As a monopoly, the Data and Communications Company (DCC) needs incentives, which mimic competitive pressure, to ensure it efficiently manages its costs whilst delivering an appropriate quality of service. A key performance incentive in their licence is that DCC’s baseline margin be put at risk each regulatory year.
Under current arrangements, DCC’s margin is tied to meeting certain Implementation Milestones (IMs) set by the Department of Energy and Climate Change (DECC) and assessed by Ofgem as part of its determination of Allowed Revenue.
Once the IMs are complete, an Operational Performance Regime (OPR) will take over. DECC has provided an OPR framework in the licence for Ofgem to develop and populate by direction.
This document invites stakeholders to provide their views on the scope, principles and possible performance metrics of the OPR as well as complementary reporting metrics that will give a wider picture of DCC’s performance but may not be incentivised. We will consult further over the summer and will work closely with DECC to ensure the finalisation of the IMs complements the introduction of the OPR.