- Publication date
- 28th July 2015
- Information type
- Policy area
The Data and Communications Company (DCC) has an essential role to play in the energy market. Its performance is critical to making the smart meter rollout a success, and enabling suppliers to provide a good service to their customers.
It is important that DCC receives sufficient funds to fulfil its role and deliver high quality services. It is equally important that we hold DCC to account for its costs, which are ultimately passed on to consumers. The price control mechanism under its Licence is designed to ensure that the costs DCC incurs to provide its services are economic and efficient.
DCC is required to report price control information by 31 July, following each regulatory year. Using this information, we assess the costs reported and if we consider that costs are not economic and efficient these will be Unacceptable Costs under the Licence.
For any costs that we determine are Unacceptable Costs we must direct whether they are to be excluded from any future calculation of DCC’s allowed revenues, or whether to accept an undertaking from DCC. Any undertaking must relate to how DCC will manage Unacceptable Costs in the future and on the future procurement of relevant service capability.
Each July, DCC can also propose an adjustment to its Baseline Margin values. We assess this proposal and determine whether or not to change the level of margin values set out in the Licence.
This document is intended to inform stakeholders, to the extent possible at this stage, of the Authority’s approach to cost assessment under the DCC price control and the determination of Baseline Margin Adjustments.
Some of the principles and our approach have been documented in the price control assessment we carried out 2013/14. To clarify future price control processes we committed to issuing this guidance document. This should help to ensure the principles and criteria that will apply in conducting our assessment are clear. We are publishing this to make the cost assessment process easier to understand, so that DCC and stakeholders are better prepared to engage in the process.
This guidance is relevant to both ongoing and future cost assessments. We intend to keep both this guidance and our approach to cost assessment under review to make sure they align with policy developments and to deal with issues as they arise.