Settlement Reform Update - July 2019

Publication date
1st July 2019
Information type
Policy area

Settlement reform update

To contact the team email: halfhourlysettlement@ofgem.gov.uk

Settlement reform highlights

Business Case and Impact Assessment 

We published our response to stakeholder feedback on our Outline Business Case on 12 June. We are preparing to publish a Request for Information (RFI) to inform our draft Impact Assessment. We are holding a teleconference on 15 July to discuss the draft RFI. Please email halfhourlysettlement@ofgem.gov.uk for more information on how to participate, or with any questions about the Business Case process. 

Consumer Issues policy work

Following the closure of the Call for Evidence on potential consumer impacts following Settlement Reform on 29 March 2019, we are going to publish a summary of responses shortly and will continue discussing these issues with stakeholders.  Please email us at halfhourlysettlement@ofgem.gov.uk with any comments or questions.

Access to data policy work

We published the response to our consultation on access to half-hourly data for settlement purposes on 25 June. Alongside that we also published an updated version of our Data Protection Impact Assessment (DPIA), reflecting the decisions set out in the response. 

Target Operating Model (TOM)

In accordance with stage two of the TOM development, the ELEXON-chaired Design Working Group have delivered their preferred TOM and are now working on the transition approach. The DWG proposed transition approach is now undergoing consultation (with responses due 8 July 2019). This consultation is on the BSC website.

We published our decision on supplier agent functions on 29 May 2019.

Business Case

In mid-June we published our response to feedback on the Outline Business Case for Settlement Reform. Stakeholders were broadly supportive but called for more economic analysis.

To that end, we will shortly issue a draft Request for Information (RFI) seeking input on the potential impacts of introducing MHHS. On 15 July we will hold a teleconference to discuss the draft RFI. After considering stakeholder comments on the draft, we expect to issue the RFI at the end of July. Stakeholders’ responses to the RFI will inform the Impact Assessment (IA).

We have been re-planning our project timelines and will soon announce new milestone dates, including anticipated dates for publishing the draft IA and the Full Business Case, with Final IA.

Key links

Outline Business Case Response

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 asked a number of questions focusing 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.

Following the closure of the Call for Evidence on 29 March 2019, we are going to publish a summary of the responses we received shortly. We are also continuing to speak to stakeholders on these issues. The responses will also inform our ongoing review of network access and forward-looking charging arrangements.

Key links

Call for Evidence

Access to data policy work

On 26 June we published the response to our consultation on access to half-hourly data for settlement purposes. The consultation ran over summer 2018 and included 15 questions relating to data access issues. The seven key decisions we have made as part of the process are set out up front in the response, including confirmation of our consultation proposal of an opt-out scheme for domestic consumers. Alongside the response we also published an updated version (v2) of the Data Protection Impact Assessment reflecting the decisions made. We expect to draft the next iteration of the DPIA when making our final decision on settlement reform. The response letter and DPIA can be found here.

Following the headline decisions being made, there are now some important further design aspects of the system related to data sharing that we need to work through. These include, for example, the timing of the transition for domestic consumers from an opt-in to an opt-out system for settlement data, as well as designing how the opt-out mechanism will work in practice. Now that the data sharing rules for settlement have been defined, we feel it is important that the transition to the new system takes place as quickly and efficiently as possible to ensure as many new customers as possible are subject to the updated framework. We will be seeking stakeholder input in order to help work through these issues as soon as possible.

If you would like to be involved in the process or have any questions or comments on our decisions, please contact the Settlement Reform team at halfhourlysettlement@ofgem.gov.uk

Key links

Response to access to data consultation

Target Operating Model (TOM)

Ofgem received the Design Working Group (DWG) Report on their preferred Target Operating Model (TOM) for Market-wide Half-Hourly Settlement (MHHS) back in January this year. Since then, the ELEXON-chaired DWG have been working on its approach for transition from the current settlement arrangements to the Preferred TOM. This transition approach is now out for consultation on the BSC website. We would like to thank ELEXON, the DWG, and all sub-group members for their work to date on the TOM design and the transition approach.

ELEXON published the preferred TOM transition approach stakeholder consultation on the BSC website on 7 June 2019. The consultation will close on 8 July 2019. Following this, the DWG will deliver the final Stage 2 report to Ofgem during summer 2019.

At the end of May we published our decision on supplier agents under MHHS. Our confirmed position is that MHHS should not include centralisation of agent functions, and that there may well be a case for future models where data is not aggregated for submission into central settlement systems. As part of our Impact Assessment we will weigh up the costs and benefits of a TOM where central settlement systems take in non-aggregated data. It is by using the Full Business Case that we will take the decision on the final TOM, and our decision will be informed by all the relevant evidence available to us, including stakeholder responses to the Impact Assessment and advice from the Design Advisory Board.

Key links

Ofgem, Design Advisory Board webpage

ELEXON, Design Working Group webpage

Agent functions Decision 

Your feedback and future updates

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If you have any feedback or enquiries, please contact us at halfhourlysettlement@ofgem.gov.uk

Looking Ahead

15/07/2019: RFI teleconference, please email the team inbox if you would like to attend