Financing arrangements for DCC1 and DCC2 during Business Handover

Details of outcome

We proposed to modify the Smart Meter Communication Licence in two ways to: 

• expand the definition of Pass-Through Costs to create a pathway for the Successor Licensee to recover legitimate Business Handover costs before it can levy its own service charges
• impose a duty on the current Licensee to temporarily ringfence the profit elements of its Allowed Revenue in the final two Regulatory Years pending Ofgem’s final determination of the Licensee’s Allowed Revenue to ensure sufficient funds are available to meet any liabilities that may arise

Having considered the feedback, we have decided to proceed with the first proposal, to expand the definition of Pass-Through Costs.

The licence changes will take effect on 16 February 2026.

We will implement further changes to the conditions of the Successor Licence, expected in March 2026.

Extension to statutory consultation

As some respondents requested more time to make additional representations, we are extending the consultation period on the second set of proposals linked to liabilities.   

Read the December 2025 notice and original consultation at the bottom of the page. 

The deadline to make additional representations is 16 January 2026.

Read the full outcome

Original consultation

Consultation description

This consultation is part of the DCC review programme, through which we are reviewing the regulatory framework for the Data Communications Company (DCC) to put in place new arrangements following the expiry of the Smart Meter Communication Licence in 2027 and appointing the Successor Licensee.

This is a combined policy and statutory consultation. It sets out proposals for modifications to the current SMCL and changes to the draft Successor Licence to ensure that both DCC1 and the DCC2 can recover necessary costs and to manage financial liabilities during the handover period. The proposals are primarily of technical nature, aiming to clarify the processes that both Licensees will be expected to follow.

We propose changes to the SMCL and draft Successor Licence to:

• allow DCC2 to recover Business Handover costs before the Transfer Date via DCC1’s Allowed Revenue
• enable DCC1 to recover costs for mandatory activities after the Transfer Date through DCC2’s Required Revenue
• clarify arrangements for transferring and ringfencing funds between DCC1 and DCC2 pending our final Price Control decision

We expect to publish our decision in December 2025.

Who should respond

This consultation is aimed at:

• Smart DCC (the current holder of the Smart Meter Communication Licence)
• DCC customers, including energy suppliers, distribution network operators, customer groups and other users of the smart metering network
• parties applying to be the holder of the Successor Licence
• organisations and individuals with an interest in smart metering policy and regulation