like to see critical milestones set out so that in the event of delay the critical wins can be prioritised. We support use of alternative powers, if these become available, to provide a greater ability for Ofgem to drive strategic change across multiple codes.