DCC Review Phase 2: Determination of Allowed Revenue - conclusions
Decision
- Publication date
- Company
- Smart DCC Limited
- Industry sector
- Supply and Retail Market
- Licence type
- Smart Meter Communication Licence
- Decision for
- DCC Review Phase 2: Determination of Allowed Revenue
The Data Communications Company (DCC) manages the communications and data transfer service for smart metering. We are reviewing the regulatory arrangements for DCC ahead of the expiry of its Licence due in September 2027 (“DCC review”). This decision sets out our conclusions in relation to the process for determination of DCC’s Allowed Revenue (cost control).
Background
In August 2023 we concluded the first, scoping phase of our review with a set of key features to form the basis of the design of the new regulatory model.
Phase 2 of our review has focused on developing these key features into detailed policy proposals to underpin the Successor Licence.
In May 2024 we published the first policy consultation focused on future arrangements for governance and Centralised Registration Service (Switching). We published our decision in two parts in December 2024 (Switching) and January 2025 (governance).
In December 2024 we published the second policy consultation focused on the process for determination of the Licensee’s Allowed Revenue (cost control).
Our decision
This document summarises the responses to our December 2024 cost control consultation and outlines our policy conclusions on the areas we sought responses on, including:
- Cost control scope and cycle
- Managing risk and uncertainty
- Financial incentives
- Customer engagement
- The implementation of the first Business Plan
Next steps
Alongside this decision we are also publishing two consultations:
1) Statutory consultation on interim changes to the DCC licence to:
- Implement our conclusions on the transition to an ex-ante cost control arrangements (our conclusions outlined in chapter 6)
- Account for the end of the Licence as pertains to Price Control and other regulatory reporting, including the Baseline Margin and External Contract Gain Share mechanisms
2) Consultation on two draft guidance documents to help DCC prepare the first Business Plan and ex-ante cost control submission
- Terms of reference for Customer Challenge Group
- Business Plan Guidance, including cost control processes/procedures
We anticipate conclusion to these consultation in summer 2025.
We expect to publish our third policy consultation of phase 2 focusing on the future role of the DCC, objectives and operating model over the coming weeks.