Electricity settlement

The electricity settlement process places incentives on suppliers to buy energy to meet their customers’ demand in each half hour of the day. Accurate and timely half-hourly consumption data from smart metering could significantly improve the quality of settlement, which in turn could encourage innovation and efficient use of energy.

We consider it is in consumers’ interests to be settled using half-hourly consumption data from smart meters. Suppliers can already choose to settle consumers half-hourly through our elective half-hourly settlement work. We expect, however, that we will have to require that all suppliers do this in order to maximise consumer benefits.

Looking forward

In July 2017, we launched our Significant Code Review, which sets out our revised timetable following our November 2016 consultation on the timetable for reform for market-wide half-hourly settlement (previously mandatory half-hourly settlement). The decision on whether to require that all suppliers across the market settle half-hourly will be made in the second half of 2019 and is subject to cost-benefit analysis.

HHS has a fundamental role in delivering the Smart Systems and Flexibility plan which could save consumers up to £40bn off their energy bills in the coming decades.

Approach to design of the Target Operating Model

One of the key outputs of this Significant Code Review is the development of a Target Operating Model to deliver Market-wide Half-hourly Settlement. To achieve this we have set up the following design bodies:

The ELEXON forward work plan for the Target Operating Model design work, last updated in May 2018, can be found here.

Publications and updates

  • Published: 11th Jul 2019
  • Open letters and correspondence
  • 1 Associated documents
This working paper sets out our considerations to date on the potential future changes to the energy market which the TOM design work will need to take into account.

  • Published: 10th Jul 2019
  • Open letters and correspondence
  • 2 Associated documents
Ofgem seeks comments on a draft RFI about the impacts of moving to market-wide half hourly settlement.

  • Published: 1st Jul 2019
  • Guidance
  • 0 Associated documents
Settlement Reform update: July 2019, including notification of stakeholder webinar on draft RFI.

  • Published: 25th Jun 2019
  • Decisions
  • 2 Associated documents
Consultation on access to half-hourly electricity data for settlement purposes: Ofgem response and decision following stakeholder feedback.

  • Published: 12th Jun 2019
  • Reports and plans
  • 15 Associated documents
The Outline Business Case is the second iteration of the Business Case for market-wide settlement reform.

  • Published: 10th Jun 2019
  • Guidance, Reports and plans
  • 0 Associated documents
The ELEXON-chaired Design Working Group has published a consultation on the transition approach to the preferred Target Operating Model to enable market-wide half-hourly settlement.

  • Published: 30th May 2019
  • Decisions
  • 1 Associated documents
Consultation on supplier agent functions under market-wide settlement reform: Ofgem response and decision following stakeholder feedback.

  • Published: 20th May 2019
  • Decisions
  • 0 Associated documents
Ofgem has decided to appoint new members to the ELEXON chaired Design Working Group developing the Target Operating Model.

  • Published: 15th Apr 2019
  • Agendas, minutes and presentations
  • 3 Associated documents
The minutes, agendas and slides for the sixth meeting of the Design Advisory Board (DAB) was held on the 31st January 2019.

  • Published: 2nd Apr 2019
  • Guidance, Open letters and correspondence
  • 0 Associated documents
Ofgem is opening up applications for the membership of the DWG as it moves into developing the transition approach for the TOM to MHHS.