Settlement reform update

Publication date
12th March 2019
Information type
Policy area

Settlement reform highlights

Consumer Impacts policy work: We published the Call for Evidence on potential consumer impacts following Settlement Reform on 5 February 2019 (with responses due by 29 March 2019). We held a related stakeholder workshop on 8 February 2019 to discuss the Call for Evidence themes.

Target Operating Model (TOM): In accordance with stage two of the TOM development, the ELEXON chaired Design Working Group have delivered their preferred TOM. This TOM is now undergoing consultation (with responses due 15 March 2019).

Target Operating Model (TOM)

Ofgem has now received the Design Working Group (DWG) Report on their preferred Target Operating Model (TOM) for Market-wide Half-Hourly Settlement (MHHS). The ELEXON-chaired DWG have come to the preferred TOM following the development of the five Skeleton TOMs, which were set out at the end of Stage 1. 

During Stage 2, the DWG developed the more detailed service requirements for the TOMs, evaluated the different TOMs in light of Ofgem’s Design Principles and policy steers, and chosen a preferred TOM. This work was supported by four workgroups reporting to the DWG, with the Design Advisory Board providing the strategic input.  

ELEXON published the TOM stakeholder consultation on the BSC website on 18 February 2019. Submissions will close on 15 March 2019. Following this, the DWG will then develop a transition approach for moving from the current Settlement arrangements to the preferred TOM. The DWG will consult on this and deliver the final Stage 2 report to Ofgem during summer 2019, in time to inform our decision on the Full Business Case and on when and how to implement MHHS.

Key Links

ELEXON, Design Working Group 

Policy decisions for Settlement Reform – Least-regrets steer to the Design Working Group

Consumer issues policy work

On 5 February 2019, we published a Call for Evidence seeking stakeholder input and evidence about the potential impacts on domestic and small non-domestic consumers that may follow implementation of electricity settlement reform. We are seeking to better understand these impacts in the context of the transition to a smart, flexible energy system that will include future network access and charging reform that is facilitated by settlement reform. Our questions focus on four themes: consumers’ engagement with their electricity usage; consumers’ ability and willingness to load shift/offer flexibility; consumers’ ability and willingness to access/use new (smart) technology to help them offer flexibility; and consumer attitudes to the range of new products, including time of use tariffs, that may develop in a future retail energy market. We also want to better understand how the impact of these changes may get distributed across consumers and whether specific risks may arise for some of them for which further protection and engagement measures could be needed.

We held a stakeholder workshop on 8 February 2019 to gather some initial external views. We welcome views, supplemented by relevant available evidence, from a wide range of stakeholders interested in the potential consumer impacts by 29 March 2019. We will consider the responses and how the evidence provided can help inform the business case for electricity settlement reform and any further work we may undertake on, for example, consumer protection and engagement issues that it may raise. Responses will also inform our ongoing review of network access and forward-looking charging arrangements.

Key Links

Consumer Impacts Call for Evidence 

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