DFS needs third-party switching mechanism

A future Demand Flexibility Service (DFS) must include a built-in mechanism to handle customer requests to switch between providers, an industry expert has urged.

Naomi Baker, senior policy manager at Energy UK, chairs an industry working group which has recently outlined its views on how the DFS could be improved if it was deployed again next winter.

A problem with the design of the DFS, Baker told Utility Week, is the fact there was no built-in mechanism to handle customers switching between providers. This is in contrast to the retail energy market where if a customer decides to switch electricity provider, the process is managed by the Central Switching Service which is governed by the Retail Energy Code.

She explained: “Last winter the only provider that offered it to all eligible customers was Octopus, all customers with a smart meter could partake in the service via Octopus. The reason why the other large suppliers only ran a fairly restricted service was because of the administrative burden of trying to sort out the switching and because the short lead for the service meant that most were using mainly manual processes that were hard to scale quickly.

“Often customers would sign up with multiple suppliers, not realising this wasn’t possible. Each Friday the Electricity System Operator would run a check to identify meters registered with more than one provider. Any ‘duplicates’ were suspended until resolved meaning customers lost out.

“As there wasn’t a process or mechanism to resolve this, providers were spending a lot of resources on back and forth emails trying to identify customer preference – time that would have been better spent analysing the data and expanding volumes.”

Baker was further asked if the DFS was to be reinstated next winter, it should be mandatory for suppliers and aggregators to participate in the scheme.

In response she said: “Absolutely not, I don’t think it would be helpful for there to be any mandating. I think the way that this will develop is all about the skill of the suppliers and aggregators in designing services that we as customers want at the right price.

“Really getting their heads around the data of how different customers want to engage, how quickly, how reliably and what volumes etc.”

She cited the fact Octopus Energy knows that at least 300,000 of its customers can respond within four to six hours.

She added: “Mandating the DFS would be the opposite of what we need, providers need time and more learning by doing to see what we can do with this new tool really.”